The only thing that maintains the value of any asset (or currency) is the collective belief in that asset or currency. Put another way: there is an inescapable component of trust in every asset.
Crypto in any form doesn't solve the trust problem other than a very narrow slice because as soon as you interact with anything outside of the blockchain, you're adding trust. Even on the blockchain, all the math in the world doesn't avoid the trust problem (eg it's been estimated that over half the Ethereum are owned by less than 10 entities).
Even backing a currency with gold (or any other asset) doesn't solve this problem. Additionally, it's not even correct. In years long gone the US government just maintained a peg between the US dollar and the gold price. Any reserves (which were never 100% anyway) are irrelevant to this. You don't need them. You just need sufficient capital to maintain the peg. Even if you had 100% reserves you still have to trust the government to honor redemptions and not to change the peg. If you have sufficiently deep pockets, you end up not even having to spend much money because no one challenges your peg.
So what actually makes the US dollar work as a currency is that it is backed by the long dick of the US government. This is a combination of economic, military and even cultural might.
So going back to algorithmic stablecoins, it doesn't matter how much you have in reserve. It doesn't even matter if there's new money entering the system (as this article claims) to maintain the peg. If people lose faith in the "stable" coin, it's finished.
Most non currency assets are cash flow generating financial instruments.
If analysts don't believe a company is worth a dime, it can show them wrong by being profitable and paying dividends.
Edit: I think my point is - even if no one else believes in a stock or bond, you can still profit by "being right". The same is not true for currencies.
I don't think this is very useful, since "yeah but without society there are no companies, money is nothing" doesn't take us very far! But hey.
How does a company make money? Why does it distribute that money to shareholders? Why can't someone working at the company just keep all the money? Why can't the bank just confiscate it?
The answer at all levels is the the threat of violence. Property rights (eg to the money) are enforced by the threat of state-sanctioend violence, for example the police showing up at your house and throwing you in jail if you don't comply with laws.
So why would the police show up and do that? Why would the courts enforce those laws? It's not just the threat of violence, essentially. It's the collective belief in that system.
I'm happy enough to put value in USD or imaginary-coin if I can swap my holdings in them for a nice house/car/jet. You don't really need "economic, military and even cultural might" - just for the currency to be accepted somewhere where you can buy real assets and for the supply to be limited so it doesn't inflate to nothingness.
Without that collective belief, owning anything is a huge effort to defend it against whoever else it might appeal to.
The reason people are willing to give away their house/car/jet in exchange for crumpled is the existence of the market protected by that "economic, military and even cultural might".
Trust here is not in that the some big guns are protecting your cash, it is rather about you trusting that the next day/month/decade people will want that cash about the same as today.
That's because it also has use value (and land use value), etc. Crypto coins don't have any.
>Most financial assets are backed to some extent by real assets.
Negligibly so in modern economy.
I can be happy with a nice rock I found on the beach if I really love it and it's important to me. However, what we are taking about here is are assets which have a wider value on an open market.
If people suddenly stopped believing that living in your location makes sense, the value would drop very much. See ghost towns.
The problem is getting stuck holding the asset for a long period of time. USD will lose 80% of it's value over the next 50 years. Tether likely will lose 100% in that time frame.
Right. I believe the point of the post you replied to is that while it may be "valuable to you", it also may or may not "have value" (which I interpret as being exchangeable / interesting to other parties), which requires common belief/faith that it has value (basically a circular definition). I could be misinterpreting one or both :)
It surely is, but this is just a semantic play on the word "value". You mean something like "personally important" in that sentence, the comment you were replying to was using it under its well-established economic definition.
In fact, your house is *not* valuable (in the economic sense) if there isn't a collective belief in it's equivalent in currency. Rather: it is exactly as valuable as the market is willing to pay, which is just a statement of the definition of "market value". That's what "collective belief" means in this context.
Examples have already been posted here. My house has a use value to me because I need somewhere to live. If I lived on a small island off Antarctica it would still have great value to me but perhaps no value to anyone else.
