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You could put the $ on an energy standard tomorrow.

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Fri Sep 6th, 2013 at 03:05:42 PM EST
[ Parent ]
You could put any currency on any standard you want tomorrow.  The question is: Why would you want to?

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Fri Sep 6th, 2013 at 03:25:26 PM EST
[ Parent ]
I think it's one of those 'When you have a hammer, everyone looks like a true Scotsman' arguments.

Most of these suggestions - including Martin Hay's disaster - confuse the various functions of money in not very insightful ways.

I think it would be interesting to have currencies that make all the different functions explicit, so you would know for sure whether your transaction was based on a claim of future resources, or executive rationing, or a simple power play, or any of the other things that people get up to while trying to hoard and/or spend imaginary tokens.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Sep 6th, 2013 at 03:31:26 PM EST
[ Parent ]
That is a fascinating idea, which I will try and think some more on.
by Zwackus on Fri Sep 6th, 2013 at 09:08:26 PM EST
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There are plenty of people aiming to design just such currencies and good luck to them.

I take the view that most people would understand and accept in payment a local currency based upon and returnable in payment for the use value of land. The majority of fiat currency is in fact indirectly based upon capitalised land rental value.

I also take the view that most people would accept a currency returnable in payment for energy use.

Other currencies? Be my guest, invent what you like and see who accepts it.

But people-based (P2P) credit in respect of goods and services is not the same as currency, and is not to be confused with P"P debt in respect of existing fiat currency.

It is quite possible to envisage a community credit card owned by local businesses and people in common, and operating on a 'not for loss' basis as a utility, managed by a service-provider-formerly-known-as-a -bank.

Such a community credit (mobile SIM) card will require neither deposits nor currency for settlement of obligations because settlement may take place by chain generation A>B>C>D>E>A of open balances.

Such a mutual credit clearing system does require a meaningful unit of account, however. I'm open to suggestions as to what such a unit of account should be.

In my view, only a unit of energy works as a unit of account.

Unfortunately, Martin does not understand how the existing system works and that is a big mistake on ET.

I believe I understand it better than most, and I'm willing to learn from anyone. But I've found that the best way of learning is by doing.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Sep 7th, 2013 at 04:19:59 AM EST
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A>B>C>D>E>A appears to be a chain sequence as typed, but is actually a wave. You can choose to see "credit" circulating clockwise, "debt" circulating anticlockwise or both taking place at the same time.
by martinahay on Sat Sep 7th, 2013 at 04:44:11 AM EST
[ Parent ]
the use value of land.

I think the majority of people have no idea what 'use value' is. And unless you're planning to throw open the big estates and country parks in the UK and allow people to grow food or put up holiday cottages on them, 'use value' is meaningless anyway.

I'll try to explain this really simply - most people do not understand financial abstraction.

They understand that they can buy stuff, or not buy stuff, and do stuff, or not do stuff.

They particularly understand whether or not they can do more buying and doing of stuff than their neighbours can, because this kind of competition is encouraged and praised as a fruitful activity.

A few understand gold is shiny, and people seem to want it, so gold is good.

Everything else will forever remain a mystery to at least 95% of the population. (Including most politicians and not a few bankers.)

The majority of fiat currency is in fact indirectly based upon capitalised land rental value.

No, the majority of fiat currency is based on faith in the future, and violence - or threat of same - in the present.

Land ownership happens to be one of the claims on resources this system encourages. There's nothing primary about it at all.

I suggest you read the introduction to Polanyi ARGeezer mentioned in today's Newsroom, because it explains all of this much more succinctly than I can.

But the basic problem with all your suggestions continues to be that you're still essentially a marketista.

I'm not. Changing units of accounts does nothing to destroy market ideologies such as the Holy Rite of Competitive Acquisition.

