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A MODEST PROPOSAL FOR A FEW STEPS TOWARD EQUALITY


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We spend much of our lifetimes observing the world around us and trying to understand what we see through our explanations. When there are no reasonable explanations we settle on “that’s just the way the world is, (that people are)”. With deeper insight we might realize what could be the causative factors for the trends that we observe.

One obvious thing we do see is the sharp division between wellbeing and deprivation. We tend to think that some people are better than others, and they know how to make more out of their lives. We do acknowledge some political, cultural or religious structures that slant the odds for who succeeds and who struggles. Some people start out with money, and some start with nothing.

1. World money fulfills many needs. We probably can't imagine to what degree the world money system is molding our society. The one function that has come to dominate global society is that money is designed to duplicate itself. This was a good thing in the past, so that capital could more easily accumulate, and be reinvested into the community.

Now wealth has lost its loyalty to any one community (or nation) and it roves the world looking for the highest return. The highest returns are transitory, so short term goals and free movement of wealth are the rule. Even though every human being lives in some community, it is no longer the objective that their accumulations should boost their community. In fact communities are played off against each other to further divide ownership of both real and virtual assets. This ensures that the dividing mechanism is always being strengthened, and it has created colossal imbalances in humanity. Nothing imaginable seems to stop this trend.

The interwoven money structures have become indispensable in so many ways. There is no way to alter them with a direct frontal attack. Any such attempt will create many side effects and contrary flows, such that life for the majority would become impossible. We are held hostage by this, because it can function both as a system and be manipulated as a weapon.

2. World money can be analyzed so that one can see all the functions of money, and see which features of the money system support or denigrate each function. Taking two top functions; for people who live by their labor the most important function is the medium of exchange. Each time currency is spent and re-spent it represents someone’s job.

For people who live by their investments, methods of saving and capital creation are the most important functions, so that those savings can be loaned for interest received.

Actually savings are not the principal way to generate capital. But let's use it as a simplified marker to explain the movement of capital away from the periphery. Those with savings have the assets to qualify for loans, that actually do create world capital. So where they focus their energy is where the money moves.

Saving (as in this metaphor), takes money out of circulation and it is contrary to spending and re-spending. If it is taken out of one community and invested into another, it is doubly damaging to the deprived community. That is what is happening everywhere in the world under the name of Urbanization. Urbanization simply means impoverishing the periphery by contrary capital flows. After that, what’s left but to move to the big city.

3. If flows of money divide our society, could another money system have a different impact. First let’s state that we are not searching for an optimum theory, unless we can envision a way that it could become practicable. Therefore any system that will make some improvement, must operate in parallel to the dominant system. 

In fact the name that has been coined is “complimentary currency”. They are systems designed to function along side of, and in spite of the deteriorating (for the majority), aspects of the main world system. (Don’t get me wrong, in western society most people are doing pretty good. I am just looking at the undeniable trends of the growing segments under stress.)

We are saying that money concentrates wealth, by allowing some people more access to it, and keeping it scarce somewhere else. I am not saying all people should all have the same assets. I am talking about access to the medium of exchange. Therefore the money system also concentrates poverty. This is probably in equal measure to the concentrated wealth, (although it is not a necessary ratio for my premise). Poverty is not a thing, but a condition. Poverty is the absence of a thing, it's the absence money.

What then seems obvious is to inject some kind of medium of exchange into pockets of poverty, and to manage it (by its design), so that the flows outward from that pocket are minimized. That is also simple. People will only accept money if they can spend it on something they need. If money is local, you can only spend it locally. You spend it with those enterprises that will take it, which are those that will then re-spend it in the region.

4. Remember this is called complimentary currency. There is some normal money in the region, or else everyone would already be dead. And there will continue to be normal money. Regional money is just a fraction of the total exchanges. Everybody will need some of each. Many people will not need to involve at all in the new system.

In fact the whole idea is proposed only because there is an overwhelming need. Regional money has to solve a basic problem, and not be initiated just as a good idea. There must be surplus capacity both of production and of labor. New currency must put that surplus capacity back to work. Unemployed (and underemployed) people have to be hired. Otherwise most of the exercise is useless.

5. A certain number of people are going to receive a certain fraction of new money. They won’t be able to easily satisfy all of their daily needs with this money. What can’t be bought with their source of new currency could be produced locally in small quantities. Therefore the first opportunity is to revitalize local production capacity to produce items for import-substitution. This is the same in the nation, in the state or in the city and metropolitan area. Foods, household goods, personal care items, light building materials, even generic or OTC drugs could be produced, depending on what resources are available, and how big the region is. All it takes is that some things could be produced locally, in enough quantities to absorb the new money.