Money is a financial instrument that only has exchange value, unless you count say the use of bank notes for lighting fires or papering walls. It's value as money is entirely by consensus.
Notably not even the government that issues it actually sets it's value. Ask the governments of Venezuela or Zimbabew about that. Yes of course they can do things that affect it's value, like printing too much of it or defaulting on bonds, or consistently paying on their bonds, but the actual value is set by people. When someone sells a product or service they ask for a price, and if someone pays it then that establishes a value for the product relative to other products, and a value for the currency exchanged. What happened in Zimbabwe is people asked for an awful lot of ZB$ for things compared to how many US$ they asked for. Thats what set the value of the ZB$ (and to some extent the US$ of course).
Governments sometimes do try to manipulate currency values through currency controls, but what that actually does is constrain currency flows. If a currency control set a high price for a currency, it will just not be traded as much, only people willing to pay the premium will do so. Those not willing to pay it simply won't and those transactions and that economic activity will be constrained (or the exchange will happen on the black market).
There can be coercive pressure of course, such as Russia requiring companies to hold Rubles, but you could hold a gun to my head and force me to hand over my house at a discount or for nothing. That says more about the use value of loaded guns than about the exchange value of my house. Governments have the ability to take value rather than exchanging it, but even that has it's limits.
The house you and others have mentioned is an easy one. That whole concept of ownership is reliant on an entire system existing and enforcing those "rights". It's the threat of violence that prevents someone from showing up, "claiming" your house and kicking you out.
It's the ability to demand and enforce tax payments in that denomination - with the consequence of not doing that being you will lose property and liberty.
Obtaining the denomination to settle the tax then becomes the discounted option, since the other option is far more expensive.
That alone makes the currency worth holding, since you can always get rid of it to somebody with a tax bill to pay.
As we have seen with Russia that power extends wherever the denomination is used. The US government has 'taxed' Russia anything it holds denominated in US dollars - completely unilaterally and wherever it was held.
But I think a broader statement is that the "long dick of the US government" is the collective expectation for the behavior of major world governments. On the other hand, it's worth noting that US currency is not absolutely stable.
This is false in the general case. An asset means a useful or valuable thing, person, or quality. If something is useful to me, such as food, hydration or shelter, trust is irrelevant. In fact, something can have value to me (perhaps even objective value), even if there are no other agents/persons.
Even where there are other agents/humans, no trust in an asset is required in some cases. Suppose we all can independently verify the use and quality of something (we call this measurement). If that thing has some definite utility to us, the value each will assign may differ, but that thing's value is not dependent on the subjective valuation (Say a morsel contains 15 Joules and I can harvest 9 Joules and you 11 Joules, the value we each could assign differs, yours being greater than mine, but is objectively derived, being based not on trust nor subjectivity. Subjective meaning based on or influenced by personal feelings, tastes, or opinions). Granted, we can not preclude the possibility that someone, somewhere providing a subjective value to this thing, merely that somethings have value, potentially to many of us that is objective and intrinsic in and of the thing itself.
Trust in every asset is, indeed, escapable.
That simplifies too much. There's also the fact that all taxes on income, capital gains, and consumption must be paid in this currency.
It has a very real value, in that if you don't pay using this then people will come and lock you in a cell.
It's not just a collected belief.
I also believe that the government will by force not allow its own currency to be replaced within its borders.
That's a belief in a trusted third party, not a collective belief.
The only thing that maintains the value of any asset is the demand for it.
Where that demand comes from may or may not be belief.
Water has value because there is a clear demand for it, not because anyone believes in it.
As long as there is someone who wants an asset, it has value. Belief is but a cog in the machine.
The issue with most crypto tokens is that its demand only exists within the closed crypto ecosystem in the form of liquidity, not in the real world. This makes is much easier to shake belief.
Having a reliable long term income stream attached, an actual use for the asset and/or a supply which shrinks in relation to the fall in demand is a much more sustainable source of demand.
