Exactly. By targeting low ROI, you actually defeat yourself, because nature has dictated that low ROI is the antithesis of investment. The Bible explains this in the Parable of the Talents.

Yes I am.


The power-law distribution of effort, knowledge, sacrifice, and wealth will always exist. If you are jealous of that, go join with Karl Marx.

That is not theft. It brings greater prosperity to all, by expanding productivity at the highest rate. You are trying to equate a lower-productive mode  (low debasement) to a highly productive mode (higher debasement). If you slow down incentives for production in order to supposedly protect the stored wealth of the less productive, you actually destroy the less productive because they lose the higher productivity gains that were destroyed.

Competition is what makes the free market efficient.

Furthermore and most saliently, there is no single frictional cost of time. It is a multiplicitous vector.

Furthermore there isn't just one asset to store wealth in. There are a smorgasbord of choices of debasement levels to choose from.

Sorry socialists always want to top-down plan things which are not even top-down definable. They grant themselves non-existent, omniscience by decree (i.e. fiat).

fi·at
ˈfēət,ˈfēˌät/
noun
noun: fiat; plural noun: fiats

    a formal authorization or proposition; a decree.

---

Let's analyze why power-law distribution exists.

How many Michael Jordan's exist?


Subject: Pride in ourself

Please watch this VERY SHORT (60 seconds) video from Michael Jordan:

https://www.youtube.com/watch?v=PH8nTfxwByY

Listen carefully to every word of that video. Everything that needs to be said is entirely contained in that video.

If one listens carefully to that video, they can't possibly see their teenage peers as anything but stoopid!

I am the coach, and I want to inspire you to greatness. In my life, I have been down at times, and I have been great at times. Greatness is the best by far, there is no comparison.

How can I convey from far away the tiger feeling, the grit of my teeth, and the determination to win and seek greatness!

I want you to watch the video of Jordan playing 1 against 5! That is superman. How did he do it? It was his desire. He worked out every day, worked out longer and harder than anyone else. Watch this please, it is amazing:

https://www.youtube.com/watch?v=jvAOYwuwcBc
https://www.youtube.com/watch?v=_LOVTGjXahw

Michael Jordan understood that these mental character traits are what made him so much better than all the other players who were also physically talented. Jordan had the mental desire to kill himself to be great. I feel that coming back to me. I was 3 days in the gym, pushing my sore muscles. And I feel that tiger feeling come back to me - Thank GOD!

I want you to watch Jordan play a championship game with an amoeba stomach virus:

https://www.youtube.com/watch?v=OxXoHRwhD24

That is way I feel sometimes when I workout because of my illness. I look exhausted and can't even smile, but I still try to push through it. I am coming 50 years old this June 28. Yet if the other guys my age ask me to play a pickup game, I laugh inside, because I want to play against the 20 year olds (and do!).

Excuses are for losers. We want to aspire to greatness. Learn to love the struggle. It is in fact from the pain of struggle, that we feel greatness. It is not actually the greatness that feels great, but it is knowing that we fought hard and conquered our demons, that is what makes a person feel greatness.

Then you can smile, and know you are great.

Greatness comes from within your own fire and desire to prove to yourself you are great.

Just say NO to drugs. Zero tolerance policy for yourself.

Learn to be great. Learn to struggle and fight for it! It is the best way of life.

Let's stop wallowing in the mud. Hold you head up high and prove to yourself how great you can be.



Subject: Today start a new life

Get in the car, grab the rear view mirror, tear it off and toss it out
the window!

Don't look back. Today begin a new life with all the determination of
fierce bull with a gentle heart.

This is my motto. Struggle for it. Taste it every minute because you want
it so much.

I want my athletics back! Normal people in my condition go down and end up
crippled. But I want it so much to be able to do the moves and things I
used to be able to do.

I want my greatness back. The past is gone. The mirror is thrown out.

How can I respond when you've made no argument?

1. It is exceedingly obvious that different people have different opportunity cost matrix.

2. How can reducing the productivity of society by directing more stagnant claims on capital to the less productive not be a theft paradigm?

More saliently, why are we even arguing something that doesn't exist? There is never only one asset for people to store their wealth. They can choose the asset with the debasement rate they prefer. So how can I steal from the less productive who decide to hold gold or Bitcoin instead of an altcoin with a 5% debasement rate? Maybe you are thinking of reserve currency status (e.g. the dollar) and the effects it has. But that is precisely what we are trying upend with decentralized crypto-currency.

What you are really trying to say is that any collective without choice (e.g. one currency and one asset that everyone is forced to use with no alternatives) is a theft paradigm.

In others words, lack of choice, i.e. lack of free market, is the theft paradigm.

The fact that we can't model the complexity of the free market in action, is precisely Adam Smith's Invisible Hand.

Reality check. The market will chose what it prefers, regardless of your pronouncements.

I really don't understand why you are making a such a big deal out of something that doesn't exist.

I really think you should take the last word. You always give it to me. But please make an argument, else admit you don't have one.

 
Ok it is clear to me that I have not effectively communicated my argument so let's go another round and I will do so in a more formalized fashion. Lets examine the issue from the bottom up rather than top down and examine the game theory behind the decision to invest.
Observe the case of an investor who is capable of making investments over his lifetime with a average annual return of x percent annually while operating in an economy that is growing at y percent each year and a monetary unit that is debased at z percent.