• Generally domestic consumption is not enough to keep a business going.

• But now this must be a new model of light and flexible production.

• Maybe one week of production is enough for a few months supply, and then move on to another product.

• Who carries the inventory?  It is new money, with new credit facilities and zero or low interest.

• Who buys the limited selection, maybe old fashion and perhaps more expensive?

• Those people that have limited national currency have no choice.

• There is no convincing required, because now they are unemployed, tomorrow they will have some new money.

• Why not make new products that have even more value added built into them?

• Make spare parts to keep old cars and machines running longer without importing new.

• Remember there is still national currency with which most people would buy.

6. Local government has to get involved to make it work. Some public agency that has power to tax has to accept the new money for all or part of some fees. This is to pin a value on the new medium. The money that they would take in, they would spend out on maintenance and modernization of public infrastructure and even for part of their administrative duties.

Government employees that take some fraction of new-money in their salary could receive a temporary matching new-money bonus. The stipulation could be that they have to do home improvements with that extra salary, hire some builders, workmen, handymen or landscapers to improve their homes, build a garage or repair something. Spending is the only option because there is no advantage to saving it.

New people that are receiving new money are adding to local demand. Only this isn’t the old formula where that demand is satisfied by importing some more goods. Outsiders don’t want local money, which is of no use to them. Therefore local merchants and local producers have a fraction of new business, but their challenge is how to make good out of it.

It only takes a fraction of new money to short circuit the traditional leakage of money, and to revitalize a region. Supplies of national currency will be more and more utilized to bring in non-local raw materials, and technological necessities that are not feasible for local production. The ratio of new money to old money (how much to keep in circulation), would be periodically adjusted to manage these flows, and by how much economic expansion is absorbing surplus capacity.

This local area production can be exported into other regions.

7. What are the obstacles to make this happen for various societies.

a) First it is a given that now there is excess production capacity and a growing number of unemployed people. The greater this recession, the more likely the program is to succeed. Lacking that, it is just an honorable hobby, or pumping a new money on top of traditional money, which is already doing its job.

b) If a society has a vigorous social assistance, then there is a great inertia to getting off of that assistance. Usually accepting other income disqualifies you from the program.

c) If a society has pension rules that you will receive a percentage of your last wage as a pension, nobody will accept a lower wage than they were getting pre-recession.

d) If a society has guaranteed worker’s rights and union contracts, payments in new money won’t fit with those rules, and will not be adopted.

e) If a marginal community has solved poverty with increased crime and drug or substance trafficking, it is probably not going to get weaned off of these excesses by a new kind of money. (Can you steal it? If it is digital you could hack it, but not for long. It is spent locally, so we know you.)

f) If a society has no tradition of self-help, small commercial enterprise, handicraft or private contractor/consultancies, people won’t give a try to a new opportunity. They will just demand more external guarantees.

8. Under-employed people will probably give it a go to get some extra side work. Secondary activities, caregivers, pet care, and beauty operators will probably use it to absorb spare time. Restaurants and services could use it for promotions and loyalty programs. Food stores who rely on local farmers, and the farmers will take it. Big chain stores might take a fraction of it in order to get it out of circulation and maintain market share.

Retired people will probably choose to participate. They want to keep involved anyway. But their retirement is mostly in traditional money.

The new money would add all the community benefits catalogued in other less critical complimentary currencies, community pride, getting to know neighbors, caring for others, local trading of services, rewards given for ecological behavior, co-production of services.

But if it is not multiplying the regional output, it is more of a hobby, and has to be continually marketed to get more users to replace those that have stopped participating.

Somebody with a deep local interest has to be the major booster. That is not going to be a national or international corporation. It has to be local government, small local business and perhaps employee leveraged buyouts that would be focused on this particular community. Some or all of these entities should be capitalized with an initial stock of new money, and spend-in this money with their employees and suppliers. The fractions of new-money / old- money in their prices have to be flexible in order to source the outside raw materials that each entity needs in order to produce.

Nothing about the idea has to be sold-in and nobody has to be convinced to use the system. If there are buyers, there will be sellers. If the system fulfills a burning need, users will flock to it. Regional balances of financial flows will automatically self-regulate, and that surplus will begin a growth cycle. Local money capitalization can just as easily stimulate export products sold for national money. Young people will find jobs at home. Families will remain united and self help networks will grow.

