**A** (0:00):
Okay, so yeah, the goal of this panel is we're heavily going to sort of explore a lot of monetary policy. That's what we've been talking about thus far. But then what happens when it starts to come back into. When you put it in an international context? Yes. And so yeah, for those who don't know me, my name is Sunny. I was one of the co organizers for this event and I'm one of the researchers at Cosmos and I've been kind of really been deep diving into the monetary theory lately. I took a course on Coursera called Economics of Money and Banking, which I heavily recommend everyone take. And it basically just made me rethink everything I've been doing for the last three years and which kind of inspired me to throw this event to kind of help me learn more. So yeah, Zaki couldn't make it to this panel today. He was on the panel earlier this morning. So instead we have Jay and I'll let him introduce himself.
**B** (1:02):
Thanks, honey. My name is J. Kwon. I invented Tendermint, co founded Tendermint, the company and worked on Cosmos as well. And along the way. So all that started in 2014 and since then I've become more aware of what's happening to the environment and how there needs to be a dual coordinated effort to combat it. I think, or at least first consensus that it is a problem. And I realized, especially after Libra came out, when NEVA came out, it became clear that we're at an inflection point where cryptocurrencies will become this, it will become the new money. And it got me worried because.
**C** (1:59):
A.
**B** (1:59):
Consortium of for profit companies should not be dominating our monetary system. And I think we need to really ask the question, what monetary system do we need in order to promote better balance with the environment and promote our communities? That's what I'm here.
**A** (2:25):
Thank you.
**D** (2:29):
Hi, I'm still John Connolly. My specialties are game theory, theory, theoretical economics, operations research, axiomatics, things like that. I've been interested in ICT economics since about 2009 initially and so on. Spent a sabbatical year at Microsoft research in 201617 and got interested in photography, biometrics, systems design, networks and so on.
**B** (3:01):
And.
**D** (3:04):
I was not really happy with these consensus protocols that I observed. And so that led me to use skills I had in game theory to try to develop a new one. And that's the geek project that was mentioned here. It's a consensus protocol called Proof of Honesty. And now I'm here.
**E** (3:27):
Hi, I'm Steve Waldman. Sometimes an economics writer blog Interfluidity I'm sometimes an Ethereum developer similarly to my co panelists. I got interested in this stuff because you know the world is going to shit a lot of ways across so many dimensions.
**C** (3:53):
And.
**E** (3:56):
I think that we need a lot of institutional innovation. And mostly what interests me about blockchains is if they're sort of superficially technical systems but they're really fundamentally social institutions reified in a technical way that make a lot of things that are sort of tacit or opaque very visible and auditable. And so that's the optimistic case for these things. But there are a lot of pessimistic cases. So Jaeh's discussion of Libra that these technical architectures don't carry social virtue with them for free. We have to build things that are good and I think it's a very open question whether what we are currently in the middle of doing will result in good things or not. Let's try to make that happen.
**C** (4:51):
Hi, I'm Ben, I'm a robotics engineer by training turned crypto investor. Hash is a crypto native cross border investor. We back over 50 companies including Cosmos initially and we invest especially in the Asia side international companies that are building blockchain protocols such as some of them are public blockchains and these are touching some of the regulators on some of their monetary policy and how they impact some of their e commerce payments as well. Sunny reached out to me to share a little bit more about some of the libra's impact on krw. So Korean government has been paying strong attention into crypto ecosystem because of the high penetration rate of crypto. The survey shows that around third of the white collar population has touched cryptocurrency at some point. And In Korea about 90% of the payments are cashless so it's all electronic. So it's a really easy environment for these kind of product to widespread and take over possibly Fiat and KRW itself, you know as a country with the neighbors of a strong economy such as Japanese Yen R and B&USD it is highly impacted by some of their monetary policy changes. But if you look at Libra and as J mentioned, if we can actually reach that inflection point and reach the high potential, it could be the another biggest monetary system that KRW have to deal with. So that has been a big attention for the government and the ecosystem.
**E** (6:33):
Cool.
