822 sats \ 3 replies \ @elvismercury OP 1 Nov 2023 \ on: _Broken Money_ book club, part 3 bitcoin
In the 60s-80s, tensions between the USA and CCCP were high; many thought that nuclear war would be the final result. But the US eventually came out ahead, and Lyn refers to Luke Gromen's assertion that the petrodollar system was a major reason why -- the Soviets were at a terrible disadvantage vs a country that could print the money the world used for oil and trade.
If we accept Gromen's assertion, is this an example of fiat being effectively deployed for virtuous ends? Would you rather live in a world of sound money but where the USA had been unable to exhaust the Soviets?
If we accept Gromen's assertion, is this an example of fiat being effectively deployed for virtuous ends?
I believe in answering hypotheticals without questioning their premises, so, yes that would be a virtuous use of fiat.
With that out of the way, I believe that framing grants way too much credit to American politicians for "winning" the Cold War. There was never an alternative to the Soviet Union collapsing. Central planning doesn't work at scale. As time goes on, more and more errors compound. With no price system to communicate economic knowledge, there's no way to correct those errors without creating even bigger ones. Eventually, the problems become existentially large.
Where I do think credit is warranted (on both sides) is that they didn't end humanity in a nuclear war. Hopefully, today's politicians will follow their example.
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I appreciate you answering the question even though you don't like the premise. I think it's a helpful way to be, when people have good intentions, at least.
I've always wondered at the argument. Before Gromen, you used to hear a similar thing said of Ronald Reagan, that it was his great genius to run the Soviets into the ground with this economic strategy. That always seemed quite convenient, to do the thing you wanted to do anyway and then claim the results for your side at the end, if they happened to be good; and not to mention it, if they weren't.
I think the "compounding errors" is a nice way to frame it. The question, then and now, is: how long can you wait for compounding to solve the problem for you? Not just wrt monetary policy, but in life in general. I have a prompt for later in the day that gets at this idea, hopefully you'll come back for it :)
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how long can you wait for compounding to solve the problem for you?
I'm not old enough to have been wrong in real time, but I probably would have expected the Soviet Union to fail much faster.
It's reminiscent of "The market can stay irrational longer than you can stay solvent."
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