Some general currency-value thinking.

jos boersema

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Dec 19, 2009, 9:38:17 AM12/19/09

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Needed for a fiat currency:
- The fulfillment of a need/desire that can be delivered in return
for the money.
- The physical money itself.
- A method of destroying counter fitted money.

If someone is willing to work in exchange for a note, he/she could
print a currency in that note (IOU). Someone could print a note saying

That I-owe-you-this note can be traded around. In theory it could trade
globally, in reality it only has highly local value.

Susan can print that note from nothing, and then buy a cup of coffee
with it. The cafe owner can trade it to the store for a half liter of
milk, who can go to Susan to have his bike fixed. If Susan doesn't
comply with the bill, she's shot (just kidding.)

This money is always latched unto some person. If that person dies,
that currency is dead.

To make it abstract is difficult because why would a third party bother
to fix someone its tire when a note is shown that says 'value is one
bike tire fixed,' and what then should happen with the note. However
the Susan notes could function as real barter between third parties,
because as long as Susan is alive and some faith is put into that she
can fix a tire and would, the note has a value.

I suppose the obvious thing to do is: Susan will expand her operation,
open a tire repair shop that can fix 100 tires a day. This way Susan
corporation could spend a lot of notes, who will drop in value if too
many are issued causing long waiting times. The benefit for the markets
in general is that while Susan may want a cup of coffee, but the cafe
owner might not even own a bike and wants milk, the notes become the
lubrication that connects the disparaging needs of various trading
actors (the essential function of money in trade). People may not need
a Susan note for themselves, but may know someone who might want it,
Then the money starts to work like it should (though Susan notes would
probably not nearly be enough to provide the markets with enough
currency, since its total value is quite small and can't be expanded at
will).

But what if Susan Corporation became "Susan Variety of Services," Susan
issues notes, in return for which "Susan Variety of Services," provides
a wide range of services, say basically covering 10% of the entire
markets in a variety of venues. Suposedly then they could at some
point issue enough notes to satisfy the need for trading money in the
whole area/group ? Since they'd always perform a service in exchange
for a note, their notes are good value. You could even get all sorts
of services denoted in a variety of prices on the now abstract notes
that carry value numbers. Chances are good everyone will have some
use for those notes one day or the other, and if not them then someone
they want to trade with, etc.

You could even have several such competing Variety of Services
groups issuing a variety of currencies into the same economy, who go up
and down relative to each other, depending on how well the services are
done and what you can get for a certain value in a certain note.

Obviously a note would be checked for authenticity when delivered into
the Services group. The people working for the Variety Services group
get payed in the notes, who they trade into the economy to people who
expect to get services in exchange back (the backing of the note is
services, a promise to deliver a service.)

So I guess providing work means you could launch a currency, the more
work you do and the greater the variety and quality, the more currency
you can spend into circulation, going from 'weird asset,' to marginal,
a big part of the markets traded through your notes, to saturation of
the market: everything traded by your notes. I have no idea how much
work that would require, it will depend on how often people actually
trade in their currency for services. If they never do, then you can
issue a currency without any work; if they do all the time maybe your
Variety Services group would encompass 50% of all the work done in an
area.

Social contract:
----------------

It may also work to do a sort of social-contract thing: everyone in
a group agrees that they will pay every week 10,- in currency, or
they will do some serious chores for the community. A government is
established, with adequate democracy, who will print notes. Why would
anyone, bother with these notes: those in the contract will at least
some of the time want them, because they need at least 10,- to pay
the taxation 'or else do the chores.' Since these in the contract
want the currency, the notes can be flapped about in their face for
trade: 'you give me 25 carrots or I won't give you your note.'

It seems that in such a system you may not need a Variety Services
group, that work is being done by the tax-payers.

This leaves the problem of why would people agree to a contract to
pay taxes: an obvious solution is that the Government provides them
with a set of services they like to purchase. Not purchase individually
but on ongoingly getting services and ongoingly paying money every
week, even if they don't take out any service. The benefit is that the
Government could then engage in community services that may not be
directly linked to any singel person, such as maintenance of public
roads, making up food safety standards, policing the street, installing
a Judiciary, etc etc.

In a limited-contract currency where some people are in the contract
and others not, the money could still function if it encompasses enough
people so that there's enough currency for the whole economy (that
people who work for that money work for, giving it its value even
between non-contracted third and fourth parties). In this case the
services would only be delivered to the tax-paying people, why else
would they bother paying taxes. That then means the services provided,
will again be individually targeted and not general. Then one could
say the Government keeps tabs on how much services one person has
already gotten.