**A** (6:34):
So. So I guess I'd like to start by introducing one of the corner ideas that I've really been thinking about especially when it comes to the international monetary systems. And I'm sure a number of the people on the panel might be aware of this idea. But just to give some background to the audience, there's this concept called Roderick's trilemma, or the trilemma of the political economy proposed by a professor at Harvard, Danny Roderick. And what he proposes is this trilemma. You know, we're very familiar with trilemmas here in the crypto space. But the one that he proposes is about economics and politics. And the three points of the system are he called, I'll put in my terms, I think some of his terminology is a bit odd, but I would say globalization, national sovereignty and democratic control over monetary policy. And he basically says you have to choose two of three. And so we've seen different regimes where we have tried all three of these. So the gold standard is famously the one in which we choose national sovereignty and globalization, where we have these fixed exchange rates between countries. You have high mentioned national sovereignty, but now you don't have any sort of democratic control over decision making. Then we have the, you could choose globalization and democratic control, but you lose out on national sovereignty. And this is sort of what Keynes proposed in his Bancorp plan. It's also what the Euro kind of attempts to do, not at the global scale, but maybe at the European scale. And then finally we have what's the Bretton woods compromise or you know, the post Bretton woods order where we have free float foreign exchange rates. We have, we need capital controls in order to maintain a level of national sovereignty. So with that in mind, I guess my question is to start off is are we in the right point on this trade off point? Because currently the world that we live in is primarily focused on still in that Bretton woods like system where we give up on a lot of the nationalizing, the globalization that is possible. And we, we have some pockets where we're trying more large scale federalism like the European Union. You see, this is where we're going to continuously to go. Are we going to see more pockets at the EU or we're going to see things evolve. So whoever wants to take the question.
**C** (9:11):
Start it off.
**B** (9:12):
So I think, I think we have the design assistance based on the facts, the facts of the environment is, the fact of the world is we share this earth, we share the air. And if the environment goes as shit affects all of us, many things affect all of us, like political turmoil causes refugees and so on, or collapses trade. So there's something about the global, I think that needs to be taken into account out in order to. For everyone who wants to participate voluntarily, to globally enforce or incentivize certain things. But on the other hand, we don't know what the best system is. We need decentralization, experimentation. So we also need states or local localities to have their own policies too. So I think. I think you can't choose one or.
**C** (10:05):
The other in terms of globalization, whatever.
**B** (10:07):
That means in nation states, I think you need a balance because you need both.
**D** (10:17):
Well, I don't like being told what to do. I prefer to do what I like to do. And to the extent that I don't cause harm to other people, that should probably be what I'm allowed to do. But there are externalities. You can breathe the air, you can. You can mislabel food. There are all kinds of things that have enormous impacts on the rest of people, even at a global scale. The problem is that you can't really necessarily trust the central authorities to internalize those externalities correctly. As soon as you focus power, well, then the power focuses on itself. So it's not clear what the right thing to do is. I think what I would try to do is, is design things as much as possible so that individuals make decisions and don't cause externalities and reserve the minimum possible for the higher authority. And that's one reason I like crypto. That is, I think, the only technological thing that we have that's big right now that moves in the direction of decentralization, AI, machine learning, big data, universal connectivity, IoT. All of these things are instruments of centralization, control and network externalities. So I think we have hope it's somewhere in blockchain.
**A** (11:32):
So just to push on that a little bit, whose externalities are we measuring? Whose externalities? Like, so are you. Are we trying to, you know, aggravate the externalities of the people within the United States, or do we do it at a global scale? If we make monetary decisions that have externalities on the economy of Korea, for example, is that an acceptable moral? Or maybe we don't care about morality. Maybe. Should we. Is it okay to make monetary decisions of the United States that maybe have negative externalities on the economies of other countries?
**E** (12:11):
Yes.
**D** (12:14):
Well, I think that what I want my government to do is to take care of me. And at every level, I want my government to do that. I want my city government to take care of me as a city. I want my state government to take care of me as a state. I don't really want my government thinking about Alabama or New York that much because that's not, it's not their job. They're looking after me. There's a degree of benevolence though. I mean I would be upset if my government was doing really malicious, horrible things that would upset my sense of ethics in the right. But I think the first responsibility of any hierarchical unit is to take care of the people that it's over, take.
