'Good' fiat money?

Yesterday I wrote about how using a currency strengthens the story and gives value to the acts for which that currency was issued. I suggested that anyone can informally certify socially beneficial behaviour and accept those certificates as recognition of their own contributions. Today I will discuss how that principle might pan out in the macroeconomy.

I read somewhere (anybody know?) about a money made from elaborately worked wood and leather disks, which anyone could make with a little practice. If ever anyone couldn't earn the money needed, they could just make it. In this system no-one need hoard money because it can be made when needed, so it should circulate better than modern money for a start. And secondly nobody need lack because if they can't earn they can make the money to buy the things they need.
This system only works if:

  • the value of the coin is slighlty less than the cost of making it. Automation of coin production would bring inflation.
  • the work which generates the money would not otherwise be done.
  • equally easy for most people to create.

So the question is, instead of passing around grubby war certificates, what if money could be issued to acknowledge work we actually want doing?

New Bitcoins are issued for the arguably beneficial work of validating the blockchain. From the Bitcoin perspective miners are socially useful, because without miners Bitcoin could not exist. Other work could be envisaged if mining wasn't necessary, such as slaying pixelated beasts, or more usefully, number crunching for SETI, or calculating primes, or giving space to a file storage network. But note that from the set of all possible socially useful tasks, this is a very small subset.
The problem is that the quantity of socially beneficial work has to be agreed by the whole network, and this is a difficult problem. Once the work leaves the realm of mathematics, it requires a trusted authorising body to determine the monetisable work and ensure it is done to standard.

Right now for example the global economy is gasping for money to make its monthly interest repayments to commercial banks. Normally governments pay such debts by slashing public spending (austerity) and further borrowing (selling bonds).

Let us say that, following the principles above, money were to be issued for socially useful work which is not being done, but could wait; say, cleaning up nuclear pollution land-mines, and greening the energy supply. If that's not enough we could finance public transport, health and give one2one tuition to every child. Ten trillion dollars worth of fiat money could be issued ex nihilo - a bit like a Keynesian stimulus except the money is created not borrowed. The only difficulty with this idea is the interests of the banks, who currently issue 97% of money for profit. Secondary effects would include the paying of much debt, full employment, and maybe the end of poverty. If 10 trillion were insufficient more could be issued, or if excessive it would be spent on additional projects. Because the quantity issued would be determined in the interests of the economy, inflation/deflation would only result from a miscalculation.

Such an issuance would change the quality, the very karma of the medium of exchange. If all the NGOs in the world did this behind the backs of the governments, and all the people said - hang, on, I can't pay my taxes with this money therefore I do not value it, will not accept it, and will not participate, the project would fail. But if the people of the world said, I want to have a part in restoring the human habitat, I will accept, and spend this money regardless of how the government values it, then the job gets done.

We have all seen the campaigns urging us to spend our money into eco/ethical enterprises. One clean exchange is a start but ultimately the money itself is tainted. To get to the root of the problem we much earn and spend money which is issued for something we actually value.

Check out the Boya Boya currency, issued in recognition of CO2 savings.

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