The Meritocratic Monetary System

#1

We should make it more clear why the monetary system needs to be changed and what our plan is. Much attention is being drawn towards the money creation mechanism.

Economic historian Alexander Del Mar is cited prominently by Zarlenga (Lost Science of Money) and Kumhof (Chicago Plan Revisited) on the subject of private money control. It is from Del Mar that we see that the current system of money private creation was instituted, with support of the British East India Company, in 1666 by the English Free Coinage act. This marked the sovereign’s submission of control over the money supply to private institutions. It cannot be overstated how monumental this change to the monetary system was. This is a sleight of hand at the core of the modern politico-economic system. Financial crises did not exist in England until this change and all of a sudden they became standard. Between 1694 and 1890, 25 years never passed without a crisis in England. These crises are attributed by the likes of Zarlenga to overshooting in the creation of money, credit and debt by private banks in a fractional reserve system.

Martin Wolf’s recent book has paved the way for discussion on monetary reform. It is significant that individuals of his stature in economics are now discussing the fact that since the 17th century, power over the money supply has been relegated to private commercial banks and that this is fundamentally the fragile base of the financial system that leads to systemic crises.

“…the balance between the role of the state as ultimate supplier of money, and that of the private sector as actual creator of almost all of the credit and money we use, is highly destabilizing. We have made a pact with the devil. It is not a new bargain. On the contrary, it goes back many centuries. But we have recently been reminded that the dangers are huge. Moreover, the liberalization of finance seems to lead to crises almost automatically. Surely this strongly suggests a need for a new kind of system.”

“The ideal way to go….at the national level, would be to adopt something closer to the Chicago Plan, or similar radical monetary proposal”

Statements like these and especially the work of Positive Money have led to an upcoming debate on money creation in Parliament, supposedly the first of this kind is 170 years. “This morning we were told that Parliament will hold a three hour debate on the issue of ‘Money Creation and Society’ on Thursday 20th November.”

This is a recent quote from Baker: “I believe that this is a problem that is absolutely at the heart of our society and what is wrong with our economy. The organisation Positive Money has helped me to campaign on this issue… I want it to be on money creation and society to flesh out both the problem and the range of possible solutions.”

http://www.positivemoney.org/2014/11/uk-parliament-debate-money-creation-first-time-170-years/

Positive Money’s proposals are similar to the Chicago Plan. There are many advantages to this type of monetary systems but there is reason to think that Chicago Plan like monetary reform is perfectly incorporable for the banking cartel. However, alongside other meritocratic reforms and mutual credit clearing, this may not be the case.

It seems monetary reform may become a legitimate political issue in the near future. Adair Turner will likely be discussing this in his next book and he has recently become more outspoken on the subject. The Bank of England’s first quarter 2014 report on money creation has been a major factor. It has been suggested that the nature of this report was influenced by The Chicago Plan Revisited. Michael Kumhof was partly inspired to do that study by his affiliation with the American Monetary Institute (AMI), which is a forerunner to Positive Money.

AMI’s reform proposals claim many planks on our general platform, like funding for university education, enhanced public education, student debt cancellation, other forms of debt cancellation, physical infrastructure, scientific research and development, support for small and medium sized businesses and full employment.

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#2

Consider this post in the AMI’s google group.

https://groups.google.com/forum/#!forum/the-american-monetary-institute

The Fed, Environmental Destruction and

How to Fund a Sustainable Energy Infrastructure

By Jamie Walton, with contributions from Mike Holden, Howard Switzer, Joe Bongiovanni, and Mark Young; participants at AMI conferences, and on the AMI Google Group forum

(go to: https://groups.google.com/forum/?hl=en#!forum/the-american-monetary-institute)

October 20, 2014

The Fed (the Federal Reserve System) is the back-stop, bailor-outer and get-out-of-jail-free-card-dispenser for the banking system. The banking system creates the bulk of what we used for money (so-called “deposits”) whenever a bank makes a loan or purchase, by using the same bookkeeping procedure as though someone had actually deposited some cash with the bank for safekeeping (don’t worry, in no way does this procedure make any real sense, but we’re not going to go into that here).

