On Tue, 25 Dec 2001, Tim May wrote:
On Tuesday, December 25, 2001, at 01:50 PM, Adam Shostack wrote:
Many posts have talked about a both a 'fixed level' of money, and a commission. I find this odd, especially as there will be no way to add funds to the system. If you have a commission on every exchange, the money essentially deflates (there will be less of it tomorow than there is today, making it more scarce, and thus more valuable.) Thus it makes sense to hold onto it, making it illiquid, which is a bad thing for a currency. Since this is magic money, why not issue more of it now and again?
For all intents and purposes, the total supply of gold has been relatively constant for decades. A fraction of the total is mined and brought to market each year, but only a small fraction of the total.
And yet the assay and marking cost (several percent) has not crippled gold.
But gold is, at least for this sort of discussion, illiquid. How many gold coins do you have in your pocket right now? I'll wager asymptotic to nill.
Further, the fee for assaying and marking (melting, minting, stamping gold bars, etc.) is a fee for a service, and goes back into circulation.
Actually the payment for the fee for the assayist and the mint aren't likely to come out of the metal they are processing today. Now if we were talking of a 'frontier' sort of situation then you wouldn't have those fees going back into circulation, at least not immediately. In that case the 'cut' would be collected over some suitable period of time and then sold. Or the assayist could simply take their cut on the upstream broker payment (this assumes of course they have sufficient liquid capital in hand).
I expect the operators of a money changing operation would similarly aggregate their 1% or whatever and use the aggregated fee as their compensation for providing a service.
But these examples, at least from the perspective of the money changer are dealing with effectively 'unlimited' cash pools to draw from. Your objections to Adams points don't hold. -- ____________________________________________________________________ Day by day the Penguins are making me lose my mind. Bumper Sticker The Armadillo Group ,::////;::-. James Choate Austin, Tx /:'///// ``::>/|/ ravage@ssz.com www.ssz.com .', |||| `/( e\ 512-451-7087 -====~~mm-'`-```-mm --'- --------------------------------------------------------------------