I really like the idea of abundant non-fiat money explained by Douglas Rushkoff: http://www.youtube.com/watch?v=h3z27ZvB2VU
http://www.youtube.com/watch?v=OHMvknT_uk4 Our economy is suffering from scarce money because money is not "worked into existence". But we can also use technology with powerful information processors. So people are connected using a "peer-to-peer" exchange technology.
I really envision currency competition allowing people to choose the monetary system of their choice. And the system I would choose would allow each person to develop a digital account with credentials. People could also voice their demands on their digital account. This information about the supply and demand within the economy will be much more "aware" than any supply and demand calculation available today. Free market barriers exist today. Scarce money is a barrier. And awareness of supply and demand is also a barrier. And through empirical observation - we can begin to notice other barriers... which I have many theories about as well.
It makes no sense to attempt indirect trades with things that aren't scarce.
I suggest you watch this lecture about money from the Mises Institute:
Money And Prices (by Joseph T. Salerno)
We "work our currency into existence". Labor is the currency. And the value of that currency is related to supply and demand information. People will naturally attempt to provide labor that is scarce because it is more valuable.
I am suggesting a change in the money creation mechanism.
A gold backed currency is a barrier to trade. A disabled person has property that can be worked. And another person can work that property to grow crops. They don't need gold. Gold is better than a fiat currency. But we should really work toward a non-fiat currency that is worked into existence. We should not ignore the capabilities of our powerful information processers in doing calculations.
We should not ignore the capabilities of our powerful information processers in doing calculations.
These monetary schemes - no matter how clever - will never work. The fact is that if you own no property the only thing you have left to sell is your labor. Capital theory shows how the accumulation of property (particularly what Austrians call "higher-order goods") leads to increased human productivity and, hence, greater prosperity. Creating a paper money backed by "hours" or some such nonsense will not lift those who own no property out of poverty and empower them to become capitalists. The ultimate appeal of any such system is its potential to redistribute wealth from the rich (capitalists) to the middle class and poor (those who have only their labor to sell). But history shows how all these misguided attempts to "correct" the "imbalances" of society always backfire and make things worse than they ever were. You don't think the Elites have infiltrated every populist redistributionary movement in the last 200 years? You don't think the power-elite can say one thing ("Redistribute wealth to the poor!") while doing another (redistributing even what little wealth the poor might have to the rich)?
No more games. No more clever money games. Get the government out of money production, end the State monetary monopolies and permit people to freely choose what they will use as money.
Clayton -
Clayton - you are discussing what you think we should be doing right now. I am only discussing what I see as the better monetary system. You are talking about a completely relevant - but different topic.
Digital Compensation
Dc should be worked into existence.
The middle man is the market. Labor is invested into the market and digital compensation is created. A construction worker builds a house. A farmer works the greenhouses. The compensation is dependent upon supply and demand calculations. And that compensation is dynamic. The compensation is self aware. The compensation knows how it was created and its value upon creation. The compensation knows its last use in trade, and it knows its value at that time. Over time – the compensation changes value based upon current supply and demand information as it relates to its previous usage.
The value of dc should reflect supply and demand.
Value is determined by supply and demand information. As the information processors become more aware of supply and demand: credit creation is done in recognition of effective value calculations. This is not central planning because the calculation uses variables associated with real supply and demand. If there is no demand for a form of labor – then there is no compensation for that labor. The labor can be recorded. And if that labor becomes valuable in the future, then the digital compensation gains value. The laborers digital account increases in value. Likewise, a digital account can decrease in value over time. And the value of dc is always dependent upon current supply and demand.
There can be trade of dc in existence.
The fluctuating value of a digital compensation is dependent upon its previous exchange. An individual can maintain an account of dc as an investment – but there is risk. It is less risky to continue moving dc because changes in value can be more drastic as more time passes. A construction worker does labor building a house. And the worker is compensated as credits are created. Estimations are used to evaluate the day to day labor of the worker. And because the dc is self-aware: future work by the laborer influences the real-time value of previously acquired dc. This encourages workers to maintain credibility by developing and maintaining a sound reputation.
Property damage can be calculated as a way of reducing the dc within the perpetrator's account. The account can even go negative. Dc can be gifted and it maintains its exchange value based upon its last labor value.
Ideally there is no debt creation.