**B** (12:53):
Care of your family.
**D** (12:56):
It's not the job of my boss to worry about other companies. He worries about his company.
**C** (13:04):
And they're going to get that point. I think it's just a balance of power.
**B** (13:07):
Right.
**C** (13:08):
Even in the fiat world it doesn't work like we described that they take kind of all the external entities making sure all the parties involve are okay in the crypto landscape I think many of the projects are doing this in a way that they can become bigger, too big to be shut down rather than asking for some of the admission into the system system or acceptance. I think regarding Libra, since it's someone of the topic, one thing that I thought was missed, maybe wrong position was that they didn't even launch it but they just proposed the idea but they made it to public early. We're not becoming too big enough with the strong incentive alignment with all these partners before making it that this info is all laid out in the system of their social graphs. And I think one of the good approach that I like is like what is a Terra? It's a stablecoin project starting in Korea built on Tendermint and you know they abstract Apple crypto component and make it as just a good payment product and now it's doing 500k sign users within three months with around 2 to 3 million dollars transaction per day. And government don't really see it as a threat maybe yet but if it reaches to hold digital payment landscape that I mentioned which is 90% of the whole Korea it could be too big for it to be shut down. So I like this kind of approach rather than thinking about all this intertwined power balance in the crypto landscape.
**A** (14:50):
So with Terra your stablecoin is stable relative to the US dollar SDR please to the sdr. Okay. And so okay, that changes what my question is going to be. Okay, how about there's many other stable coins for example, you know we have some presentations from CeeLo earlier. Many of the stable coins are trying to make themselves stable against the US dollar and by promoting it as the as a currency to promote use all over the world are we essentially promoting the this idea of that the US should control the United States should control the monetary policy of the economies throughout the world. And so is that one. So what was, I guess what was some of the reasons you used in choosing the sdr?
**C** (15:38):
I mean, had a researcher, Tara Nicholas right there. But one of the reasons, the core reason was that even USD is volatile. And as we see with the US and China tension pegging to single monetary policy can be volatile for the whole crypto ecosystem. And SDR is one of the most, I think the most stable currency bucket right now with the fiat. So I think it makes sense. I think liver is also back to SDR currently.
**E** (16:11):
I'd like to answer your original question about the, about Dani Rovick's dilemma. I'm going to be sort of the opposite of my neighbor a little bit, although very much share the inclination towards decentralization as a design goal, a little bit more pessimistic about the possibility that in the world that we live in, externalities can be disentangled. So a libertarian universe looks very nice to the degree that we can kind of localize the effects of our actions. We should have liberty where we don't hurt or adversely affect other people. And unfortunately, I think we are in a time of great crisis. And a significant part of that crisis is that libertarianism worked pretty well, especially in the United States, which was a big, not very dense country, when technology didn't bring us all together as much, when our economy was a little bit less developed, when there was a stronger notion of the local. And I think that what we're struggling through right now, and crypto is kind of a part of this, is that when there are externalities we need to be enfranchised. There's going to have to be some kind of a decision making system beyond we have the liberty to do what we want and we need to be enfranchised in that system. And what Rodriguez Trollema points to is there's a tremendous tension between, from an economic development perspective, you want a global system for sort of standard economic reasons has a lot to offer, but from an enfranchisement perspective, you really want things to be local. And so the Bretton woods compromise was after the experience of the wars.
**A** (17:54):
That.
**E** (17:54):
Came from a similar period of globalization followed by backlash of people who felt like, like they no longer had communities or a say or left out and a retrenchment towards a much more national world. And I think we're reliving exactly the same struggle, exactly the same events we'll need to have in the Short term, exactly the same set of outcomes. Which is to say we've gone through a period of, in Roderick's term, neoliberal technocracy, where we've been part of a global economy from which we've been disenfranchised, from which we haven't had any democratic input and we've rejected it. Right. Trump is a rejection of that. Brexit is a rejection of that. All the various anti liberal authoritarians rising up around the world are basically people trying to sort of take back more organic communities from this neoliberal technocratic version of the world. But we can't actually go back to local, to sort of the part of the triangle that is we're enfranchised in our nation states, disentangled economically. We have the democracy in the markets, but not the globalism because we're much too entangled. So crypto, in my view, the one reason to be interested in it is one way or another we have to figure out democratic institutions that will get us to the global democracy side of the triangle, where we do have a global economy because we can't help it, but where we have a meaningful kind of democracy that enfranchises all of us. It doesn't have us feel like we're falling behind, that we're left behind, like we're crushed, we're oppressed, we're ignored, and we just have a limited time as a species to figure out how to organize a meaningful global system in which we feel enfranchised. And the institutional development aspect of crypto, the idea of being able to build new kinds of institutions, new kinds of voting systems and organizations, I think optimistically might play a crucial part in that. In the meantime, until we get better institutions, we're going to retrench into a more national world because it's the only way we don't tear ourselves apart.
