“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Adam Smith, Wealth of Nations (1776)

This tweet observes a relationship between laws and markets:

An observation countered by a point from Adam Smith that such conspiracy against the public (loosely, a cartel) can only exist where government regulation protects [the cartel].

Today there are antitrust laws which forbid this type of practice — and shows how laws and markets are interdependent.

And on a wider level, this tweet lays out the benefit of a government or central authority in co-ordinating economic activity:

Game Theory Response to Cartels

It has been shown cartel arrangements are attractive because they induce cooperation [between parties involved], but longer term are generally unstable due to incentives to break away.

Game theory provides explanations for this — and this tweet makes such an observation in relation to the Bitcoin Cash forks:

A response:

A reply:

A further observation:

The assumption [that] banks form cartels is false, for the reason we have antitrust laws. It does however lead into something which merits further examination.

The Hal Finney Observation

“George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self-regulating…I believe this will be the ultimate fate of Bitcoin, to be the “high-powered money” that serves as a reserve currency for banks that issue their own digital cash.” Hal Finney, 2010.

George Selgin: The Theory of Free Banking

A more in-depth understanding of the theory Hal Finney referred to in context to Bitcoin can be found here, but a summary of The Theory of Free Banking is that if left to it’s own devices, banking finds a natural level over time.

It is thought Bitcoin can be the basis for such a theory due to its adjusting algorithm, which creates apolitical equilibrium between demand and supply — to the extent there has been speculation Selgin was involved in its creation.

Selgin however hints at distaste for Bitcoin:

Which is redolent of Frances Coppola’s claim in 2012 that Bitcoin could be the basis for international comparison between monies, spelling a radical departure from interest rate management and inflation targeting.

However, like Selgin, Coppola now expresses distaste for Bitcoin:

The Language of Economics

Economics has been dubbed the ‘dismal science’, presumably because of a comparative difference in methodology.

John Nash described himself an outsider to economics in this regard, calling for a more scientific approach.

Despite Nash winning an Nobel prize in his contribution [to economics], the ‘insider’ Selgin makes this observation in respect of the basis for Nash’s Ideal Money:

Nash has also been thought to be Bitcoin’s creator, due to it’s similarity with [Nash’s] Ideal Money. As this tweet notes, there are also similarities between Bitcoin and Keynes’ bancor proposal:

What Do They Know [of England]?

Or what do they know of monetary economists which monetary economists only know? Or so it seems: language is just as much a game in the context of Central Banking as it is anywhere: formal English requires no clarity as such, other than to be in on it (the game):

Immutability?

The meaning of language can change in how facts are presented. This is no more apparent than the meaning of inflation, which changes from a supply condition to a price level condition on will: all that is required is a power to such will.

A Scaling Insight

The co-opted bonds of words are those which provide [words] meaning: nature is brute force to such regard in any other conjecture.

Finney’s understanding of Bitcoin [as high level settlement] gives way to confusion among the highest levels of monetary management and narrative who want to form a cartel like relationship around their understanding of Bitcoin, the quality of money issuance in general and in our expectations of what money should be:

The Environment is Dead

Bitcoin is a computer network that can’t be switched off — this is presumably the point of its non-Turing completeness. In this regard, game theory is applicable: a trust standard whose stellar performance against all sovereign monies means, that unlike the bancor proposal, Bitcoin is not reliant on largesse of nation states for take up.

And just as constructions of justice and inflation and their meanings can change over time, so can the environment. In response to this:

This:

And this:

And where the narrative slips away, a reaction from those who wish to restrict money practices: