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Occupy Economy: The case for soft money

Money is a tool to facilitate exchange.

Money follows, like everything else here on this physical plane, the principles of yin and yang. There is "hard" (yang) money and there is "soft" (yin) money. At this time, the world is dominated by yang money. My purpose with this article is to convince you that we need to find a better balance in matters of exchange and economics.


Money.jpg


Do we need money at all?

There are two systems that have historically been used and that are - to varying degrees - still in use today, that allow us to exchange the fruits of our toil and those we appropriate from nature, without the use of money.

There is the gift, which does not require an immediate return. Actually, it's nuanced. Some gifts are freely given without any expectation of return, but if we are talking about a "gift economy", usually the expectation would be that everyone, in some way or another, plays ball. That means, you can't just be a freeloader. Even in a gift economy, there is some expectation for all participants to pull their weight, meaning to participate in the giving. People who only receive and never give will find themselves marginalized, and rightly so. Flows do need to be balanced. If you only inflow (receive) and never get to the outflow part (the giving), things tend to get stuck. The inflow will stop sooner or later. The point is that, even in a gift economy, the principle of exchange cannot be violated with impunity.

Sacred Economics with Charles Eisenstein - A Short Film about the gift economy from Ian MacKenzie on Vimeo.

Then there is barter. In a barter economy, we also need no money. The exchange is direct. The needs of one are matched with the offerings of another. It is rather cumbersome at times to find a match, and it isn't always successful, but barter has been with us throughout history. It has served us well where money was not available or its use was not practical. Today, there are various initiatives to revive the barter economy. Computers allow us to provide better tools to match offerings and needs. Some of those tools merely let you choose from a larger number of diverse offerings. Others extend the barter concept from a one-on-one exchange to a circle of linked exchanges. A gives to B, who gives to C, who gives to D, who in turn gives to A. Circle closed. Barter has one big problem though. It generally has no time dimension. It is not easy, in a barter economy, to receive something today and to give maybe next week, or to provide your fruit to someone today when you actually don't need anything of theirs right away. That is where money comes in...

- - -

Money is a placeholder in the business of exchange. It is a little reminder to everyone that you have already given and that, tomorrow, you are within your rights to ask that the exchange be completed. Money allows us to add the missing time dimension to barter-type exchanges.

How did money develop?

At first, it was a little object, anything commonly available, not of great value itself, but sufficiently distinct so that it could be given from one person to another to signify there was an open cycle of exchange. Sea shells, pieces of metal, wooden tally sticks ... there are thousands of forms money could and did historically take.

As time passed, money was formalized. The form of money became different. The material used was something more scarce, and the creation of money was restricted to the ruler of the day, the king, the duke, the emperor. Gold and silver as money came into use when scarcity of the physical form of money became important. At the same time as money became scarce and its issuance became the prerogative of the ruler, a caste of assistants or "money handlers" developed who, at first, used to have their banks (tables or market stalls) in the places where people went to buy and sell, the markets. Gradually, money handlers became a respected profession and we had bankers.

"Hard currency"

In the hands of the bankers and over a period of time, money was transformed. What started out as a soft, rather commonly available means of exchange, became - without anyone paying much notice - a more and more scarce "resource". Money itself became a commodity. It hardened. It transformed, in almost imperceptible steps, from yin to yang. Today, money is highly controlled, it is scarce, and it is firmly in the hands of the bankers. Its control passed from the hands of the ruler, into the hands of the banks. We didn't really notice, because the central banks, which control the issue of money today, are a clever fig leaf. Politicians were fooled into a belief that the central banks are actually emanations of the governments. But nothing could be further from the truth. Every country has a central bank, but central banks do no longer respond to politics. They are independent, privately owned institutions that jealously defend their separate nature, their independence from political "meddling".

And with that independence came a price. Money all of a sudden had a price. Those who had money used the banks to defend their "property". Yes, money has become property. So much so, that today, economists tell us that that money has a dual function. It serves as a means of exchange, but it also serves as a "store of value".

The price of money

The price of money, you may have guessed it, is called "interest". If you want my money, you have to pay for using it. Every year, you have to give me a percentage of the money you are using, and unless you can repay me, that price of money is added to increase what I originally gave you. Not only has money turned into a resource, a property, it acquired a quality of life, it could now grow. And grow it did. It became one of the few industries that kept growing and growing. But of course it did not, by itself, produce anything. It only "allowed" us to produce - for a price.

