Elaborating on two tweets:
Money may be only a form of exchange, but it violates liquidity conservation,allowing exchange of obscure value for clear value.
Therefore one must be very careful that its creation doesn’t favor certain people who like to obscure value and profit from it.I like the idea that money is regarded simply a means of exchange.
But where does the money from? Who enables a creator of the currency? Because liquid money is used mostly to get valuable and perishable stuff like food and medicines, and also illiquid things of much more uncertain longer-term value (art, businesses, etc).
The miners who create the money have a phenomenal privllege: in creating (or having the authority to create) the means of exchange they can use it to favor themselves or favor others. Central banks abuse that right at times, favoring the banks, and so do commercial banks when credit becomes too easy. So does VISA — there are certain people they won’t let you make credit card payments to.
I don’t know the solution but I like the idea of money being created in as neutral a way as possible, with favor towards none. Helicopter drops are random; so are lotteries, somewhat like distributing pieces of all the state-owned enterprises to everyone in a privatization.
Would it go to the “wrong” people? Or would someone like Khodorkovsky go around and buy up all the helicopter-dropped money in exchange for longer-term more illiquid investments or even scams, the inverse of what happened in Russia?
Probably no way to avoid all abuse, but creation of the means of exchange seems so important there should be some principle around it. One thing seems sure: if you abuse the privilege of creating the means of exchange (call it “bankriptcy”) that privilege should be taken away from you.