And it's the ideologies that are the problem, not which metaphorical fingers people use to count with.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sat Sep 7th, 2013 at 09:11:03 AM EST
[ Parent ]
And it's the ideologies that are the problem

Classical economics pretty much culminated with John Stuart Mill and Karl Marx. In his work On Socialism Mill noted that, while the capitalists system was the most effective system known for generating wealth it did not follow that private ownership of that system was the most efficient means of distributing that wealth. Marx of course went further. That is what brought the 'neo' to classical economics.

Henry George showed just how damaging the classical economists could be in the hands of someone who cared about fairness to the people. At the same time economics was coming to be a more standard university discipline. Several of the very wealthy wanted to make certain that a version of economics was taught that was favorable to their interests. Add to that the fact that the most likely employment outside of academia for economists was in banking and in the administration of large privately owned trade and manufacturing concerns and it is not hard to see why neo-classical economics developed.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Sep 7th, 2013 at 11:05:19 AM EST
[ Parent ]
I most certainly am a marketista.

Just not markets with value-extracting middlemen - public or private - in them. That's so Last Century.

It changes the game entirely if intermediaries are bypassed, and that is precisely what they are doing because with conventional financing and funding terminally fucked it is their only remaining option.

There is no profit or loss or double entry book-keeping in such a bottom up networked market, but there is shared risk and reward, and there is shared surplus and there is a meaningful unit of account for as long as the market persists pending the arrival of a gift economy.

The accountancy of such a networked market is interesting.  

But I won't go there just yet. :-)

Ideology? I'm not into ideology. I'm into seeing 'what works' to do what we need to do, and seeing who joins in.

In my view we won't see a Party create Policy in future: we'll see the Policy create the Party/Movement.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Sep 7th, 2013 at 02:39:25 PM EST
[ Parent ]
The reason you would want to go onto an energy standard is because of the outcomes.

But in order to achieve those outcomes you also need a new generation of governance protocols to replace the existing ones.

Since people may consent to whatever protocols they wish, it is in fact possible to bypass - or perhaps reconfigure - the existing intermediated relationships.

Both Public=State and Private=Plc are obsolescent because conventional finance capital is simply unnecessary.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Sep 7th, 2013 at 03:54:49 AM EST
[ Parent ]
How are the outcomes any different from other fixed currency regimes?  You're still fixing the currency to a "commodity" whose value is disconnected from your country's macroeconomic needs in the name of achieving some imaginary "true" value.

We got away from fixed currencies for a reason.  The Eurozone is currently engaged in a fine display of why we did so.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sat Sep 7th, 2013 at 07:00:49 AM EST
[ Parent ]
The problem is that so few people understand money, banking or 'money and banking'. 19th and early 20th century monetary economists such as Irving Fisher, John Maynard Keynes and Allyn Young clearly understood the problems of the gold standard. The UK only really came out of the Long Depression when large quantities of gold started coming out of South African mines. Then prices started rising again. It was the financial collapse of 1873 which led Walter Bagehot to write Lombard Street, describing how the banking system of the day worked to assure that cash flows were available to meet cash demands. Part of the problem we have in understanding the current ongoing crisis is that we have largely forsaken 'the money view' and taken our eyes off the money.

In The New Lombard Street Perry Mehrling describes his view as being based on 'the money view' and notes:

...a fundamental premise of this book is that a "money view" provides the intellectual lens necessary to see clearly the central features of this multidimensional crisis. The reason is simple. It is in the daily operation of the money market that the coherence of the credit system, that vast web of promises to pay, is tested and resolved as cash flows meet cash commitments. The web of interlocking debt commitments, each one a more or less rash promise about an uncertain future, is like a bridge that we collectively spin out into the unknown future toward shores not yet visible. As a banker's bank, the Fed watches over the construction of that bridge at the point where it is most vulnerable, right at the leading edge between present and future. Here failure to make a promised payment can undermine any number of other promised payments, causing the entire web to unravel. (p.2-4)

Mehrling goes on to describe how 'the money view', which was what Walter Bagehot described in the late 19th century in Lombard Street, has come to be eclipsed over the last four decades by 'the economics view' and 'the financial view'. These terms are Mehrling's analytical constructions:
On the one hand we have the view of economics, which resolutely looks through the veil of money to see how the prospects for the present generation depend on the investments in real capital goods that were made by generations past. On the other hand we have the view of finance, which focuses on the present valuations of capital assets, seeing them as dependent entirely on imagined future cash flows projected back into the present.

