Our cumulative research and analysis reveals the roots of financial dislocation, economic collapse and problems which have now been identified as “global issues” and referred to in the Sustainable Development Goals (SDGs) from the United Nations.
Centralised issuance and control of money drives Human Activity, often with disastrous consequences in terms of economic crises, hunger, disease, inequality, conflict, waste and environmental destruction. Structural incentives and penalties create these as consequences of the current global money system. We see the effects of centralised control in macro risks, i.e. systemic or structural risks that threaten everyone.
The following are indicators of structural flaws in the current political economy which give rise to systemic or macro risks from an economic perspective.
Asymmetric power ensures the dominance of the ‘short side’.
“Markets are never in equilibrium, thus don’t be fooled by prices, but consider quantities: The short side exerts power.” See point 3 of ‘Shifting from central planning to a decentralised economy’ by Richard Werner
Commercial and regulatory pressures funnel capital to the global banks and into their products, creating a ‘winner takes all’ environment in which personal accountability has been removed. Buy lists and model portfolios have become de rigeur to comply with regulation and maximise profit – those that don’t emulate or buy into the ‘market leaders’ and their process/research/products find it hard to compete.
A vast proportion of securities traded are virtual or financialised, i.e. ‘paper’ representing assets, not the assets themselves. Estimates vary but one study suggests that the derivatives market adds up to some US$700tn. Netting off would reduce that figure but nevertheless, it is a ‘known unknown’ in terms of the risk within the derivatives market.
This CISI Review article provides greater detail: https://www.cisi.org/cisiweb2/cisi-news/the-review-article/has-financial-services-regulation-made-the-world-a-safer-place-for-investors
Reform Proposals in the Monetary System for Attaining Global Economic Stability
In 2017, armed with our shared understanding at that point, we accepted an invitation to have our Reform Proposals in the Monetary System for Attaining Global Economic Stability published in the Islamic Economics Journal of King Abdulaziz University in Jeddah, Saudi Arabia.
Subsequently, we’ve attempted to alert people to the anticipated financial and economic collapse through multiple channels of communication. One of the earliest indicators of impending collapse was when the US Federal Reserve Board (Fed) began the dramatic expansion of its balance sheet in September 2019, although its significance only became clear in early 2020. Economic depression and financial collapse are underway irrespective that published data fail to reveal the reality: over-issuance of major currencies and the decimation of large swathes of the global economy are leading us into uncharted territory and potential disaster.
However, we have the means to alter the trajectory to achieve economic recovery and resilience.
Distributed Tokenisation to Escape Economic Dysfunction
We published three papers in 2020 which describe the emergence of alternative distributed money systems that can help alleviate the immediate affects of the unfolding collapse. In addition, our research and analysis suggest that open access to distributed money systems will be the foundation of the sustainable, inclusive political economy.
Structures and Money In Transition – April 2020
The End Of The Age Of Plunder – May 2020
COVID19: Plunder and Population Reduction – Structural Violence in 2020 – July 2020
What is Money?
Until recently, we contended that usury or interest on money is one of three fundamental flaws in the structure of the political economy, the other two being institutional hierarchy and theft of commons. However, usury is not the end of the story when it comes to money.
Our subsequent work on the Taxonomy of Money revealed that while usury is undoubtedly a driver of economic dysfunction, the source of our money is of crucial importance.
Interest on money has resulted in the concentration of power to issue and control money to which access is conditional. It is exogenous (originating from outside; derived externally) to human activity. Human Activity has become the servant of money rather than money serving humans (other than those who issue and control money).
Taxonomy classifies all money according to fundamental elements or attributes. Accompanying the Taxonomy of Money submission is a spreadsheet that categorises a variety of physical and digital currencies. Download the spreadsheet to explore these and other currencies you may wish to add in order to taxonomise them.
Money is a concept that has been around for a few thousand years but has changed little in its fundamental nature and its effects, irrespective of technological and financial innovation. Current money is Money 1.0 and an upgrade is long overdue.
Money 1.0 is premised on a fundamental misunderstanding of what it replaced.
Contrary to Adam Smith’s arbitrary declaration that money replaced barter, for millennia, Human Interaction involved satisfying each others’ needs via relationships and within environments based on Trust and mutual support, rather like a large family. Families tend not to pay each other for gifts, favours or help.
Unlike Adam Smith’s claim, there is ample anthropological and archaeological evidence of such value systems in action and ledgers documenting values in medieval societies. Tally Sticks, used for hundreds of years in England, were a form of ledger.