9. Just how much of this money should be created, and who gets to have it first? How is credit born and retired? What is the form of it and how is it traded. Paper bills, coupons, credit and debit cards, computer trading, smart phones?

These are technological question that I do not propose to answer here.

• Credit creation is fundamental for regional development.

• The medium of exchange function has more priority than the saving function.

• In fact the saving function can continue in the national currency.

• New money can even be penalized for hoarding (for saving).

• Paper bills can be for older people and tourists, or for souvenir packages.

• Smart phone payment for the bulk of the users. • Computer trading for B2B.

• Really, the currency is no good for internet purchases, because it isn’t spendable outside of the region.

• Buying into the currency with legal tender causes no harm, but shouldn’t be the only basis for participating. If you can’t make a salary in new money, then what’s the use?

• It doesn’t need to be universal, and a high percentage of trades is not even the goal. There is a critical mass to get enough spending options.

• Easy facility to convert out of new currency might be useful if there aren’t enough spending options. Better to get more options to spend.

• Somewhere, someone that has a use for it, will make a market to convert it. It’s not a worry of the system.

10. Money continues to divide our world and the stress builds. Up until now in many countries there still are certain rights to operate a parallel currency. Somewhere the need will be great enough that people will really support an alternative system. It is not only one alternative that is probable. Currency systems of smaller regions within regions are going to be useful. Poverty concentrates, and because it's less mobile it is more visible than wealth, which we know concentrates. So small regions will have the ideal conditions to band together to trade. Bankrupt provinces or states could have money systems and bankrupt nations can create specialty moneys. Diversity in currency systems will bring more resilience and sustainability into our world.

If societies with alternative moneys start to automatically restructure themselves according to these newly built-in values, we will see what kind of world we will be living in. 

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"Money continues to divide

"Money continues to divide our world"

Money doesn't divide, humans divide.

If anything at all, fiat currency (via a federal reserve banking system) causes division. Fiat currency enables corrupt bureaucratic systems to fund corporatism/crony capitalism, excessive military expansion and excessive bureaucratic expansion. Fiat currency is disadvantageous to small business and lower income earners, through constant inflation which depletes meager savings through depleted purchasing power and an inability to compete with Big government and Big industry in the market place.

The ability to print currency at will (through the federal reserve banking system), undermines the currency value, resulting in an inevitable currency crash, as the market inevitably loses confidence in the currencie's strength to maintain value.

For example, if the government can print money at whim, then the value of the currency that I hole onto for future purchasing power, becomes increasingly valueless as the currency gross supply increases.

My confidence in that currency depletes and I start looking for something that is much more dependable, such as gold or silver etc, which will increase in value in comparison the depleting currency value.

It will take an increasing amount of dollars for example, to buy the same weight of gold or silver, as the value of the dollar has decreased inline with the amount of inflation.

Inflation actually ought to be really perceived as deflation, a deflating currency value.

As the amount of currency is pumped into a system, the value of that currency deflates, and consequently savings and purchasing power deflates.

If we pump into a system, double the amount of currency, then each dollar will be only worth 50 cents for example.

This will affect the low income earner and the small business owner inproportionately much more than a massive multinational corporation (which can manipulate markets via government regulation), and also a massive bureaucracy benefiting from quantitative easing/currency debasing.

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World Money Has Predictable Flows

Social science is the study of human movement and behavior. Many theories are developed. Still the world is not explained sufficiently to predict what will happen, nor what to do about it.

Even when we see what is happening as clearly as daylight, we still don’t know what to do about it. Most of the applications of our theories about global warming, sustainable use of resources, economic development and increased equality are frustrated. All measurements point to continuing downward trends.

Another way to look at life might be to suggest that humanity is a fluid medium that takes the shape of the container that it is poured into. Then instead of studying people, we could study the containers that they inhabit. People try to change their “container” by joining a different religion, working at an NGO or green business, supporting charities, voting for moderate parties, trying to improve their society, but the fight goes on.

All of these containers which I have just mentioned, are in another container, which gives form to every human activity. That is the world money system, which has harsh values built into it and spills over into every human endeavor.

I wish to use this story to illustrate possibilities for incremental corrections to the excesses of this system. 

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With Heart Felt Thanks, Richard Miller.

  

 

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