> So what actually makes the US dollar work as a currency is that it is backed by the long dick of the US government. This is a combination of economic, military and even cultural might.
What many people call fiat is in fact partly a proof of violence consensus algorithm. Practically applied it means the sovereign will create a demand for its currency by imposing taxes denominated in that currency on its subjects and then threatening or using violence against parties that don't pay those taxes. However, that alone is insufficient to maintain the value of a currency. Mr. Mugabe of Zimbabwe surely had no philosophical aversion to using violence to maintain the value of the Zimbabwean dollar, but the collapse in his country's productive capacity rendered that moot.
Thus we can see that another major part of what makes the US dollar work is that the US economy that the US government has the power to tax is extremely large, productive, and well-diversified.
I agree: ultimately government is a collective decision on who gets to do the violence.
As for Zimbabwe, the primary difference it and the US is reach. More generally speaking, we've seen currencies collapse when people have lost faith in their value and what happens is people instead use a different currency (eg the US dollar) because they have more confidence in its value.
You throw this kind of claim without providing proof. Unfortunately, it's a claim I have seen made before (e.g. https://www.financemagnates.com/cryptocurrency/news/top-10-e...) and it doesn't hold any level of scrutiny. Although you embellish it and exaggerate it even further.
This kind of number typically assumes that a smart contract owns the ETH that it contains. Which is not true by the very nature of the smart contract, what it can do with the ETH is programmed in its code and the users depositing the ETH on it are the ones that decide what to do with it.
Then it looks at the accounts that have the most ETH (https://etherscan.io/accounts), aggregates together all centralize exchange accounts, assumes they also own the ETH. Do some quick math and publish a misinformation article ready to be shared by anyone whose confirmation biases are triggered. Bonus points if you can then exaggerate the numbers further without providing any figures and keep the misinformation going.
Some numbers...
There is currently 39 M ETH locked in DeFI smart contracts (32% of circulating supply). https://defillama.com/chain/Ethereum?currency=ETH
There is 13 M ETH locked in the staking contract (11% of circulating supply).
There is 2.5 M ETH locked in L2s (2% of circulating supply). https://l2beat.com/
So that's 45% of circulating supply not owned by any single entity.
It actually does. If the backing is real, the user knows he will always be able to exchange his coin for $1. If the price on an exchange goes under $1, the issuer of the coin can buy it back, making a profit. If the price goes above $1, the issuer can sell. It's a trivial algorithm. Of course, it only works if the backing is real.
Unfortunately having billions in cash is a huge temptation to invest them and make even more profit. That's what Tether did. And now, if their commercial paper is under water, they are insolvent.
The benefit of these: it mimics in person interactions and describes a simple process.
But The trade off is that they only work if they grow slowly and organically, which seems to be contrary to what the crypto space is trying to do.
Hello jmyeet! Unfortunately, I believe this statement, as you have given it, is untrue.
I hear it often, as it is continually and frequently asserted by crypto enthusiasts (and I am not suggesting you are one of those).
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For assets, value is grounded in utility (whether to do some useful function, generate some feeling, etc).
Asset price, on the other hand, could be almost anything depending on supply/demand and may be affected by beliefs at times.
It's important to disambiguate price and value. I can buy a superb pair of shoes from a desperate seller for $1, but that doesn't make their 'value' $1 to me or other people. Value can be personal, it can also be societal i.e. averaged over many people.
Indeed if price and value were the same thing, there would be no buyers or sellers, because you would have little reason to go to the effort of swapping two things of identical value to you.
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For currency, specifically, national currency where you are living in that nation - the value (and relative price) of a unit of a currency is grounded in taxation enforced by, well... force, by the state.
Taxation generates continual demand for units of currency regardless of individual or collective beliefs.
And in trust in the currency, again, is enforced by... force, by the state. Which prevents unlimited supply (by random people), again, regardless of individual or collective beliefs.