Money's growth, like a cancer, started out slow but then it took off. The tumor got a life of its own. It started growing exponentially. And in the process, it changed our economy, that started out as a happy state of production and exchange between and among ourselves, into a war economy. It forced us into using ever more of our precious natural resources to chase a mirage ... continuing growth for its own sake. Economists today tell politicians that in order for everyone to survive, in order to avoid certain collapse, the economy must grow. And so here we are, in this present time, doing our darndest to "make the economy grow". But all we are doing is feeding the monster. We are feeding a vicious cycle of wars, of environmental destruction, and ultimately the destruction of ourselves as a species.

The arrangement is so clever and so pervasive that it is actually at the verge of destroying itself. Someone has likened the economy to a pump, a giant machine that is transferring both our resources and our products into the hands of a tiny moneyed elite. Here is how it works:

The wealth pump

95% or more of all money existing today is not in the form of cash. It is bank created "credit" for which interest has to be paid as long as it exists. Banks are credit mediators. Anyone who needs money first needs collateral. You have a house, a car, a regular paycheck, a factory. You go to the bank to take a loan. The bank takes ownership of your collateral and now calls that an asset of the bank. Against that asset, the bank issues a loan in the form of an account entry on your account. The bank has the asset, you have the money. You work. If it takes you 10 years to pay back what the bank gave you, you have just paid twice the amount of the original loan to the bank. The bank made a clean 100% profit on that loan in a relatively short ten years. Not bad for merely providing some digits. Remember, the bank had nothing to lose, it owned your house, until you finished paying.

Now apply that to a whole economy, a whole country's economic activity. As I said, and you can check into that, some 95% of all money in circulation is bank originated loans and it circulates not as cash but as digits in computer systems. Consider that 95% as one big mortgage. It is really made up of millions of loans that constantly get issued and re-paid, but for the purposes of a country's economy, we can say it is a loan from the commercial banks. Let ten years pass, and the economy-as-a-whole must pay to the banks that provided the loan a sum roughly equivalent to the amount of the loan. Do you start to see the wealth pump at work now?

As the economists are telling us, the economy must grow. That means, the economy's mortgage with the banks also must grow. That mortgage is our constant companion. There is no way to pay it back - ever - unless we want to shut down the economy, which clearly we don't want to. So with every per cent of economic growth, we are digging a larger hole. We must now pay more for the privilege of using money, or face disaster. We must cut more trees, extract more oil, grow more food, produce more consumer goods, all in the name of keeping going. It is the end stage of growth, brought about by our continued ignorance of some important facts about economic affairs.

And what if the banks get in trouble by giving "bad loans"? Don't worry. Our governments are ready to "bail them out" by putting a government-backed mortgage on our future... we have seen that in these last few years.

So what is the solution?

Clearly, "hard currency" has become an unsustainable proposition.

So - drum roll - enter ...

"Soft money"

We cannot change the situation overnight. There is neither the necessary political agreement nor the will to do so. We must continue to toil under the hard money yoke for some time. But do not despair. There IS something we can do. We must find a way to put the yin back into money and the economy - slowly.

With politicians unable and economists and the holders of all that money unwilling to change, it is encumbent on us to do that, any way we can.

Lucky for us, much of the change we are looking for is already well underway. A friend on facebook put it in a nutshell. His comment was in reply to an item, which says that continuing robotization of production will put us all out of work soon. It was introduced with the following quote:

"Too often we treat things as separate subjects, not realizing the interconnected nature of our reality. This mistake has made us weak and vulnerable. Over the last 70 years, we have set the stage of our own demise, we have become increasingly discontent, the quality of our relationships has fallen, and we have lost track of what really matters. Today, everything is amazing, and nobody is happy. It's time to take a step back and think about where we are going."

Robot.jpg

The article: Robots will steal your job, but that's okay: How to Survive the Coming Economic Collapse


The comment which nails it, was put in these words:

scenario 1 : the rich get everything, made by robots, protected by robots. everyone else dies.

scenario 2 : p2p production transforms our economy into one where things are made on-demand, locally and sustainably. Everyone is an independent artisan and owner-operator of their specialised fabrication technology.

The crucial point is right now we get to CHOOSE one or the other of these scenarios. But there's no historical / technological determinism which makes one of these scenarios the "right" one. If we want 2, then we have to fight for it. Starting right now.

We need to work - through inventing the technology in a p2p friendly manner; creating the institutions like hackspaces that support p2p learning and making; promoting local currencies and resilient manufacturing; ensuring local food; resisting laws that try to use "intellectual property" to lock up the ownership of all production processes in the hands of the rich; resisting laws that try to take our general purpose computers and 3d printers away from us because they're "too dangerous" for the general public. And resisting companies that do the same by telling us that the public is too stupid to manage their own computer. Etc. etc.

