Originally posted by pai mei
reply to post by pai mei
A new cruise ship has been built. The biggest ever. Also heard that the ones who made it will be fired - the shipyard has no more orders for ships.
Think about the hundreds of thousands involved - not just the workers at the shipyard. 80% of what we do - is like that ship. Useless wasting of our
lives, and planet. Turning it into cruise ships then garbage. The machine requires it. We could work less and have all the basic stuff - which we need
to survive. Less work, no stress - about getting fired , no destruction. Work in turns - something like 1 in ten years - you go do your work period,
the rest of the time you just sit - and have food and clothes and some items (something like everything you take when camping - nothing more) -
free. No money involved. No more homeless, or hungry. You will have time - to build yourself some house. Or just travel around.
While this sounds quite rustic and I agree there are a number of human activities that are tantamont to taking the paper-work from the in-pile,
transferring it to the out-pile and then recycling it back to the in-pile. There's still much that we've gained by ruthlessly pursuing efficiency,
not just scientifically & technologically, but in the arts.
Just because I can see the virtues of a particular mode of living doesn't mean that I want to force my views on to to others who have an alternate
take on the best course for mankind. This is why I think it's important that there be a healthy balance between all manner of political / economic
systems rather than picking one over the other due purely to ideology.
The question is, "Is this possible?"
To try and answer this objectively I considered the difference between a debt-based society (fractional reserve) and a 100% reserve-based system.
"The 100-percenters say that in a free society, force is outlawed, a statement both sides can endorse. Next, since fraud is a form of (implicit)
force, it too must be banned. Since a fractional reserve system promises to pay specie in amounts greater than what actually exists, that promise is a
fraud. Therefore, the 100-percenters contend, a fractional reserve banking system has no place in a free society.
The fractional reserve advocates, who disagree with the 100-percenters, also base their arguments on free market principles. In a free market, they
say, anyone can do what he wants as long as he doesn’t use force against others. This includes banks. If a bank issues notes that aren’t 100 per
cent backed by specie, by what right do we stop them? They aren’t forcing people to accept the notes."
(
1)
Understanding these two mutually philosophies it's easy to see why we don't have 100% reserve banking mixed with a fractional reserve system because
as Gresham's Law states, "Bad money drives out good under legal tender laws." The opposite is true when there
aren't such legal instruments
in affect.
Therefore if we were to provide mixed financial services distinguishing between fractional / 100% backed holdings, then where legal tender laws do
exist money would inflate and the 100% backed currency would decrease in value as artificially created "bad money" is put in to circulation. So 100%
backed currency in a predominantly fractional-reserve system would protect what's in the vaults but wouldn't protect value relative to total
supply.
In a system where legal instruments
do not exist then necessarily all fractional-reserve money is seen as a promissory note and therefore
people would expect some form of interest to compensate for the degree of risk involved taking a financial instrument for the face-value of the note.
These two concepts reflect two modes of operation: deflationary versus inflationary practices. In an inflationary system those who have access to
money first receive greater value for the worth of the currency; and because a fractional reserve system promises to pay specie in amounts greater
than what actually exists, the value as written on the face of this fiat currency is a fraud.
In a deflationary system those who
hold money retain greater value as currency is split. However this limits the freedom of banking
organizations to loan out currency and ultimately slows growth because those who have money retain that money. Making it very hard for new people
entering the system to compete.
What this shows is these two concepts are orthogonal to each other. Viewed under this light it seems certain systems cannot under any circumstance
happily coexist together.
Or can they?
To make them work together is so extremely difficult because their point of intersection is tangential. To marry these two notions would require
some form of euclidean metric where the horizontalness and verticalosity are not independent, but are
intertwined such that they're inseparable. Meaning for this to happen we need a system where this formula is true:
A = 100% reserve banking
B = fractional reserve banking
Sqrt[ (A)^2 + (B)^2 ]
The question is how to implement this (security (A) / growth (B))? I can only guess but that's the solution.
Getting back to my main point. This shows there is a way for all systems to work together even if they only have a single point of intersection. In
trying to solve that formula the best I've been able to come up with is this:
- 1/3rd competition / free market capitalism (fractional)
- 1/3rd projects voted on by the group (100% reserve / fractional)
- 1/3rd social minimum to ensure all people have a basic standard of living (100% backed, separate currency)
If you think about it what this is really saying is: 1/3rd competition & efficiency
(B), 1/3rd combination competition / all people (
Sqrt[
(A)^2 + (B)^2 ] ), 1/3rd of the pie shared equally by all people
(A). So really this seems to show a sort of balanced equation where these
things function together in a non-degenerative manner.
Focusing on A (a purely safe economy with stagnation) or B (pure capitalism with high-risk as the norm) means we eventually hit a point where the
triangle collapses to a line and we have a degenerative case that causes social / economic hysteresis.
Should these legs of the triangle always be at 1/3rd or 60 degrees to each other? I would say the proportions should be primarily a function of (A) or
bullet-point 3. So long as (A) is satisfied then (B) or bullet-point 1 can be maximized.
However, it's worth noting, whichever leg is the longest (the hypotenuse) will necessarily reflect which direction the system is going to converge.
So if we put more money in to (A -
100% reserve banking) we'll end up with a first-come, first-serve entitlement system where those who hold
their money the longest control the cash supply. If we maximize (B -
Fractional reserve banking) we'll end up with pure capitalism where
ultimately bankers / corporate fat-cats end up with all the money.
What isn't in affect with our current system is the notion of the public having a direct say on the (sqrt(a^2 + b^2)) component (the leg that pushes
the two apart or viewed another way the leg that represents the intersection between the two). The only solution is to have the public directly have a
vote on how taxes are used which can be seen as the hypotenuse (or the sqrt(a^2 + b^2) segment). This is why I so strongly advocate for
this type of change to our our representative process.
[edit on 25-11-2009 by Xtraeme]