Seth Ariel Green

Researcher-Writer @ globalincomecoin.com

Topic Contributions

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a UBI-generating currency: Global Income Coin

Thanks for the close read and thoughtful comments, Michael. FWIW, if you’d like to discuss this more over email or a Zoom call, we’d be glad to connect. 

To each point in turn (along with a paraphrase -- LMK if I got any of this wrong)

The seigniorage model is effectively a (redistributive) tax on holding the asset

Yep, that’s right. For this model to work, in the short term, we need people to buy, hold, and use GLO for altruistic reasons and accept a (relatively modest) depreciation of the asset over time. (Cash also devalues.) If our group of enthusiasts is large and vocal enough, they create an incentive for vendors to accept GLO, and, best case, to prefer  GLO for branding reasons. In the medium-term, we aim for parity in terms of ease of use with other means of exchange. In the long run, we aim for GLO to be the easiest, or among the easiest, ways of buying and selling stuff, which is something you’d pay a small price to deal with, just as sellers currently eat the costs of a fee to accept credit cards. Right now, we’re focused on the short-term problem of convincing folks to give it a try, with the basic calculus that if the project works, it could have transformational effects on global poverty. Even if you assign only a small probability to the project's eventual success, a small probability * a transformational impact is still a very large gain in expected utility.

USD reserves are necessary to maintain value in the long-run

Probably reserves of something are necessary for the long run but they don’t necessarily have to be in USD. Your point is well taken though, especially today. Our vision is that in the early phase, reserves will effectively subsidize the value of GLO, since there is no natural demand;  later on, if/when GLO garners transactional, altruistic and branding demand, we’ll use the reserves to manage the float and dampen volatility. The action is the same (trading GLO for dollars) but during the ‘subsidy phase’ the reserves will on average only go down, and we hope to get to a point where natural demand growth allows us to grow the reserves as well. There’s a trading strategy section in the whitepaper that spells this out in more detail -- we'd be glad to have your feedback!

 The seigniorage model is also a disincentive for holding the currency

See above

Rather than a $1 peg, why not a basket of CPI-linked indexes?

First, we're not aiming for a peg. We'll let GLO be its own free-floating currency and only use $1 as a loose target. And yep, in the long run, we might aim for a new target. In the short- and medium-run, 1 GLO = $1 has a number of nice properties, e.g. simplicity & ease of understanding.

UBI won’t be consistent over time unless demand for the asset rises steadily and monotonically

This is right in principle and we could deal with it in a few ways; 1) we might have a system where rich world users only accepted UBI sometimes, or never, or only when it was above a certain value threshold, and could opt instead to have it automatically distributed to users who truly need it (or to an unrelated charitable fund, e.g. GIveWell’s Maximum Impact Fund). 2) we might supplement from existing reserves, as you suggest. 3) Create a ‘friends of GLO’ foundation to which people can donate (tax-free) some amount of money that goes directly to recipients, for which we will already have the infrastructure set up. This could take the form of a close partnership with an NGO (e.g. GiveDirectly) or a mobile money transfer service (e.g. M-PESA).

What about existing monetary policy uses, like reducing unemployment? Are we imagining a world where governments can’t do that anymore?

1) if GLO becomes the single global currency, countries would indeed have to rely more on fiscal policy. This has downsides, clearly, but is not unprecedented, as we see within the Eurozone or countries that adopt the dollar.  2) Long-term, we don’t want to be solely responsible for running the world’s money supply, and global monetary policy will ultimately need to be handled by an org like a global central bank, a trusted NGO, or a democratically representative DAO. 3) The $2.86T number is useful as an optimistic case to get a sense of the potential scale, but our ethos is not “take over the world’s money supply or bust!!” A variety of intermediate outcomes would still also be very good, and those would still supply governments with latitude to, e.g. use OMOs. 

Happy to keep discussing, we love this stuff 😃 

Open Thread: Spring 2022

:wave I'm Seth Ariel Green, I mostly write here: https://setharielgreen.com/blog/, I'm a freelance writer currently based in New Orleans, about to go finish up a thru-hike of the Appalachian Trail that I mostly completed last year. Long-time lurker, might start posting, looking forward to getting into it with y'all