Why can’t we use money?

khim · Post by **khim** » 06 Sep 2005, 11:28

isenhand wrote:That was about energy accounting not money.

There are difference ? Read this. Replace gold with "future energy" and reread this again. You'll see nothing will really change. To do any sort of planning you need to know not only how much energy was spent (this is calculable) but also how much energy will be available. And this is immeausurable - you can only guess but next Katrina can break the rig and make all calculations moot. And smaller disruptions (like drought) will produce smaller changes. But the end result will be the same: number on paper (or in computer memory) after some time will have little relation to reality. "Energy money" will go the way "normal money" passed.

In fact such experiment was conducted - in Soviet Union (if you'll strip ideology that's exactly what was done there). After 75 years it was deemed failure. Computers will not really help much: there are way to many exponential problems.

isenhand wrote: << Yes. But what this has to do with money ? Amount of money available in today's system is just a number. It's not limited by anything.>>

Yes, it is. Its creation is limited by the banks and by Governments. Even in today?s system it is not possible to create an infinite amount of money without bringing the whole system to a halt. Even if it is just numbers in a bank.

It's impossible to create infinite amount of money instantly. I fail to see why it's impossible to create more and more money (3-5% more per year, for example) endlessly.

isenhand wrote: << Yes, we need to balance the system. I fail to see why we should abandon money to do so.>>

Because it forces growth, throw interest, profit seeking, savings etc. If it is growing, it is not balanced.

Weak argument: everything you said does happen in virtual money space where there are no limits and there are no need to keep anything in balance there. Real world is connected to this world via adjuster and it's real world where balance is needed, not money space.

MacG · Post by **MacG** » 06 Sep 2005, 11:52

khim wrote: I fail to see why it's impossible to create more and more money (3-5% more per year, for example) endlessly.

You seem to be unfamiliar with som basic mathematical concepts such as exponential growth. Yes, it is indeed possible to create money exponentially, but the result quickly become ridiculous. Beside, you dont seem to understand the origin of inflation and how it is created.

I find your posts to be agressive and extremely ignorant and find no reason to engage in further "discussions" on these terms. Cheers, bye.

isenhand · Post by **isenhand** » 06 Sep 2005, 11:53

<<There are difference ?>>

Yes, there is. In one you?re a measuring something that is an actual variable of the system. In the other you control variable does not measure what your system is actually doing.

<< but also how much energy will be available. And this is immeausurable - you can only guess but next Katrina can break the rig and make all calculations moot.>>

You can do a bit better than guess. You can do an estimate of how much energy you have available best of what energy producers you actually have (which is more than guessing). And yes, you never know what the future will bring, hence the idea to adjust the accounting at the end of a two year period.

<< In fact such experiment was conducted - in Soviet Union (if you'll strip ideology that's exactly what was done there).>>

No, they still used money and a centralised economic planning, not the same thing at all.

<< It's impossible to create infinite amount of money instantly. I fail to see why it's impossible to create more and more money (3-5% more per year, for example) endlessly. >>

Because you will sooner or later run into physical limits. You make more money, for what point?

<< Real world is connected to this world via adjuster and it's real world where balance is needed, not money space.>>

And money is connected to the real world.

Bootstrapper · Post by **Bootstrapper** » 06 Sep 2005, 15:14

The lesson I've drawn from history is that wherever civilisation has emerged, the invention of money has always followed. A 'moneyless' society may be possible, if the circumstances were just right but those circumstances can't be guaranteed.

Wherever money has been invented (or re- invented) clever, unscrupulous people have found ways to abuse it. It stands to reason that any monetary system is vulnerable to abuse. I contend that monolithic systems that rely on central 'administration' are far more vulnerable to manipulation and abuse than 'distributed' systems of limited scope that rely on individuals or small groups policing themselves. Yes, local currencies can and have been abused but the economic damage done is very limited and the culprits are almost always caught (and punished). Compare this to the almost unlimited damage that abuse of the current system is capable of effecting - global economic meltdown.