Debts are risky. Debts can be acquired through a judicial system. And debts can be created between individuals. A farmer can give food to a person without dc. And the dc accounts can go negative. Because the dc is partly or entirely a debt-based creation: it has intrinsic risks. The holder of the negative account may die, become sick, or simply choose to maintain an irresponsible life. The individual who accepts the debt-based dc can not trade that dc until the debts have been accounted for. An individual with a negative account may die, and their organs may be used as assets for compensation.
There can be property damage due to the wilderness. And there are various forms of insurance. We can protect ourselves against floods by using floating houses. This is insurance by design. Individuals may also organize with others who agree to insurance programs. These programs might collect and manage dc in a way that allows people to obtain help from the community if there is a need. Organizations can have negative accounts as well. But entities that accept the debt-based compensation can not use that dc in trades until the debts have been accounted for.
GavinPalmer1984 wrote: "... But we should really work toward a non-fiat currency that is worked into existence. ..."
Ever been to a gold mine?
You might want to participate it the BitCoin economy?
We are the soldiers for righteousnessAnd we are not sent here by the politicians you drink with - L. Dube, rip
Gavin: If you wanted to prove that all modern physics is wrong, you would be well-advised to begin with the language of modern physics. Your manifesto is filled with statements like "The middle man is the market" that are unintelligible.
Clayton - you are doing nothing constructive in this thread.
http://www.digitalcoin.info/Digital_Coin_Introduction.html
http://mises.org/resources/194/The-Theory-of-Money-and-Credit
bbnet: http://mises.org/resources/194/The-Theory-of-Money-and-Credit
I am reading Chapter 2. I really want to figure out how to do value calculations in a way that gives each individual equal influence - to some degree... so that the demands of poor people can equal the demands of rich people. The difference between the poor and rich should be the amount of labor contributed and the quality of that labor. Value calculations should not be dependent upon wealth... and that is the problem I would like to solve.
I don't like fiat. I don't like the inability to work money into existence. And I think we can figure out a way to do value calculations in a more just manner... using networking information technologies.
I feel that Chapter 5 totally disregards "money as information". When you begin to recognize money as information: many of the claims reveal erroneous analysis.
The gain and loss of information most assuredly influences the end product. And as information increases - welfare most certaintly has more potential to increase. Information is capital. Information is valuable.
I guess I need to read "Money and Credit" - by Karl Knies... seems he was on a better course of thought than Mises... considering that Mises did not understand money to be a medium of exchanging information.
Money does convey information through prices. Read the whole book and then refute mises. You cannot cherry pick one thing that you may not be comprehending and reach the conclusion that mises was wrong. That little book you started reading is the definititive source on what money is and how it ties into the rest of economics.
GavinPalmer1984: I guess I need to read "Money and Credit" - by Karl Knies... seems he was on a better course of thought than Mises... considering that Mises did not understand money to be a medium of exchanging information.
Read whatever you want but don't strawman Mises (makes you look like an idiot.)
My Blog: http://www.anarchico.net/
Production is 'anarchistic' - Ludwig von Mises
Chapter 5 - Mises: "The Theory of Money":
The loss of a consumption good or production good results in a loss of human satisfaction; it makes mankind poorer The gain of such a good results in an improvement of the human economic position; it makes mankind richer The same cannot be said of the loss or gain of money.
Money is information. And when you lose information - you lose potential. When you gain information - you gain potential. The value of a computer is influenced by the software within it. The software is information.
I am not saying Mises is wrong in his entirety. But I am saying that he can be very wrong in some of his conclusions because of an erroneous maxim. A maxim that ignores money as information - will produce erroneous conclusions. One of which - I illustrate previously.
Money conveys information through prices. And prices indicate supply and demand information. A person can acquire money through labor, and the money in possession is an informational representation of the person's labor. If the person loses the money - then that information is lost. If the person has money stolen - then the information is misrepresented by attributing the value of one person's labor with the theif.
When we begin to see money as information - we can begin to investigate alternative money that possesses more information, and that information can be machine readable. The value of money might even be calculated based upon awareness of every person's demand prioritiy lists in combination with lists of their capabilities and contributions.
When individuals own the means of production - the demands of those wealthy individuals weigh more than the demands of those who own no means of production: and valuation is less than satisfactory for the society. People accomodate those who have commodities, and the demands of poor able laborers are often ignored.
