An Interesting Corollary
From Ideal Money:
…if all sorts of non-European countries decided to define the values of their currencies as on a par with the euro, without actually joining into any system of cooperative regulations associated with that, then the effect of that would seem likely to destabilize the stability of the euro if it would otherwise be highly stable and of good value quality.~John Nash, Ideal Money
I have long wondered exactly what this is a reference too and yet now I believe I can find a useful corollary that extends from it.
We start with the assumption (for whatever reason!) that central banks have an increasing incentive to raise the quality of money.
And so if we can be allowed to make such an assumption, I want to suggest, if we take Nash’s conjecture above it could be said then:
‘if the quality of a “cooperatively issued” currency is to increase, then the participants that typically or historically hold/held DOWN that quality, will have increased pressure (from all sides) to defect and/or leave/break from the associated coalition.’
I use “coalition” purposefully as another essay/lecture from Nash comes in mind, where he cites the possible absurdity of a (grand) coalition given certain conditions.
In this context, if we are thinking about trader groups, as a subset of our global economy, especially in relation to some average of a quality of money or a lack thereof, and thinking about the breaking and/or formation of subset coalitions, I suspect it can be stated, shown, and understood that a global economy under the agreement of one (Ideal!) currency is the optimal solution to the rational individuals’ preferences (there is A LOT left for clarification here).
If we take this insight as truth, then in certain subset games we use to study fundamental economic problems, it could be (or rather would be) that the creation of a subset is the very act that renders our global economic ‘game’ unsolvable (un-optimizable) from the limited context.
GAMES may favor coalitions in regard to the optimal expectations players can create/have, but our asymptotic evolution it seems does not.
I do feel I have more insight onto why this may be, from other perspectives and transmutations of the content/context.
In short/conclusion, it seems that the idea of “trade agreements” should ultimately be seen as a disagreement to trade with the rest of the world not in the coalition formed.