Why is this distinction vital? Because these human value systems rely on Trust both between parties and within the wider community. Furthermore, within human value systems, everyone is looked after in terms of their basic needs, irrespective of their capacity to Create.
Why did money materialise? Because once you attempt to transact beyond the Trust boundaries of the community, i.e. to deal with strangers, one needs a medium of Trust that will hold true irrespective of whether parties to a transaction are trusted. When transacting beyond the local community, one could not rely on its societal bonds to establish Trust for trade with other individuals or communities, particularly on a large Scale, e.g. when deploying armies in foreign lands.
Money’s current form was adopted because it was the means to overcome these hurdles of Trust and Scale. Once established, humans haven’t questioned the fundamental nature of money since, not least because of Adam Smith’s unsubstantiated declaration.
“Trust” in Money 1.0 has displaced Trust between humans leading to numerous adverse consequences.
Endogenous Tokenisation (Human Value Systems)
Essentially, endogenous tokens are integral to Human Activity; they foster Trust, collaboration and inclusion rather than competition. In addition, endogenous tokens overcome the obfuscation of value or worth through the proxy mechanism of exogenous money, See 5.1 of the Taxonomy submission.
Endogenous tokens reflect the Use Value of a given transaction to each party and, within a distributed network, the Use Value to the network.
The “currency” of endogenous tokens is Trust; they are a store or Count of Trust.
Endogenous tokens are described more fully in the Tokens section.
Human Value Systems (Endogenous Tokenisation)
We are indebted to the structure created by money not to individual humans, although undoubtedly some humans are beneficiaries of the Money 1.0 structure which feeds off the value created by Human Interaction locally, nationally and globally.
The invention of Money 1.0 suppressed the notion/understanding of Human Value across the world.
Human Value Systems help to Create and then Capture, Store and Transfer the value arising from interaction between humans. Political economy underpinned by such systems is driven by Use Value, thereby eradicating the perverse consequences of Money 1.0.
Macro or Systemic Risk
The single point of failure of the proposed human value systems or endogenous tokenisation is the internet itself but that applies to today’s money as much as any digital money system, centralised or distributed.
However, as explained in the Introduction, distributed reward systems will embed resilience and stability into the political economy, thereby avoiding the risks …of Scale, Homogenisation and Virtualisation driven by current exogenous centralised money systems.
Failure of the Internet – solution: Physical or Analogue BackUp/Records
- Scale – financial system failure contagion leading to global economic collapse
- Manipulation of Exchange Value leading to misallocation of resources: Needs are met only for the few – Widespread Poverty and Inequality; Creates more Waste than Use Value – Environmental Destruction
- Virtualisation of Assets leading to Money, rather than Need, driving Human Activity
Money Supply is the lever to control Human Activity.
Exogenous money not only dictates where resources and effort are applied but expansion and contraction of the money supply dictates the level of economic activity in absolute terms. The following article is not concerned directly with money supply but describes the effect of central bank intervention on markets which, in turn, influence economic activity.
Has financial services regulation made the world a safer place for investors? – The Journal of the Chartered Institute for Securities & Investment – The Review
When using endogenous tokens, we are talking about infinite “supply”. Unlike exogenous money, endogenous tokens (digital) aren’t recycled but once in existence, stand as a measure of Use Value.
The level of Human Activity is unaffected by the “supply” of Value Tokens (VTs) because Human Value is the “supply” – the accumulating number of VTs is a measure of growing prosperity.
The accumulating data on specified Needs and capacities to Create provide valuable insights to enable those participating in the distributed network to optimise resources for maximum Use Value.
New Model for Enterprise
There is no “passive” investment in enterprise within an economic system driven by Use Value, comprising Need Tokens (NT) and Create Tokens (CT) recorded within the distributed ledgers (see. Tokens). “Shareholding” or participation is represented by the resulting Value Tokens (VT) held by individuals throughout the distributed network of endogenous ledger systems.
The Sustainable Development Goals (SDGs) address, among other things, environmental issues. The environmental goals (SDGs) are unobtainable within the current money system because structural incentives and penalties resulting from exogenous money are driving planned obsolescence, waste, destruction and pollution. Exchange Value (i.e. exogenous money) dictates where and how resources and efforts are applied. Human Activity (environmental destruction) is driven by exogenous money.
The Use Value represented by endogenous Need tokens relating to an individual’s Needs are Validated and satisfied by goods and services, the Create Value of which has also been Validated. In such an environment in which Use Value is validated between many parties (see. Tokens), only that which is needed is created.