There is NO technological determinism that makes any prediction of the future the right one. As Alan Kay (almost) said : "The ONLY way to predict the future is to MAKE it" Your responsibility starts here.\

We already have soft money - to a degree. There are a myriad of local exchange systems springing up, the reformers are busy. Yet, it is easy for all those efforts to be marginalized. For one, they are split into many small initiatives, none of them set to take on the juggernaut. So I think something is missing: a universal standard for soft money that allows us to all work together seemlessly, regardless of distance, regardless of what we are putting our efforts into in our quest to bring about that new world, and that new economy.

"Fuzzy" money?

When the hard (yang) logic of programming languages proved inadequate for complex jobs, someone invented a different kind of logic: Fuzzy logic. And it turns out fuzzy logic is much better suited to run appliances and a number of complicated jobs than the rigid logic of yes/no that came before it.

So the question arose: If fuzzy logic is superior to the yes/no binary type, could this same principle apply to money? Could fuzzy money with no fixed value be better suited to constructing a p2p world than our normal, government-backed "hard" currencies?

How can we put that fuzzy quality into money? So far, most of the efforts to make a local currency have tried to compete with hard money, capturing some of the transactions that fell by the wayside because there was no way to give them value in the context of today's economy. Most of them struggle to, in some way, emulate the "value" part of the hard currencies, even to the extent of fixing their own value in terms of a dollar, a euro or at least something similar like an hour of work's worth.

It seems to me that it would be best to get away from that kind of thinking, that we should let the value of our yin currency float freely. Let it be worth whatever we think it should be worth, in whatever local context we find ourselves. No fixing of value, as that would inexorably draw us back into the world of yang, of banks, of profits, of having to increase economic activity for its own sake. Not that we should not be busy, that we shouldn't produce. But that should be everyone's own decision, not one forced by the kind of money we use.

Whatchamacallit?

We need a name for our new money. I was thinking to call the units "fuzzies", being that the whole idea is for the currency to incorporate the quality of being many-valued. But I am not so sure about that either. Since most local currencies are made by people giving each other credit, there is a good case for just calling them "credits". There is also a precedent in some of the stories of science fiction, where credits were in universal use. So for now, I will use credits as a working name. A better one may come along, and there is no resistance to changing, if that is what emerges.

How to keep track of those credits?

There already is an emerging standard for keeping track of, and for easily exchanging ... credits. It is called Web Credits.

http://www.webcredits.org/

The initiators of Web Credits have joined in a W3C Community and Business Group.

"The purpose of the Web Payments Community Group is to discuss, research, prototype, and create working systems that enable Universal Payment for the Web. The goal is to create a safe, decentralized system and a set of open, patent and royalty-free specifications that allow people on the Web to send each other money as easily as they exchange instant messages and e-mail today. The group will focus on transforming the way we reward each other on the Web as well as how we organize financial resources to enhance our personal lives and pursue endeavors that improve upon the human condition."

Manu Sporny, one of the initiators of the Web Payments Community Group explains in more detail what the purpose and vision behind the initiative is.

http://www.w3.org/community/webpayments/2011/08/16/launch/

While Web Credits are not specifically geared to be a currency, they may well be the future infrastructure that is needed to make credits a workable reality.

Bad money

There is a principle in monetary economics: Bad money will drive out (replace) good money. The thought goes back to Sir Thomas Gresham and the principle is generally referred to as Gresham's Law.

How does this apply in our case? Sir Gresham said that "When a government compulsorily overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation." This means that money that is useless as a "store of value" (the compusorily overvalued money) will circulate, while the money that is correctly (exactly) valued will tend to disappear into the coffers of those who wish to use money to store value. Credits, having no fixed value, are the ultimate "bad money". They will circulate like crazy while the "good" money that is guaranteed by the government will be used for speculation and hoarding. Actually that is exactly what we are seeing today. The Euro (good money) is leaving the poor countries and in the absence of "bad" money to take its place, the economies of Greece, Spain, Portugal and to some degree Italy and Ireland, are in shambles, threatening to pull down the whole works with them. So it would actually be in the interest of the countries that are struggling economically to make their own "bad" money and let it circulate, at least the people would have jobs and food.

So the objective, with credits, would be to make real "bad" money.

How could credits work?

Here are my first thoughts, gathered from a recent email discussion, on how to do that. Note that I am not calling them credits yet, in those early exchanges.

February 14, 2012 5:48:03 PM GMT+01:00

There are, as you are well aware of, large numbers of efforts to solve the "money question" with local currencies, bitcoin and others weighing in. All of these, I believe, are making the same mistake: they are too close to the current system, which is tit-for-tat, goods for money, money for my service, etc.

