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New Forms Of Money?

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To the Moderator - please move this to investment or general if you think it is too off-topic.

Fellow HPCers,

Thought I would start my first ever thread after reading a quite interesting book by Bernard Lietaer, called "The Future of Money"...he has had a 30 year career in the financial world (including being Business Week's 'most successful money trader')...so he knows what he is on about. He raises some interesting points:

The current financial system is now not working in our best interests. There is way too much speculation (for example, fully 98% of the volume of trades in the financial economy are now purely speculative, whilst only 2% relate to the real economy - it has literally become a global casino). The overwhelming majority of this speculation (the new growth area) is in currency speculation, and the volume of money traded in currency spec is now staggering - something like $2 trillion DAILY in 2000 (this is 50 times world DAILY GDP). Clearly something is not right - this is one of the many reasons I hate financiers. The result of this is that central banks are now woefully undercapitalised to deal with this volume of money flow - currency speculation movements can literally destroy an economy in a day because a national central bank reserves are simply not big enough to compensate for the volume of a run against their currency.

This is what happened to EU in 1992/1993, and UK in 1992, Mexico 1994, Asia 1997 etc.

Additionally, the way money is supplied to our economy - through debt, has massively stoked House Prices AND contributed to record debt levels...I think the current system is very damaging and by it's nature leads to boom/bust cycles (we are teetering on the edge of the abyss now).

Anyway, I am quite keen on monetary reform, so it is interesting to see there are many alternatives (not all sound good!) that are coming into play, largely with the internet.

For example, fully 1/4 of the global trade is now done through barter! No I am not talking about Sudanese farmers swapping chickens for cows - an example is the operations of Pepsi Cola in Russia: all the Cola Pepsi sell in Russia in swapped for Vodka, which Pepsi then ships to the US/Europe for cash.Corporations are increasingly able to deal directly with each other without recourse to bothering with national currencies - why should they? It strips out volatility and simplifies operations. The information revolution has largely made this possible.

Also in corporate dealings with consumers there has been an explosion in corporate scrip 'currencies', such as air miles, nectar, Tesco clubcard points etc. And does anyone remember Beans the internet currency? I think it is dead now, but there are hundreds of examples of nwe forms of money coming on-line right now, again largely a result of the internet: - these are the beginnings of corporate issued money.

Some commentators think that corporations will eventually be dealing with each other in their own digital gold-backed currencies.

There are many other groups experimenting with creating new money systems: For example, digital gold and silver backed currencies are already the subject of a lot of interest, such as http://www.libertydollar.org/ (more advicacy for a PM standard than just a business), http://www.goldmoney.com, http://www.e-gold.com/, goldgrams....many already exist - and these facilities can be used to make payments, i.e. they aren't just investments but represent a new form of money. See http://www.lewrockwell.com/north/north149.html for a discussion.

Also, there are many thousands of LET and local currency schemes around the world set up by small community groups - and 400 alone in the UK. If anyone reading this is a member of one I would be very interested to hear your comments!

I remember first becoming interested in the nature of money during the Pokemon craze - when I looked at Pokemon cards and thought 'this is like money'.

Anyway, Lietaer foresees a possible future where corporate scrip currencies will eventually supercede national currency - we could literally be using McDollars or SonYen as valid currencies. Corporations (such as Cendant which has huge databases on consumers) may have the best chance of introducing their own currencies because they can use their information power to do so (again, internet driven). This corporate driven takeover of the monetary system sounds just as bad if not worse than the current fiasco/casino. For example High school children in corporate-funded education schemes have been 'taught' that it is good financial practise to have 20-30% of your income earmarked for credit card repayments!!

Anyway, I am sorry if this has been a bit of a ramble...I just thought I would share some of the interesting stuff I found with you, and wonder what anyone thinks about where money is headed in the future.

