/leftypol/ - Leftist Politically Incorrect

repost

I’ve been thinking about something tonight that I wanted feedback on, like whether anybody can just tear it apart or give constructive crits. It was basically a riff off of the idea that Bitcoin has a lot of volatility partially because by design its value is volatile (in the classical sense). This isn’t my observation or anything, I’ve seen it in several places, but due to the fact BTC’s block difficulty increases with the hashrate (the material costs of BTC rise) but the reward is arbitrarily fixed to the halving schedule (ever mined block rewards some fixed amount of bitcoin for several years), then the material cost (the labor cost, or similar to Ricardo, in BTC’s own terms the “difficulty”) systematically deviates from the amount of coins produced. Basically, if BTC was like any other commodity the more invested in mining it would produce more of it. But instead, the value of each BTC just inflates because no matter how much you invest in mining it, you keep getting the same amount.

So BTC’s price is just a feedback loop of the speculation on it. There isn’t a normal regulating pressure towards a natural price like other commodities, instead the value just rises with the demand. With other commodities, investment as a response to high demand usually causes the price to fall back down to its value as more are produced at the relatively stable difficulty of its production in terms of labor (all else being equal, ie no big technical changes or exogenous shocks throwing off the conditions of production).

So this has a pretty simple fix, just make something like BTC’s block reward a ratio of its difficulty. The difficulty still rises to make blocks mined at regular intervals, but as the difficulty rises the blocks produce more coins. So that should put a downwards pressure on the price of each bitcoin, it will converge closer to its cost of production as miners sell their BTC on the market for more competitive profit margins between each other and across the wider market.

So there is the crypto and value-theory part, and leave aside for a moment the question of liquidity, why people would be buying and selling this crypto as a medium of exchange. First lets get the big vision in picture. Where does MMT come in? Well, I figured that if you had a sovereign issuer of the currency, like the proverbial “money printer”, then you could use the liquidity of the currency to make money “out of thin air”. But of course, you can’t make too much too fast. It has to be in respect to the liquidity, the open market has to be able to absorb your sale of the crypto without strongly throwing off the price. But again, leave that aside for a moment. Just assume you can, that the market is liquid enough. Imagine the Printer is controlled by the working class, obviously through democratically structured working class organizations. So the Printer is accountable and transparent to the working class.

What does the Printer do with the money? In accordance with MMT, the sovereign issuer can spend as much of its currency as it wants and is only constrained by the productivity of the market that is using it. Basically, as long as more goods and services are being traded in the currency, then it isn’t going to drastically inflate. How does the Printer increase its market, which is basically increasing the size and liquidity of the market for its currency? It uses the money to buy property, which it leases, leases being payable in the currency (as far as I know, in the US you can accept whatever you want for payment federally, but state laws may vary. You just need to pay your taxes in dollars). But why do this, what does it have to do with socialism or the working class? Well, you can buy residential land and lease it back to housing cooperatives you help the tenants form, or for homes you can do what Community Land Trusts do and kind of simulate a housing market, except you lower the costs significantly by turning the land value into a modest lease (which is basically georgism, CLTs are like little non-profit georgists).

So now you’re taking residential property off of the housing market and leasing it for modest fees payable in the crypto. This creates liquidity as it raises demand for the crypto, stabilizing the price as when the exchange rate to dollars is low the lessees will buy more so they can pay cheaper fees, which pushes the price back up. So you’re creating a growing market in the crypto, and you’re culling landlordism. Great, but we can go further.

So take how businesses often get sold. Often the buyer will buy the assets + goodwill of the business and leave the actual LLC or corporation as a shell that still has all of its liabilities. So you avoid any hidden debt bombs or anything like that. The Printer can do the same thing, but the Printer isn’t interested in owning businesses. It just wants to lease property to the people who live and work with it to control it mutually. So instead it buys the assets + goodwill and it tells the employees it will help them form a worker cooperative and lease them the stuff. Of course, they pay it in the crypto. So now we are in businesses, and we are converting them to worker coops while continuing to expand the liquidity of our currency in a virtuous cycle.

I think that is a decent summary of the big vision, so now jump backwards to how you get started. It would be very difficult, as crypto people will be skeptical of a Proof of Work coin that has what appears as an arbitrarily powerful network participant. Why have this decentralized PoW coin but also a money printer? Well on one hand ideally the crypto is actually competitive when it comes to transaction fees, so that businesses and individuals might be induced to choose it to make transactions and transfer money rather than something like Visa. If that is the case, great, we are in the free market now! But I don’t think you want to rely on that, after all how do you market this thing? The crypto space is awash in random scammy coins, how do you stand out and grow enough to start your scheme of printing and selling crypto to raise money?

That is where practical politics comes in, the only way I can imagine it is if you partner with currently existing orgs and influential people on the left. And after all, this isn’t supposed to be your dictatorship, it has to be sustainable. It has to be democratically accountable, the working class needs to engage with it and have oversight of it, have a stake. So you partner with some orgs that have reach through either their membership or simply their social presence, and they communicate what is going on. Hopefully then you have an activist base that basically starts trying to help by finding ways to transact in the currency, contributing computing power to a mining pool would be easy and helpful, to increase its liquidity. They’re basically indirectly funding the project, so you’re pooling funds without using crowdfunding or issuing securities. It is all decentralized, people are mining the coins themselves. It is only later when the market is more liquid that the Printer comes in, prints some and sells it at the market rate. Then it gets to work.

Ideally this would grow exponentially, as there would be that virtuous cycle of growing the market for the currency by acquiring and leasing property in the currency (simulating a tax basically). Eventually you’d probably run into legal trouble, hopefully because of how threatening you look, and you start getting sued or dragged before Congress or something. But this is actually good and normal. You’re being threatening, you’ve started expropriating the capitalist class with their own tools. It is like a leveraged buyout of their class’s property. But when Congress or the SEC or whatever starts taking you to task, starts calling you criminal, you just make it loud and clear in public that all you’ve done is increase the wealth of the working class. You’re not price gouging or anything, what is your crime? Who are you hurting? Obviously the answer is the bourgeoisie, you’re threatening their hegemony over capital. So the class struggle comes out, there is a real alternative being presented. Do you want control over the money printer to be in the hands of this cabal of assholes who are trying to stop you so they can continue funding military adventures and benefits for the wealthy? Or do you go with the money printer that lowered the cost of living of hopefully hundreds of thousands of people and made them wealthier by cutting out their landlords and capitalists?

Last thing I’ll say is that obviously this idea is low on details, which would necessarily be messy as finding real political consensus and will on the left to embark on such an exotic project would be hard. I think a lot of the bigger orgs would feel threatened by it too, in the sense that they’d feel the inherent risk involved. But ironically I think that risk comes from how this structure would definitely expose them to various forms of legal harassment due to how it doesn’t really have many institutional precedents. The DSA has an institutional shape, it is a non-profit political association. Labor unions have institutional shapes, they have prescribed channels with calculable risk. But something like this doesn’t, which is a part of what gives it its opportunity. It would have to have a strong democratic connection to the people it is participating with. The tenants would need to have powers in something like the bylaws of the Printer, like the ability to veto any proposed building sale by the Printer. I think aside from any democratic means of appointing the managers of the Printer (through the orgs or through membership as tenants or whatever), those kinds of isolated veto powers would be helpful in making sure that the larger org doesn’t abuse the smaller parts that are using the mutually owned property, and the smaller parts don’t abuse the whole