Shared ownership of resources allows for the laborer to be accomodated for the DIRECT quantity, quality, and "fair market value" of that labor because commodities are not owned. Imagine a form of socialism with stratfication and money: if you can. Imagine a socialism without central planning where individuals engage in contracts as a means of accessing products and services.
I am talking about Free Market Socialism!
How does your socialism solve the calculation problem Gavin?
There are possibly infinite protocols and algorithms. But one such protocol would allow every person the ability to provide a machine-readable priority list of wants, needs, capabilities, and contributions. From collective priority lists, algorithms can be used to calculate value based upon real-time supply and demand information. So there is no central planning because people's demands are used as variables in organizing labor.
I am sure that there are better protocols and algorithms. But I hope you see how the calculation problem is addressed and central plannign is avoided.
This type of cybernetic economy allows for forms of central planning for sustainability. For instance - the availability of fish from the ocean will be artificially determined based upon science. The people who do labor of more quantity, quality, and value - will have more access to ocean fish: allowing for stratification and incentive. In this way - we can integrate science into the market in a way that influences supply and demand calculations.
Your society would be awesome to live in! I would love having to spend all my time constantly updating my list of desires in your super computer as they are constantly changing through time.
At best all you could obtain would be a picture of what everyones value sales WERE at some point in the past. You cannot anticipate changes and you would end up misallocating resources. Making too much of some things and not enough of others. What is your plan to correct the mistakes that will inevitibely happen? How are you going to deal with the ripple effects of one mistake?
I don't know if you are being sarcastic or not - sorry.
There are some things that will be predictably valuable: like a minimum standard of living.
I would not attempt to anticipate changes. Every time the supply and demand lists are changed - there can be a real-time alteration of value calculation.
I like to think that a person's labor credits will change value in real-time as well. Some forms of labor will increase in value over time and some will decrease. So holding on to your labor credits will be a risk.
The cybernetic system would better allocate resources as it become more ware of relevant information.
"The cybernetic system would better allocate resources as it become more ware of relevant information."
Reading this tells me all I need to know to reject your idea out of hand.
.500NE: "The cybernetic system would better allocate resources as it become more ware of relevant information." Reading this tells me all I need to know to reject your idea out of hand.
Care to explain yourself?
The price system efficiently allocates resources as it is well aware of changes in relevant information.
The price mechanism is the result of supply and demand AWARENESS. When you introduce a technology like Angie's list into the economic system, the pricing mechanism can change for the better. The economic system I propose attempts to increase supply and demand awareness to the point where prices are more objective.
How can something that is purely subjective (prices) possibly become "more objective?"
You are dancing with a number of errors, so I picked some of the worst quotes to rebut. I feel that these are the most significant errors and so I selected them. It is not an attempt to cherry-pick your arguments.
""Our economy is suffering from scarce money because money is not "worked into existence".""
We have scarcity of money because money would be worthless without scarcity. If you mean to suggest that there is a "shortage" of money, then you do not understand the divisible nature of money. With fewer dollars, each dollar is worth more, and so the price in dollars of any given item would be less.
""People will naturally attempt to provide labor that is scarce because it is more valuable.""
They do that already. Its called being well-paid or having high prices. This is the signal that your goods/labor are valuable.
""A disabled person has property that can be worked. And another person can work that property to grow crops. They don't need gold.""
No, all they need is a verbal agreement. But what do they do with the crops? They have to trade them for something. So over the many various trades, we discovered that these shiny metals are really useful for representing value, not least because they take labor to bring into a useful form and do not perish. Gold is a money that is worked into existence. So is silver. Also tobacco, salt, and ammunition.
""I really want to figure out how to do value calculations in a way that gives each individual equal influence - to some degree... so that the demands of poor people can equal the demands of rich people. The difference between the poor and rich should be the amount of labor contributed and the quality of that labor. Value calculations should not be dependent upon wealth... and that is the problem I would like to solve.""
Each individual has the ultimate power or influence on any transaction that he or she is a participates in: veto power. The abilitity of that individual to transact with someone else, entails another transaction. In a free system, people would only get rich by providing high amounts of quality labor. That is because wealth is accumulated through a process of efficiently meeting the needs of "demanders" with a supply that is priced lower than the competition. Rest assured, people already use the digital marketplace to supply the demand.