**D** (20:01):
So I used to be libertarian.
**C** (20:03):
I got better.
**D** (20:05):
Disease of youth. But no, I mean, I like your program. I wish the concern, the concern I have is this, that the more local you are, the smaller your group, the bigger you say and the more likely it is to reflect your preferences. I'm not saying that you can reduce problems to your group, but I say to whatever extent you can, that's the preferred option. Now, the problem with global or even large kinds of voting is. Well, this is why economists have no friends, because we know about impossibility theorems. There's the arrow impossibility theorem, there's sat of weight, there's impossibility, preference aggregation. It just Turns out that as even an abstract exercise, you really cannot in any reasonable way that satisfies any reasonable set of conditions, let people express preferences in a way that doesn't really come to disaster. It's just not possible. I mean, I wish it was, I really do. I would love to have a global government that was good and nice and beneficent. But the theory says no. But I think the empirical evidence is not so strong either.
**B** (21:12):
I actually agree with everyone here and I don't think that's what I'm trying to say is when I say I want some global aspect of economy, I'm not saying I want a global government that where I'm bound to. I am only promoting voluntary associations. And I think basically by enabling people to create their own monetary systems and to have competition at fiat, we will be able to create a system that balances the needs of local monetary needs as well as global coordination. By having competition of many global models and allowing people to freely associate, I think we will come up with the best set of balances. Just one more thing. The reason why I believe this so strongly but like my dad lost his job or the company that's working for folded because of the IMF crisis due to the way that the interest rates were changing. And then the housing crisis too affect my family the same. So at this point I don't want to be bound by any fiat currency. I would rather die than be held to a decree that says I have to use this money because I don't support this money system. I don't support the dollar, I don't support the wars that were waging. I want to stop using it. Thank you.
**A** (22:44):
Steve. I mean a lot of your talk was about how the system, like you know, the slavery system that fiat creates is somewhat beneficial still to running a well functioned society. And so how. So what would you say to Jay, for example, about like, you know, is it possible to create a system of, is it, could we ever have like, you know, one of the topics here is the Hayekian denationalization of money. Is that ever possible in a world in which fiat currency exists, in which the government requires taxes in one currency?
**E** (23:18):
Well, governments have a tremendous advantage at defining what gets to be the sort of high network effect currency because they uniquely have the capacity to create debt obligations ex nihilo from nothing. So anything can kind of be monetized. We can coordinate on cigarettes or go over whatever for a while. But the reason why states are really good at it is that they can make something desirable by fiat, by saying you have to pay taxes in it. So, you know, it's a little bit like Facebook. I hate Facebook and want to see it erased from Europe. Just sort of make that plain. But it's really hard to deal with because they have this tremendous network effect. And social networks really, really do have value associated with the network effect. So fiat currencies or currencies in general have a tremendous network effect. There's a tremendous benefit to having one that everybody uses. So given that governments have this capacity to make the thing that they issue, to give an advantage to the thing that they issue as a currency, become a currency coordination point, they have tremendous advantage. And those things want to be big. I don't really see a role for kind of as a general purpose currency, for lots of little things interacting with one another. I want to caveat that on the sort of institutional side because I think, you know, I don't actually disagree all that much with my neighbor. I think it's critically important as much as possible to create, create notions of locality for ourselves because our larger affiliations, we're always going to be unhappy with them to some degree. And within smaller communities, one way that you can kind of bind together, give sort of sinews and blood to a smaller community is by having the community sort of describe patterns of how economic value flows. And those can be expressed as something like a complementary currency. So I can see a world in which there are lots of quote, de nationalized money that are kind of the scripts or tokens of local or intense or very, you know, small. Not necessarily very small, but small relative to the nation state communities. But I don't think we're going to get to a world of kind of competing monies for general purpose commerce.
