For the economic impact of monetary systems, the main role of currencies is handling credit - handling direct transactions is intuitively the direct application, but the impact of transaction costs ('costs' in the economic theory sense, not only the direct expenses but also any barriers, difficulties, risks, etc) on the economy, while significant, is not as huge as the impact of availability of credit and supply of money.
For example, when considering dollars, having the possibility to detach the dollar from the gold standard was so extremely valuable to the economy that all the possible transaction costs with handling paper or coins are a rounding error compared to that. Enabling fractional reserve banking is an immense effect on the productive output, due to the big increase in productive investment it enables, so it matters a lot whether a monetary system can support that. Historical changes to what metals were used for coins had a huge impact on economy not because of some decrease in transaction costs but because of changes to money supply. Etc.
At it's core, the primary function of finance is (and arguably has historically always been) handling debt, not handling transfers. So evaluating a currency system on the basis of how good it is for transactions is kind of putting the cart ahead of the horse, if the nature of that currency has, as most cryptocurrencies do, a major impact on the money supply (and thus handling debt).
This is correct, All currencies have transaction costs, but compete on having lower transaction cost than the alternative.
The theoretical maximum is zero transaction cost for a transaction. It cant go positive. Components of transaction cost are triangulation, transfer, and trust. Currencies attempt to lower the cost of the transfer and trust components.
Any positive value a currency claims to have as method for settling transactions is just a differential with another method.
There is a cost to going to an ATM and carrying USD cash, but it is lower than carrying around 100lbs of cabbages to barter with.
Don't forget externalities. E.g. you can get a fee-free bank account with fee-free cash withdrawals, courtesy of the bank being able to loan out that money under fractional-reserve restrictions. In that sense transactions can pay for themselves. Presumably nobody would print money if it wasn't being put to use. Hence, novel currencies can enable novel business models and potentially do more than just lower transaction costs in a zero-sum way. (Admittedly the value of such business models at present, e.g. crypto scams, is somewhat debatable)
Economic activity. Switching from free banking [1] to a centralised currency made trade easier in America which increased the amount of trade. It's why monetary unions work [2].
Bitcoin, similarly, has enabled certain modes of trade that previously didn't exist.
I think that is more of consequence resulting from lower transaction costs, rather than an economic externality. That said, I understand the definitions of externality is changing in popular usage.
> that is more of consequence resulting from lower transaction costs, rather than an economic externality
An externality is "an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity" [1]. If Visa reduced its fees, the merchant's additional profit is an externality.
> understand the definitions of externality is changing in popular usage
Third-party economic consequences have always been the definition [2].
As I see it, I think the distinction between consequences and externalities is that externalities are applied to cost and pricing, but not concepts.
Wikipedia doesn't go too deep into when externality analysis is appropriate or useful, but hints at this in the following sentence to the one you quoted.
>Externalities can be considered as unpriced components that are involved in either consumer or producer market transactions
Something like the advent of centralized currency isnt a priced good or action, so it doesnt make sense to say it has a positive externality (e.g the transaction price of "centralized currency adoption" is not a priced object).
This is why it is more appropriate to say something like the advent of centralized currency has consequences instead.
Regarding the Visa example, the merchant isn't a uninvolved 3rd party, so the profit is not an externality. Value on the table during an economic exchange is not an externality. Similarly, the value created or lost for each interacting party is not an externality.
One more thoughts on common externality misconception.
The general connotation is that externalities describe pricing failure and market failure (e.g. pollution). The usefulness externality analysis breaks down quickly when you move from realized external costs or benefits to opportunity costs or benefits.
If a $1 pill saves a worker's life, is the value that person generates over the remainder of their life an externality. Technically yes. If you sell them a pill again a year later, the same is true. That doesnt mean the pill is priced incorrectly.
This illustrates how externalities can be duplicative and should not be confused with pricing errors.
> the transaction price of "centralized currency adoption" is not a priced object
Of course it is. Joining a currency union carries costs.
Broadly speaking, you're correct: the term has ambiguous meaning. My point is that isn't something new, but an element that has always been with the term.
I think that still runs afoul of the "uninvolved 3rd party" part of the definition.
Two actors can both generate value from a transaction due to a difference between price and their respective utility value for what is traded. This producer and consumer surplus is explicitly distinct from externalities.