If everyone is in the contract and pays taxes, the services could
be general purpose (all roads, not just private driveways; all shops
and streets patrolled not just those of the few tax payers.)

The people in that Government would again be willing to work for the
Government, being payed in that currency and knowing they can exchange
that for services with the tax-payers who want it for paying taxes,
and third-parties who know the tax payers want it (value spreading).

That is the system used by fiat currency nations.
Only thing to keep that good is: don't over-print the currency, make
sure taxes are payed and then re-inserted as payement for Government
done services.

IOW it is 'you can issue a currency, if you are willing to work for it.'
It seems possible that it would work in very small groups too, clearly
it already works for entire multi-million people nation with universal
tax obligation.

In a very small group of say 300 persons, the money system could
function once some sort of series of services is found that can be
delivered in exchange for either traded money (more private/free model)
or regular tax payements (more general/universal model). Once enough
services that are wanted are found, based on that you could issue a
currency ?

If the currency is purely universal taxation, you probably don't even
need to provide a service anymore, because the key is you take the money
back in. If you want to take it in under negotiated trades you'd have
to put out a service for each amount of money. If you tax it back by
force you don't need to put up a service anymore, though if you don't
you're probably going to be faced with armed revolution ... (as that
currency would be little more then a tool for a crime syndicate, who
can use the currency needed by all for taxation to plunder the economy
at will.)

Translating that into a model for a tiny group: the 'chore penalty'
would put an upper limit on the amount of services someone still having
to acquire the money to pay taxes will be willing to do for the last
bits of money around at the end of a week, preventing extreme value
fluctuation from the money supply nearly drying out all of a sudden
(very small economy might have total money in circulation fluctuate
a lot right?). You'd need some sort of 'hub' that issues the money,
test it for counterfit on return, acquires tax payments, penalizes
non-payers, and probably provides services in return. Maybe a tax
system doesn't work well for a very small group, but the Variety
Services approach might be better because it is more apparent how
much value a note exactly is (10,- is cleaning a home, etc). Makes it
easier to trade to know what you'll get, especially if in a tiny economy
the total money supply might fluctuate daily/weekly by triple digits.

(I admit I'm not too sure about this, though the tax-system + legal
tender law works.)

People always talk about 'commodity' money, but this would be a 'service
backed' money, which seems in principle even closer to the essence of
economics, which is trade in effort, work, and not the trade in objects
(which only function quite well in the markets because they are results
of work?).

[QUOTE]
http://www.marketskeptics.com/2009/04/us-states-start-printing-their-own.html
U.S. states start to print their own currencies
09.04.2009
Many U.S. communities are creating their own currencies now. They try to
help consumers and companies to fight the global financial crisis and the
recession.
[IMG]
U.S. states start to print their own currencies

The idea, borrowed from the Depression era when the currencies were known
as "scrip", is designed to boost local spending and keep money circulating
within the community.
Typically, a group of businesses print a new currency which shoppers can
then buy at a discount - typically one dollar will cost 90 to 95 cents -
and spend at full value with participating companies.

Some of the currencies have been around for years but the recent economic
downturn has encouraged others to follow suit. According to some
estimates, there are now more than 75 local currency systems across the
country.

Others include the Ithaca Hours in upstate New York and the Plenty in
North Carolina.

(...)

[/QUOTE]
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jos boersema

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Dec 20, 2009, 5:43:33 AM12/20/09

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On 2009-12-20, no_...@void.nul <no_...@void.nul> wrote:

> Why not just trade a goat, chicken, rocking chair or a pig for work
> done?

I'm hoping you are smart enough to find the answer, it is actually in
the above also. It's not that hard. Leftists must learn how to think,
that has never happened in all of history (as the anarchist and marxist
movements existence proves), but it is the only way forward.

Good luck. Don't be discouraged by your apparent ignorance, all
beginnings are difficult, and economics is really quite an interesting
and varied subject of study that isn't really all that obvious on casual
observation (contrary to what capitalists, anarchists and marxists seem
to 'think').

Why not have a system where people trade around what they have made or
have in their hand ? Well indeed, why not ? Can you not find the answer
to that question ?

Message has been deleted

jos boersema

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Dec 20, 2009, 1:32:23 PM12/20/09

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On 2009-12-20, no_...@void.nul <no_...@void.nul> wrote:

> That's what I said. You fix my car. I give you something of value. IE
> a pig

But I don't want a pig.

Thanks for persuing this, great. Keep at it, that's the key.
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