Wei Dai said

However if it did become mainstream I think there are some interesting macroeconomic questions here. Will prices really be stable as they're designed to be? Will there be business cycles? What is the optimum inflation/deflation rate?

Perhaps a solution is to fix not on a basket of commodities, or equities, but on provision of future service (much like Frequent Flier miles). Suppose the money is demoninated in Mb of web hosting (I've no idea whether this would be a good choice as I just made it up). Then you know you'll get what you want in terms of service, irrespective of the inflation/deflation. Sure, if web space inflates against the dollar then that's a problem (for people with dollars). But suppose you could accumulate the things that you actually want rather than specie (as a proxy)? Consider this as a thought experiment. Microsoft issue m$, each m$ being worth 1 minute of Microsoft technical support. People who need Microsoft technical support would buy m$ (big companies would know roughly how much they might need) whereas people who don't need or want it would sell m$. Instead of storing up dollars, the value of which might fluctuate (especially since Microsoft could change the price of technical support whenever they want), companies now have a firm fix. Just an idea. Regards, Dave Birch. === mailto:daveb@hyperion.co.uk ===== http://www.hyperion.co.uk/ ===