Paper: arXiv 2301.04244
Authors: Anup Rao
Abstract
Elastic Cash is a new decentralized mechanism for regulating the money supply. The mechanism operates by modifying the supply so that an interest rate determined by a public market is kept approximately fixed. It can be incorporated into the conventional monetary system to improve the elasticity of the US Dollar, and it can be used to design new elastic cryptocurrencies that remain decentralized.
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 conceptual mechanism for algorithmic money supply regulation tied to market-driven interest rates. However, it lacks extensive empirical backtesting and rigorous quantitative proofs, relying primarily on theoretical economic framing.
Research Flowchart
flowchart TD
A["Research Goal: Improve money supply elasticity via decentralized mechanism"] --> B["Input: Public market interest rate & supply data"]
B --> C["Mechanism: Dynamic supply adjustment targeting fixed interest rate"]
C --> D["Integration & Testing: Apply to US Dollar & new cryptocurrencies"]
D --> E["Outcome: Improved USD elasticity & new decentralized elastic cryptocurrencies"]