“There’s a lot of new-form Gresham’s Law out there where the bad practice drives out the good. If you run a nice conservative bank and some other guy has a bank and does a lot of very aggressive things that appear to work, and he reports higher and higher profits—the pressure to join the crowed on the guy at the lagging bank is huge.” – Charlie Munger
Related:
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On original Gresham’s Law, see Saifedean Ammous (pp. 47-48)
- The law contributed to the British pound’s downfall relative to USD
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Gresham’s Law is both an example of unwanted consequences and what Garrett Hardin calls a pejoristic system—a system which by its very nature makes matters worse
- 6-3b3g Federated (protocol) networks have a tendency, a fundamental by-product of their architecture, to evolve into corporate networks because network effects ensure that small advantages compound to create big winners
- I don’ think corporate networks per se are problematic—if anything, we need them <> 2-1a0c1d The One Commandment is about focus - Focus on a single moral innovation <> 2-1c1 ‘Comparative advantage’ - If others can do it, let them
- It’s only problematic when certain actors can influence by use of coercion
- Fiat money drives out value investors (e.g., see Li Lu and Ludwig Lachmann)
- 6-3b3g Federated (protocol) networks have a tendency, a fundamental by-product of their architecture, to evolve into corporate networks because network effects ensure that small advantages compound to create big winners
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- The premise then should be to not allow bad players
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- Fragmentation → without global market → the capital won’t flow effectively
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3-1c3c4.1 It’s easy to push a really good idea to wretched excess
- E.g., Michael Saylor with his leverage might ironically help the whole crypto ecosystem by shifting money from BTC into ZECrevisit
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3-1c3c4.3 “Be fearful when others are greedy and be greedy only when others are fearful”
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4-1a3b Go to specific places to get specific feedbacks: the more people, the more bad practices
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12-1a2a1 Free markets and free speech, by definition, transcend the concepts of nation-states
- A corollary of the law of cryptocurrency isomorphism is the fact that regulators can’t just ban certain cryptocurrencies—they will need to ban every cryptocurrencies, likely to their own demise
- The entire network has to coordinate to expel privacy coins—one state adopting it will undo such coordination
- <> 1-2i Brandolini’s Law (the Bullshit Asymmetry Principle)—the amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it
- Chris Dixon: “Crypto-history depends on cryptography and game-theory”
- The entire network has to coordinate to expel privacy coins—one state adopting it will undo such coordination
- If the state bans free market money equivalent, then its physicality will deteriorate because we can vote with foot
- Intervention by fiat, ironically, might accelerate NgU and subsequently adoption (e.g., see Bitstein)
- A corollary of the law of cryptocurrency isomorphism is the fact that regulators can’t just ban certain cryptocurrencies—they will need to ban every cryptocurrencies, likely to their own demise
“Capitalism works not just by allowing upward mobility, but by accelerating its downward equivalent.” – Nassim Taleb
When Gresham’s Law (which is basically a form of free market mechanism) is intervened, we get technofeudalism. The problem is the stickiness.
And when it’s sticky you get less diversity (e.g., Rory Sutherland complains about sourdough).
Related:
- 6-3b2 In corporate networks you can only quit
- Maybe I should separate corporate networks which you can quit from ones you can’t, and call the latter coercive network (or imperial network). This type of network uses soft coercion (instead of brute force) nowadays. So you don’t really feel it.develop