And on the other hand, even a "gift economy", while it seeks to escape from that paradigm, is firmly linked to it by our understanding of gift, which is something that is NOT exchange, i.e. a thing freely given without anything expected in return. So we have the capitalist system of exchange (rigidly regulated either as barter or as money-mediated exchange, and we have its apparent opposite, the gift economy, where ostensibly there is no expectation of any return.

In reality, the natural economic behavior would be a mixture of the two. We do like to give, at times, and we'd give all the time, if we could afford it, but we would like to know that at least in some way we can expect someone (doesn't have to be the same person) to reciprocate and give something to us. That got me thinking of an inbetween-type economy, that is partly gift and partly exchange, but really is neither in a rigid sense.

We do not need money in the traditional sense, but we need something that brings the idea of exchange into a free-flow economy, where people are routinely given things and services like in a gift economy, but where there is still a balancing factor, something that tells me someone is more worthy of receiving my attention than someone else.

How could that be organized?

I propose we need a new kind of "money" that isn't like today's money. Its value is not fixed, yet it eventually becomes ubiquitous. It is a kind of fuzzy money, a point system of sorts. I give something away, and in return I start accumulating units of that fuzzy money. The amount to be determined by the recipient. There is no guarantee that I can ever buy something for it, but that isn't really what I'm after. All I want is for there to be an approximate record that shows that I did my part in sharing, meaning I gave things away (or I gave my time to help, or whatever).

The value of "fuzzies" (I am calling them that for lack of a better term) isn't fixed anywhere, but it will evolve and stabilize with time. Yet it will float freely and it could change. It's the worst kind of currency you could imagine. No guarantee that you can get anything for it at all. No claims can be made for it. Yet people will flock to it and use it all over the place, if someone creates a mechanism for it. According to economists, "bad money will drive out good money", so I am proposing to make the ultimate bad money. Ridiculous and worthless, if looked at from the capitalist point of view, but quite workable in stimulating exchange where there is a willingness to give, and a fuzzy expectation of return.

It will start out like a game, something attached to the "gift" economy, but also something that can act as the "exchange" for any operation. Eventually it will become an accepted exchange mechanism in its own right, and I believe it would give a tough time to official currencies. It would give a minimum of structure to a "gift" economy, but it is soft enough to not be a burden. The only thing is - it can't be attached to any commercial or semi-commercial exchange network. It would have to be open source, free and simple to use.

Perhaps the Web Credits standard could serve as the basic mechanism for keeping track of it. Web Credits is basic and simple enough, it's an open effort, and I believe it would be malleable enough to accomodate the "fuzzies" that could constitute that worst yet in time perhaps most successful of all currencies.

and here another message, trying to expand on the argument...

February 16, 2012 5:16:16 PM GMT+01:00

The problem is that, from the standpoint of the individual user, we are no longer used to "go out and do an exchange" like in past times they went to the market with whatever they had to offer, to try and barter it for something they needed. We are used to thinking about inflow (buying, acquiring) and outflow (producing, selling, working) as time-separated activities. We work for hours and even days, and then we go out shopping. We don't do the two things at the same time. Money, as much as we might hate it, is what allows that time separation between inflow and outflow in our personal lives.

Money, even all of the alternative kinds, seems to always be attached to something else that determines its value, and exchanges then tend to be evaluated all in relation to that value.

Yet the time delay factor between inflow and outflow must be taken care of if an exchange system is to work properly. The exchanges to be mediated must be more than just the relatively few that can be perfectly time matched.

"Soft" money

When we hear of money, it is always an accounting unit, and it has a certain value. We hear of "hard currency". It's very exact, and it has VALUE. That seems to be the nature of money. So actually, soft money is not really money at all. It is a convention that is renewed with each transaction, a promise to "pay back" ... if not to the person we acquired something from, then to another member of the circle of exchange.

That is where the idea of fuzzy money (or soft money) comes in. "Fuzzies" aren't really money so much as they are promises. They are the incorporation of a time-storable promise I receive when I give (sell) something but want nothing in return just at the moment. You could look at them as a flexible point system that allows time storage of promises.

If you look at fuzzies from the viewpoint of money, they are the absolute *worst* incorporation of the money concept you can imagine. But perhaps that is not so bad. After all, we want to get away from a centralized currency with a fixed value. Their value floats freely and is determined newly for each exchange. The value is based on the willingness of the buyer, to accept the request of the seller. The value of the thing being bought/sold is freely determined between the two at the moment of the transaction.

I like to call those things fuzzies, but we could just as well call them promises or - why not - credits.

