From: tzeruch@ceddec.com
Date: Tue, 24 Jun 1997 06:58:20 +0800
To: "Vladimir Z. Nuri" <vznuri@netcom.com>
Subject: Re: new money systems
In-Reply-To: <199706200103.SAA06874@netcom11.netcom.com>
Message-ID: <97Jun23.185147edt.32257@brickwall.ceddec.com>
MIME-Version: 1.0
Content-Type: text/plain



On Thu, 19 Jun 1997, Vladimir Z. Nuri wrote:

Money is different than "wealth"

Start with "Money Mischief" by Milton Freidman for an interesting look at
the role of money.

Money has three functions:

1. as a medium of exchange (as opposed to barter)
2. as a store of wealth
3. as a measure of value (1 cow = $X, 1 sheep = $Y, 1 pig = $Z, instead of
   1 cow = 3.6 sheep).

> 1. why is it that even as our economy becomes "more productive", we
> have to work harder? families now require more than one wage earner
> when before they did not?

> 2. there are statistics that show in earlier times, it took [x]
> farmers to produce the food for the population, such that the ratio
> was something like 1 to 2 or so. now the ratio is nearly 1 to 60
> or greater. why does this not translate into more free time for
> everyone? could it be there is a means by which some entity can
> siphon off our spare energy and time?

If anyone was to adopt a 1920's lifestyle (few cars, no telephone or
electricity, no indoor plumbing in many places) they would have plenty
left over.  As long as consumption is the goal, you can keep working
longer to satisfy more marginal wants.  If I can convince a couple that
they "need" two luxury cars, they will work the longer hours.  If they are
satisfied with something less, they may get by with only one earner. 

However, you are correct in the sense that only half of today's income
goes to actually satisfying our wants, the other half goes to satisfy the
government.  In the 1950 you had a 1% taxation rate, and few regulations
(cars without air bags, computers, and catalytic converters are cheaper).
If you want to go back to 1950, and make your own decisions instead of
letting the government do so, you would have these things restored.

We work "harder" and have less free time only in the sense that we prefer
working longer hours and having expensive things and less free time to
working shorter hours and having more free time.

> 3. if someone is siphoning off energy from *everyone* simultaneously,
> could it be detected in our system? how?

It is called economic inefficiency (the electrical analogy might be
resistance).  If tarriffs are imposed on an import, I end up paying the
domestic producers a little more.  If some regulation forces an employer
to spend $100,000 printing manuals or something, he is spending that to
satisfy the government and not me.  And then there is the obvious "tax",
which you pay regardless of who sends the actual amount to the government
(e.g. the "employer's" half of FICA).

> what's the solution? some are looking toward "alternative" or "local"
> currencies. there are some cases such that local communities experienced
> more efficient economies when they resorted to local currencies out
> of desperation. 

The problem is one of exchange.  A local currency (banks used to issue
their own notes) is only good in that locality.  How do I buy a California
pistachio with Michigan Money?  Or with British Pounds for that matter. 
In all cases you get an exchange rate.  There will be a varying ratio
between any two given fiat currencies, and even two currencies based on
(i.e. redeemable in) different commodities.  A coupon for "one free
hamburger" is a type of currency.  You will sell it at a discount (less
than face value - the price of the hamburger) to someone who wants a
hamburger if you prefer a salad.  In that sense each fast-food place could
issue their own currency (or Shell with their prepaid gasoline cards), but
they would all be discounted from the cash value - why should I pay $1 for
a $1 coupon good only at McDonalds?  If I eat there often, I may pay $9
for 10 $1 coupons.  Another place where they already exist are "barter
clubs" as barter points.

But all the above won't fix any of your above points.  You will work
harder and be taxed on barter points, hamburger coupons, or anything else
based on their (hopefully discounted) value in dollars.  I will still have
to spend more of whatever to get a car with an airbag which I don't want.

The only reason we have national currencies is because nations have
different ideas about how large their inflation rates and defecits should
be and about trade.  That way they can control the supply of that currency
and require changing into that currency to do trade.

The archetypical digital monitary note would be exchangable for a fixed
amount of gold (only because that is considered by most people as "money" 
in a true form, but you could theoretically use any nonperishable
commodity).  As long as they were honored, it would be the same as having
a bullion coin of that amount.  (it could also be exchanged for another
equal note for those schemes that need to track "spent"  digital chunks). 

Having 1000 other currencies would mean that each currency would have a
fluctuating value relative to each other (great if you are an
arbitrageur), and to gold, so why would I want to say I have 5000
eco-greenstamp units instead of 2 grams gold when everyone would recognize
the value of the latter, but only locals the value of the former?