**A** (25:51):
Okay, so you did mention earlier about, you know, maybe we can build the democratic tools to like make global governance possible to an extent. Why are we like, you know, I think the best example case we have today is the Eurozone and you know, they successfully created a monetary union but they have been unable to credit fiscal use. And what makes us think that we can do that in a global sense if we can't even do it in the European sense? And like, when it comes to Libra, for example, if the all like, you know, we can't even get European countries that share like a European union to pool risk to issue common bonds, how can we get these multinational companies with like competing interests to do so?
**D** (26:45):
I think we probably shouldn't. I mean the reason that Greece and Germany don't have A common fiscal policy is that Greeks are not Germans and they have not only behave differently, they have different preferences, they wish to behave differently. And the policy that's right for the Germans is not right for the Greeks. And so there's a reason to have separation between the fiscal policies.
**A** (27:02):
So do you think we could, do you think it's possible to create a long term sustainable monetary union if we going for a fiscal union?
**D** (27:09):
Well, like I say, it's always balanced, right? There's the externality, there's the network externality, benefit of getting together, but then there's the loss of personal preference and choice if you do that. And so it's a balance, you know, there's not a single right answer.
**B** (27:31):
I think it's my personal opinion, I'm sorry, still learning this, that the EU should not have had the euro, that the benefit of a single currency is not that great. You can construct other means on top of individual states currencies and make it all work. The reason why I think we need something global is primarily to deal with things that are now naturally global, such as dealing with the environment. There should be a global system for incentivizing the planting of trees and carbon sequestration. And I'm not suggesting that this system needs to be forced on everyone. But states or towns for example, can participate voluntarily if they so choose to. I think if we find the right model that has the right legitimacy, the right transparency, accountability that makes the right decisions, then I think people, people choose to fund it and associate.
**A** (28:28):
So you say that like, you know, it's up to states to kind of do this voluntarily participate in when it comes to like environmental issues. What happens when there's like states that don't want to participate, like if they're, they don't want to sacrifice economic productivity for environment. It's a large scale prisoner's dilemma where we're all heading towards a doom, but no one wants to be the one to fix it. So do you need to do some sort of enforcement enforcement to fix this?
**B** (28:58):
Not so much an enforcement from the top, but more like from the peers. So for example, you can have a union of peers that say, well we're going to not trade with this partner until they adopt something sensible, for example.
**C** (29:15):
So as Steve said, I think fiat currency having the governance of the nations forcing it has a big power in keeping everything within the same network effect. But I also agree with Jay and also what Jay shared remind me of some idea, like just one idea that I was fussing around with my friends around how today super rich or even just like top maybe 1% are kind of free from jurisdictions in terms of their financial wealth or their activities. And I think with the cryptocurrency and we see a lot of crypto wells in a lot of conferences, they're very global and they're kind of abstracted away from the nationalities and also the fiat world. So in the future like some people say that, you know, this crypto governance brings people from decentralized communities into more back to like nomadic communities. So maybe this wealth accumulating up in the virtual world like cryptocurrency side could lead to next generation of daos that represent, you know, like kind of voluntary nationalities that is aligned within the ones that share similar interests and maybe the denationalization of money. Yeah.
**A** (30:34):
What was a very Fabian last comments or anything.
**C** (30:39):
So.
**B** (30:43):
Some of us are starting a project called Virgo and it is to create an association of technologists, but also economists and so on in order for us to not only decentralize our social media communications, our financial systems and our governance systems, but ultimately so we can answer questions like what should our monetary system be and solve for things like global warming. It's not a tech centric, you know, we're not, we're starting it as a people centric organization and project. So please join us@virgo.org you'll see the manifesto and links to a forum. Thanks Virgo v I r g o.org.
**A** (31:24):
All right, thank you guys so much.