If there is a currency deal between the US and Argentina, the consequences to those countries are not an externality. However, if this deal produces a 2nd order change in the Chinese RMB, some would call that an externality, although I would call it a consequence (because externality implies mispricing)
Your right on the first point, but I would consider the “productive output” to be the product and services that ultimately drive the trade. While there are plenty of contemporary hedge funds that would disagree with me here—with few exceptions, simply moving numbers around, constructing high-level abstract financial instruments, and/or arbitrage trading is not what I would consider productive activity. After all, if there are no firms designing widgets, mines digging up widget ore, factories making widgets, logistics moving widgets, stores selling widgets, technicians supporting widgets, or consumers using widgets, then there quite literally is no market.
Cryptocurrency has precious little to demonstrate itself as an analogous store of value to legitimate, organic market activities. It’s primarily been a tool for speculation, as well as evading regulatory and legal scrutiny. I believe Bitcoin has been an incredibly valuable and unique experiment, a fascinating exploration of human nature and our culture of trade. Much of the technology behind it, like the blockchain have found useful applications, but mostly outside of cryptocurrency proper. But it’s been long past the point where, if cryptocurrency had a unique purpose with which it was particularly suited towards, it should have found that purpose by now.
If one takes a strictly amoral perspective, then I suppose the cultivation, manufacture, transportation, sale, and consumption of illegal drugs would technically fit within my prior definition of “productive output”. Whether or not that’s worth its own overhead, complexity, inherent risks, and the collateral consequences to most/all of the humans involved with that productivity is a larger question…and to be fair, a lot of those concerns are nothing new or unique to cryptocurrencies.
But if the intention is to weigh a given currency’s efficacy and inherent value against a broader slate of considerations then, in my opinion, the most definitive distinctions by far between cryptocurrencies and traditional sovereign fiat currencies is the tangible, productive, economic output of its respective national domestic industries that naturally selects and underpins its perceived value and stability.
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TLDR; it isn’t some collective delusional belief that makes a dollar worth a dollar, but rather the aggregate sum of the American people’s labor and dynamism, which isn’t nearly so easy to handwave away, as some of the more myopic cryptocurrency advocates have been known to do in an attempt to undermine traditional financial systems, and draw a misleading distinction between fiat currencies and cryptocurrencies.
The piece itself mostly discusses Nvidia, which is an interesting company from an "AI hype" perspective in that they can only physically produce so many chips, and they are riding a very thin line where their margins are very high and FLOPS (or the equivalent) are in many ways already a commodity, so everyone wants to be set up to compete with them at the first misstep.
It's quite possible that the causality goes the other direction, and a baseline population of brain disorders is being ascribed to the last notable thing that happened to them (which has also happened to ~ the entire population at this point).
These are participants whose health is being followed long term. They had brain scans before and after COVID, and abnormalities were detected in the scans post-COVID.
Most of the indica of "North Korean workers" are also correlates of protected hiring characteristics ("names that didn’t match their ethnicity"). If the United States federal government has a reason to dislike your company, they will use your efforts to suggest illegal hiring discrimination, as they did when they attacked SpaceX for not recruiting "refugees" to work on export-controlled dual use rocket tech.
Noncompetes are terrible and should be banned as a matter of public policy. But it's a legal atrocity that the FTC gets to, by fiat, throw out massive numbers of existing contracts, because they woke up one day and decided they are suddenly "unfair competition" (mind you, not lack of competition). They could just as easily decide that companies "compete unfairly" by making employees better offers - and in fact did exactly this during the FDR administration!
A ton of the industrial revolution was actually motivated by that input-driven thinking. You don't decide you want an Eiffel Tower from first principles, you consider "what is the coolest thing I can make out of wrought iron".
They released Gemini without even token red-teaming and it wasn't because they didn't put in enough hours, it was because they decided as a matter of policy that they would rather pretend not to know the outcome of that exercise.
So from a cursory reading, these protests were originally because a quota system for government jobs, originally intended for descendants of veterans, was in the past paused, and now has been reimplemented as set-asides for politically favored demographics?
Yes, that’s one part of the initial protest.
See https://northeastbylines.co.uk/news/world-news/report-from-b... for details.
Unfortunately Bangladesh’s democracy was slowly suffocated, with the only party in power liking their corruption schemes a little too much to allow for fair elections.
