OK i've got a new idea.
If we want to increase the supply of BitUSD and BitCNY we need to encourage people to borrow it in to existence and spend it.
The best way to encourage people to borrow MPAs into existence and spend them would be a financial incentive.
AKA Negative interest rates.
So the opposite of HERO which increases by 5% a year. We create an MPA that loses 5% each year.
This is what many central banks have been talking about doing for a while but can't because physical cash inhibits it.
Why would someone want to hold an asset that loses 5% a year? They won't want to hold it for long but they will like it because theres a lot of it available. Not wanting to hold an asset that has a large supply will create good liquidity.
Why would there be a lot available? Because anyone who borrowed and spent it would have a margin position that would get smaller every year.
Still thinking this idea through in my head, but theres potential here I'm sure.
Food for thought Jonny. Dam you are smart man. :)
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What a surprising idea. Are you thinking of a new MPA or FBA? What would the name be? If it's value decreases compared to the USD, it can be referred to as USD only for a few months.
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I think this is a bad idea. It is effectively what the US government is doing with the current zero interest rate policy. Right now interest rates are basically/effectively zero. They should be 4-10% (my guess at a long term 500 year average with no government intervention). Inflation causes the US dollar to lose money each year. So While you can hold cash or put money in the bank annual inflation -lets call it 3%- causes the US dollar to lose value. So right now putting money in the bank you lose 3% to inflation and 4-10% -lets call it 5% interest you should have earned so 8% a year cost of holding cash. Bitcoin and the cryptocurrencies were created by people who were not happy with government banking policies. Most people would not object to a dollar backed crypto-currency. The best way to do that would be to have a central trusted bank issue it; but the the government has shut down those attempts (and there are a lot).
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