# Market Economy

Classical 'free market' hypothesis teach us that in an efficient market profit motive and market incentives generally guided economic decisions down more productive and efficient paths rather than any intervention of an 'authority' like a government. Although Adam Smith was a scholar and he doesn't have to be correct all the time! We have many examples in the past and present economy where we saw government invention was needed, and it was not provided, and that led to economic catastrophe! I am talking about the Great Depression. As the stock market collapsed on October 29, 1929 (significant date today!), the federal govertment raised the interest rate throughout early 1929, thereby shrinking the money supply. At the time, Federal Reserve's decision making was decentralized (wink!, wink!, I am thinking about Hive), and therefore slow and ineffective to deal with a crisis. When the October Crash happened the Fed couldn't raise the money supply fast enough. The lack of money supply cause a 'run on the bank's and the country plunged into depression.

<center> ![image.png](https://images.hive.blog/DQmdbwXSPKERobQz4KACEzRALGAkoribd3kfXT7JTrrgohW/image.png) </center>
<center> [Source](https://www.federalreservehistory.org/essays/great_depression) </center>

> “Regarding the Great Depression, … we did it. We’re very sorry. … We won’t do it again.” Ben Bernanke, November 8, 2002, in a speech:  “A Conference to Honor Milton Friedman … On the Occasion of His 90th Birthday.”

Ben Bernanke is a Depression scholar. We often do not realize, how lucky we were he was the Fed President during the 2008 Financial Crisis. Bernanke and most other modern central bankers go by the Keynisian Economics. John Maynard Keynes in his book, The General Theory of Employment, Interest and Money (1936), argued that there are reasons that the self-correcting mechanisms that many economists claimed should work during a downturn might not work. This is the fundamental basis of modern central bank policy, the official name for it is Quatitative Easing. Basically when things get ugly, people need swift and decisive action. Less time for aruments saves lives and economy.

<center> ![image.png](https://images.hive.blog/DQmXkRaDuXTRw9FehPWLZZXujc5ppWwdbAa9zUABkrPX3Rp/image.png) </center>

<center> [Source](https://commons.wikimedia.org/w/index.php?curid=7667465) </center>

If you look at the chart above you can see the aftermath of the Great Depression. The recovery that followed, we must thank the War Machine for that. Without the miliratization of the United States and the War Economy of the 40s and 50s, the recovery would have been even longer.

# Incentive

So that little history lession is very relevant today as Oct 29 have already started in the far east. That backdrop keep us grounded in terms of what we must do and how we do it in a decentralized economy like ours. Here I am talking about Hive Economy. Lately Hive price is under a lot of pressure. Some of it is external and beyond our control, but some of it is internal, and we can control it.

#### External

1. Rally in BTC prices. Means Hive/BTC must go down. That is the story of every alt-coin. There is nothing we can do about it
2. General market weakness. Global markets are in correction.
3. Money supply is low, especially on an individual basis. People are saving their discretionary income.

#### Internal

1. Hive is still 'new'. We just did our first HF after our existence, and things are still not 100% operational. 
2. Hive development is 'slow' (of course this is relative, and this is not a criticism)
3. Hive doesn't have a marketing team
4. Hive doesn't have any new 'hype'. We all know crypto runs on hype
5. There is a selling pressure on this inflationary coin, as all 'gig economy' people must sell to monetize their operation

These are mostly facts. The question is how do we handle this as a community? We can't control some of the external factors. But we can at least try and address some of the internal mechanism.

During hard fork I really felt a need of a governing body that has some amount of centralized authority. This would have helped with coordination and should have made communication simple and decisive. We see a classic example in a second layer token on Leo which recently went through a small crisis. However, due to a simpler centralized governing structure Leo responded to the crisis swiftly. Communication was effective and timely. Why can't we learn from that?

Question boils down to incentives? Why would we create such a thing? What benefit does it have? Isn't 'centralization' is a taboo topic? No. I am not talking about centralized governance. I am just talking about a governing body that bridges the gap between common users and developers who are "building the hive". Right now this gap is widening and this leads to unnecessary misunderstanding. That same body can have a marketing purpose as well. We can also bridge communications with second layer tokens and market with them and for them. This governing body can be incentivised through both DHF proposal and perhaps even Ad revenue. Part of the revenue can be used to buy Hive from open market and burning it, thereby reducing inflation. There can be other options which I am missing. I goal is to start a conversation, that's all.



_Disclaimer: This is NOT professional advice, this is all just my own opinion and experience. I am NOT a Certified Financial Adviser. Consult professionals for any financial, accounting or legal related questions you have._

_Charts are created in Tradingview.com, which is a free service._

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