The Future Monetary Ecosystem

youtube-Logo-2gc2reddit-logoOff the keyboard of Graham Barnes

Follow us on Twitter @doomstead666
Friend us on Facebook

Published on FEASTA on June 8, 2017

Discuss this article at the Economics Table inside the Diner

Over the next generation or two, there will be increasingly visible turf wars between money-suppliers with four very different motivations. It’s not really a fair fight, but it isn’t as one-sided as it used to be.

The spoils

The general term for the benefit associated with the issuance of a currency is seigniorage. Historically, the term has been associated with the profit made by a government from issuing currency, especially the difference between the face value of coins and their production costs. At the risk of outraging pedants we can use the term more broadly to include a wide range of benefits accruing to the issuer.

The spoils may be in the form of direct financial benefit (like the interest charged on credit-money created ex-nihilo). Or they may be indirect, in the form of influence that can in due course be traded or cashed-in (for example preferentially allocating credit to favoured partners).

There is, however, a further dimension. Money congeals as wealth. The location of wealth signals the ‘revealed preferences’ of the underlying money-system. Sure, there’s luck, inheritance and sometimes energy, enterprise and hard work. But mainly there’s the money system.

The motivations

a) OneWorld. The cherished belief of a certain section of the international elites that governance is best left to those who know best (i.e. them), and that societal and economic diversity is somewhat of a nuisance, entailing the never-ending energy-sapping suppression of a series of hare-brained ‘alternatives’. If this seems like a conspiracy-too-far for you, feel free to skip this section but remember that just because you’re paranoid doesn’t mean you aren’t being persecuted.

This direction of travel can be portrayed as a natural extension of monetary scope – if money is ideally a universal lubricant of exchange, then the more universal the better. Focal points for monitoring progress of this ideation are: Bilderberg, the future of the euro, and (most importantly) the evolution of the SDR (Special Drawing Rights) [1,2], the IMF’s ‘international reserve asset‘.

b) National Sovereignty. The nation state is the traditional home of the fiat currency, and indeed gives those currencies their primary raison d’etre – the compulsory requirement to pay your taxes in them. Unfortunately national governments have had a well-documented history of abusing their money-issuance privilege – usually via the simple expedient of issuing tons of it before elections to create a feel-good effect; occasionally in more subtle ways.

The current arrangement of outsourcing money-as-credit creation to the banks is at the subtle end of the spectrum (see The Bank-State Bargain [3]). It obviates the need for governments to have to bother much with real national strategies (typically characterised as ‘picking winners’ rather than ‘sustaining the planet for future generations’). They can concentrate on tinkering.

It’s not quite as attractive as printing money and putting it straight into your own account, but the revolving doors arrrangement ensures that political apprenticeships can often be traded for corporate gravy. Put it into your mates’ accounts and wait for payback. The arrangement is underpinned by a sense of inmpotence as national governments race to the bottom (regulation, tax) in response to corporate threats of absenting themselves. TINA.

But this gradual diminution of sovereign influence does beg the question – can’t corporations do the money thing themselves and cut out the sovereign middle man.

c) Private Money. As is often said, anyone can create money – the problem is getting it accepted as payment. Private entities cannot coerce quite like a government, but they increasingly have huge market power that can be brought to bear if they think they can profit from operating a currency. They can use this power to construct unique value propositions. And are likely to do so.

The potential for the likes of Amazon, Facebook, Apple and Google to operate their own currencies has been given a boost by the cryptocurrency phenomenon. All are already actively looking at payment systems and it seems likely that the next generation competition for commercial banks will come primarily from out of sector. The crypto-angle has opened up the possibility of currencies that cannot easily be closed down by the state, as many of the successful alternative currrencies of the 1930s eventually were. Of course private for profit currencies are unlikely to make use of the fully distributed consensus model of Bitcoin, being more interested in permissioned blockchains with the gatekeepers being – yes Google, Facebook, Apple or Amazon. But the possibilities of the blockchain are encouraging disruptive thinking.

One starting point for initiatives in this area is Hayek’s writing on the denationalisation of money [4]. Hayek generally thought that competition was the answer to everything, and he saw money as no exception. He thought monetary policy to be ‘neither desirable nor possible’, and identified government as the major source of economic instability. And while his writing predates our current over-financialised economy, he certainly anticipated the ‘parasitic’ secondary activities that could attach themselves to a monetary monopoly and saw competing currencies as a solution to that.