Fuzzies (or promises) are created by the people transacting. The seller accepts (a fuzzy future promise) in exchange for a valuable thing or service he gives. The buyer puts his reputation on the line, promising to give something of value to anyone who will accept it. The transaction creates a promise, a debt by someone, that is now sitting on the account of the seller, who can in his turn find something (or not) to buy with it.

Seen from the point of view of the system as a whole, anyone willing to provide goods or a service for a fuzzy promise of future return is actually providing a loan to the system as a whole. He injects 'life' into the circle of commerce by providing something without demanding an immediate return. He gets credit(s), a promise, a "fuzzy" for that. Probably the longer time he lets pass between supplying the value and demanding a return, the more his reputation should grow, because he's subsidizing the life blood of the circle of commerce.

On the other side, someone who receives something without immediately giving in return should feel that in their reputation. They are in the negative on promises (and therefore have a lower reputation) until they do provide something to the community that's worth as much or more than they received.

Now what's the value of a promise? There really is no fixed value. It's all up to people freely agreeing on a transaction. With time, promises will have an approximate (known) value and people will routinely use them. But in essence they will always remain just "a promise" or "a credit".

Now that you have seen my ramblings on this, you can get the idea of where this is intended to go. Perhaps I am completely off my rocker. I don't believe I am. Perhaps we need to experiment. People could just send each other credits for what they received, with the idea that someone else, in time will give them something for that worthless thing. We have to take the dive into the unknown. We have been conditioned to think of money as value since the time Kings and Dukes and Archbishops issued funny pieces of metal with their faces stamped on them. We now think that money is a pre-condition for us to work at all. It need not be that way. We can make our own money, fuzzy as those credits might be. Let's try it out!

Oh yes, if you are a programmer and you are into open source, or as Stallmann says, "free" software, consider joining the effort at Web Credits

http://www.w3.org/community/webpayments/wiki/Web_Payments:About

to polish up that standard and put some meat on the bones of an actual workable payments system on the web.

And if you are into LETS or any other local or alternative currency, please consider whether the principles outlined here could perhaps be applicable to your efforts.

This needs to be a community effort.

And yes, I declare this work to be in the Public Domain. That means it's free. You can copy it, translate it, use it, base your own work on it, whatever. If you are smart and your work makes a big splash (and a lot of money) I explicitly do not reserve any right to come after you for part of the proceeds. Of course if you want to give me credit, or even send me some of those credits... I would not say no.

Translators and creators: Please have a field day with this one. If you like what you read and you make a translation, or use this in another type of work, please send me a link. I will post it here. Should you have no space to put it up, I might be able to help...

Related:

The Secret of Oz - Understanding Money - We Know the Secrets of the Federal Reserve

The world economy is doomed to spiral downwards until we do 2 things: outlaw government borrowing; 2. outlaw fractional reserve lending. Banks should only be allowed to lend out money they actually have and nations do not have to run up a "National Debt". Remember: It's not what backs the money, it's who controls its quantity.

Directly on YouTube:


Barter Followed and Did Not Precede the Creation of Money
In this article, David Graeber lays bare one of the key myths of economists, i.e. that money followed and simplified barter, while the historical and anthropological evidence shows the opposite... (I found this one after writing my article, so if there is inaccuracy, I beg for your leniency - Sepp)


David Graeber studied 5,000 years of debt: real dirty secret is that if the deficit ever completely went away, it would cause a major catastrophe
This article discusses the raising of the debt ceiling in the USA. An interesting point made by Graeber is that, without the mountain of debt money in circulation, the economy could not function. He also makes another interesting observation, which is that there seems to be a 500 to 1000 year cycle of change between "soft" money and "hard" money being used in our society. This makes me ask: Could we be on the cusp of a swing from hard to soft?


The Money Fix - a Documentary for Monetary Reform (Full length on YouTube)
This video discusses money and argues that we need to change from hard to soft currency...


What if the Greeks, Irish, Baltics, Spaniards, Italians did this: high-tech parallel monetary systems for the underdogs?
A proposal from Trond Andresen in Norway that bears some striking similarities with what is proposed in this article...
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Having a field day with this aready. Looking for a name? How about "directs" (anagram of "credits"). Or Synaps because they connect people and transactions.

I guess you have seen the #punkmoney movement emerge. http://www.webisteme.com/blog/?tag=punkmoney

I see you've been spreading this one around.

About the name - I think we'll let that steam for a while before deciding.

I have lightly brushed against punk money, and I like the idea, although it has struck me as somewhat limited due to there being no real infrastructure of keeping track. But you're right, the idea is out there and ripe for coming to fruition...

Here is some additional discussion on the email list where I got the original impetus to start thinking seriously about the issue. The first message is from Melvin, the guy who is working on web credits and who linked it in the discussion...