""I feel that Chapter 5 totally disregards "money as information". When you begin to recognize money as information: many of the claims reveal erroneous analysis.""
Money is a store of value. Prices are information. Think about this until you understand it and many of your problems will disappear.
""The loss of a consumption good or production good results in a loss of human satisfaction; it makes mankind poorer The gain of such a good results in an improvement of the human economic position; it makes mankind richer The same cannot be said of the loss or gain of money.""
Mises is correct. If you lived on an island with all the goods in the world, but no currency; plenty of jewelry, but no bullion; and all the paper notes were encased in picture frames and museum cases, would you feel poor? If you could drive your porsche home and get online and see that your bank account balance was $0.00, would you lean back in your leather chair in your mansion and say to your afghan hound "I wish I had some francs in my wallet. Or maybe some pounds. I feel poor with all these luxury goods and no media of exchange."?
""Money conveys information through prices. And prices indicate supply and demand information. A person can acquire money through labor, and the money in possession is an informational representation of the person's labor. If the person loses the money - then that information is lost.""
Actually, the money is the store of value that represents the market value of their previously performed labor. If the money is stolen and spent, the guy who received the stolen money isnt being deceived about anything except the true owner of the money. The value doesnt change, because a thief spent the dollars. This would be a lot easier to understand if you were thinking in terms of real money, but the prevalence of fiats in this culture allows you to abstract money as "information" when it is really pure value. The amount of money is the information aspect.
""When individuals own the means of production - the demands of those wealthy individuals weigh more than the demands of those who own no means of production: and valuation is less than satisfactory for the society. People accomodate those who have commodities, and the demands of poor able laborers are often ignored.""
You are contradicting yourself here, of course the demands of wealthy individuals weigh more, the information aspect of a large amount of money indicates that they should have disproportionate influence. Or did you forget your own theory? Who appointed you the judge of what is best for society? Especially in contravention of the information? I see what your game is, you dont like the information so we should all agree to use personal fiat dollars and destroy information. Lol I kind of regret attempting to educate you but whatever. Just watch the news and see what happens when money stops being scarce.
It really comes down to what you think is fair. I know many of you don't like modern money and support a gold standard. And a gold standard would be more fair because it is not fiat. But I argue that a gold standard still suffers because it is not a zero-sum currency that can be worked into existence.
Gold is a positive-sum currency that is worked into existence. Why do you want to live in a zero-sum world? Do you like seeing people suffer?
I see the market as a functionless noun. The monetary system is a technology used within the market to facilitate organization of supply and demand. I think our modern monetary system is a very outdated technology. I think a cybernetic system can be used to eliminate many barriers that exist within our modern monetary system. When I say "free market" - I recognize "free" as an adjective that attempts to describe a market without barriers to exchange. But "free markets" are impossibilities like "utopia" and "perfection". All we can do is discover and implement better technologies as a means of eliminating barriers. Ancient money, roads, and horse-drawn carriages helped make the market more "free".
Description of a possible algorithm: The algorithm would account for a priority list of demands from every consumer that uses the algorithm. Necessities that allow for a nutritious diet and healthy living conditions would be at the top of the priority list (and might even be assumed to some degree). Some people might have allergies and medical conditions that cause them to have specific necessities. Non-necessities would be less priority than necessities. This accounts for the demands of people. The algorithm would also require information regarding the known processes that can be used to provide the products and services to each consumer. Among these processes - there will be indirect demand. Some processes will be more efficient than others: allowing for equal or higher quality with equal or less resources. This indirect demand can also account for knowledge related to sustainability and "fairness". The algorithm must also be aware of the available resources - raw materials and means of production. The algorithm will need to be aware of information regarding the raw materials: like quality, quantity, and accessibility (position and density for instance). The algorithm will need to be aware of the means of production - those tools used to create the product and service. Remember that labor is one of those tools. And the algorithm must be aware of quantity, quality, and accessibility information with regard to the means of production. The algorithm must maintain records of information and past calculations of information as a means of recognizing when and how discoveries manifest. These records can also allow for education as a means of analyzing relevant data, making hypotheses, and performing experiments. The recorded information regarding a person's labor contributions are used to make calculations regarding quantity, quality, and accessibility of an individual's current labor. The recorded information can be used to maintain knowledge regarding relevant information for all resources. Hayek supported currency competition. And I would consider each algorithm to be a form of currency that could be in competition with other algorithms. Hayek also spoke of the economic calculation problem. The computer-internet illiterate Hayek assumed that central planning requires a person or group of people to have much power and make decisions without the decentralized information regarding consumer supply and demand. He was correct in thinking that this information is naturally decentralized. But he naturally ignored the capabilities of technology. Modern networking technology can allow decentralized systems to interact very quickly - allowing for dynamic centralization of the decentralized information. And modern computers can handle this massive amount of information. The cybernetic system allows for a much better price mechanism. Hayek described the free price system as something of spontaneous order... like human language. But spontaneous order is not ideal. The language of humans is hardly machine readable. We have developed programming languages and communications protocols that allow for machine readability. These programming languages are developed with the intention of compensating for human's natural limitations. The free price system can likewise be replaced by machine readable languages and protocols to account for human's natural limitations.