So while Hayek’s for-profit currencies generally come from a very different political place than value-based Intentional Currencies [5] and today’s complementary currencies, they share the core belief that ‘A money deliberately controlled in supply by an agency whose self-interest forced it to satisfy the wishes of the users might be best.’

d) Peer-controlled money. It is difficult to title this section. The vision is similar to Hayek’s but the ‘wishes of the users’ are determined in a co-operative way and the money is controlled not by a for-profit ‘agency’ but by the users themselves through various forms of co-operative institutions and governance mechanisms (including platform co-ops). I have previously expressed dissatisfaction with the adjectives ‘alternative’, ‘complementary’ and ‘community’; and ‘intentional’ can include a for-profit motive if objectives are explicitly set out, as can ‘value-based’. It can be argued that this form of money is the purest because it is directly controlled by its users; by the people who give the currency value by accepting it in exchange.

The Battleground

We can indulge the late Mr Hayek a bit further by exploring the competitive landscape, both between and within currency models . If we plot on a matrix the reaction of an *established* money-type to an *emerging* (or re-emerging) money-type we can surface a wide range of conflictual issues, including the regulation of private currencies (b/c),acceptable units of account for national taxation (c/b), national debt slavery as political influence (a/b) and the use of currencies as weapons in financial wars (b/b). Interesting stuff but far too much for a short article.

What follows therefore is a summary of two key battleground issues affecting peer-controlled money, (which is a category of special interest to Feasta).

The Ultimate Potential of Shared Value (c/d)

The core idea behind Intentional Currencies [5] is that the value-set shared by the relevant user community should be made explicit and will act as a cohesive force as a currency and its governance institutions develop side by side. However experience with intentional communities in general leads us to be a little cautious not to overstate the power of this idea. All too often communities that on the face of it have strong shared values can fracture and fragment because of personality clashes and power trips. Against this background the ‘honest profit’ metric has its attractions, (as has hierarchical decision-making). Profit is a hard verifiable metric, reassuringly value-free. From this perspective old money provides a service for us – it enables economic interaction with people we dont want to break bread with. It absolves us from social interactions.

Thus if this group of money-systems is to scale and replicate sufficiently to become a central progressive economic and societal force, the evolution of thinking around shared value is a critical success factor. Somehow it has to translate integral fellow-feeling into pragmatic mechanisms for exchange and do so authoritatively but in a co-operative fashion.

Selectivity vs Universality (b/d)

A related issue is that the restricted scope of a value-led currency – the potential preferencing of certain transactions – prejudices the variety of the portfolio of goods and services that are available. The concepts of the Preferenced Domain [6] and the Deprecated Domain [7] are attempts to flesh out this line of thinking. It is possible there will need to be an Intermediate Domain where we are relatively neutral about some goods and services and want to find ways to include them to enrich the offering, but may not want to extend full community benefit to their providers.

Conclusions

Activists in the Peer-Controlled currency space will generally welcome an increasing diversity in the developing monetary ecosystem. Thus the exchange of ideas about how value-led currencies can develop should in itself be a key factor in their progress.

There is certainly a window of opportunity. Decision makers in the higher reaches of international financial institutions will be more concerned with the power relationship with national currencies, so peer-controlled money will be somewhat off radar for while. An ‘offgrid money’ mindset may be helpful. But the same window is open for private for-profit moneys, and multinationals are already fluent in international finance.

One factor working to close the window is the increasing appreciation of the significance of digital/ crypto currency which is already sensitising established international institutions to potentially disruptive developments. Whether more democratic user-controlled currencies can establish a secure foothold before they are re-challenged by a new breed of national/ international digital moneys remains to be seen. No doubt many of the ICOs [8] coming to market now will turn out to be Ponzi schemes, but some are already seeking to differentiate themselves via value-statements (as opposed to get-rich-quick statements) and there may well be one or two that show us the shape of the peer-controlled currencies of the future.

References

[1]: IMF Factsheet: Special Drawing Rights (SDR)
http://www.imf.org/external/np/exr/facts/sdr.htm
[2]: One World, One Bank, One Currency : Jim Rickards on the SDR
https://dailyreckoning.com/one-world-one-bank-one-currency/
[3]: The Bank-State Bargain : Graham Barnes. How commercial banks facilitate deniability, debt-peonage-management and financial warmongering in return for massive anti-capitalist subsidies.
http://www.zerohedge.com/news/2015-04-05/bank-state-bargain-breaking-basic-rules-capitalism
[4]: Denationalisation of Money: The Argument Refined. An Analysis of the Theory and Practice of Concurrent Currencies. F.A Hayek published by IEA in 1990 and reissued by The Mises Institute 2009
[5] Intentional Currencies : Graham Barnes
http://www.resilience.org/tag/intentionalcurrencies/
& Designing an Intentional Currency : Graham Barnes
http://www.feasta.org/2016/07/13/designing-an-intentional-currency/
[6] Designer Currencies and the Preferenced Domain : Graham Barnes
http://www.feasta.org/2013/11/19/designer-currencies-and-the-preferenced-domain/
[7] The Deprecated Domain: the pros and cons of designed exclusion : Graham Barnes
http://www.feasta.org/2014/07/10/the-deprecated-domain-the-pros-and-cons-of-designed-exclusion/
[8] Initial Coin Offerings
https://en.wikipedia.org/wiki/Initial_coin_offering

