Paper: arXiv 2511.00365

Authors: Boliang Lin, Ruixi Lin

Abstract

A currency with stable purchasing power can always provide a psychological haven for people around the world. However, since the collapse of the Bretton Woods system, issuing more cheap currencies has become a common trend in the international community, and the legalization and over issuance of stablecoins will strengthen this trend. In this context, our study focused on a parallel monetary system based on a redeemable self-decay/devalued money(RSDM). Firstly, we point out the idea of redeeming gold at a fixed denomination with gold certificates is similar to an impossible perpetual motion machine. Only when the face value of a gold token self-decays or self-depreciates and the weight of the reduced value can compensate for the storage cost of physical gold, can it be convertible or redeemable. Secondly, we pointed out that as a modern “good money” under the Internet environment, it must have two basic functions: long-term value storage and zero logistics cost of money circulation. Thirdly, we found that a single type of money is difficult to shoulder the responsibility of modern “good money”. Only a parallel monetary system, including RSDM, such as a triple-monetary system consisting of RSDM, domestic fiat and major international reserve currencies, can form the ultimate safe haven of wealth and safeguard the reverse Gresham law. Based on this analysis, we build an integer programming model for currency optimization selection in a multi-monetary pool. Fourthly, several potential application scenarios of RSDM in the real world were discussed, including a new approach to activate dormant gold assets in India based on RSDM, and the gold monetization scheme in the United States. Finally, the demand for RSDM with precious metals as collateral was analyzed, providing theoretical support for establishing a sound parallel monetary system based on RSDM.

Complexity vs Empirical Score

  • Math Complexity: 3.5/10
  • Empirical Rigor: 2.5/10
  • Quadrant: Philosophers — conceptual discussion, limited math and data

Why this score: The paper presents an intriguing theoretical concept of a redeemable self-decaying monetary system to address storage costs of collateral and over-issuance of fiat/stablecoins. However, it lacks empirical validation, backtesting, or real-world data analysis, relying predominantly on conceptual arguments and basic optimization models.

Research Flowchart

  flowchart TD
    A[Research Goal: Create stable parallel currency system RSDM to hedge fiat inflation] --> B[Conceptual Model: Define RSDM with self-decaying face value to offset gold storage costs]
    B --> C[Optimization Framework: Build Integer Programming Model for Multi-Monetary Pool Selection]
    D[(Inputs: RSDM, Domestic Fiat, Reserve Currencies, Precious Metals Collateral)] --> C
    C --> E[Scenario Analysis: Simulate real-world cases like US & Indian gold monetization]
    E --> F[Key Outcome: Triple-monetary system protects wealth, enables zero-cost digital circulation & enforces Reverse Gresham Law]