Thus, both supply and demand for the units of currency are set by the state, and supply/demand is what it takes to generate a stable price and mandatory use.
I note you mention trust, and 'backed by...' and 'might'.
However, discussing currency in terms of only trust and not in terms of taxation, misses half the argument. Both halves are essential for the argument to make sense.
Absent a mandatory minimum demand, control of supply of currency (and trust in that control) is meaningless.
In computing terms, you can see taxation + limited supply as a technique to 'bootstrap' an initial price for a currency without needing any shared or individual beliefs at all. It also underwrites the price in the long term, again, without any need for beliefs.
None of this is to say that a currency can't have its price/value shifted around by collective beliefs once bootstrapping / underwriting is in place. Of course it can. But what maintains, inescapably, a certain minimum price (your own words: maintain, inescapable), is enforced taxation.
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Going back to the price of assets. Well, you can believe all you want about, say, oil, and your whole country may have a collective belief, or even the planet, but since there is X units of oil needed and Y units of oil in supply, the price will be set by ongoing auction as always, or you can freeze/be stuck in your garage/factory shutdown. Supply and demand. Beliefs can affect supply and demand, of course. But supply and demand are primary, beliefs are secondary and they sit alongside necessity and physical reality.
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(Finally - again without wishing to imply you are a crypto enthusiast - a lot of crypto enthusiasts seem to imagine that mathematics has a similar 'force' to states, 'there can only be X coins', ignoring that a) chain algorithms/limits can be changed by widespread consensus b) no one is forcing anyone to use the crypto at all i.e. no physically enforced taxation c) it's trivial to substitute a chain with a duplicate chain (again consensus), as e.g. dogecoin proved rather effectively. They also invariably neglect the issue of needing 'mandatory demand' via taxation. I would speculate this is because the essential need for tax in currency systems, completely undermines the ponzi's disguise as a currency.)
(I use the word 'ponzi' casually here; technically ponzis are zero-sum, whereas crypto is worse - negative-sum, especially for the environment).
You don't need to trust gold or bitcoin. They are verifiable. Don't trust, verify.
Also, the US dollar doesn't work very well, so you're redefining reality. They're constantly abusing that trust and creating way more money than would be necessary or moral.
In scenario where financial system collapses only real currency is skill - if you can make food from something available locally or be helpful like being a medic.
Why would I trade a chicken that I can eat for piece of gold when I can trade chicken for sewing my wounds after being bitten by a stray dog.
Even in failed states gold maintains value. For example in Somalia’s recent past, not only was gold still fully exchangeable but the existing Somali currency continued to work with counterfeit currency filling the vacuum.
What stops gold exchange is not non-existent government but any particularly strong and draconian government that decides that alternative forms of money are a risk to the regime (e.g. North Korea).
Scalable, self-similar, clustering, and long memory are some of the characteristics of the fractal-style randomness of financial markets. Thus, build in safety factors, multiple redundancies, hedges, etc. with those characteristics in mind.
Definitely not a “proof” in the logical sense.
Likely the Vitalik post linked in this article will have some insight.
> While there are plenty of automated stablecoin designs that are fundamentally flawed and doomed to collapse eventually, and plenty more that can survive theoretically but are highly risky, there are also many stablecoins that are highly robust in theory, and have survived extreme tests of crypto market conditions in practice. Hence, what we need is not stablecoin boosterism or stablecoin doomerism, but rather a return to principles-based thinking.
1. "Stablecoin insurers" (in the author's terminology) are not short puts on the stablecoin, because noone has a specific right to force them to buy the stablecoin. Their position (as I understand it) is much more akin to some sort of swap where they pay/receive the difference between the stablecoin and the volcoin
2. Since it's a swap, then their position has 1 delta, so they don't "delta hedge". They need to make good losses on the stablecoin (and collect profits in good times)
3. There is no expiry so they are not long theta. They are collecting carry on the swap
My understanding of the term 'stablecoin' means that it is a crypto 'proxy' to some fiat currency, typically US dollar, just to avoid the actual conversion between crypto and fiat (because of taxes etc). So why isn't there just a DumbCoin(tm) that simply is 1-to-1 backed by the dollars? You give me a dollar, I mint you a coin. Somebody sends the coin back, I return them the dollar.
