Love Economy Coins

Money can be based on something as lovely as love.   Consider:

www.thegivingcoin.org

from they're website:

Inviting Trust, Connection, and Playfullness, this Program is sure to create exciting innovative ways of "Paying it Forward".  Each Flyer will then be Given a Coin, and asked to do something Magical and Creative for another Human Being... Something that reminds them that this Reality is indeed Magical as well...  Give Love, and Pass it On..

This is quite an interesting basis for a currency.  Gift economies are often implicit reciprocal agreements that the giver is expected to get something in return.  A binding of the receiver into an informal debt.  Gift economies can be quite lovely, and not necessarily of the God Father, "I will do this for you today,  but remember, one day, and that day may never come, I will call upon you todo some service for me." variety.

But these coins are intended to be given without any strings attached.  They are perhaps the loveliest coins i've seen.

Love,

Ken

financial innovators

consider everyone at this conference:

http://www.netbanker.com/2009/04/quick_guide_to_the_upcoming_finovatestartup_conference.html

This is the cutting edge of organizations developing financial technologies for the economic market place.  I've met a few interesting currency innovators, but this is the leading edge of who bankers will take seriously.  

there's also quite a bit of innovation that occurs outside of technological innovations (take derivatives and cdos) that are primarily regulatory and conceptual innovations.  

I'll go through these companies and report on any interesting demos.  the most interesting is the person-to-person debt market places.  kiva.com and other micro-loan infrastructure is coming along, and not represented at this conference.

these p-to-p loans are quite interesting, as it's trading one type of currency (debt) for another (cash), both of which have different properties.  the debt "paper" generally isnt transferable.  but what happens when the 4,000 year old innovation of making this p-to-p security transferable?  This is a particularly interesting innovation that is waiting to be repeated on the venue of the internet.

Debt is money

Our financial system is based on debt.  

Regardless of how you feel about capital and debt being the organizing forces of our political-economic world (rather then say democracy), to understand what is going on with politics or the macro-economic background we live in, this stuff is basic

consider:

http://video.google.com/videoplay?docid=-9050474362583451279&ei=MIoQSdDFBYSKqQODp7WHDg&q=money+as+debt

this video is the cartoon about how gold commodity coins became bank debt money.  .

Now consider the Micro perspective:  

A monetary transaction involves a buying "with cash or credit".   with cash, or it's check, asset or barter equivalent, the buyer in a sense paid for the transaction in the past.  with credit, the buy pays for the transaction in the future.

The behavior of the transacting actors is certainly effected by nuanced difference.  If the buyer has nothing, wants something now, debt is the buyers only option to transact.   an influence of going from doing nothing, to doing something.

also, there's a philosophic perspective engrained in Net Present Value economic theory that it's rational to discount the future.

it's the differing perspectives of NPV where the banking games begin.  And asymmetry of primarily rationality, but also in information, sets up situations where debtors often will fall into the infamous debt trap.  and this is where socially minded people get up in arms about the slavery abuses that can be intrinsic in monetary systems.  

For things far out into the future (like the health of the planet) actor psychology environmentalists will enter the discussion also because the future value of the planet as a whole can be destroyed for present pleasure of the political economy.  but a post for another day.

Now that we've established that debt is a form of money, I will begin to post interesting debt related innovations.

Metal Money

The long history of gold and silver coins is deeply rooted in our collective psyche. Consider this interesting definition of cold hard cash from Warren Buffett’s father:

Human Freedom Rests on Gold Redeemable Money
by Hon. Howard Buffett
U.S. Congressman from Nebraska

Reprinted from The Commercial and Financial Chronicle 5/6/48
"Congressman Buffett stresses relation between money and freedom and
contends without a redeemable currency, individual's freedom to sustain himself
or move his property is dependent on goodwill of politicians. Says paper money
systems generally collapse and result in economic chaos. Points out gold
standard would restrict government spending and give people greater power over
public purse. Holds present is propitious time to restore gold standard."

"Is there a connection between Human Freedom and A Gold Redeemable Money?
At first glance it would seem that money belongs to the world of economics and
human freedom to the political sphere.

"But when you recall that one of the first moves by Lenin, Mussolini and
Hitler was to outlaw individual ownership of gold, you begin to sense that there
may be some connection between money, redeemable in gold, and the rare prize
known as human liberty. You see, gold is mobility, gold is a passport to move
across borders.

