Author Archives: Brian Andersen

By Brian Andersen

In my previous posts I stated several times that a currency should be equally spendable, savable and earnable. But I never tried to justify that idea, or explain why we should pursue those features as opposed to others. So the purpose of this post and the next is to explain that position. It is impossible to say what features the currency should have without some underlying value system to motivate the existence of currency in the first place. So in this post I will lay down the values I think should guide a sound currency administration. And in the next post I will use those values to explain my view that an equally spendable, savable and earnable currency should be our primary objective.

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By Brian Andersen

It only makes sense to compare ETF issuers to currency issuers if issuing currency is like issuing ETFs. In my other posts I assumed that to be the case. But perhaps that isn’t obvious. So the question becomes, what do ETFs and currency have in common that make one an appropriate model for the other?

The answer is that ETFs and currency are both examples of risk-free nominal assets. The language stems from philosophy where there are thought to be things and names, and the names are used to retrieve the things. So nominal assets are the names and real assets are the things that they retrieve. Just as it is unhelpful to have multiple names referring to the same thing, it is unhelpful to have too many nominal assets trying to make claim on a given pool of real assets. While interesting from an etymological point of view, it is not entirely accurate to think of nominal assets as names referring to specific things.

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By Brian Andersen

In my previous post I outlined the strategy used by Exchange Traded Funds (ETFs) to create financial assets that offer both price stability and high liquidity. I defined price stability as the ability to hold the asset without gaining or losing purchasing power. And liquidity as the ability to buy or sell the asset on demand. Since this mechanism has been shown to work very well in the equity markets, I think it could be instructive for issuers of fiat currency, because fiat currency are also financial assets that are supposed to offer price stability and liquidity.

To that end I extracted four guidelines for a currency issuer to follow, based on what is already known about successful ETF operations:

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