(Melvin:)
Sepp, that's a really cool blog post. I love your writing style. Thanks for the mention of web credits! I've had some feedback and am aiming to make the next version more understandable / readable. Thank you for the additional perspective.

Have you read David Graeber's debt the first 5000 years? He talks about the 'myth of barter', which may be interesting to you. There's a few summaries on the web, here's one:

Graeber on the invention of money

I'm starting to think of money as functions of both debt and TRUST. 100% trust could be thought of as triple A. 0% trust could be thought of as default.

It's easy to think in terms of black and white, however the world has found out recently that trust is very hard to estimate. We have not good way to model it, and price discovery is a poor estimate, yet it can determine the fate of nations.

I am starting to think that both debt and trust need to be considered when considering money. This is also particularly when creating new money (or web credits). They could be trusted not at all, or trusted quite well.

In our current world of 'peak debt', Is there such a thing as the 'law of conservation of trust', I wonder? If i issue new debt, does that reduce the trust (and hence risk of default) in the existing system. Could this be seen as a transfer of wealth?

How should the options for trust be determined. Historically it has all to often been achieved through monopolies and force or arms.

Are we ready for a conversation about freedom to trust, or should we just plough straight ahead with the technology, and let society catch up?


(my reply:)
Melvin, thanks for reading and for the acknowledgement.

Yes, I really do think that web credits is ideally placed to become the infrastructure for a new kind of money such as the credits I envision.

Now for the trust. I have sincerely tried to link trust into this, while discussing it with the developers of a circular barter exchange system. Couldn't make sense of it.

Then I realized that trust, in the current context, only has negative implications. Positive trust does not get you much, except being relatively undisturbed, while negative trust really puts you down in the dumps (punishment). In the barter world, all you can strive for is for sufficient trust to take part in the exchanges, you just want to avoid being downgraded to where people *don't* trust you any more.

So my conclusion on trust was that, with the kind of money I propose, trust is really implicit. If you even participate, you already demonstrate trust in the system and in the other participants. You are taking the first step and showing trust by supplying something in return for a mere promise. But you are also doing something more important. By giving in return for a credit, a promise, you increase trust in the system, and implicitly in everyone else who participates. You create a circle of trust, and your "performance" in the system is the trust metric. There is no sense in measuring trust in any other way. You either have it or you don't. And it's a positive, not a negative quality in this distributed exchange.

I haven't read David Graeber's book. Found an interview by him just recently and was really fascinated to read that he talks about different times of history where money was yang and others where money was yin (he didn't use that terminology, but the concept is that) and that those cycles are on the order of 500 to 1000 years between each swing. So my thought is: Could it be that we are on the cusp of another such swing from hard currency to soft currency?

The Graeber interview I found, by the way, is here:

The real dirty secret is that if the deficit ever completely went away, it would cause a major catastrophe

I have also read the piece you linked of Graeber in nakedcapitalism.com and must say I enjoy his sense of humor and sharp reasoning when it comes to the origins of money. It makes sense that money actually started out as a diffuse and somewhat fuzzy credit system rather than the awkward barter that the economists tell us about. Unimaginative types those economists...

As I said, trust should probably be seen as inherent in the (credits) system. For one, someone who has given and obtained credit(s) from others inspires more trust than someone who is without credit(s). But other factors flow into this as well. We prefer to work with (exchange with, do business with) certain people and certain companies that have little to do with a formal measure of trust. It's a wholistic evaluation of connections and experiences.

So trust, rather than being formalized, should probably be left up to the individual participant in a credits economy. It naturally evolves from experience, and it naturally flows into economic decisions. But I don't think we need a separate, formal quantification of it.

Formalized trust is really a part of the yang, "hard currency" economy. Since everything is based on profit and competition, you really need to make sure you can trust the person you are doing business with and especially the person you "trust" with your money. But that's not part of what we're talking about here.

My comment of Feb 23, 2012, to Sepp Hasslberger's article "Occupy economy - the case for soft money"

As far as I know. Ying and Yang correspond to the fundamental duality of nature -- hence, I don't see how one of these two poles could be abolished. Much the same skepticism applies to those who want women to outnumber men in top positions: the really outperforming leaders we badly need are likely to be couples...

Hence, we need a balance between hard and soft money -- yet this balance is not so much a fundamental prerequisit as it is a resultant of a more fundamental balance in societal organization, i.e. the balance between the sedentary and the mobile elements of society.

This balance, known in Nature as symbiosis, is what ensures the perennity of all livestock -- not predation (as the current tenants of power tend to make us believe through movies like The Lion King, The Chronicles of Narnia, or Dysney's latest documentary African cats), which is at best an epiphenomen of evolution, and at worst sheer parasitism.