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *

Support the Diner
Search the Diner
Surveys & Podcasts

NEW SURVEY

Renewable Energy

VISIT AND FOLLOW US ON DINER SOUNDCLOUD

" As a daily reader of all of the doomsday blogs, e.g. the Diner, Nature Bats Last, Zerohedge, Scribbler, etc… I must say that I most look forward to your “off the microphone” rants. Your analysis, insights, and conclusions are always logical, well supported, and clearly articulated – a trifecta not frequently achieved."- Joe D
Archives
Global Diners

View Full Diner Stats

Global Population Stats

Enter a Country Name for full Population & Demographic Statistics

Lake Mead Watch

http://si.wsj.net/public/resources/images/NA-BX686_LakeMe_G_20130816175615.jpg

loading

Inside the Diner

Quote from: DoctorWhom on Today at 04:59:05 PMQuote from: RE on Today at 04:47:04 PMQuote from: DoctorWhom on Today at 02:36:49 PM[quote author=RE link=topi...

Quote from: agelbert on Today at 05:06:09 PMEddie said, Quote Congratulations and thanks for all you do, AG. I have often wondered about the spiritual lives of dogs. I think they almost always di...

Quote from: David B. on Today at 04:53:44 PMWhen you buy the original bring the chain in to a huskvarna or stihl dealer and have them make you one up.  That's what I did.  I'm really not sure of the guage, it ended up be...

I had more errands today for getting SaVannah ready for her Summer Road Adventures this year here on the Last Great Frontier.  I found a couple of things online available for store pickup, the 12V charger for the Ryobi cordless power tools at Home Depo...

This kind of attack is so simple a child could do it:Starting with a list of the most common passwords (like "password", "123456", "qwerty"), you try and login to the account, and keep trying until your list runs out.  If you succeed, POP3 will downlo...

Diner Twitter feed
Knarf’s Knewz

 The Cape Grim Baseline Air Pollution Station, in [...]

Several Ohio government websites were hacked with [...]

Wind turbines at Avangrid Renewables’ Baffin Wind [...]

Diner Newz Feeds
  • Surly
  • Agelbert
  • Knarf
  • Golden Oxen
  • Frostbite Falls

Quote from: Uncle Bob on June 26, 2017, 06:29:06 A [...]

Quote from: Uncle Bob on June 26, 2017, 06:29:06 A [...]

Donald has decided after all his isolationist, de- [...]

Quote from: Surly1 on June 26, 2017, 05:31:15 PMQu [...]

Quote from: agelbert on June 26, 2017, 05:06:09 PM [...]

 The Cape Grim Baseline Air Pollution Station, in [...]

Several Ohio government websites were hacked with [...]

Wind turbines at Avangrid Renewables’ Baffin Wind [...]

Liens Filed Against the Federal Reserve: The Key t [...]

All this sabre rattling & the best gold can do [...]

The whole nuclear war thing must be a deliberate s [...]

Quote from: azozeo on April 25, 2017, 01:59:58 PMT [...]

There may not be a banking system after next week. [...]

 Science & EnvironmentHow cats conquered the a [...]

There is an very old aphorism that says " It [...]

Alternate Perspectives
  • Two Ice Floes
  • Jumping Jack Flash
  • From Filmers to Farmers

The Greater Depression By Cognitive Dissonance   Once or twice a month Mrs. Cog and I pack up the ca [...]

SkyNet is Sentient and Will Destroy Your Investments and Pension By Cognitive Dissonance     Do you [...]

Poo Be Gone…Please! By Cognitive Dissonance (And now for a little humor.) For countless millions of [...]

I don't normally publish my rants. By  definition they are an excess of emotion regardless of h [...]

Imperial Conditioning Fear…the Controlling Meme By Cognitive Dissonance   Admittedly we are a bit is [...]

