tag:blogger.com,1999:blog-6704573462403312459.post1251167450221522889..comments2024-03-28T06:53:23.473-04:00Comments on Moneyness: Long chains of monetary barterJP Koninghttp://www.blogger.com/profile/02559687323828006535noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-6704573462403312459.post-63518524431146793632013-05-08T18:13:32.045-04:002013-05-08T18:13:32.045-04:00A government bond has X liquidity relative to bank...A government bond has X liquidity relative to bank deposits. Y liquidity relative to rolls of quarters. Z liquidity relative to Fed reserves. Every financial asset (or real good, actually) has different liquidities relative to every other asset/good. (Though Asset A's liquidity relative to B and relative to C could be identical or very close, and they could have been that close forever. i.e. one dollar bills relative to five dollar bills.Steve Rothhttps://www.blogger.com/profile/11895481216028771016noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-73027515083482888572013-05-08T14:47:11.863-04:002013-05-08T14:47:11.863-04:00On definitions...
Imagine that you can buy some g...On definitions...<br /><br />Imagine that you can buy some good x of which there are versions x.1 and x.2. The only difference between these two versions is that if you buy x.1, you can only resell it after one year has passed. If you buy x.2, you can re-market it whenever you want. <br /><br />Buyers will pay more for x.2 because it provides more potential liquidity services... it has more moneyness. The price premium of x.2 over x.1 is the extra bit of value people will pay to enjoy the x.2's superior liquidity/moneyness.<br /><br />Put differently, moneyness/liquidity are the set of services provided by a good or asset that you forgo when you irrevocably freeze that good/asset in inventory for a period of time. We can back out a market price for those services, let's call it a liquidity premium or a moneyness premium.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-54184967479244583582013-05-08T10:13:56.139-04:002013-05-08T10:13:56.139-04:00Which gets me thinking about the definition of my ...Which gets me thinking about the definition of my UOE term (which I use synonymously with "financial asset.")<br /><br />Does it refer to:<br /><br />Apple stock<br /><br />or<br /><br />A share of Apple stock.<br /><br />??Steve Rothhttps://www.blogger.com/profile/11895481216028771016noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-37652614288986757282013-05-08T10:05:26.139-04:002013-05-08T10:05:26.139-04:00This is great, really addresses my issue, that any...This is great, really addresses my issue, that any financial asset/unit of exchange's liquidity is *relative to* other particular units of exchange/real goods. So:<br /><br />o Any UOE has multiple liquidities<br /><br />o The liquidity of UOE A relative to UOE B may be dependent on its liquidity relative to UOE X, Y, and/or Z, because a chain of transactions may be required to get from A to B.<br /><br />Also points out that "liquidity" may need to be decomposed. May include the ease, the speed, and the predicted certainty of exchangeability, including the certainty of 1:1 exchange as measured in the dominant unit of account. (We could call that "nominal stability"?)<br /><br />All further pointing out that we simply shouldn't use the word "money" in technical discussions because nobody agrees what it means.<br /><br />And: "moneyness" is used here I think as a synonym for "liquidity" (?) which I suggest needs a more careful definition itself.Steve Rothhttps://www.blogger.com/profile/11895481216028771016noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-76149876386084639162013-05-08T01:30:48.751-04:002013-05-08T01:30:48.751-04:00Definitely agree with you that people act differen...Definitely agree with you that people act differently when an exchange is conducted using goods versus an exchange conducted with paper. If friends help you out when you're moving from one place to the next, they'll be insulted if you offer to pay them in dollars, but if you offer to take them out for pizza they'll happily accept.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-13384081151899700622013-05-08T01:26:27.853-04:002013-05-08T01:26:27.853-04:00"...was wondering what you thought might be u..."...was wondering what you thought might be useful applications of ripple."<br /><br />I think you already answered your own question. Figure out a way for people and businesses to exchange coffee for CAD-denominated ripple IOUs. JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-22384172943622839952013-05-07T19:26:57.587-04:002013-05-07T19:26:57.587-04:00Wouldn't it be easiest though if you could jus...Wouldn't it be easiest though if you could just buy coffee with Bitstamp CAD-denominated ripple IOUs? There's inefficiency with pricing goods in bitcoin due to it being volatile in Canadian CPI terms.<br /><br />BTW I'm in contact with some people talking about building a ripple startup and was wondering what you thought might be useful applications of ripple.Johnhttps://www.blogger.com/profile/18312224023541798450noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-44250203234644562742013-05-07T18:56:17.553-04:002013-05-07T18:56:17.553-04:00Hmm, now that I think about it, with a bit of exag...Hmm, now that I think about it, with a bit of exaggeration, an Austrian might say that exchanging sex for movie tickets and a restaurant bill is a more roundabout method of production and signifies a lower time preference :-).Peter Šurdahttps://www.blogger.com/profile/17346161576941109337noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-34905458135982669422013-05-07T18:51:07.384-04:002013-05-07T18:51:07.384-04:00Money indeed is not a monolithic entity and thank ...Money indeed is not a monolithic entity and thank you very much for reminding us this, including clear examples, because apparently most economists from all schools appear to be entirely oblivious to this and it tends to drive me nuts.<br /><br />The distinction (or lack thereof) though goes beyond economists and is a part of our appraisal of social interactions. Whereas exchanging sex for cash is often frowned upon, exchanging it for movie tickets and a restaurant bill is nowhere that controversial. An Austrian might object that it is not really the same good that is being exchanged, which is fine, but my point is that this alone is not a sufficient reason to reject the catallactic foundation of an exchange. I recall that in one lecture, Philipp Bagus used the example of finding a girlfriend as an extreme case of double coincidence of wants, so clearly I'm not the only one entertaining such thoughts.Peter Šurdahttps://www.blogger.com/profile/17346161576941109337noreply@blogger.com