In order to sort out which elements of society should belong respectively to the sedentary and the mobile sectors, we have to take a closer look at symbiosis as Mother Nature has evolved it:

The generic rule of symbiosis is collaboration between species, with a large predominance of vegetal/animal partnerships committed to the recombination of vegetal ADN between distant individuals, and subsequent geographical spreading of new identities through dissemination of seeds -- whereby the first step, called pollinization, is mainly carried out by flying animals, and the second by both terrestrian and flying animals through their excrements containing non digested seed. Note that some vegetals do it all by themselves through airborne seeds of the helicopter or parachute type (which by the way reminds us that neither the windmill and the chopper, nor the parachute are human inventions).

I guess hard money should belong to the sedentary sector (maternity hospitals, nurseries, kindergartens, public schools, colleges, universities, high-schools, utilities, public offices, hospitals, old age homes) with, however, part of its various professionnal actors as well as users pertaining to the mobile sector where independent and private entities (factories, offices) and their actors are yet predominant.

This symbiotic societal structure calls for highly developped individual mobility, i.e. a degree of freedom of movement by far not granted by the automobile, as it is tightly confined to a one-dimensional infrastructure (the road network) not only belonging to the State, but also leading only to places where the State deems to let its citizens go to -- whereby the only transport mode offering the required quality of individual freedom of movement is the vertical-take-off-and-landing personal aircraft.

Moreover, in order to minimize the cost of access roads, buildings tend to concentrate along roads and road crossings -- a phenomenon which has led to insanely huge urban concentrations and sprawling of suburbs, with the collateral damage of emptying the surrounding countryside to the profit of socially and environmentally damageable industrial agriculture.

Hence, the first step to be undertaken is to have the Human Rights Chart's first article stating that every human being is granted ownership of a portion of land sufficient to grow enough food for himself of herself, in order to get people out of their multi-storey urban dwellings and back to the country -- which calls for large-scale land redistribution. The article should of course stipulate that personal land cannot be sold before the owner has reached a minimum age, and that the money can only be used for specific categories of investment, along with a limitation of land surface acquirable by any individual or entity.

In Switzerland, the part of farmers is less than 3% of the population, whereas I guess it should amount to anything like 20% to 30% -- and considering that state-of-the-art agricultural appliances and machinery allow for part-time farming, a new generation of half-time farmers could have their other half-time dedicated to any of the other professions, either by teleworking or commuting.

Only once these prerequisits concretized, could we start pondering the best way to balance hard and soft money -- noticing by the way that massively popularized individual aeromobility, together with the computer-based facilities mentioned by the author, would significantly boost the barter part of the new economy.

Finally, since the substrate, i.e. the soil for a new, highly dynamic symbiot of the existing urban society has been created by this very same urban concentration in the form of emptied landscapes around the big cities, the transition might not be as slow as predicted by the author if in a first stage the actors of this new symbiot were able to rapidly occupy these empty spaces, thus ensuring their self-sustainability which I regard as a sine qua non prerequisit for the second stage, i.e. occupying the ailing urban economy.

In order to greatly speed up the initial phase of the process, the architecture of the personal homes of the new farmer community shoud be of the spherical type standing on a slim stem, so as to look like a leaf tree from a distance when covered with vegetation -- and a tiny sphere, at that, since neither kitchen, nor bathroom, nor laundry room are needed if the inhabitants can fly with their Personal Aircraft to collective sites where to take a shower, a swim, and a meal, while having their worn clothes processed in the launderette. Also this tiny sphere would be extremely lightweight compared to a rectangular house, so as to be transportable throug the airspace over long distances, which allows for mass-production of Personal Homes with a price tag comparable to a motorcar.

After the PC, watch out for the PA and the PH !

And I nearly forgot this: for practical reasons, the new-age part-time farmer community is deemed to entail a dramatic downsizing of dairy livestock in favor of vegetal crops, thus eliminating one of the biggest environmental pollution sources.

Interesting article. As CoCreatr mentioned, #PunkMoney is such an effort to define a gift-backed currency.

You might find the tracker worth a look: http://www.punkmoney.org

Eli

Thanks for the pointer, Eli. I agree that #PunkMoney is an interesting start in this direction.

And Euroflycars, I like your vision. Certainly a generalized move of people into "real" life would be a consequence, if not a precondition to changing the way we see the economy. In practice, I believe that the two will go hand in hand. One won't wait for the other. They will both develop in synchronous progression.