The Institute for New Economic Thinking has sponsored a course in Money and Banking offered by Perry Mehrling through Barnard College, Columbia University, and available free online through Coursea in which I have enrolled. The first reading assignment are three topics on the history of banking by Allyn Young, available in PDF through the online course. What I read there, combined with what I already knew inspired the above and much more, but I have decided that this material is better the subject of another diary, which I am currently preparing. If I posted the rest of what I have written it might derail Chris's diary and that is not my intent.          

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Sep 7th, 2013 at 04:06:52 PM EST
[ Parent ]
I'm not fixing the currency to anything because neither a commodity nor a unit of currency is a unit of account. A unit of account is a standard unit of measure for value by reference to which commodities, currencies and other value may be exchanged.

If I accept your IOU in exchange for my widget, and Mig accepts it from me in exchange for his gizmo and ARG accepts it from Mig in exchange for a nice lunch and ARG finally presents it to you in exchange for mowing his lawn then all of us will have made a value judgement in respect of your IOU by reference to a unit of account, in this case the abstract $.

Our value judgement will probably have been based upon our judgement of your capacity and willingness to provide goods and services to fulfil your obligations.

In other words, how good your credit is.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Sep 7th, 2013 at 05:02:48 PM EST
[ Parent ]
I'm not fixing the currency to anything because neither a commodity nor a unit of currency is a unit of account. A unit of account is a standard unit of measure for value by reference to which commodities, currencies and other value may be exchanged.
A simple yes/no question: does your idea work just as well if instead of being denominated in energy units (say, in joules), the prepay certificates are denominated in... I don't know, wazeegles?

Finance is the brain [tumour] of the economy
by Carrie (migeru at eurotrib dot com) on Sat Sep 7th, 2013 at 05:19:02 PM EST
[ Parent ]
ChrisCook:
Both Public=State and Private=Plc are obsolescent because conventional finance capital is simply unnecessary.

unnecessary? it's toxic, a baited debt-trap. it's what your mother should have warned you about.

it's like a guest who always takes more than is given, a cold-hearted chiseler who starts off pretending to be in good faith, leaving you to discover different in time as the cog-diss bites deeper, and you start paying interest on the interest with no end in sight, just a growing weight and sense of indenture to rentiers.

you can invent any new way you want, but until capital figures out a way to enslave it, brute force will be used to ensure it gains no traction, while the public's eyes roll and glaze perusing the byzantine arcanity of the language needed to keep the stark truths from being self-evident enough to enrage enough people to a sufficient incandescence that change will bust through like a mushroom through cement.

i think the problem with your energy units has nothing to do with the idea's viability per se, it's that it presupposes the ability of good sense to predominate over the borg's assimilation of the finest mathematicians, probabilists, odds estimators and margin-hunters, all beavering away for all the wrong reasons behind an array of the best liars money can buy.

we are an astonishingly naive, immature species, for the most part successfully programmed to be led by the nose like so many pigs to market.

you have the dubious honour of being a century ahead of your time, at present rates of evolutionary human self-awareness.

that century will largely consist of a few visionaries pointing to a wiser course and explaining the jargon to help mass self-education of the electorate, as (much like how some prisoners use their time in prison to study the law) we pawns use the downtime of unemployment to study exactly how we ended all herded into debt corrals anyway.

and then read Faust again...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sun Sep 8th, 2013 at 05:25:10 AM EST
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