Cryptocurrencies have promised a lot, and delivered a certain amount of utility. But the clear problem with cryptocurrency as a concept is that your technology stack is intrinsically tied to your token and its value.
Technology changes frequently. Throughout history, accounting technology has changed from one medium to the next. Commonly, these accounts would simply get updated, to use the latest technology. Coins could be upgraded to paper money, talley sticks would be upgraded to more robust ledger systems.
With cryptocurrencies, the token, technology, payment system, and value mechanism, are all tied into one big bundle. …
The mainstream narrative, behind interest rates, is that lower rates increase lending, and thus drive inflation. Meanwhile, higher rates reduce lending.
But who is lending to who, and for what, actually matters. So you can’t make a blanket generalization, about these effects. The biggest effect of lending practices on inflation, is how collateral is priced. If the bank is willing to lend you $400,000 for a home, that is only really worth $200,000, then that will drive those prices up. So for prices, collateral matters and not rates.
Interest rates across the economy do not have to be uniform, because…
Iterate when you are close to your target
How to use leapfrog debugging
When you are first learning a coding principle or practice,
it is extremely beneficial to debug and test at every step.
Even with experience, incremental testing has certain benefits.
But like anything there is a cost.
Leapfrog development is a set of ideas and practices designed
to save you time in the long run, by tuning the number of steps
you take, and using iterative processes only at the very
end to get closer to your target goal.
With any effort, iterative processes are by far…
Many people have imposter syndrome, meaning they feel underqualified for the role they are expected to perform. Most of the time, they are correct. We have high expectations for people that isn’t really based in reality, but rather wishful thinking.
If I tell you that this imposter syndrome isn’t your fault, I don’t want to give you the idea that you can skate by and do nothing about it. You have to fix that if you want to succeed, and coddling yourself with false assertions is not the way to do it.
You can be competent and qualified in 1,000…
What is a bank? Based on the name, banks are custodians, in other words, they hold onto something for you. In order to do this, the first step required is that you have to be able to identify yourself to the bank. So the first technical challenge of banking is identification. The bank must be able to identify you reliably to hold onto your stuff.
There are many ways to do this, and there are always tradeoffs involved. They could give you a password, but passwords are easily lost or stolen. Another option is to simply remember what you look…
What does this mean? A company can issue as much shares as it likes, and those shares can never make it go insolvent. The worst effect is that the shares get devalued. When a company issues new shares, they either do so by buying things, (ie selling shares to raise “capital” ie buy fiat money) or compensating employees.
Furthermore companies can issue as much debt, of their own shares as they like. Again, to redeem that debt, they simply issue the actual shares. This is not too far off reality, as companies will often compensate employees with stock options.
In part 1 of this series, we talked about credit. I identified 3 main forms of credit “Interest sharing loans”, money creation, and grants. To comment briefly on each of those, conventional interest rates are merely a way to offer a fixed return, in contrast with equity returns which are automatically adjusted to the level of profit. Interest is not competitive for 3 reasons: credit relationships are inter-personal, level of profits varies anyway between endeavors, and money creation has no opportunity cost. Money creation is leveraging a social contract to pay people now, but allow them to spend that money…
Before we can talk about credit, we have to understand the difference between real and nominal spending. Any activity of credit involves allocating real resources to a person or project, and it may also involve allocating money in order to compensate those involved.
There are 3 basic kinds of credit:
An interest sharing loan is the typical type of lending that is performed today. A borrower receives a lump sum of cash to do a project, such as build a house…
The standard story about interest rates goes like this: you raise interest rates, fewer people borrow money, the “money supply” shrinks, and money retains its value or you stop inflation.
However, this explanation does not fully examine all monetary and credit flows, and the effect on real resources.
The interest income channel is the money people receive as interest payments. Because governments of all levels carry debt, and that debt is unlikely to be contracted when interest rates rise, the holders of the debt will receive more income in the form of interest payments.
If firms which are in debt…