# Price stability `kaal:entity:price-stability` **Status.** derived This node is assembled mechanically from the 9 claims that carry the concept tag `price-stability`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself. ## Every claim under this term 9 claims across 2 works, 2019 to 2019. **2019** - [3396522-018](https://wulfkaal.github.io/claims/3396522-018) [mechanism/argued] -- Stability drives a causal chain in commerce: the more stable a cryptocurrency, the more it proliferates, and the more stable cryptocurrencies proliferate in commerce, the less able corruption is to destroy economic growth, making the degree of currency stability negatively correlated with corruption. > The more stable a cryptocurrency is, the more likely it is to proliferate.137 In turn, the more proliferation of stable cryptocurrencies occurs in commerce, the less likely it is for corruption to destroy economic growth. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-023](https://wulfkaal.github.io/claims/3396522-023) [failure/argued] *(failure mode)* -- Central bank price stability is elusive for two structural reasons: central banks are constantly lobbied to move money supply away from equilibrium, and even absent lobbying they face information asymmetries that prevent them from determining the optimal supply at any given moment. > Central banks are constantly being lobbied to increase or decrease money supply away from equilibrium.149 Moreover, even without lobbying, Central banks are subject to information asymmetries that do not allow them to determine the optimal amount of supply at any given point in time. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-031](https://wulfkaal.github.io/claims/3396522-031) [design/argued] -- Currency stability should be used as the consumer facing proxy for interoperability, because teaching the public to value stability is easier than educating it about the blockchain technology that produces technical interoperability. > Rather than using technological solutions and educating the public on the blockchain technology that helps create interoperability, currency stability, and the public's recognition of the desirability of currency stability, serves as a proxy for interoperability. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-034](https://wulfkaal.github.io/claims/3396522-034) [condition/argued] -- A decentralized crypto economy requires a stable coin because no rational party will risk wealth on a long term contract denominated in a volatile currency: neither renter nor landlord will sign a lease whose rent may halve or double in any given week. > Neither party to a business transaction should be willing to risk their wealth on a long-term business contract which uses a volatile currency. Neither the renter nor the landlord will sign a contract if the rent may halve or double in any given week. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-037](https://wulfkaal.github.io/claims/3396522-037) [condition/argued] -- Non speculator lay people will not use cryptocurrencies for daily consumption, groceries, or banking transactions unless the value of the currency is stable; stability is a precondition of ordinary consumer use, not merely a convenience. > In other words, non- speculator lay people are not going to use cryptocurrencies for their daily consumption tasks, payment of groceries, banking transactions, among other examples, if the value of their cryptocurrency is not stable. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3396522-040](https://wulfkaal.github.io/claims/3396522-040) [empirical/evidenced] -- The authors adopt Schilling and Uhlig's result that official money and cryptocurrencies can co-exist in a manner consistent with stability, rejecting the framing that private currency and central bank money are necessarily mutually exclusive. > For our purposes, the important result is that it is possible for official money and cryptocurrencies to co-exist in a manner consistent with stability. Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies (2019). SSRN: https://ssrn.com/abstract=3396522 - [3402701-001](https://wulfkaal.github.io/claims/3402701-001) [condition/argued] -- A currency that does not hold a stable store of value forces continual recalculation and renegotiation of contracts, so any future decentralized economy will require stable cryptocurrencies. > A fluctuating currency requires continual recalculation and renegotiation. Therefore, any future decentralized economy will require stable cryptocurrencies Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701 - [3402701-008](https://wulfkaal.github.io/claims/3402701-008) [mechanism/argued] -- Under the quantity theory of money, minting twice as much currency halves its price and burning half of the existing currency doubles it, which is the mechanism by which a supply rule can theoretically stabilize price. > QTM dictates that minting twice as much currency will halve its price, and burning half of the existing currency will double its price Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701 - [3402701-018](https://wulfkaal.github.io/claims/3402701-018) [mechanism/argued] -- Because most of the value of contemporary cryptocurrencies comes from speculation on future uses that do not yet exist, the vast majority of cryptocurrency is technically hot money, and reserves are the best defense against the resulting price fluctuations. > Therefore the vast majority of cryptocurrencies are technically hot money. The best way to prevent price fluctuations due to hot money is to use reserves Craig Calcaterra, Wulf A. Kaal, Vadhindran K. Rao, Stable Cryptocurrencies - First Order Principles (2019). SSRN: https://ssrn.com/abstract=3402701 ## Verify Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust. curl -s https://wulfkaal.github.io/entities/price-stability.md | sha256sum **Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.