"Also, when you find that Lenin declared and demonstrated that a sure way
to overturn the existing social order and bring about communism was by printing
press paper money, then again you are impressed with the possibility of a
relationship between a gold-backed money and human freedom.

"In that case then certainly you and I as Americans should know the
connection. We must find it even if money is a difficult and tricky subject. I
suppose that if most people were asked for their views on money the almost
universal answer would be that they didn't have enough of it.

"In a free country the monetary unit rests upon a fixed foundation of gold
or gold and silver independent of the ruling politicians. Our dollar was that
kind of money before 1933. Under that system paper currency is redeemable for a
certain weight of gold, at the free option and choice of the holder of paper
money."

Libertarians appreciate precious metal based financial systems because it limits the power of the issuing authority. Namely, the issuing authority is physically limited from making more of it. Printing more of it, or nullifying its use as legal tender, can’t destroy its value. The financial power of a lifetime’s worth of savings can be held within the palm of one’s hand. Bury it for 1000 years, and it will still have value.

Benjamin Franklin had a pre-marxist view of gold, in that he equated this hard cash as being equivalent to the labor (the effort it took to dig gold out of the ground). In a sense, under a gold standard, the issuing authority is whoever can get, and keep their hands on this yellow magic. It’s no surprise that gold lovers often are infatuated with the liberty they believe a gun gives them.

The desire to capture more social economic power motivated whole demographic movements, including the conquistador conquest and opening up of the Americas, to the California Gold rush. It’s a clear example of how the reserve basis of a money supply can guide large political-economic shifts.

The psychic effects of gold seem like they can still be achieved (at least for a while) if a financial system of currency is at least partially based on this deep seated appreciation of gold. A fractional reserve system gets away with it, as long as there’s not a deep contraction of the money supply (due to currency users redeeming their notes for the actual reserve).

For gold and silver are perceived as a good Store of Value. This is particularly true if it’s also used as the Unit of Account. Unfortunately, these days it’s not. Gold savers are more often speculators like the Hunt brothers:
http://en.wikipedia.org/wiki/Nelson_Bunker_Hunt
And its relative economic value in relation to cash can spike in times of uncertainty, and collapse again, when confidence returns to the Issuing Source. Sometimes, confidence doesn’t return to the issuing source, and that bank, or government collapses.

If you want to buy some coin freedom, you’re local coin dealer will help you out. Or you can buy some at:
http://bullion.nwtmint.com/

This post is getting too long to bore you with the thousands of examples of failed currencies. Though I suspect if you buried it for 1000 years and it still is intact, you’ll still get someone to buy that currency off of you. Though perhaps I'll talk about super long term value of things, and normal NPV failings, some other day.

photo from national geographic

Social Justice currency being considered in San Francisco

I just met with Heather Young, a San Francisco activist, who is organizing a local currency project. She’s quite a wonderful woman, and is interested in making money have less (what she considers) negative externalities associated with the current dollar economy. She doesn’t say it that way. Who, but an economist, would throw around terms like this?

She wants a currency that promotes social connections, and isn’t controlled by selfish private or large government bureaucratic interests (both of which she believes to have conflicting interests with nurturing community based society). To achieve this, while being sensitive to all the participants values in the forming group, she believes a local cash economy, directed by a civic non-profit, will serve this purpose. Locally produced non-profit money exchanged between the hands of neighbors will promote social connections, and will keep control closer to the people who create the currency.

http://bayareacommunityexchange.ning.com/ , her organization, is this fairly radical and incredibly well intentioned group. I’ll be attending their next currency planning meeting, where they’ll be discussing various cc examples, their underlying values (hopefully coming to consensus on this), and determine next steps. Like many SF radicals, they are coalition builders and are quite interested in networking with other projects. Currency projects included.
Quite an opposite extreme from SDRs!

SDR - a currency for a world with no borders

and the nation-states have very little power.

The G20 moves the world a step closer to a global currency

In effect, the G20 leaders have activated the IMF's power to create money and
begin global "quantitative easing". In doing so, they are putting a de facto
world currency into play. It is outside the control of any sovereign body.
Conspiracy theorists will love it.
It has been a good summit for the IMF.
Its fighting fund for crises is to be tripled overnight to $750bn. This is real
money.

