I propose that the paradigm described here of money, credit, currency, debt etc is the old incumbent flawed one, which cannot be used as a competent basis for realising the full potential of holochain for designing and implementing a competent economic transaction system that will displace the existing bankrupt central banking system and its next fraudulent incarnation.
The first error is locating the origin of economic purchasing power[1] in the domain of exchange (i.e. trade), instead of locating it in the domain of production.
NOTE 1: Purchasing power is known popularly as “money”, i.e. in-ledger credit as “money of account” (i.e. bank money) or off-ledger credit accounting tokens in the form of coins and notes known as “currency”.
Before anything can be exchanged/traded it has to be produced. Human economic production is a cooperative process based on added-value supply-chains which give rise to evolutive ecosystems of production and consumption, based on the specialisation of human work and its organisation, according to the inherent abilities and interests of economic producers (i.e. not autarkic producers who subsequently trade or exchange).
Even under primitive technological conditions, autarkic production cannot support human life. Mutualisation of specialised abilities among members of primitive hunter-gatherer societies was a condition of individual survival. A system of ensuring reciprocity between production and consumption within these primitive societies was not needed due to their small population size and primitive technological development, wherein unmeasured economic transaction (known as the “gift economy” was sufficient. Barter was never a precursor of accounting systems for economic transaction.
A unit of account to measure the relative value of commodities or work, originated in primitive societies as a means of allocating compensation for injury done to members of a tribe, or for religious atonement / sacrifice. This is the origin of debt as a publicly notarised accounting entry that had to be settled / redeemed by the payment of a measured amount of goods or services. The unit of account was often expressed in terms of livestock (head of cattle), but the compensation payment could be made by other means, so long as their value corresponded to the value of a given number of livestock that represented the unit of account.
Early legal systems originated as public records of the amount of compensation to be paid to redeem “crimes”/sins, by which the amounts of compensation were expressed in terms of the agreed unit of account.
Once human technological development reached the stage of settled agriculture supporting large population urbanisation, economic reciprocity between production and consumption could no longer be maintained on a gift economy basis, due to the massive increase in the specialisation and scope of the economic ecosystem, based on ever more complex and extended added-value supply-chain networks.
The innovative solution was to enumerate the commodity and labour inputs of a large scale ultimate supply-chain production (such as a public works irrigation system and food storage facility), and allocate a reciprocal amount of purchasing power to requisition the commodities and labour required to complete the final production. This was done by using the unit of account used since ancient times within the legal system, which ensured codified measures of compensation for the redemption of debt for various injuries / sin caused.
In other words, scribes would firstly list the total material and labour inputs for a public infrastructure that would significantly increase the economic potential and prosperity of the society. Then each budget item on this list would be enumerated using the unit of account from the legal-compensation system. The enumerated production budget would then be totalled, and notarised on the debt side of the double-entry accounting ledger. A reciprocal amount of requisition rights (purchasing power) would then be inscribed on the credit side of the legal system ledger.
The production enabling rights on the credit side of the ledger were then transferred off-ledger to physical tokens, which were unconditionally transferrable, thereby enabling the producers of existing inputs to give up their surplus production in exchange of such requisitional tokens that they could use as unconditional purchasing power, enumerated according to the societal unit of account. The first tokens were made of clay and had no “intrinsic value”, because they were instruments in a legal-accounting system to ensure economic reciprocity between enabling production rights, issued against (counterparty to) a notarised production obligation.
As Aristotle remarked, “money by nature is law”. Since ancient times the Greek word for money is “nomos”, which means “law”. The word economy comprises the Greek works “oikos” (eco) and “nomos” (law). Oikos signifies “household” as well as the wider notion of a social unit or polity (such as a city state). Economy therefore transliterates as the law of the polity that regulates reciprocity.
Fungible commodities such as precious metals were not used within domestic jurisdictions, but as a means of settlement between monetarised jurisdictions (i.e. for international trade). The use of commodity money within domestic jurisdictions is a sign of the breakdown of law, usually caused by war, where foreign mercenaries were employed and paid in precious metal coinage.
Today with the use of ATMs, we can still see the original link between different but interlinked accounting systems of purchasing-power: in-ledger purchasing power (credit in a bank account) and off-ledger purchasing power (coins and notes).
The incumbent central banking system is a fraud which requires the creation of the extractive speculative financial market system. The first fraud is that enabling rights (credit) to fulfil a notarised production obligation (debt) can only be issued to a bone fide producer who has undertaken such notarised production obligation (debt). However, the banking system steals the producers credit, and claims is as its own “asset”, which it then “lends” (rents out) at a compounding rate of interest. All bank credit is therefore counterfeit, especially when it is issued to non-real economy producers.
There is a lot more to say, but I need to take a break. My intention is to restart this thread in the hope that we can discover the right paradigm of “money”, and thereby use holochain in the most powerful way to free humanity from financial slavery. We have to go beyond the present concept of “mutual credit”, so that we can architecture a system for regulating economic reciprocity that is decentralised. The ultimate “capital” (as a means of production) is human creative discovery and production. That capital exists within the sovereignty of each individual. Each one of us is therefore the true investor of our innate talents. That is why we need a decentralised banking system. Banking is a system of accountancy on the scale of economic ecosystems. As Max Plank said “when you change the way you look at things, the things you look at change”.
Thanks for your interest. I hope my input can be of use.