As far as algorithmic stable coins are concerned, I have no idea what the point is. Largely experimental as far as i can tell (but pretty much guaranteed to fail given how they work)
1. In fact so big now that cash managers and corporate treasurers keep an eye on Tether as they have a material impact on the bills and CP markets.
Eventually you will get tired of the work and costs involved in maintaining your dumbass coin in perpetuity for no benefit.
Those exist (like USDC), but they rely on a trusted entity holding the reserves.
Q: Where would you actually keep the dollars?
> 1. There must be a transaction tax for real utility provided by the Stablecoin.
Don't all major reserve-based algorithmic stablecoins charge some kind of minting/redemption fee, to reward the risk taken on by reserve holders? And that makes this whole argument somewhat moot, since it's not a purely closed construct like they're describing. Though perhaps this line of reasoning (equivocating to other financial constructs) could lead to fee pricing equations required for some notion of stability.
Just like driving a car proves impossible without continuous manipulation by its driver.
Is that really a position you want a non-democratically elected agency to have? Society at the behest of Jerome Powell?
Seriously though this is a very wrong analogy. The economy is more like an ecosystem where individuals interact with themselves & the environment. It doesn't need continuous manipulation. In fact it tends to distort than aid.
Which leads to the inevitable conclusion - the US dollar is a simple public monopoly, and therefore monopoly rules apply.
[0]: https://www.c-span.org/video/?c4454549/user-clip-bernanke-ag...
The idea behind prices in a market economy is that they're an information-carrying abstraction. They let producers at every stage of the value chain understand the relative costs that go into different alternate ways of producing a good, without needing to understand every single stage of the supply chain and all the decisions that their suppliers made. And it also gives them information about relative demand, so that producers which make things that nobody want go bankrupt and those make things that lots of people want rake in windfall prices.
The whole point of the Fed is to alter prices, on one hand to keep producers from raking in windfall prices (price stability) and on the other to prevent too many of them from going bankrupt all at once (full unemployment).
Problem is that when you do this too much, for too long, the biggest input to a firm's production decisions becomes the Fed funds rate. When it goes up, time to layoff people, because the cost of capital just went up and you can't do anything without capital. When it goes down, time to go on a hiring frenzy because if there's money for the taking and you're not the one taking it, you get outcompeted by the ones who are. Over time this begins to dominate all other signals that pricing normally provides, like producing goods efficiently and making things lots of people want. You get companies like Uber, which lose money on every transaction but make it up in fundraising.
In turn this increases sensitivity to the Fed's actions, which limits their freedom to take them. If the whole economy breaks when you raise rates to 1.5% (as happened in 2019), it becomes very hard to raise rates above 1.5%. So rates get pegged below the natural rate of interest (which equilibrates supply of savings with demand for productive investment), lots of economically dubious projects get funded, you inflate a perma-bubble, and you can't deflate it without taking down the whole economy.
Beauty is in the eye of the guider.
I don't believe that's the case.
However, once you've put your hand in the meat grinder of debt, what you just said becomes a self-fulfilling prophecy.
Then theoretically as long as there is demand for this coin, it will go up in price and therefore can back any sidechain coin that will grow slower in price (or better yet, gradually drop in price relatively to it like the dollar).
That’s what we are planning to do with Intercoin:
https://community.intercoin.org/t/intercoin-application-virt...
No, that is not the definition of a Ponzi scheme. A Ponzi needs funding from outside money to continue to operate, but not everything that needs outside funding to operate is a Ponzi scheme.
As an example let's create a gambling system. Any deposits made into the house account gives you a proportional share of the profits of the system. If the house gets lucky investors can make money. If they are unlucky the house account can run out of money and require outside money to work again. This gambling system isn't a Ponzi scheme at no point are you paid out with new investor's money. If you are lucky you are paid out with gambler's money and if you unlucky your investment goes to 0.