What limitations do you refer to? Whats the problem? Are you literally envisioning a sea of computers that not only notices that I am running low on m&m's and didnt buy any, but through some strange concidence, and tha annual halloween surge, there is going to be a run on m&m's tonight, and shifts the shipments of m&m's to my city, because it knows that the neighboring cities have plenty of m&m's?
Malachi:What limitations do you refer to? Whats the problem? Are you literally envisioning a sea of computers that not only notices that I am running low on m&m's and didnt buy any, but through some strange concidence, and tha annual halloween surge, there is going to be a run on m&m's tonight, and shifts the shipments of m&m's to my city, because it knows that the neighboring cities have plenty of m&m's?
I am saying that a computer system can do this stuff. A computer system can make better calculations than humans. People who wanted to be guaranteed m&m's would let the network know they want m&m's. The computer system would let you know how to get your m&m's.
This is a great example because there are times when a store runs out of m&m's. And the customer goes shopping for m&m's only to find out that the product is unavailable.
But a computer system can do so much more than this. The computer system can take into account real-time demand information: to allow for immediate production and distribution of products.
What is money? What are prices? What is value? Until you can clearly define all three, go no further.
Bert: What is money? What are prices? What is value? Until you can clearly define all three, go no further.
Money is information concerning the value of past labor. A standardized unit for measuring value allows for exchange of various types of labor - each type having different values. A price indicates value. And the biggest question is: what is value?
Value is a calculation dependent upon supply and demand information. Valuations become more accurate as awareness of relevant supply and demand information increases.
Money is information concerning the value of past labor. A standardized unit for measuring value allows for exchange of various types of labor - each type having different values. A price indicates value. And the biggest question is: what is value? Value is a calculation dependent upon supply and demand information. Valuations become more accurate as awareness of relevant supply and demand information increases.
Money is a medium of exchange, and stands alone from the value of past labor (if any it reflects current market prices).
A price is a reflection of the market's value on that particular good or service (I could expand on this, but I'll give the most basic statement I can).
Value is subjective. There's no calculation on supply or demand information. It's subjective to the individual for what they are willing to pay for that particular service/good in the present (or future). Supply can cause scarcity, so the value may rise or drop depending on what's available, and how many want to demand, you can't calculate this, but the value is reflected through the prices of goods/services.
The same can be said of money just like any other good, if there is an abundance of money it's value, or worth, drops.
Work with those definitions, and then form statement that's coherent to whatever hypothesis you have.
Value is subjective. There's no calculation on supply or demand information. It's subjective to the individual for what they are willing to pay for that particular service/good in the present (or future). Supply can cause scarcity, so the value may rise or drop depending on what's available, and how many want to demand, you can't calculate this, but the value is reflected through the prices of goods/services. The same can be said of money just like any other good, if there is an abundance of money it's value, or worth, drops.
In a relatively blind monetary system where we are not aware of supply and demand information - value is very much subjective. But as we begin to use technology to obtain relevant supply and demand information: value becomes more objective. Suppy and demand information is objective. And that information can be communicated in a language that is machine readable. Computers can then make calculations on that information. And I call those "calculations of objective value".
In my system - the money supply increases as the amount of unused products increase.
Are you saying that even if I have knowledge of all supply and demand my preference values would be objective? I can tell you that value will remain subjective, regardless. Unless you are completely confused on this topic (which could be the case). Even if all consumers had knowledge of supply and demand, all their preferences would be subjective, because I highly doubt every customer would agree on the same price and has the same preferences and demands as everyone else.