This seems to be a popular idea that's gaining momentum. It's an alternative to the Paul supporters to jump ship from the gold standard rhetoric. Occupy wall street people have mentioned it, and plenty of other groups who think they've figured it out advocate this.

I don't have a problem with "getting rid of money", in the narrowest sense of getting rid of fiat currencies. It would be a lot better to trade with a currency that is based (and in the strictest sense is a proxy for) real wealth. There will still be a currency exchange, but the currency exchange and market exchanges are then the same exact thing. A lot of the recent instability of markets is because of fiat currencies. Asset valuations are wild because they are valued in currencies.

But I only advocate moving to a trade medium that reflects a capital account. The need to use "resources" needs to go IMO.

10/8/2011 2:33:53 PM

Doesn't matter what we try to anchor the media of exchange in, we'll have rich people trying to influence policy to their advantage and politicians willing to hear them.

10/8/2011 4:58:16 PM

While the price of fiat currency is clearly unstable, it is several orders of magnitude more stable than any commodity I have checked.

10/9/2011 12:32:15 AM

What if I could wave a magic wand and almost everyone who has a job they are paid to do has their job done for them?

What really would money be for if brooms pushed themselves, stocks picked themselves, and computer programs wrote themselves?

It doesn't seem like our system can handle this evolution without stifling it or trending towards collapse.

10/9/2011 1:04:37 AM

we would require more vespene gas

10/9/2011 10:06:27 AM

^^ Then competition would drive down the prices of labored goods (cars, food, etc) to "very little", say ten dollars for a car, ten dollars to feed a family of four for a year, and 100% of the price of everything would go to land owners (the last remaining scarce resource), which includes the owner of the iron mine, owner of the oil well, and owner of the land containing the apartment block.

The price of land would fall dramatically, as freed of labor constraints new mines would open up and new cities be built using the now free labor, further collapsing the cost of living.

Everyone will be freed of the need to find work, thanks to the collapse of the cost of living, and the unlucky people which found themselves without any cash when the transition came could be easily supported given just one individual feeling charitable.

10/9/2011 11:20:51 AM

Quote :

"While the price of fiat currency is clearly unstable, it is several orders of magnitude more stable than any commodity I have checked."

valued in what?

Now, I don't want to troll and nothing else, so let's get the real issue. The volatility that matters is the price of one commodity relative to another. But why stop there? There's the value of a commodity relative to equity and relative to debt. Cash can be taken as a form of debt IMO.

Given the different flavors of wealth vehicles, which is the most unstable. Again, things I can come up with are:
- commodities
- debt
- equity... in companies and other containers, which includes real assets (like buildings), and is often stacked against debt. In other words, you are often short on debt by holding equities.

Would you look at these and make a case that commodities are the least volatile? This is a valid question.

10/9/2011 1:41:35 PM

Here is my value proposition:

If the current world domestic product is $60 Trillion per year, then take that as an annualized number. Let's assume an average nominal yield of 2.5% (small b/c it's nominal). Then the total capital account is:

(capital) x 0.025 = $60 Trillion

capital = $2,400 Trillion

This should be the total wealth of the world in the conventional economy. What about value that is not counted? Well there's economic activity that's not counted too, so it balances out. This isn't a representation of total wealth, it is a representation of obviously monetize-able wealth.

If you took all of the capital in the world and summed it up, you should get a number similar to this. But in reality you'll get more, because of debt. Fiat currencies are a form of debt because they increase the counted value of the capital account. Because of this, we should get rid of it.

How much of the total capital account needs to be liquid so that it can be used as a transaction medium? I don't know, but if you wanted, you could create a list of attributes that would work to make the most desirable transaction medium. I would maintain that gold does not fit this well. Gold is like a fiat currency born out of human nature. Other rare metals would serve the purpose better if not better. We no longer lack the mechanisms of accurate accounting of other type of wealth. Gold is easy verify, store, and count. These are no longer major stumbling blocks with our modern financial system.

10/9/2011 3:13:33 PM

Quote :

"we would require more vespene gas"

if elected, mitt romney will build more pylons.

10/13/2011 11:46:07 AM

Quote :

"Cash can be taken as a form of debt IMO."

Whose debt? If I have $10, who has a legal obligation to me because of it? What is it you think they owe me?

People want money because people want money. Its the same as saying people accept dollars for payment because people accept dollars as payment. This isn't debt, it is a voluntary medium of exchange.

10/13/2011 1:58:52 PM

That makes squat sense to me.

What value was created through the issuing of the currency? By holding the currency you're loosing money. Fiat currencies always loose value over time contrary to the expectation for any other holding.

You could argue that people gain value from the liquidity of the cash. It's easy to buy stuff because everyone accepts it. But it's hard to think of something that role could not be fulfilled by, and it would obviously be better fulfilled by something that is an actual asset.

10/13/2011 3:55:00 PM

You didn't answer the question. But, just to be nice, I'll answer your questions.

The value was not created when the currency was issued, it was created when someone created something of actual value and slapped a price on it. What denomination they price it in is irrelevant to those trading, as the odds of trading for currency for use as something other than currency would always be rare. However, pricing in something other than dollars would destroy value.

