[ExI] Bottom-up currencies

[Mirco Romanato]

Il 11/03/2011 6.27, Emlyn ha scritto:

> What's on my mind is that Money is, fundamentally, imaginary.

Imaginary as in "foresight" or in "delusion"?
Money is money when the value for future exchange is greater than the
value for use for self.
For example, gold become money when its actual value for
industrial/personal use is lower than the value you assign it for use as
a mean of exchange for other goods you want  (value is an individual
perception, not a group perception, apart when the group share the same
or similar individual perception). And this is true for anything.

> Something it seems to do, which we understand viscerally, is provide 
> us with "conservation of value"; similar to intuitions such as 
> conservation of volume. If I give you something, you should give me 
> back something of equal value. "Fairness" is mixed up in there 
> somewhere.

In a market exchange, the exchange happen only if both parties value the
things they give up less than the things they receive. If they value
them more or the same, the exchange don't happen.

Gold is often used as money, like silver, because there are a limited
supply and production and limited consumption . Increasing both is
difficult and require efforts. Gold is used in industry, so it have a
value for someone that is linked to its use and this is the floor.

The storage of value is given from the fact that more gold is hold, more
its price will not fall (usually it will raise) and no one is able to
make gold from thin air at will.

Fairness is a concept it is better to keep out of economics.

> Except, that it doesn't look like that if you make the money. In
> that case, it's now something else, a confidence game. What is money
> worth? Whatever we think other people think other people think it is
> worth. So if I can convince enough other people that their
> confederates think their other confederates will attribute value to
> it, then it will have value, and I can go ahead, mint it, and hand it
> out.

> Which governments do (and is one reason why the intuition about 
> national government budgets being like a household budget are dead 
> wrong).

They are not, because confidence is not something governments or
individuals can build at will. At the end, government budget are like
household budget. It simply work at a very large level, where many
interactions are obscured and lied about.

When government print money it is robbing money holders (the poor more
than the rich, because rich people have less money in share of wealth
than poor people) and giving the value stolen to its components,
friends, allies and cronies.

> So I'm thinking that really, any group should have the power to make 
> its own currency and work with it if they want to. They decide how 
> much of it there is, when to issue more, and what the rules are. 
> There's a lot of power in that, great links in the wikipedia local 
> currency article talk about it.

In jails inmates use cigarettes as currency, because they can not have
or use money. They surely didn't meet and agree on using it. They simply
did it and of all commodities, cigarettes were the best fit to the use.
No one is forced to accept them as money but at the end they are used
for this.

> And I guess we see it all the time. Online games and social networks 
> create new currencies all the time. There are lots of historical 
> examples. But, it never seems to take off as a mainstream concept.

If you understood how money emerge from a free market you would
understand why it is really difficult for an virtual currency backed by
nothing or by something of very limited use to take off.

In the past we talked about how in Africa the people are using the
cellphone pre-paid time to exchange value (pay for fish, fruit and
transfer money from a place and person to another place and person)
instead of using inexistent banks. Cellphone minutes have a real value.
People can not create them by fiat. Cellphone carriers can not create
them by fiat, because they must deliver them at some point.

All that is needed is a carrier that price its time in gold and allow
inexpensive exchange of the credit between users and there would be a
gold money available.

> And meanwhile, I think we often have opportunities for creative and 
> productive endeavor stifled simply due to there not being enough 
> currency around to make them go, largely because the community that 
> understands the opportunity doesn't have the cash, and the people
> with the cash don't understand the opportunity.

Here you mistake the money for the resources priced with it.
It is not lack of money, because if you print it and hand it around it
will not change nothing or make things worse.

Lack of money is rarely the real show-stopper.

> The ability for any group to just define and implement a new
> currency at the drop of a hat (and then another and another) seems to
> me like something that wants a platform. Particularly, if you could
> easily interoperate between currencies (because there was a smooth
> technical platform which provided for allowed automated
> administration and trading), the concept would be more appealing,
> because if you build up real value in a mini currency, you could
> realise that value in trades outside of the currency's community. And
> communities get to take advantage of the benefits (and bear the
> risks) of making their own currencies; micro-economies stop looking
> like a zero sum game in that context I think.

This is really strange for me.
When and where are micro-economies zero-sum games?
They are positive sum games by default.

The interoperability of these local currencies is only dependent on
their exchange with the outside. Do they have something to sell? If they
have, they will be able to buy. If they don't, they will not be able to
buy. I don't need yen if I don't go visit Japan. If no one commerce with
Japan no one will need yen, apart the Japaneses that will commerce
between themselves.

Your "easy interoperability" between local currencies go against the
reason because local currencies are established: local lack of liquid
money. But, for fiat money, this is usually cause by the meddling of the
government with the money supply and demand.

> Relating this back to bitcoin, that's trying to do something 
> different. It appears to be trying to be a single currency (not 
> designed to make many separate currencies), and the ideas about the 
> money supply seem to be about trying to tie it to something external 
> and objective and non-manipulable with respect to the participants, 
> which goes in a different direction to what I'm thinking about (ie: 
> actually giving that power of creation and manipulation of the 
> collective delusion of money to the participants themselves). It
> also looks like it's trying to be digital cash, which is a laudable
> aim, taking away the power of the central institutions; I would
> propose to do that rather by groups simply abandoning currencies
> where the central institutions are letting them down.

In the end, there is never a real local currency. Something is a
currency if others are willing to accept it as a payment. A local
currency can and will become global if it have real value. And, in the
end, people want a single currency because it is easier to calculate the
value of things.

-- 
Leggimi su Extropolitica Blog <http://extropolitca.blogspot.com/>

Leggimi su Estropico Blog <http://estropico.blogspot.com/>

*Mirco Romanato*


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