The end result is that every dollar in circulation has a dollar of interest-bearing debt tied to it, somewhere in the banking system; as all bank deposits are matched by more than an equal amount of loans, mortgages, lines of credit, etc., on the collective balance sheets of the banking system. This means that every dollar in circulation today has to eventually be paid back to the banking system, with interest.

To satisfy this condition, banks will endeavor to only make loans (or bond purchases, etc.), that they think will be able to be paid back, with interest. This means that the borrower has to do something which generates at least enough income to service the debt, i.e., some sort of “commercially viable” activity. While commercial activities can produce many of the goods and services we want, they often do so at great uncounted cost to the environment. For example, cutting down the Amazon rainforest for cattle grazing. The cattle graziers don’t pay for the loss of oxygen in the atmosphere (this is called an “externality”). Likewise, no bank is going to lend money to someone to plant trees and not cut them down, because there is no way this will generate income to service the loan.

To solve the real environmental problems we need face up to today, we need money that doesn’t need to be paid back. The National Emergency Employment Defense (NEED) Act provides us with a money system where money can be invested in environmental projects and doesn’t need to be paid back with more money, because that money is debt-free sovereign money (like only our coins are now). Instead, we can enjoy the payback in the form of cleaner air to breath, cleaner rivers and oceans, less soil erosion, and so on. These are real environmental benefits for humanity and all life on earth that may be beyond measure, but in any real conservative analysis must be seen as far outweighing the initial investment in dollars.

Due to the processes described in brief above, the present debt-money system run by the banking system is driving environmental destruction everywhere. Obviously, a system that is driving environmental destruction cannot be used for environmental restoration.

The NEED Act provides us with the means to embark on the critical transformation that we need to make towards a sustainable path, by enabling us to really and truly invest, to the full extent required, in environmental restoration and conservation projects, and in new eco-friendly infrastructure projects. See here for more background and explanation.

How to Fund a Sustainable Energy Infrastructure

What is a sustainable energy infrastructure?

It must be renewable or inexhaustible, and it must be non-polluting.

As discussed above, the debt-money system run by the banking system is not amenable to investments to protect our environment, nor the kind of concerted and co-ordinated pure research and development we need to undertake to get right away from non-renewable and unsustainable energy sources. Only national efforts with national funding can do this.

To prove the point, here’s an example of some of the technologies we use every day that were funded by the U.S. Government and other nation’s governments1, and which probably wouldn’t exist if it had been left up to private entities:

CPUs (Central Processing Units); integrated circuits, in microprocessors in computers.
DRAM (Dynamic Random-Access Memory); memory in computers.
HDDs (Hard Drive Disks); hard drive storage for computers.
LCDs (Liquid Crystal Displays); color screens on some computers and TVs.
Li-ion (Lithium ion) or lithium polymer batteries, used in electronic devices.
DSP (Digital Signal Processing); converts analog signals to digital form.
FFT (Fast Fourier Transform) algorithms, used for computer calculations.
Cellular technology and networks, used by mobile phones/devices.
GPS (Global Positioning System); used by mobile phones/devices.
Click-wheel navigation and multi-touch screens; used on electronic devices.
SIRI – AI with a voice-user interface; used in iPads and iPhones.
Internet and HTTP/HTML; the world wide web of computer and phone connectivity and the computer language which helps it to work.

What’s needed is a national government initiative, a national research and development program akin to a 21st Century “Manhattan Project" for a sustainable energy infrastructure

The NEED Act provides the means to be able to fund this national effort without more debt and more taxes. It provides debt-free sovereign money which can be invested in the betterment of our future without having to be paid back; we can get the payback in the form of a cleaner environment, without any financial burden on future generations.

It would make pragmatic sense to go for the low-hanging fruits first, by fully developing the technologies we already know about but haven’t fully developed to their full potential, such as non-interrupting hydro2, geothermal, wind, solar, wave and tidal.