Edited by marko

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Marco you raise a good point and Lietaer's book raises many interesting points. I re-read it this summer funnily enough. The speculation - and the vast sums involved - is what creates real uncertainty for our future.

Even stranger to see you mention Pokemon cards. They were indeed like money and I remember buying them trade by the box and letting my two children open pack after pack ("I've found a dark charizard!") in search of the real money!

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please, please do not let this insightful post collapse into YET ANOTHER GOLD RAMPING THREAD!!!!

the original poster made an interesting observation - he did not say "i think we should back our currency with commodities again." he is trying to prompt a much more general discussion about monetary reform and barter in a climate that is, apparently, turning in on itself (non-productive wealth grabbing rather than growth and enterprise) due to the obvious lack of real opportunity (we know why this is ultimately of course)

i thank the original poster for his / her observations and i truly hope we don't just get the usual suspects on here talking about gold.

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please, please do not let this insightful post collapse into YET ANOTHER GOLD RAMPING THREAD!!!!

the original poster made an interesting observation - he did not say "i think we should back our currency with commodities again." he is trying to prompt a much more general discussion about monetary reform and barter in a climate that is, apparently, turning in on itself (non-productive wealth grabbing rather than growth and enterprise) due to the obvious lack of real opportunity (we know why this is ultimately of course)

i thank the original poster for his / her observations and i truly hope we don't just get the usual suspects on here talking about gold.

Losing Faith,

Thanks, I agree: please can we keep this one off how wonderful Gold is (although I rather suspect that it is!! :D ) and stick to something more general about the nature of money and possible directions for it to move in the future.

I have not finished Lietaer's book so I have plenty more to learn. Do people think corporate money can eventually supercede national? Can we replace the current system with something more useful?

Personally I am doubtful that the current system will change except only after a whopper of an upset - when it goes to the wall is when the public get's angry and that is when things have the potential to change.

Edited by marko

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Money/ monetary systems is also something I am interested in.

Few observations. Corporate money does exist - check out the HK dollar. OK, it is pegged to the USD since 1984, but it is issued by commercial banks (HSBC/BOC/STDC) Actually, I trust HSBC more than most governments...

A lot of the reason behind barter is tax minimisation, especially transaction taxes. You can play alot of games to keep tax as low as possible. E.g. most exports from China are first sold to a HK company for little profit, then the big margin is made by the HK firm (tax rate much lower than China...)

I think Visa/MC could also have potential. Also to keep a look out for are new, cheaper, more conveneint payment systems/ platforms (mobile phones, smart cards)

My favourite is Japan, where because the banks were so crap, a whole alternative payment system has evolved around convenience stores...

As for no growth and enterprise, take a trip to China or India. Plenty of growth and enterprise still out there, at some quite stunning rates.

I am also for speculation. Massive liquidity is a good thing, and it stops governments/ countries getting away with stupidity for too long. UK 1992, Asia 1997 had tried to "buck the market" for a long time, so fell hard.

One outcome is that now currency/ IR hedging is now very cheap. A big MNC treasury department almost operates as if using a basket currency now, neutralising currency/ IR swings in the short term.

So, for a given project, who can remove non operational risk. E.g. if you build a refinary in Singapore, you can use the market to "sell off" financial risks (IR/ xchange rates/ oil prices) leaving you free to concentrate on running the best refinary possible, and knowing if you do that, you'll make money even if there are +/- 20% fluctuations in things out of your control.

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most industrial companies issued there own coinage in the 1800s and 1700s in the uk, even towns issued there own pennies ect so this is realy nothing new.

These coins usually had a potrait of the queen/king on one side and the company name on the other, and were used by the general populance.Most notably in the companies stores ect.Lots of these are collectable now and quite intresting.look on ebay under coins/tokens

In the usa before the American mint, the gold was made into coins of private issue these today are very highly desired , and the same thing happened in australia till to stop it the british mint opened up a branch office there and thus bought the miners gold and turned it into sovereigns.At the time this was a huge worry in britain as issuing there own currency tended to give some independence to the colonies, same thing happend in canada and india.