Event Update For 2017-06-24http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2017-06-23http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2017-06-22http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2017-06-21http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Event Update For 2017-06-20http://jumpingjackflashhypothesis.blogspot.com/2012/02/jumping-jack-flash-hypothesis-its-gas.html Th [...]

Now it's data that makes the world go round? It's comfortably accepted by many that what w [...]

I left off last week's post – "Money Doesn't Grow on Trees, Industrial-Scale Renewabl [...]

When you wish upon a star the Blue Fairy sends Tinker Bell, who plants a magic seed, which grows int [...]

Wendell Berry: "What I stand for is what I stand on"; Fanfare Ciocărlia: "What we pla [...]

The sounds of the Romanian countryside, unleashed by Fanfare Ciocărlia for twenty years and counting [...]

Daily Doom Photo

man-watching-tv

Sustainability
  • Peak Surfer
  • SUN
  • Transition Voice

Concrete Solutions"We want to take the atmosphere back to its pre-industrial chemistry as quickly as possible. Fo [...]

Ground Up" This is where biochar is today in agriculture. Its a better mousetrap in the midst of a huge [...]

Paleofuturism"We haven’t hit the temperature levels we can expect from current CO2 levels, and by the time w [...]

The Way"Patterns of regenerative thinking augur regenerative patterns of living and the reverse is als [...]

Rollerblading the Halls of Power"This is what solutions look like. Some are very large. Some are very small. They are all impor [...]

The folks at Windward have been doing great work at living sustainably for many years now.  Part of [...]

 The Daily SUN☼ Building a Better Tomorrow by Sustaining Universal Needs April 3, 2017 Powering Down [...]

Off the keyboard of Bob Montgomery Follow us on Twitter @doomstead666 Friend us on Facebook Publishe [...]

Visit SUN on Facebook Here [...]

In the echo-sphere of political punditry consensus forms rapidly, gels, and then, in short order…cal [...]

Discussions with figures from Noam Chomsky and Peter Senge to Thich Nhat Hanh and the Dalai Lama off [...]

Lefty Greenies have some laudable ideas. Why is it then that they don't bother to really build [...]

Democracy and politics would be messy business even if all participants were saints. But America doe [...]

A new book argues that, in order to survive climate change and peak oil, the global money economy ne [...]

Top Commentariats
  • Our Finite World
  • Economic Undertow

My longer earlier response disappeared somehow. I see you've thought about this with great thor [...]

Give us another post Jeremy .... come on .... I know you can't resist... Burning More Coal! [...]

I have about as much hope for a soft landing ... as I have for an egg held above my head --- and dro [...]

Welcome to new day, added 's' to 'http' so everyone should feel more secure ... [...]

Just to be clear about all the different administrations mentioned; All the while not one thing that [...]

Clintons job was to keep the party going, BJs under the desk for all! Bushs job was to tell jokes an [...]

Hey Steve, why don't you look into becoming REs neighbor. After the great power down, you can l [...]

Think Vermont. All you need is a wood stove and an internet connection. I'll bet you have a lot [...]

RE Economics

Going Cashless

Off the keyboard of RE Follow us on Twitter @doomstead666...

Simplifying the Final Countdown

Off the keyboard of RE Follow us on Twitter @doomstead666...

Bond Market Collapse and the Banning of Cash

Off the microphone of RE Follow us on Twitter @doomstead666...

Do Central Bankers Recognize there is NO GROWTH?

Discuss this article @ the ECONOMICS TABLE inside the...

Singularity of the Dollar

Off the Keyboard of RE Follow us on Twitter @doomstead666...

Kurrency Kollapse: To Print or Not To Print?

Off the microphone of RE Follow us on Twitter @doomstead666...

SWISSIE CAPITULATION!

Off the microphone of RE Follow us on Twitter @doomstead666...

Of Heat Sinks & Debt Sinks: A Thermodynamic View of Money

Off the keyboard of RE Follow us on Twitter @doomstead666...

Merry Doomy Christmas

Off the keyboard of RE Follow us on Twitter @doomstead666...

Peak Customers: The Final Liquidation Sale

Off the keyboard of RE Follow us on Twitter @doomstead666...

Collapse Fiction
Useful Links
Technical Journals

Future climate forcing data at the temporal and spatial scales needed to drive hydrologic models are [...]

Implementation of greenhouse gas (GHG) abatement strategies often ends up as the responsibility of m [...]

While there exists extensive assessment of urban heat, we observe myriad methods for describing ther [...]

Usnic acid contents in acetone extracts of 31 samples of lichen Parmelia flexilis collected from dif [...]

Follow on our http://www.doomsteaddiner.net/forum/