Re: Lyle's Laws

Eliezer Yudkowsky (
Mon, 06 Jan 1997 22:45:29 -0600

Saith McCluskey:
> Any competent banker would raise interest rates in response to stronger
> than expected economic growth, because that indicates stronger than
> expected demand for capital, usually without an equivalent increase in
> the supply of capital.

Don't know whether or not you're right, but you clearly know more about
this than I do. You're probably right; it's the supply-and-demand
relationship between capital and economic growth that would determine
interest rates in a free society.

But there's absolutely nothing wrong with economic growth going faster
and faster and faster, limited only by the amount of capital available.
The Federal Reserve, by contrast, tries to limit economic growth by
imposing an artificial cap, raising interest rates above what they would
be in the free market.

> Capitalism has checks and balances which work almost perfectly in
> the presence of perfect information, fail almost completely under
> conditions of total ignorance. We operate under conditions which
> are far from those extremes.

An interesting point. I've often mused that government is thought
necessary because people can't pay attention to everything at once. The
FDA *prohibits* foods because people can't evaluate a host of
independent food-raters and ensure that each is free from corruption.
To put it another way, force is used to enforce standards because
enforcing them via the free market requires too much attention.

Money itself is necessary because every transaction has to be a simple
barter (i.e. pieces of paper for sheep), since people can't keep track
of a "complex barter" or cyclic debt cancellation system. (I.e. A->B,
B->C, C->A = 0.)

Once again, the key to the future is understanding how past social
development has been distorted by the lack of high-speed computers.

--       Eliezer S. Yudkowsky

Disclaimer:  Unless otherwise specified, I'm not telling you
everything I think I know.