What to Use for Money

Money has no intrinsic value. It doesn’t “refer” to anything, not even gold. The origin of money came from debt, which became money, which became barter. This is the opposite of what is endlessly repeated in economics textbooks, but no culture, state, or society has ever been found in which barter came first. Another fable: government doesn’t “print money”; it issues debt. (See: Debt: The First 5000 Years, by David Graeber.)

Money has no intrinsic value.

All kinds of things have been proposed and used as the basis for money. In some societies, often dating back many centuries, a cow is taken as a unit of trade for important things such as bride-price or land purchase, although not for routine market purchases. This is important because a cow has intrinsic, unchanging value.

The value of a cow is virtually constant: a cow is a cow. A cow in a hundred years is still a cow. It will not take two cows to make one cow fifty years from now because of inflation. Cows are resistant to inflation. It would seem, then, that a unit of exchange that remains as constant as a cow would be better than the common currencies used today, most of which were originally derived from metals such as gold or silver, and constantly change value against other currencies, sometimes radically. Consider the current grossly inflated price of gold.

In actuality, zero inflation
is probably the best condition.

One of our biggest problems with money is inflation. In one sense, inflation drives capitalism, because costs tend to increase over time, allowing us to pay back loans with cheaper money. But the purchasing value of a unit of currency decreases at the same time. The general view seems to be that mild inflation is good, but high inflation creates chaos. Negative inflation (deflation) creates declining investment and savings value. Items purchased become cheaper, but your money is worth less. In actuality, zero inflation is probably the best condition. Certainly it’s the most realistic, but we never have it, and attempts to freeze prices have always created additional problems and unexpected consequences.

I propose a unit of work as a universal unit of exchange. By that I mean work in the physics sense, which is defined as lifting a certain weight a certain distance. The English unit is a foot-pound, meaning the expenditure of energy it takes to lift one pound of weight straight up a distance of one foot. This never changes. It will always take one foot-pound of energy to achieve that work. However, for most commercial uses a foot-pound is not a practical or handy unit to be adopted as currency, largely because it would only be worth only a small part of a penny.

I propose a (metric) meter-ton—mtas
a standard currency unit.

The world uses the metric system, and so should our currency. I propose a (metric) meter-ton—mtas a standard currency unit. That’s one metric ton (about 2200 lb.) lifted one meter. Picture jacking a wooden flat of cement bags to table height, and you get the general idea. We can call it whatever we want. Hondurans call their currency quetzal, which is their beautiful national bird. Note that it’s not necessary to actually exchange mt, any more than quetzals are exchanged.

The mt, unlike gold or silver, is a constant, unchanging thing with a fixed definition. In contrast to the dollar, the mt does represent something tangible, a fixed amount of work that does not fluctuate with supply, market, or political conditions. A ton-meter would always be the same, no matter how other currencies fluctuated, no matter how much time passes. Using an unchangeable unit of work should help to keep inflation under control. The fact that we may find more efficient ways to perform one tm of work may actually be deflationary, useful to counteract inflationary trends. This matters, because we will soon be forced to realize that infinite capitalist “growth” is not possible in a finite world. We will be forced to reimagine capitalism, or give it up entirely.

Since the mt is universal, it should be possible for all governments to adopt its use, particularly for international exchanges, if they so chose. This would require some sort of centralized authority to determine how the mt would first be established. On the other hand, without any government participation, the Kenyan cell phone company Safaricom instituted a completely digital IOU that can be pinged from one phone to another, thus doing away with the 25%-30% fee that banks charged for cash transfers. Here’s how it works. A customer buys something and pings the digital price to the seller’s phone. The seller can then use the same digital money to pay for store stock or anything else. Goods move, and no one handles bills or coins. The interest in cashless transactions is not limited to Safaricom. There is more and more interest in paying with one’s phone in the Western world as well.

I propose that the mt be established
as a completely digital currency.

I propose that the mt be established as a completely digital currency. This would allow any government who chose to participate to begin using the mt for exchanges via credit card or the internet immediately, without the circulation of bills or coins. In fact, official approval may not be necessary, just as with the Safaricom IOUs. If all parties to an exchange agree to accept the mt and agree on the price in terms of mt, that is all that’s necessary. The mt is just a promise to pay a debt, the same as a check. The Safaricom currency, by contrast, is the equivalent of the existing Kenyan shilling, which can vary in value.

Today’s currencies would doubtless be important for other uses than international exchange or credit card purchases. On the other hand, the mt might be useful for common exchanges within a country for the same reasons it would be useful internationally: stability and universality, as well as simplicity.

Once the mt becomes established, international commerce would be simplified, because the value of the mt would be the same everywhere, and would not fluctuate with market conditions. This is similar to the euro when it is used within the European Union, but not when the euro is for purchases in another currency such as dollars or yen. The mt would be equivalent wherever it was used around the world.

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Published in: on 2012/03/04 at 4:07 pm  Leave a Comment  
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