Trade was also done between countries by the use of trade dollars, this was coinage in a certain weight traded between most countries.The coins usually of silver and the same weight as a british crown.

This was the common way for trade to be conducted at the time, realy it didint matter which countries trade dollars you had it was just once again another reconised standard weight to trade in.Being made of silver the value was in the metal itself not in the countries prosperity.

It was only when control over the currencies came in ie when governments wished to take a slice of the action, that many of these forms of currency were outlawed, money circulated at its true wealth in a weight form nothing more and carried no premium.Most trade with china was done in these trade dollars if it was not entirely swapped for goods alltogether.

Edited by homeless

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Hi, very interesting subject that has inspired to make my first post.

So far everyone has focussed on new monetary forms that are conceivably feasible within the current political climate. However, they are still based upon our current economic system that stems from banks controlling credit and interest (hence how paper money was originally created). This system requires an ever expanding economy to ensure its continuation. I think you'll agree the worlds economy and population is still expanding but the Earth and more importantly natural resources clearly are not. So a slightly more forward looking question is what sort of monetary system could be used in a global economy where long-term growth is impossible and at best we have long-term stability?

The best idea that I have come across is the creation of a global currency that is directly linked to resource usage (Think carbon credits but on a much larger scale). Each country would be issued with a set amount of this finite currency which could then be traded globally. As the currency would be directly linked with resource usage it would act as a direct control on climate change and place a limit on the continuous expansion of the economy, which is currently driving unsustainable production and wastage.

Clearly this system is politically untenable in the current political climate. However if the more negative models of the effects that climate change will have turn out to be accurate, then a total rethink over the global monetary system may not be as far fetched as it currently seems.

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corporate money does exist...

of course it does!

why look so hard for an example, bank deposits are corporate money. transaction tools for this medium are a plenty, visa, switch, dd, bacs...

As for no growth and enterprise, take a trip to China or India. Plenty of growth and enterprise still out there, at some quite stunning rates.

my point was that this is finite and will shortly run dry.

growth = more energy than last year

this is not going to be the case forever. these new up and coming economies will soon stall and backfire with terrible consequences.

...capital assets are going to be a thing of the past. no currency system will save your wealth.

Hi, very interesting subject that has inspired to make my first post.

So far everyone has focussed on new monetary forms that are conceivably feasible within the current political climate. However, they are still based upon our current economic system that stems from banks controlling credit and interest (hence how paper money was originally created). This system requires an ever expanding economy to ensure its continuation. I think you'll agree the worlds economy and population is still expanding but the Earth and more importantly natural resources clearly are not. So a slightly more forward looking question is what sort of monetary system could be used in a global economy where long-term growth is impossible and at best we have long-term stability?

The best idea that I have come across is the creation of a global currency that is directly linked to resource usage (Think carbon credits but on a much larger scale). Each country would be issued with a set amount of this finite currency which could then be traded globally. As the currency would be directly linked with resource usage it would act as a direct control on climate change and place a limit on the continuous expansion of the economy, which is currently driving unsustainable production and wastage.

Clearly this system is politically untenable in the current political climate. However if the more negative models of the effects that climate change will have turn out to be accurate, then a total rethink over the global monetary system may not be as far fetched as it currently seems.

it's a nice idea. i think. basically, you are suggesting an energy 'ration book' with the exception that people are allowed to trade their allowance.

there is no reason on earth why this couldn't work per nation - the three day week in the 70's i suppose amounts to the same thing - but more clumsey :)

i would never hold out much hope of implementation on a global scale.