Of course there are risks associated with accepting scrip from any and all individuals, but the consequences are far less than the legalised fraud we live with now. If goods were destroyed or stolen after their owner issued scrip the community could agree to allow the issuer to defer redemption or make some other arrangements to satisfy their obligations. Try getting that sort of cooperation from a central bank!

PowerSwitchJames · Post by **PowerSwitchJames** » 06 Sep 2005, 16:57

They didn't use money in Star Trek and look what they achieved - galactic peace and plenty for everyone.

beev · Post by **beev** » 06 Sep 2005, 17:00

When considering why the numbers in a monetary system need to increase perpetually, it is important to consider the fact that there are constantly more goods & services in circulaton. Remember that money is simply a credit or an IOU (promise to pay the bearer....) If you live in a small village, say, and you only have a small amount of goods & services in circulation, you only need a small amount of little pieces of paper that say "IOU" on them (though they need to be official or everybody would just start making their own regardless of what they exchange).

Now consider the size of your village (and the amount of trading within) doubles overnight. Will you need to have twice as many IOUs in circulation? Of course you will, unless you suddenly want everything to start operating at half speed.

That's not likely to happen, though. What's more likely is that your village will grow gradually. Much as you may hate the idea of growth, you can't get away from the fact that the same principle still applies. You need more cash/credits/fish/whatever in circulation to account for the fact that your population is getting bigger and there is more stuff going on.

I understand that the idea of a balanced society may involve having a stable population. Presumably that is desirable, especally as you can then do away with the evil of "growth". But how do you control your population without infringing on people's basic human rights?

Bootstrapper · Post by **Bootstrapper** » 07 Sep 2005, 03:47

PowerSwitchJames wrote:They didn't use money in Star Trek and look what they achieved - galactic peace and plenty for everyone.

Well, one out of two ain't bad

Bootstrapper · Post by **Bootstrapper** » 07 Sep 2005, 04:49

G'day, Beev

The total volume of goods in any market varies with time, for example the seasons. Bona-fide money varies with the volume of goods and services available. When there's more goods and services, the money supply expands and when there's less goods, the money supply shrinks. Contrast this to the money system we have now. Official money isn't redeemable for anything except more official money!. It enters the system but has no way to leave it. The current 'cycles' of inflation and deflation are the symptom of a money supply that's unresponsive to the rise and fall of the volume of goods and services in the economy.

This is why it's essential that currency be issued by all who wish to trade, provided they redeem it. This mechanism automatically spends currency into the market as and when the volume of goods rises and removes surplus money from circulation when it falls. Under such a system, deflation and inflation can't occur, except under unusual circumstances such as a natural disaster.

It doesn't matter who writes scrip, as long as the writer honors the commitment to redeem it and the seller agrees to accept it in payment for his goods or services. Notice there's no compulsion here, just a commitment on the part of the issuer to exchange goods for his note at some future date. There's no government oversight or legal tender laws required, just a voluntary agreement between between the two parties to the trade. No wonder governments hate the idea!

It's been demonstrated that, in the absence of other influences, a population will voluntarily restrain it's birthrate as the general level of wellbeing increases. So, if you want a stable population, the most equitable way to achieve it is to ensure everyone (not just a priveleged elite) has all their basic needs (food, clothing, shelter, security, income etc.) satisfied, in full. A bona-fide monetary system goes a long way toward achieving this.

isenhand · Post by **isenhand** » 07 Sep 2005, 06:03

PowerSwitchJames wrote:They didn't use money in Star Trek and look what they achieved - galactic peace and plenty for everyone.

Sounds like a technocracy

isenhand · Post by **isenhand** » 07 Sep 2005, 06:05

Bootstrapper wrote:The lesson I've drawn from history is that wherever civilisation has emerged, the invention of money has always followed. A 'moneyless' society may be possible, if the circumstances were just right but those circumstances can't be guaranteed.

I think so too

Bootstrapper wrote: Wherever money has been invented (or re- invented) clever, unscrupulous people have found ways to abuse it. It stands to reason that any monetary system is vulnerable to abuse.