Edit: Even with a positive house edge the house can get unlucky and go bankrupt.
The stablecoin on the other hand claims that stakers are being rewarded for risking their capital without holders of the stable coin being fleeced at their expense. The only way to do this is by the number of people coming into the system expanding, and unlike the gambling system, the proposition of the stablecoin is these new participants don't lose money either. It has the classic Ponzi dynamic of being a zero sum game masquerading as a positive sum game through growth.
I guess a stablecoin could theoretically operate on the basis that "stakers" were supposed to enjoy average negative returns for the sheer joy of gambling like people on craps tables. That would be much more like your proposal, and would be far too truthful in its white paper to be called a Ponzi, though it might have trouble attracting gamblers compared with the glitz and glamour of the casino and all the crypto ways to gamble money that don't openly admit paying negative returns.
They mitigate the risk by settings caps to maximum bets. You can't just bet a bit more than half of a casino's assets in double or nothing with them. They don't want to be taking a 50% chance of losing everything. Even if there was a 2% edge that's still a 48% chance of it happening. They would rather work with smaller amounts where the chance of someone winning a ton of times in a row to eventually win everything is practically 0%.
>The stablecoin on the other hand claims that stakers are being rewarded for risking their capital without holders of the stable coin being fleeced at their expense.
They may be rewarded but they aren't being guaranteed that the value of what they hold will always go up.
Again a Ponzi scheme is a very specific thing. People make an investement and returns on that investment come from new investors. In this kind of stablecoin system there is no part that where that specific thing happens.
>were supposed to enjoy average negative returns for the sheer joy of gambling like people on craps tables
This is usually how algostables work. People bet on growth of the project and once growth has peaked negative returns will be coming. By trying to avoid this period of negative returns a depeg happens.
More relevant to stablecoins:
If the stablecoins need constant funding then what is their real value? Why should someone hold them? Why spend them? Why owe them? Constant funding itself isn't bad as such but how much and how often are what decide value.
This is not to say they are useful or useless. But it certainly seems like the market hasn't got a firm answer either. The greater market is at least certainly ambivalent about them.
Contrast what would happen if any of these stablecoins were used for purchasing crude oil or wheat or some other international commodity. In that case we'd see very different views on their value.
> Investments that are provably problematic should be appropriately regulated and efforts should be made to protect consumers against them.
Not at all. Regulate yourself and don't buy things that exceed your risk threshold, or if you are a child incapable of that, tell your parents to regulate you.
If stablecoins are a pyramid scheme, the USD is too. Virtually every currency is negative-sum, destroying value every time they are spent.
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> Virtually every currency is negative-sum, destroying value every time they are spent.
What?! This is not even remotely close to accurate.
It's being conflated with the word "pegged".
Pegging something to something else that is unstable doesn't make it stable.
For as long as monetary policy in fiat continues to ease, you'll have more dollars around, inflating the money supply.
The pegged item will need to match this in the long run to maintain the peg. Which won't be possible without further minting of the so-called stablecoin.
The real solution, which I admit is a long time away, is to just stop using fiat and their "stablecoin" proxies altogether and just use another currency altogether.
The sky is the limit with Algorithmic stablecoins and you can't throw the baby out with the bath water. All this is simply not true in every case.
Imagine a stablecoin over-collateralized with interest bearing crypto (basket of POS coins) and certified tokenized REITS, synthetic S&P, commodity futures, etc.
An algorithmic stablecoin with a backing system can survive some stress. What they can't survive is a net outflow, because they can't reprice downwards. The era of "line goes up" is now over, and we see net outflows in many financial sectors.
A lot of faith-based financial instruments are going to tank.
To buy a loaf of bread, the price needs to pay for the wheat, ovens, energy and the employee costs. This relationship is recursion. The staff of the bread company need to afford bread of their own and shelter and energy and transportation.
