With the GDKP ban, I’ve seen a lot of confusion over what to ban and, really, why this over that? This post provides clarity (hopefully) and may bring you to acceptance or at least depression:
Instead of gold, let’s say we’re dealing with tomatoes. Tomatoes are farmed and then sold. People buy tomatoes for a variety of reasons, sometimes to make ketchup.
What sets the price of a tomato? Demand and supply of that tomato. Also “intangibles,” such as the “inherent value” of the tomato or its underlying currency–so long as the place that has the tomatoes is successful, tomatoes will have value, even in the absence of real, meaningful demand.
So, what happens if I ban or curb tomato farming? It raises the price of tomatoes. It makes the game of tomato purchasing riskier–especially for a bad batch of tomatoes. You could really lose your livelihood.
But what happens when I ban ketchup? This lowers the price of tomatoes. Suddenly, people need less tomatoes. It also does something else; it lowers the amount of tomato farmers.
Why is this? Because farming tomatoes is no longer worth the farmer’s time. He can move on to carrots or peas.
So, really, a ketchup ban does two things: 1) it lowers buyer risk, and therefore, the negative effect of regulation of tomatoes; and 2) it deters farmers, thus less farms.
Banning ketchup is good for all of us, even those that love ketchup, because we like less tomato farmers.
Thanks for coming to my Ted Talk.