As the national research and development effort continues, we may find way to harness the sea of energy in which the Earth floats. Such technological discoveries are really discoveries of nature, and nature shouldn’t be patentable - we should see this as part of our common wealth. The NEED Act gives us the key and catalyst for a sustainable future.

1 Courtesy of Mike Holden, AMI member in Michigan.

2 There are methods of harnessing energy from rivers that don’t involve interrupting the flow of the river.

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#3

To reassess the value of economic markets and create alignment with a Meritocratic Republic Capitalism, the consideration must begin with the number of lives, of every species, that have benefitted, or have been detracted from, in the transaction of each good and service. Any good or service that causes obvious or even apparent harm, except in cases of negligent accidents or intentional misuse, will not be permitted. For the reasons that a good or service may reduce the life, liberty, or pursuit of happiness of any being(s), it is essential to reduce the occurrences of such products or actions to as close to zero as possible. To undermine the power in place, the source of their control through resources in energy and material goods, such as gold, silver, and oil, must be reduced to a value of zero in public markets. Ideally, if energy production was completely redirected from all non renewable sources, it would be free. All practical applications of gold will be replaced with other materials. Finite resources create conflict. In order to reduce entropy among humanity and the world environment’s health, all desire to transact these destructive goods and services must be erased from market trading. In return, monetary notes will have a renewable resource backing. The new resource backing will provide the capacity to make a broad spectrum of products including, but not limited to: clothing, fuel, medicine, carbon nanotube supercapacitors superior to graphene, paint, cosmetics, food, furniture, plastics, home construction materials such as, boards, beams, and hempcrete! Hemp notes would create a market of goodness through positive, productive, healthy, and creative transactions of goods and services. All notes in circulation would be relative to the mass of the collective hemp reserves, printed in correlated values established for the amount of resource available to refine into manufacturing raw forms: fibers, hurds, seed, oil, leaf…etc. Once the hemp notes are redeemed at the reserves, these raw forms can be used to feed, house, clothe, and medicate, or transform into any one of the aforementioned products of major use. To transition into this monetary system, businesses that can produce goods or services using hemp replaced materials, would buy a volume of hemp resource from the reserve in the local currency. In return, the employees would accept, as an increasing proportion of their checks, hemp notes that would be spent for-profit in hemp supporting markets. Because the market is literally grown, the mass volume of usable resource could always increase the value of the notes, because the transaction of the notes would not outrun the attainment of it.

The number of times a product is acquired from a market, represents it’s desirability, whether it is art or a unit of resource or energy. A calculation of merit could be reflected by the value of total transactions in various markets, so long as it is being incorporated in a healthy and helpful way to mankind and the planet. Since hemp notes are redeemable to utilize for the essentials, all government welfare and social programs would be erased. Nor would the reserves require identification for redemption of currency, because it will only yield a beneficial result through the use of the hemp acquired.

Some of the benefits of this system: inflation would only take place on non-renewable resources, that would increase in price with the overall amount of resource/money held at reserves, just to maintain it’s rate of attainment, so as not to use these too quickly; Reverses atmospheric CO2 ppm; Reverses environmental radiation; Does not require pesticide, herbicide, or fungicide to grow; Produces approx. 80 times the amount as that of trees, per acre over the course of 20 years; Chemically safer to bleach;

#4

I will be giving a presentation on a meritocratic monetary system to a small group of activists on March 2. Here is a link to a description of the event. https://sites.google.com/site/monetaryliteracy/
I will have a post which summarizes some of the ideas I am presenting.

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#5

That sounds excellent @EMX!

Is this your first time meeting the group as well or were you already a regular?

@jjdnow - is it taking place near to where yoou live? Might be interesting to head down there and for the two of you to meet up :).

#6

Yes, Ed has already contacted me, Im going to make every effort to attend.

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#7

Ah, wonderful to hear.

#8

I hope it goes well tonight! I look forward to hearing the recap when you get back :).

#9

It went really well. This was my third meeting with the group. There was 9 attendees, all older in their 50’s-60’s. I guess they have been meeting for about 6 years, initially to oppose corporate person-hood (at the instigation of the iconic documentary “The Corporation”) and now they also discuss monetary literacy.