Scenario #1: x > y (Return on investment exceeds average economic growth)

In Scenario #1 the investor is capable of achieving average real returns greater then the average growth in the economy. In this scenario the investors decision is easy and he should always invest. The investor is the upper elite in terms of productivity and will always be better off investing regardless of currency debasement.

Scenario #2 0 < x < y (Return on investment is below average economic growth)

As you pointed out productivity is power-law distributed. Therefore it is mathematically impossible for the majority of humanity to fall into scenario #1. Most of humanity are and always will be be in a situation where their investments on average generate a real return that is less then the average growth rate of the economy.

The ideal outcome for humanity is that investors in this situation make these net positive but lower return investments. The growth rate y is not a single value but rather the aggregated sum of the growth vectors over all the individuals in the economy. If investors in scenario #2 do not invest the value of y and prosperity overall is reduced.

The majority of humanity in scenario #2 face a free rider deliema. In the extreme situation of z = 0 (no debasement) they are decisivly better off not investing and letting the overall growth in the economy increase their purchasing power. In this situation instead of making net positive investments the majority of humanity gain most by parasitizing the gains of the upper elite and prosperity overall is reduced.

This delima can be solved by introducing a non zero debasement rate z. As we raise the debasement rate individuals lose the incentive to be free riders. At a debasement rate of z = y all inverstors in scenario #2 like those in scenario #1 have a positive incentive to make net positive investments. Money loses the ability to parasitize on the gains of the productive. Furthermore money at this debasement rate maintains its ability to act as a store of value. Meaning that with a debasement rate of z = y a saver who chooses to defer consumption will still be able to purchase a like basket of goods and services in the future.

Now lets examine the situation where z > y and debasement rate is set in excess of the underlying economic growth. All investors still have optimal incentives to invest. However, what changes is that individuals on the upper portion of the power-law distribution now gain purchasing power in excess of what they actually produce.

To understand why this is the case we need only look at the example of an investor achieving returns of y in a world where z = 2y (a world where an debasement is twice the rate of aggregate growth). Such an investor is achieving a growth rate that matches the average in the economy, however, his rewards do not reflect that.

If such an investor starts with initial capital C then his returns over n years can be calculated as follows

Return = C((1+y)^n * (1-z)^n)

You can plug in different numbers to see what the exact result will be for varying levels of growth and debasement. However, in all cases where the debasement exceeds the average economic growth z > y our investor who contributed an average share to the growth of the overall economy finds that his capital significantly depreciated over time. Where does that purchasing power go?  It is redistributed to the upper elite who while they are the most productive gain purchasing power in excess of what they produce.

Such an approach does in theory maximize growth I do not dispute that. Historically this idea has been referred to as trickle down economics. However, you need to be honest about what debasement in excess of the aggregate economic growth really is. It is certainly not needed to maximize individual incentives to invest. Instead it is simply a redistributive mechanism. It is a form of reverse socialism redistributing from the poor to the wealthy because they in theory can better put capital to productive use.

I agree that in the end the market will decide between competing alternatives. However, in any realistic economy, real or virtual, there is a demand for at least one good which is used as a store of value that and is not intended to be used but simply to transfer purchasing power across time. The Bubble Theory of Money dictates that the optimal strategy is for everyone to standardize on the same asset as a store of value, and for this asset to be one of intrinsically limited quantity.    
 
My thesis is that a market of rational investors will choose the monetary unit that maximizes individual incentives to make productive investments while minimizing redistributive transfer from the poor to the wealthy. That level is a debasement rate that matches the rate of aggregate economic growth. You can make the case that society will be better off with reverse socialism if the wealthy later pay back their ill gotten gains by returning a portion of them back to the poor perhaps via the establishment of a guaranteed minimum income or other welfare type programs. However, any such an arrangement would be very difficult to stabilize in light of the problems outlined in the OP. Furthermore it is emphatically not compatible with anonymity.

The debate cannot adequately distinguish "capital". If the situation is such as previously in the Soviet Union, or now in the United States, or in the Middle Ages, that it is not possible to generate real returns on capital, then it is more reasonable to eat it away and continue in an economy with little to no capital, where only human effort can produce returns.

rpietila that brings us to the second of your two posits. The first which kicked off this recent debate I believe to be a genuine insight as I argued upthread.

However, I was curious about the second. You mentioned the fact that the supply of gold has not decreased and that this was important. I was curious as to why.

Rising prices encourage you to save?  If you can buy a car for a dollar today, and that car will cost you $1,000,000 dollars tomorrow (rising prices), you're going to put that dollar in a piggy bank?  I believe the phrase that best describes your economic outlook is "batshit insane."

People don't even realize any more that if the quantity of currency is NOT at the whim of any person (like the quantity of gold is not), then people can and will use the information that the prices, interest and discount rates, etc. provide, to make educated economic decisions.

Nowadays, the economic calculation is either all but impossible, or total hogwash, and all stable units of account (gold, silver, BTC) are heavily manipulated to make their purchasing power bereft of the very information that it could convey if the unit was widely used and therefore more stable due to being a denominator of prices also.