Who invents the money? Is it not the ? unscrupulous people ? who abuse it? Thus, is it not the case that money goes wrong from it very introduction?

isenhand · Post by **isenhand** » 07 Sep 2005, 06:55

beev wrote: I understand that the idea of a balanced society may involve having a stable population. Presumably that is desirable, especally as you can then do away with the evil of "growth". But how do you control your population without infringing on people's basic human rights?

A very good question! I tend to like the idea of engineering the system so that people natural behaviour is the more desirable behaviour. Not sure how that would work with population. What Bootstrapper says would fall under that category. Failing that the next level down would be education and then if that fails there is law and it?s enforcement but I would hope that things would never get to that point.

But another way to look at things is to say that the population should remain within bounds. It has a maximum and a minimum level for a given ecosystem and you maintain a balance within that ecosystem. If the population gets too large then you could move to another ?ecosystem?. That could be building artificial habitats or colonisation of space etc. Then you could move the excess population to the colonies.

These are just thoughts. Really, this becomes a people problem so that the people who live in such a future society should decide themselves what to do.

Bootstrapper · Post by **Bootstrapper** » 08 Sep 2005, 04:38

isenhand wrote:Who invents the money? Is it not the ? unscrupulous people ? who abuse it? Thus, is it not the case that money goes wrong from it very introduction?

Excellent point Isenhand.

Historically, currencies have been imposed on populations by governments because that's where the power is at. It's no exaggeration to say that the pinnacle of power in any society is the exclusive privelege to issue it's money. No wonder governments and central banks guard this privelege so jealously! This guarantees that every official currency has been (and will be) abused - by the very officials that issue it. Too much power, in too few hands! I'd say that the 'official currency' experiment can be considered a failure, don't you?

The difference with local currency is that it comes from the community - from below, not above. The rules are agreed on by the people creating and using it. This implies that they understand how it works and by extension, are aware of how it can be abused and defrauded. Also, the limited (geographic) scope of local currencies ensures the effects of fraud are contained, much like the watertight bulkheads in a ship contain flooding, to prevent the adverse effects spreading through the wider economy. Financial disasters can (and will) happen but they will be local, not national.

It will probably take the onset of a great calamity - A PO induced TEC or the 'Greater Depression' to stimulate communities to experiment with local currencies (or alternatives to money altogether), once official currency becomes less valuable than bog rolls!

MacG · Post by **MacG** » 08 Sep 2005, 07:40

Bootstrapper wrote: Historically, currencies have been imposed on populations by governments because that's where the power is at. It's no exaggeration to say that the pinnacle of power in any society is the exclusive privelege to issue it's money

Schhhh..! Not so loud! This is a kind of thinking which MANY people have died for speaking loud about. I suggest protective colouring and flight levels below radar. "Gift economy" is for example a better term than "local currency".

Bootstrapper · Post by **Bootstrapper** » 08 Sep 2005, 09:20

Schhhh..! Not so loud! This is a kind of thinking which MANY people have died for speaking loud about.

You mean, perceiving the truth?

khim · Post by **khim** » 08 Sep 2005, 11:16

Bootstrapper wrote:The difference with local currency is that it comes from the community - from below, not above. The rules are agreed on by the people creating and using it. This implies that they understand how it works and by extension, are aware of how it can be abused and defrauded. Also, the limited (geographic) scope of local currencies ensures the effects of fraud are contained, much like the watertight bulkheads in a ship contain flooding, to prevent the adverse effects spreading through the wider economy. Financial disasters can (and will) happen but they will be local, not national.

This one (good) side of the coid. The other (bad) side is that when local society goes down as the whole (New Orleans is prime example but decline can be more gradual as well) noone from outside will help them: their currency becomes useless since local population can not give nothing to outsiders. It happened in the past many times, it happens now (small African countries or Nauru, for example) and it will happen in the future.

There are always trade-offs: with local currency you are reducing risk of global disaster and increasing risk of local disaster - what is better: frequent but localized disasters or unfrequent but global disasters ?

Plus sime things are impossible with local currency (like computers or space flight). These are of course good things but are we paying too big price for them in form of inefficiency of globalized economy ? Tough question: localized economies will be inefficient as well - but in different places.