Right now, I hold no gold what-so-ever beyond what can be found in my electronics. However, if we price everything in, say, gold, this would change. That means less gold available for the people that currently use gold, as the rest of us would suddenly be using some quantity of the world's gold supply as currency. Which means less gold used for jewelry, less gold in people's safety deposit boxes, less gold in the federal reserve, and less gold absolutely because more of it would be lost in the garbage, sinking ships, and nature hikes. Also, as gold is heavy, it will cost more fuel and effort to haul it around.

Given this fact, it is best to use something worthless as your nation's currency, as it frees up whatever else you might have used to actually use for its intended purpose (be it cigarettes, for smoking; or gold, for electroplating contacts).

As to your other statement, as can be seen from 19th century currencies there is no law that fiat currencies must lose value. It is supply and demand, if the federal reserve turned off the presses for awhile, deflation would occur.

10/13/2011 4:13:38 PM

It's true that gold as a transaction medium ties up resources that could otherwise be productively used. The same is true for most transaction mediums that could be used in a "resource based economy".

The same does not apply for corporate stocks and bonds. The more people horde those financial instruments, the more capital they offer up to be employed to create value. Cash creates competition for these things. If corporate paper could be used as a transaction medium this would not be a problem. And if more investment was needed in other physical assets, money managers (who are managing the assets represented by the corporate paper) would invest in those assets.

People lend money to other people in lieu of investing in real revenue-generating assets
People also horde money in lieu of investing in real revenue-generating assets

10/13/2011 4:56:25 PM

Privately issued currency as existed during the free-banking era? Cool idea. Banks, cities, industries, and railroads all printed their own money. Of course, they were all debt instruments, as they promised to pay gold either on demand or at a future date. Either way, the system led to hoarding of gold to use as currency in an extremely pro-cyclical way.

10/14/2011 2:28:20 AM

The only thing that should ever keep people from hoarding gold is simple intelligence, something I agree is in short supply.

Money representing debt should be more prone to problems than money representing assets.

Economics kind of relies on the ability of people to look at something and ask "will this make money or change in value?"

10/14/2011 8:32:37 AM

Quote :

"Money representing debt should be more prone to problems than money representing assets."

You can't have one without the other. If it is paper currency which is backed by gold, the holder can call it an asset, but the backer sure as hell calls it debt, as they now owe the holder gold upon demand.

Meanwhile, a fiat currency which is backed by nothing, is an asset without being a debt.

10/14/2011 9:50:37 AM

Well I can draw a piece of art and say it's worth $1,000,000 to me. Depending on your form of accounting, this increases the capital stock of humanity.

I feel like that's what we just did fiat currency. Although, of course, that's not entirely true. There are ways that we implicitly back it. Bitcoin, for instance, could not fully replace the USD without the government taking action to stop it.

10/14/2011 11:13:20 AM

But that still doesn't make the USD a debt. Suppressing competition for the dollar does not impose an obligation upon anyone to exchange the dollar for anything, it just makes it illegal to accept anything else.

That said, a bitcoin is not debt either. It is an asset created without suppressing any other value (as gold would) and without being a debt to anyone (as gold backed currency is).

10/14/2011 11:21:07 AM

Quote :

"That said, a bitcoin is not debt either. It is an asset created without suppressing any other value"

You're really going to claim that bitcoin will not suppress other value but gold will?

10/14/2011 1:13:04 PM

Well, sure, fiat currency does in fact suppress other value. Bit-coin will cause people to waste perfectly good electricity and computing power mining for bitcoins. A fiat currency will require printing presses, paper, ink, distribution, and major efforts to suppress counterfeiting. But this stuff is puny compared to the mis-allocation of using Gold as currency.

10/14/2011 6:12:40 PM

bump

10/4/2012 7:37:58 PM

I hope this idea is more than simply rape and pillage the environment to pave the way towards prosperity. . .

10/4/2012 8:48:58 PM

Quote :

"If all bank loans were paid, no one would have a bank deposit, and there would not be a dollar of currency in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money, we are prosperous; if not, we starve. We are absolutely without a permanent monetary system. When one gets a complete grasp upon the picture, the tragic absurdity of our hopeless position is almost incredible-but there it is. It (the banking problem) is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it is widely understood and the defects remedied very soon."

- Robert Hemphill, for 8 years credit manager of the Federal Reserve Bank of Atlanta. January 24, 1939

Who says money isn't debt?

It sounds like you just want to get rid of fractional reserve lending/banking.

11/1/2012 5:43:55 PM

The Project Venus shit is just reinvented, somewhat technocratic communism, that's literally all it is, and all of us real communists just shake our heads and sigh at them. It's a very poor rehashing of Marxism mixed with some science fiction fantasy.


[Edited on November 2, 2012 at 10:35 AM. Reason : .]

11/2/2012 10:33:50 AM

Quote :

"What really would money be for if brooms pushed themselves, stocks picked themselves, and computer programs wrote themselves?"

and people healed themselves?

11/2/2012 8:33:28 PM