I've mixed feelings about this type of currency. I love the idea of a world without political economic borders. perhaps it's because i was raised in the bosom of empire, here in the USA.
The question comes down to this: can we trust privileged private power to act responsibly, and not enslave the masses? well, at least there would be no war, even in the worst case scenario.

I've heard other spins on this currency calling a "super-national currency", it sounds like it's uber-nationalistic. such is the funny psychic nature of currency. call it one name vs another name, and people's behavior and interactions with it changes.

if it was called, Private Uber Banker Money, it probably wouldnt work. perhaps if you called it PUBmoney, people would think it's good for a beer? hmmm, the proletariat masses love beer....

twitter dollars

twitter dollars are at the opposite end of the spectrum of managing national currencies to resolve geo-political tensions and relations:

The Twollars idea was conceived by Internet entrepreneurs Eiso Kant and Mac
Taylor. They noticed that there was an enormous amount of 'social energy' on
Twitter that goes unmeasured. They realised that if this energy could be
converted into a symbolic standard, it could then be passed around like a
currency.

monetizing social relations gets dicey-er the closer to home one gets. transactionallized prostitution is illegal, but sex is institutionalized (for example, a marriage contract isnt valid until the relationship has been consummated). This wizardly desire to transmute value from one thing to another, and make it liquid has been the long trend of financial innovations over the past several thousand years. Drawing the boundaries of where one stops using precise mechanisms to relate is an open sociological and political question.

One trouble many have with transactionallizing relationships is that the contract of relationship ends once the payment is made, whereas a gift economy gives a psychic bond that strengthens (for better or worse) the relationship.

paypal, gift economies, and upstart community currencies all experiment with the boundaries of where the marketplace ends and where the social "economy" begins. what an interesting question of selling your soul to the devil. or to your wife.

China seeks oversight of reserve currency issuers

my oh my, everyone has money on their minds these days.

Chinese Premier Wen Jiabao called for more surveillance of countries that issue major reserve currencies, according to published reports Saturday
Wen did not specify the United States in his remarks at the Boao Forum for Asia in China's Hainan Province. But Chinese officials have recently expressed their concern
about their country's investments in dollar-denominated assets. "We should
advance reform of the international financial system, increase the representation and voice of emerging markets and developing countries, strengthen surveillance of the macro-economic policies of major reserve currency issuing economies, and develop a more diversified international monetary system," Wen said, according to China's official Xinhua news agency. Wen told the conference that China's economy was faring "better than expected." China said last week that its economy grew at an annual rate of 6.1% in the first quarter, a slowdown from 6.8% in the fourth quarter of 2008. Wen said China would seek to expand currency swap agreements that are seen as a step toward eventually making the yuan more of a global reserve asset. "We should give full play to bilateral currency swap agreements and will study expanding currency swaps in scale and to more countries," Wen was quoted as saying. China's central bank has signed six such swap deals since late 2008, totaling 650 billion yuan ($95 billion). China will set up a $10 billion cooperation fund to support infrastructure projects in countries in the Association of Southeast Asian
Nations, Wen said. The plan was announced earlier this month by Chinese Foreign
Minister Yang Jiechi.

Heaven help me for referencing MarketWatch as my first news source, but it's the first piece of news i spy with the starting of my new blog.
Interestingly in the article, it also talks about $10 billion worth of loans being given to these neighboring countries.

Is this how the currency is to be backed? By loans to the very people who are getting money? Well, that’s quite a bit like how the dollar system currency works. Money is initially issued back by loans to the US government (Treasuries), and then many more loans are generated through the commercial system via the fractional reserve system.

“Issuing Source” is an aspect of currency that I’ll talk about more in future posts. This is the supply side of money that end users generally dont think about, and even I often find academics ignoring. The methods of issuance are anything but straightforward, and are a boon to conspiracy theorists. Issuing Source is one of the main things being rethought about currencies. Who gets the privilege and the right to create cash?

The Chinese want this right. It’s quite literally the wellspring of social economic power.

welcome to the currency blog

With so much going on with rethinking currencies these days, I'm going to be posting every weekday.

nobody every gets back to the first blog entry, unless it's an orphaned baby blog...