Structural incentives and penalties within an endogenous token environment deter planned obsolescence, waste, destruction and pollution.
The Use Value of the land, what grows on or in it, together with the resources underneath it will be optimised – an achievable, sustainable, development goal.
Conventional wisdom assumes large complex enterprises or projects cannot function without organisational hierarchy. Frederic Laloux’s research and book, Reinventing Organizations, demonstrate how large, complex tasks are accomplished through self-organisation.
Frederic shows, with case studies, how self-organisation can effectively manage large scale complexity, such as in a distributed endogenous token system.
Self-organisation created the internet and related technologies, including distributed ledger technology (DLT). Self-organisation is the rational means to establish the new political economy.
Financial inclusion is much touted as crucial to achieve the Sustainable Development Goals (SDGs)
Is financial inclusion in the current exogenous money system beneficial or a poisoned chalice?
From a recent DCGI paper on Financial Inclusion:
Accumulating data demonstrates the inequality within the current money system.For example, recent statistics:
● 26 million Brits use an overdraft every year with many of us using arranged and unarranged overdrafts each year
● 19 million Brits are using arranged overdrafts, 14 million Brits are using unarranged overdrafts and 7.3 million have both
● As many as 8.9 million Brits are potentially being charged overdraft fees which, they either don’t know about or understand
● And from the same source: 40.93% of Brits don’t have enough savings to live for a month without income.
In 2017, overdrafts were estimated to have created over £2.4 billion in revenue for financial institutions.
Financial Inclusion is desirable, if it benefits those “included”. Currently, financial inclusion benefits the few at the expense of the many but inclusion in an endogenous ledger system which values and rewards Human Activity is both beneficial and easy to accomplish for everyone in the world.
In The End of the Age of Plunder, we refer to Pixie Dust when talking about money.
Money has no intrinsic value but, like “Pixie Dust”, acquires value through faith and trust; in other words, money only has value because we believe it has value. Fiat money, issued by central banks, is believed to have value because it is backed by the government and economy of the country, (in the case of the Euro read countries), in whose name it is issued.
Endogenous Tokens provide unconditional access to Pixie Dust for anyone to Create and satisfy their Needs. It doesn’t come more inclusive than that!
Current thinking on Financial Inclusion entails “Financial Literacy”; in other words, to achieve Financial Inclusion, we need to teach nearly eight billion people to navigate the complexities and avoid the pitfalls of current financial systems.
Financial Literacy is NOT REQUIRED to use and benefit from endogenous tokens.
Precedents for Valuing Need
- Green Shield Stamps
- Air Miles
- Loyalty Cards
- Steem – see “STEEMIT – A Guide for Newcomers“
Our research and analysis reveals that money drives everything… and that includes most crime, which arises from the inability to satisfy Needs.
Endogenous Tokens remove the drivers of Theft, Fraud and Financial Crime – most crime starts and is supported by people being unable to satisfy their Needs.
Distributed Trustlines promote Societal Cohesion.
Climbing the Wrong Mountain
THE WRONG MOUNTAIN
There was a man,
who could have been
any of us and probably is,
who after a long arduous ascent
full of grit and sacrifice,
glanced back across the horizon,
only to realise that he had
climbed the wrong mountain.
But it’s never too late to start again!
Exogenous money sent humans up the wrong mountain and generations followed.
We are the generations that can replace the structure that led us to this point of existential crisis, not only to alleviate immediate distress but to establish firm foundations of human value systems to co-create a fair, flourishing and resilient, global political economy.
Do Not Fear the Transition
Those working in banking and financial services may be horrified by the dawning realisation that neither are required in an endogenous token environment because people don’t need “money”.
What is needed is the expertise and infrastructure to facilitate endogenous token systems. The transaction volumes will be much greater than today because 7.8 billion people will gain the ability to access Tokens to satisfy their Needs and provide them with the opportunity to Create.
Meanwhile, exogenous money is taking us to a much scarier destination – people being unable to fulfil their Needs. In the absence of many people being unable to fulfil their basic Needs, some (or even many), will likely resort to violence.
Crucially, the switch to endogenous tokens will liberate everyone to concentrate on what interests and rewards them spiritually, intellectually, emotionally and physically.
November 2019 Gulag Academia Internet Archive
October 2019 How we live Internet Archive
May 2019 Systemic Risk and Climate Change Internet Archive