Edited by Losing Faith

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please, please do not let this insightful post collapse into YET ANOTHER GOLD RAMPING THREAD!!!!

the original poster made an interesting observation - he did not say "i think we should back our currency with commodities again." he is trying to prompt a much more general discussion about monetary reform and barter in a climate that is, apparently, turning in on itself (non-productive wealth grabbing rather than growth and enterprise) due to the obvious lack of real opportunity (we know why this is ultimately of course)

i thank the original poster for his / her observations and i truly hope we don't just get the usual suspects on here talking about gold.

goldbullion_big.jpg

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So far everyone has focussed on new monetary forms that are conceivably feasible within the current political climate. However, they are still based upon our current economic system that stems from banks controlling credit and interest (hence how paper money was originally created). This system requires an ever expanding economy to ensure its continuation.

Why is that? The only reason I can see is the everexpanding appetite for government spending that could not continue to be satisfied if growth stopped. This is clearly a political and not an economic problem.

The best idea that I have come across is the creation of a global currency that is directly linked to resource usage (Think carbon credits but on a much larger scale). Each country would be issued with a set amount of this finite currency which could then be traded globally. As the currency would be directly linked with resource usage it would act as a direct control on climate change and place a limit on the continuous expansion of the economy, which is currently driving unsustainable production and wastage.

It certainly would not place any obvious limit on the expansion of worldwide economy. At best it might restrict manufacturing and transport.

Resources provided by the Earth are finite but there is clear evidence that so might be our desire to reproduce. The chances are we will stop before the planet cannot support any more people. We will need to reduce our usage of fossil fuels at some point but that does not inherently mean the economy will shrink. It might mean that resource-intesive products might become more expensive and so people will decide to spend more money on services than physical goods. I can imagine worse problems than being in a situation where I would rather purchase frequent oral gratification than a new car :lol:

Clearly this system is politically untenable in the current political climate. However if the more negative models of the effects that climate change will have turn out to be accurate, then a total rethink over the global monetary system may not be as far fetched as it currently seems.

I am sorry but this sounds at best unconvincing. The modern society is a lot better at protecting the environment than it was at any stage since we stopped jumping from one tree to another. If there is a serious environmental problem that needs to be faced then this will be most efficiently done by using science and cooperating together, not by implementing drastic ways of reducing economic prosperity.

Thanks,

MoD

Edited by MongerOfDoom

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We the masses do not represent a significant unified and well informed and governed wealth. The wealthy Globalist have the money and the power. Thier wish is to make (through the freedom of choice without sight of the endgame) us adopt more and more electrnic money so we be more controlled and better policed. Lest we step out of line.

Electronic money cost alot but the wealth are soo rich that they are bankrolling these things cos the log term gain for them is better.

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I hope rice becomes a currency, because I've got lots of it in the house. More than I can realistically eat for the next few years.

Hmmm, on second thoughts, inflation might be a problem...especially if it's over-cooked.

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Why is that? The only reason I can see is the everexpanding appetite for government spending that could not continue to be satisfied if growth stopped. This is clearly a political and not an economic problem.

It certainly would not place any obvious limit on the expansion of worldwide economy. At best it might restrict manufacturing and transport.

Resources provided by the Earth are finite but there is clear evidence that so might be our desire to reproduce. The chances are we will stop before the planet cannot support any more people. We will need to reduce our usage of fossil fuels at some point but that does not inherently mean the economy will shrink. It might mean that resource-intesive products might become more expensive and so people will decide to spend more money on services than physical goods. I can imagine worse problems than being in a situation where I would rather purchase frequent oral gratification than a new car :lol:

I am sorry but this sounds at best unconvincing. The modern society is a lot better at protecting the environment than it was at any stage since we stopped jumping from one tree to another. If there is a serious environmental problem that needs to be faced then this will be most efficiently done by using science and cooperating together, not by implementing drastic ways of reducing economic prosperity.

Thanks,

MoD

For those that can't be bothered reading this claptrap, it translates as follows:

"I believe in laissez-faire economics, and believe that it can solve any problem that may present itself. Do not worry, everything will be fine".

Edited by Smell the Fear

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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