edilmedeiros on Nostr: I recently finished reading Better Money: Gold, Fiat, or Bitcoin?, by Lawrence White. ...
I recently finished reading Better Money: Gold, Fiat, or Bitcoin?, by Lawrence White. While I’m preparing a proper academic review, maybe someone will appreciate some of the book’s main points.
- Strong historical material explaining different implementations of money.
- Quite basic supply-and-demand methodology for comparing gold, fiat, and Bitcoin. Yet, the common ground makes for a conscientious analysis, especially for pointing that Bitcoin’s purchasing power volatility is inherent to the system from an economic perspective.
Take aways:
1. “A gold standard has the advantage that the global stock supply curve for monetary gold is non-vertical in the short run and nearly horizontal in the long run, providing responses in the quantity that stabilize the purchasing power of gold, but the disadvantage that the supply curve can occasionally shift.”
2. “A fiat standard has the potential advantage that its supply can be deliberately managed to stabilize the price level both in the short run and in the long run, but the disadvantage that has seldom been managed that way in practice, due to the incentives that accompany government control over the quantity of money.”
3. “A Bitcoin standard has the advantage that the Bitcoin supply curve does not shift, but the disadvantage that the supply curve is vertical in both the short run and the long run, implying unstable purchasing power in the face of money demand variations.”
White is skeptical about a Bitcoin standard because of purchasing power volatility. He argues that people preferred stable monies over time and that the costs associated are high.
“My prediction is that BTC is unlikely to become a commonly used medium of exchange for the same reason, namely that its purchasing-power risk and transaction costs make it unattractive to use as a medium of exchange.”
My main critique: fiat money was created by governments (White explains the mechanics of this movement) and they have a higher cost over society in the form of inflation (as he argues with historical evidence). It was done because of political reasons, not economical. I would not overlook people coming to accept higher purchasing power volatility of an eventual Bitcoin standard if governments stay in the last century’s track of increasingly assault over the institution of private property.
Does it worth reading?
Definitely, it will expand your knowledge about monetary systems and understand some fair critiques about Bitcoin.
- Strong historical material explaining different implementations of money.
- Quite basic supply-and-demand methodology for comparing gold, fiat, and Bitcoin. Yet, the common ground makes for a conscientious analysis, especially for pointing that Bitcoin’s purchasing power volatility is inherent to the system from an economic perspective.
Take aways:
1. “A gold standard has the advantage that the global stock supply curve for monetary gold is non-vertical in the short run and nearly horizontal in the long run, providing responses in the quantity that stabilize the purchasing power of gold, but the disadvantage that the supply curve can occasionally shift.”
2. “A fiat standard has the potential advantage that its supply can be deliberately managed to stabilize the price level both in the short run and in the long run, but the disadvantage that has seldom been managed that way in practice, due to the incentives that accompany government control over the quantity of money.”
3. “A Bitcoin standard has the advantage that the Bitcoin supply curve does not shift, but the disadvantage that the supply curve is vertical in both the short run and the long run, implying unstable purchasing power in the face of money demand variations.”
White is skeptical about a Bitcoin standard because of purchasing power volatility. He argues that people preferred stable monies over time and that the costs associated are high.
“My prediction is that BTC is unlikely to become a commonly used medium of exchange for the same reason, namely that its purchasing-power risk and transaction costs make it unattractive to use as a medium of exchange.”
My main critique: fiat money was created by governments (White explains the mechanics of this movement) and they have a higher cost over society in the form of inflation (as he argues with historical evidence). It was done because of political reasons, not economical. I would not overlook people coming to accept higher purchasing power volatility of an eventual Bitcoin standard if governments stay in the last century’s track of increasingly assault over the institution of private property.
Does it worth reading?
Definitely, it will expand your knowledge about monetary systems and understand some fair critiques about Bitcoin.