My main purpose was to do a project to further my understanding of monetary systems and particularly the books of Tom Greco and most specifically, alternative currencies based on an objective composite commodity unit of account. Fortunately, one of Greco’s associates, professor Jem Bendel, is currently conducting a MOOC called Money and Society which has helped my research.

I considered endorsing Meritocracy but elected against it for several reasons, primarily age. There was more than enough for us to discuss anyways and I had to skip about half of the material.

There is a lot about basic social justice issues in the PPT. Slides 24-32 get down to the fundamentals of meritocratic money.
Meritocratic Monetary Theory.pdf (849.5 KB)
There is still a huge problem for me in the literature of monetary systems. Im not going to get into it now but it has to do with the fundamentals of money creation as one of my econ professors assures me that Michael Kumhof’s ideas (slide 2-3) are not exactly correct.

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#10

An awful lot of that went way over my head, but it’s still good stuff nonetheless. I think it’s time for me to start familiarising myself once more with economics.

#11

Yea I think I could have made it more clear, part of the problem was I was assuming an audience with significant knowledge on the subject.

The main point is to introduce the advantages of alternative currencies, specifically mutual credit clearing. Current political currencies are controlled in the interests of power elites so money is kept artificially scarce causing labor and resources to stand idle. Also, there is a systemic redistribution from poor to rich. Through properly constructed alternative currencies people can empower themselves by monetizing the value of their labor without relying on political currencies.

Wide-scale mutual credit clearing is feasible with the establishment of a proper unit of account. A survey of the issue leads to the conclusion that the most ideal unit of account would be based on a composite commodity basket designed to maintain a stable relation to the number of goods and services in the aggregate economy.

Greco’s outlook is that we must transcend political currencies by private initiative.
In the context of Meritocracy, it becomes possible to envision a public initiative to restore the credit commons.

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#12

YES!!! - Right on EMX, I am so happy to see this post, the debt money system has been, and remains one of humanity’s biggest problems. With a moral, debt free money system so many problems and conflicts will begin to fade away.

#13

This is an old conversation but I’ve posted something on this line in the link below, and wanted some opinions in my point of view on this issue, regards.

      PART

ONE – ON THE ISSUE OF BITCOIN FROM A MERITOCRATIC PERSPECTIVE

I
believe that, through our powerful telepathic collective quantum mind
entanglement I’ve came to an answer that is up to the task.

When
you say that “Even at the time of Adam Weishaupt it was impossible
to stop people passing on wealth to the next generation” it makes
think that i know how to solve it. We can use the Bitcoin platform
and being more precise, the blockchain technology and their massive
hashing and cryptographic capabilities to do that. But surely we have
a massive problem on that because the current lack of transparency in
the Bitcoin network that happens at the level of the wallet software.
To solve that we must do some serious hard work on open hardware to
develop something that many Abrahamists will label “The Mark of the
Beast”. We must develop a: 1) Free/generic, 2)
biometric/genetic/quantum, 3) perennial/omnipresent wallet device, 4)
controlled by an open and known algorithm that, 5) allow the fully
transparency of all known wealth and who owns it, as is the only
accepted monetary form globally and, 6) over that system we can apply
a simple statistic standard deviation (sigma), average, median, mode
calculus on where do the inheritance taxation that will serve to our
purposes to create the perfect conditions where every human being can
find equivalent conditions to fully express his or hers divine
potential.

The
device has also to have a massive processing power that can be
obtained through laboratory proven and readily available graphene
transistors to mine Bitcoins for the users of the network, empowering
them and making them less dependent on the Capitalist Banking cartel.

In the
place of the decaying Capitalism we shall overcome our Meritocratic
Republic will direct FIB Index credit (details at part two).

All
other taxes can be forgotten, the poor will hunt the rich for that
our Meritocratic Republic get the values needed to our enlightened
purposes and that may cause episodes on the like of the most violent
phase of the French Revolution, but now, every dead rich person will
give the “state” enough wealth to fully actualize the whole of
human potential.