Everyone is thereby supporting themselves and everyone else with what they purchase. This guarantees poverty as not everyone can scale their earnings to provide for themselves and everyone else as the prices all come from the same money supply. Inflation is baked in. This is why central banks don't want wage growth. If you understand recursion and recursive relationships then you understand that poverty is baked into the system. (Edit: due to not everyone producing more than they cost)
Think what this means for people at the bottom and give to the poor.
This isn't to say that charitable giving is bad. If you are financially stable and have money to spare, please donate your time or money to those that need it. It just isn't the solution to a national problem.
SF spends ~60k per homeless person per year (maybe more now). It’s clearly not money that is the limiting factor here.
Tax more and people do less as it doesn't pay to do more labour and get less of it back.
When people start a business they must borrow money and usually pay interest. That interest forces you to be profitable, you can't just run your company at 0% profit as that would only pay for your salary and the salary of your employees and the materials and machines you bought.
It is impossible for every company to be simultaneously be profitable. After all, if there is a million dollars in the economy, you can't have a 5% profit and reinvest the money as that would require a money supply of 1.05 million dollars. Thus, the money supply must grow endlessly and if the economy can't keep, there must be inflation.
I am one person out of 7 billion. I need to provide for myself, everything I pay must cover the costs of all the costs of those people I bought from. When people buy my labour they must cover my costs of providing for everyone else.
My work and the work those people are doing needs to pay all those costs. We effectively pay eachother to work at what we are independently good at - trade.
But a worker only receives revenue from the work they do (I'm excluding unearned income)
If everyone gets everything they need ultimately from other people, and each of those people needs to get everything they need from everyone else - and sometimes the same people.
Where does the salary of the workers I buy things from come from?
I feel intuitively it doesn't matter how much bread someone can create, the total revenues from selling bread in general needs to cover the costs of all their employees and the business costs themselves.
But this process repeats for all transactions the total transactions for MasterCard pays the bills that MasterCard employees have.
Everyone needs to earn more than they cost but so does everyone else! How can this not inflate endlessly over time?
When I look at government deficit and debt levels of the world, people don't produce more than they cost and relative and absolute poverty.
What's the proportions of owners of wealth? Compare the bottom 99% with the top 1%.
In fact, you could make the argument that all of human endeavor is simply withdrawing from the bank of 4.x billion years of sunlight.
https://astralcodexten.substack.com/p/your-book-review-progr...
Farmers don't have to pay for the energy used to grow wheat. The Sun provides that for free. Same with the oxygen, and much of the water. Value is created, it's not a zero-sum game (except from the perspective of universal entropy.)
In a healthy economy, most of the value should be created rather than extracted from others. But ownership of fixed resources like land led to serfs and sharecroppers, which led to landlords and industrialists accumulating capital, which led to exploitation. That's Marx's whole thing.
The farmer doesn't pay the sun but they still have to pay other costs ad infinitum. There is no last cost.
Each of those people also have the same problem
I'm not arguing for zero sum. I'm just saying that the problem of costs is recursive, you need to produce more than you cost. As each of those people has the same costs that I do. So it can only grow in size and costs can only inflate.
Society requires everyone to produce more than they cost. The government invests in you in terms of free education and in some countries free healthcare.
Work is the resource that is renewable. Everyone is forced into a grind to raise enough to pay for everyone else's costs and your own due to the recursive relationship of costs.
I am arguing that in a society each person needs funding from somewhere, it can only come from everyone else in exchange for their work. Each person therefore depends on their costs being provided by everybody else. This relationship is therefore recursive. As each person must also provide for everyone else that someone is providing for.
As we witness in the world, not everyone can produce more than they cost. Some people cannot afford to travel or stay near work. Opportunities are cut off from them.
These people are desperate and have no capital. Money is a time machine and if you have none of it you are forced into grunt labour.
You don't get 100 million working as a pizza delivery driver or delivering parcels but the owner sure does.
