Thoughts at Random

The main idea: conditional consols are a cheap and easy way to implement futarchy today. 0. Posts on this blog are ranked in decreasing order of likeability to myself. This entry was originally posted on 02.12.2022, and the current version may have been updated several times from its original form. 1.1 Robin Hanson’s futarchy proposes we give prediction markets some role in governing nations or other organisations, in the former case by having people vote on beliefs but bet on results. 1.2 A grave issue with this otherwise interesting proposal is the lack of a quantifiable goal (the “belief” part) that can be fed to the markets, this being AFAIK one of the vectors by which Moldbug attacked the idea. 1.3 But fear not, for whilst true futarchy may be a highly speculative proposal today, there’s a much simpler iteration available to us right now, and which delivers much of the promise but requires less of the suspension of disbelief. A poor man’s version of futarchy, if you will. I eve...

The main idea: switching government (or at least regional) borrowing to fully amortized schedules only would greatly limit the propensity to acquire leverage beyond reason.   0. Posts on this blog are ranked in decreasing order of likeability to myself. This entry was originally posted on 16.10.2021, and the current version may have been updated several times from its original form.   1. Problem: balloon loans 1.1 As far as I know, all borrowing taken out by governments the world over is repaid in bullet / balloon format, where the principal is fully repaid in one single payment at the end of the loan term, and only interest is payable up until that time. Some of those loans run for 50 years, just so we are clear. 1.2 At the other end of the repayment schedule spectrum, you find a fully amortized loan, whereby the borrower repays both the principal and interest on it in a series of equal repayments throughout the term of the loan (ask Excel). The issue and solution should ...

The main idea: a Central Bank limiting open market operations to the acquisition and issuance of its own shares would suffer few of the issues that plague the current alternatives.  0. Posts on this blog are ranked in decreasing order of likeability to myself. This entry was originally posted on 06.07.2022, and the current version may have been updated several times from its original form. 1.1 Those of us who prefer monetary matters to be managed by open market operations instead of interest rates are presented with the issue of asset quality. 1.2 Will there be enough assets of good quality to buy to increase monetary supply as much as one may need to? Isn’t buying treasuries just monetizing debt? Even if not, the whole debate around treasuries being money anyway is still live and, worst case scenario, open market operations are just buying money with money. 1.3 Moreover, isn’t buying stocks market intervention? Buying up insane quantities of mortgage-backed securities sure seeme...

The main idea: issue, sell and buy unlimited quantities of consols whilst sterilising all net resulting inflows and outflows for a bare-bones automatic NGDP targeting regime.   0. Posts on this blog are ranked in decreasing order of likeability to myself. This entry was originally posted on 21.01.2025 and the current version may have been updated several times from its original form.  1.1 Earlier I have written about a thought experiment used to model the fiat economy. I actually think that model is good enough that the real-world complications and ways in which reality differs from it are minor. 1.2 Minor enough that simplifying reality to fit the model would actually enable us to come up with a decent automatic NGDP targeting regime, absent complicated instruments like futures and whatnot. 1.3 So here it goes. You have a Monetary Authority tasked with three duties: husbanding foreign exchange reserves, bailing out failing banks and issuing and buying back consols, the...

The main idea: money can be placed in three tiers depending on whether it has or lacks neutrality and a responsive supply. 0. Posts on this blog are ranked in decreasing order of likeability to myself. This entry was originally posted on 14.01.2025, though it is a much expanded first part of my first post from September 2021. The current version may have been updated several times from its original form.  0.1 This post is a fluff piece, containing analysis and commentary but no proposed solution to some issue. I try to keep this sort of stuff to a minimum as commentary for commentary’s sake is not the point of this blog.  1.1 The economy under the division of labour is a massive and massively complex system with immense degrees of freedom. Only money, an emergent computer of comparable capability, is equal to the task of daily optimising resources such as to fulfill demand to the greatest degree possible. Money alone can run such calculations at any reasonable speed. 1.2 Thes...