Baby Bonds And Snake Farms

The British Empire once discovered that the fastest way to get more cobras was to pay people to kill them.

They had offered a bounty for every dead snake in colonial India.

A reasonable intervention on the face of it.

The kind that looks sensible in a committee room, but catastrophic in a field.

The locals, the cunning locals, who'd been watching confident men mismanage things for some time, they saw this well-formed argument.

this incentive they started immediately and started well they started breeding cobras and inevitably when when the time came and the British they cancelled the program the breeders well the breeders they released their inventory back into the wild and India Well, India ended the exercise with considerably more cobras than it had started with.

Declare that a thing has value And the world reorganizes to manufacture that thing until the declaration itself becomes absurd.

This indeed is another example of the law of unintended consequences.

And the people, they've never understood this.

Those people, they keep designing things monetary policy regardless.

And there are rather more of them than you and I would hope.

Monetary reform, it's where the mechanism shows up cleanest.

Fiat currency.

Really, it's a covenant that gets quietly rewritten every decade Purchasing power, going on a long, slow walk to oblivion, a direction that no one pre-approved.

Some yell, proclaim, agitate that we should peg the fiat to gold or bitcoin.

something finite, something that committees, committees of central banks can't conjure up, something that they can't conjure up out of thin air at two in the morning.

The problem is that, the problem is that, what, is collateralizing money against the scarce assets Of course, it doesn't abolish the human incentive to game the system.

No, it moves the snake farm.

The reformists, I mean, they're still more interesting than the people who goddamn manage the current monetary system.

Those are the ones who decided that the really effective triggers is the status quo to keep rewriting the covenant quietly and hope nobody reads the small print until they're out of the building out of the building.

What does that mean? Until they've gone until they're dead, perhaps, but that covenant, that covenant has been written large.

at the grocery counter when you pay, when you check out.

Now there are perhaps five people alive today who understand why both groups end up in exactly the same place.

And what those five, what they understand is this.

The mechanism, it precedes the politics every time.