To
those that use other monetary form or that try to pass in life these
unfair advantages, we criminalize their acts and punish them with
ostracism for those who break this laws, not death penalty. The
individual has his belongings and the ones that has passed in an
unfair manner confiscated and he is forbidden to frequent the
Hyperboreas and, as a final punishment, the poor individual can be
taken and leaved in some random place in the world with nothing
beside his or her own talents to restart his or her life. - ostracism
for those who break this laws, not death penalty – so they may
learn…

All
that can be tracked through algorithms that run over the Bitcoin code
through the wallet device. Those algorithms can search, through
Biometric/Genetic databases and detect such cases.

This
part of the brainstorm/insight ahead mixes some other sources outside
our scope so I’ll avoid posting a link collection in here, feel free
to contact me to more materials on those sources that I’ll point
ahead in the text.

END of
PART ONE

  PART TWO – ON THE ISSUE OF THE MERITOCRATIC REPUBLIC AND TECHNOLOGY

An interest group outside our environment is a group that grown
around an USA Perennial President Candidate, the very controversial ex
trotskyite and former US Labor Party, currently in the fringes of the
Democratic Party, Mr. Lyndon LaRouche and his LaRouche PAC / Basement
Team his scientific “skunk works.” An alleged “unique amalgamates of
moonbattery and wingnuttery,” these people have, as far as I can tell
and, please correct me if I’m wrong, a lot of crypo Illuminism on their
approach. From them we can use several insights that, as far as I
understand, seem to me useful to our purposes.

The LaRouche PAC / Basement Team has provided us with an interesting
concept that is the plasma torch, an form of controlled high density
artificial plasma that decay in a designed fashion with the intend to
stabilize neutrons and protons in a given configuration. Several desktop
laboratories have confirmed it and researchers that I personally now
have also confirmed it too, that is is possible to create new raw
materials using as resource any kind of other material. The only thing
that happens is that the whole process is very inefficient and is
heavily depends on massive amounts of energy, what makes it economically
inviable. Another effort on open hardware, of a similar amount of a LHC
or Manhattan, or any new ISO standards has to be implemented. It has to
have the following characteristics: 1) It has to put us in the edge of a
new background of sciences and technologies, what has serious political
impact, 2) it has as aim a new technological paradigm similar to the
transition from pre-eletrics to post electrics or pre nuclear to post
nuclear, 3) it has to be the advent of the quantum technological
paradigm and our organization has to lead this process, 4) this can be
used to developed the afore mentioned wallet device, and 5) for the
transition period is has to produce two things namely: a) an high
efficiency solid state generator and b) another commodity such as gold
to serve as the bait of the endless source of liquidity in the scenario
of plunging capitalism.

That liquidity has to run until the point where the use value
vanished of material monetary form wealth to the point where is only
exchange value and the monetary form serves only as an transparent token
backed by a never before seen amount of artificial and extremely pure
gold. Money is a concept not a thing, there is a say that “He who has
the Gold rule, that is the Golden Rule” and capitalists get attracted by
that. As ABRAXAS we can control our dark side and use the power to
create wealth in a directed way that put us in charge of direction the
objectives and quality standards we judge necessary to increase the FIB
Index and energetic flux density available for our population, providing
with that the means necessary for a Meritocratic Republic to work.

Similarly to the Hamiltonian directed credit to increase the
energetic flux density as LaRouche proposes, we can do better than that
and resolve the mentioned technological unemployment through FIB Index
driven projects, in a manner that creates a Meritocratic Republic.

Some UFO related discussions that brought recently some severe
insights on alien technology were in the background of this analysis and
many of the materials of the Disclosure Project group on this theme may
be a good starting point.

Over that, a contribution of mine. An Institutional approach to a
Meritocratic Republic can star on this forms: 1) fusion of the
senates/deputies and ministers in an meritocratic unity dedicated to
manage the state monopolies and, 2) to be able to direct transparent
credit to specific FIB index driven projects having as the clause petrea
3) to create the conditions where most of mankind can express their
fully potential.

This must happen at the BRICS coalition, there is where I believe the future will happen…

END of PART TWO