Monday, December 4, 2017

The petro and Friedrich Hayek, on paper

The petro is a clever idea, although I'm not sure the, uh, tension between Venezuela's executive and legislative branches makes a credible petro very likely. Even if that political problem did not exist, Venezuela has not earned the credibility in monetary governance that would be necessary for one to believe any peg reliant on Venezuela's active defense.
As an academic exercise however, it is fun to consider this concept in the context of Nobel laureate Friedrich Hayek's 1976 versus 1978 books about the denationalization of money. This seems very well aligned with Hayek's original 1976 vision of global currencies competing over their mechanisms for managing valuation, but perhaps not so well aligned with the rethinking present in Hayek's 1978 revised argument, where he decided that network effects would likely displace such competition in the long run.

2 comments:

  1. Venezuela would do well to implement Lightning nodes across the country, using bitcoin as their inter-national currency.

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    Replies
    1. You might be right. The lightning network is not yet ready for prime time, but it is getting very close. My sense from afar is that their legislature might be receptive to that, but maybe not their executive or judiciary. But I could be wrong.

      Perhaps Zimbabwe could also benefit?

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