As for the idea that both hard money and soft money will be needed, I suspect you are right. We have had, historically, many instances where the pendulum swung too far, only to swing back the other way after some time. So a peaceful coexistence of both systems seems to be the way to go.

Hard money does need to lose some of its edge though, and I just came across an interesting proposal by Chris Cook that looks promising in this regard.

Check out Post-Modern Fiscal Theory

I disagree with the use of Ying and Yang to imply that everything is ok it is just a question of view (Ying or Yang). The classification between interest and zero interest money is not a question of Ying and Yang but one of logical coherence, Ying Yang do not distinguish coherent from incoherent they distinguish between extremes in natural processes where the optimum is a balance between the two.

An example of a legitimate use of Ying Yang with reference to money systems, would be the classification of collateral backing demands, the "hard" (Yang) currency requiring only physical land or property while the "soft" (Ying) using services etc. A balanced system would then be one that accepts both in their rightful proportions.

But I don't thing that by any means an illegitimate arrangement can be classified by either Ying or Yang. Illegitimacy whether due to error or to lying is simply not tolerated by any decent philosophy whether Asian or not. Money is an error see here:http://www.bibocurrency.org/English/The%20Scam%20short%20form.htm (a newer version of a page you approved of).

Hello Marc,

thank you for your comment.

I see that you have not really read what I wrote with a view to understanding it.

My article has nothing to do with Bernard Lietaer's thesis, althouth I do not say that there might not be similarities.

My yin (not ying) money is interest free credit that is created by any transaction where the supplier accepts a time-deferred closing of the cycle of exchange. I am not accepting an illegitimate arrangement (like charging interest on debt).

But I do agree that my view on this may seem a bit too radical...

But when you say "today's money is Yang" it implies the distinction I was talking about which was what Lietaer made i.e. Yang is interest bearing money while Yin is not. In that regard I think my comment is fair interest bearing money is out of context as it is neither Yin or Yang it is simply wrong.

Thanks, Josef, for this article.

It is important to decide if we want a new economic theory of value. I'm typing this from the deep south, but, please, read me as I though from the North.

Thank you.

Sepp, this gives me an idea. As I briefly mentioned, I'm currently developing a serious game. Its a learning game with an aim to help folks regain sovereignty over their own health, called the Herbal Coaching Community.

One of the primary platforms it plays on is Curatr which has a point system for various actions. What if these points represented a "fuzzy" currency of some kind? There are other achievement awards at play which could, similarly, be in the form of some kind of web currency.

The money would be worth something in this way (for starters)... members belong to small PLNs called Pods of 5-7 members. As they learn they're given Quests. Sometimes those Quests involve helping someone overcome a health crisis.

Let's say "Bob" develops shingles. He prefers alternative medicine over conventional med but doesn't have the money to pay an alt. med.practitioner. Or insurance for a doctor's visit if it came down to that. But he has earned 500 fuzzies in the game. He finds a Pod at the "practitioner" level of the game and offers them 500 fuzzies to consult with him.

Lets say this consulting Pod is raking in the fuzzies...they could use them in different ways too. If it were a currency that extends beyond this particular game to other web services they could use them there...or let them stand as reputational signifiers that they are "playing" at the highest standards of social currency.

I'm meeting with the CEO of Curatr on Monday and will bring this up.

Will get back to you.

Just had another thought...the 500 fuzzies Bob offers the practitioner Pod isn't so much a "payment" but rather, represents a promise on his part to take responsibility for getting well...actually doing what it takes. So, with their combined efforts, Bob successfully eliminates his shingles...so the Pod gives HIM some fuzzies back. So many possible permutations! Guess I ought to take this over to Next Edge.

Great idea Elle,

Curatr looks good. It brings the interactive part to the learning experience. And certainly a system of rewards will help to get it going.

I'll be interested to see what you come up with.

Well I had the talk with Curatr today and they were already thinking of how to switch from points to an alt. currency. But right now they're busy with figuring out how to implement Mozilla's Open Badges...so...the way we left it was I'm free convert points to whatever currency model I select. When I find something that works, they're very interested in applying it throughout Curatr. Too bad web credits isn't up yet but I'm interested in what they're doing. If you have any further ideas or can point to something already out there that you like please let me know. Thanks again for popping this (obvious) idea into my brain :-)

Good to see that Curatr is already looking around for something like an alt currency.

I don't know if anything is out there that would be usable right now. I liked the idea of making the money system simple as pie and inherent in the basic internet mechanisms, which is what web credits seems to be all about.

The person to talk to about this to find out more is Melvin Carvalho, who posted a reference to web credits in an email discussion and who seems to be involved with the team working on this. You can reach him at

melvincarvalho at gmail dot com

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