Replying to 772f9545...

I don't follow why the money stock needs to equal total estimated wealth. Suppose I own a house with an estimated price 1 BTC, a car with estimated price 0.1 BTC, and some other stuff with estimated prices totaling 0.1 BTC. Further suppose there are ten of us and the average price estimates are the same as what I have. Our houses, cars, and other stuff total an estimated wealth of 12 BTC. It does not necessarily follow that we also need 12 BTC to support this situation. I suppose 1 BTC would be a floor, otherwise we could not expect the house to exchange at 1 BTC. But we might also be able to get along with 2 or 3 total BTC among the ten of us instead of 12 BTC. We don't need to be able to liquidate everything all at once. The money is an independent good itself with its own supply and demand.

I recall doing a similar calculation where I estimated the total money in the world (not total wealth) and figured BTC would need to be like $100 USD to support all the exchange in the world. Maybe I was off by an order of magnitude, though.
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ᴛʜᴇ ᴅᴇᴀᴛʜ ᴏꜰ ᴍʟᴇᴋᴜ 1y ago

if money supply is static

all prices must adjust to match the relative proportion of value of trade and scale of preferences of all individuals, this is called price discovery

thus, the value of all assets in the world are the amount of monetary units in the world

money is half of the equation of all market exchanges, so it is equal to the notional value of all the assets, commodity or equity

you can bypass money via barter but in general the equivalence is computed between counterparties in a barter based on the estimate of the monetary value and thus relative prices between them

that's why we invented money, to act as a silent, "outside" witness to all trades to enable us to save profits and to use those savings to make opportunities to create more value

fiat currency debasement makes it so only those with the money printer have this ability and these are some few thousands of people in the world and they basically are the real ruling class of our modern world

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772f9545... 1y ago

But money changes owners in actual exchanges on the margins, not hypothetical or potential exchanges. I still don't see how the total wealth has anything to do with the total money stock other than the stock of money being a cap on the highest price good. If we had only 12 USD in existence, 12 USD would be the highest possible price for any good or service. But it does not follow that because something recently exchanged for 1 USD and there are 12 of those that there must be 12 USD in existence.

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ᴛʜᴇ ᴅᴇᴀᴛʜ ᴏꜰ ᴍʟᴇᴋᴜ 1y ago

what you just talked about in the last sentence is called "mark to market"

you clearly need to read some texts on economics if you don't understand the function of money as a means to denominate relative value of goods (and services) available on the market

all market goods and services are worth all the money that can be spent on them

decrease the supply of goods and the price of the assets goes up because there is more money to go to them

increase the supply of money and the prices of goods goes up to compensate, as more money is going to be available to spend

it's really not complicated i don't get what you are confused about

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772f9545... 1y ago

I assumed that "estimates of total worldwide household wealth" in the original author's text used the mark to market technique. That wealth is a composition of assets that might include money but is primarily non-money assets. My point is that if we estimate the wealth at X trillion money units this estimate does not imply that there must be X trillion money units in existence. We could have X/2 trillion or X/5 trillion money units without a contradiction to the X trillion wealth estimate. X/5 trillion would not imply that the wealth estimate is wrong. It could be that X billion units is OK! I do not think we can say there is an exact ratio. I am becoming more sure that the author makes an incorrect assumption, and if it is incorrect, it is also incorrect of the author to suggest Bitcoin's price would have to reach those levels when it is the money of the world.

No doubt we agree that as more people use Bitcoin more frequently as a medium of exchange there will be an increase in Bitcoin demand leading to an increase in price relative to USD and other goods and services, especially as folks prefer to use Bitcoin instead of USD and there is a decrease in demand for USD.

In short, I don't know what the price of Bitcoin should be as it becomes the world's money. The author's estimate of the equivalent of 10 million (2010ish) USD seems high based on the given reasoning. You are right that the US dollar is being debased. As the US dollar becomes not money and Bitcoin becomes money we would be estimating asset values in Bitcoin. We wouldn't compare to US dollars, we'd have to use other techniques.