Game Theory and Rebalancing the System

Over the years I have had discussions about gold and the price required to rebalance the system. I think that I, and many others, have used this argument to quiet those who say there isn't enough gold out there to return to a system where gold is money. "Ridiculous," was the response. Just slap another zero onto the price (now maybe we need a 20 bagger) and voila, problem solved. 

It is interesting to see this argument creeping into the bitcoin world. Foolish or not, Bill Tai at a recent Milken Institute conference proffered the theory that the Japanese government's rapid move to push bitcoin into use there is being done along these lines. He finds it amazing that a culture built on consensus where change happens slowly has pushed so rapidly and so hard on the bitcoin front. He considers the possibility a good one that the government knows there is almost no way out of their financial mess, and they hope that by being a first mover on crypto that its rapid appreciation will bail them out. Interesting.

You can see his comments here at about the 55:00 mark:

https://twitter.com/MilkenInstitute/status/964192583554547712

Cointelegraph also ran a story on the Polish central bank paying to run anti-crypto ads that was picked up at Zero Hedge. As I wrote last week, central bankers bashing bitcoin reminds me of the Max Planck argument about science progressing one funeral at a time. Planck understood that those in the scientific world who had operated their entire adult lives under certain assumptions about how the world worked were loath to accept new theories that rendered their life's work moot. Planck knew that it was almost impossible to convince these older folks that the new theory was correct. Only after they had all died was it possible for the new theory to be broadly accepted. 

Many central bankers, I think, are like this with regard to bitcoin. It isn't that they don't understand bitcoin, they do. What the really fear is that bitcoin renders them and their life's work of fiat promotion moot. 

Where the Planck Theory that I proposed above goes awry is that there may be a big game theory aspect to the acceptance and rejection of bitcoin and crypto. It will be interesting to watch. Poland and China are at one end of the spectrum with Japan and Switzerland at the other. There may come a time where wide scale bitcoin acceptance pushes even the most reluctant into bitcoin acceptance. It may even have already happened.

Disclaimer: This doesn't constitute investment advice.