... how does one make account in an Economic Piston (EPI)?
How can we measure the effectiveness of our economic system? What is the unit of account?
Modern economies have moved on from barter of goods and/or commodity money into a barter for fiat money.
This idea of fiat money has been further augmented by a commercial banking system that has been empowered to keep money 'on the books' so that money is currently made up of the fiat money in circulation plus the values in the book ledgers of licensed banks.
There are many features of modern money that have made modern life easier. Are there downsides?
Is money natural? Current money is not natural. Natural things have a finite life and money does not. Other than burning or discarding fiat money it is very difficult to 'unmake' money. As we move to a digital age and away from fiat money and to a complete ledger system some of this drain will be removed. Can we naturalize money? This is what we will explore in this pattern language.
It is safe to say that any replacement of money will need to do at least what money does. What does money currently do? It provides:
- A medium of Exchange
- A measure of value
- A low volatility store of value*
- Allows for a measure of deferred payment*
- Provides Liquidity
- It is resistant to Counterfeiting
*We will debate whether this a natural function of money or an artificial function. Inflation has a lot to say about how well it is a store of value and one could argue that money does not actually store value as a dollar could buy arguably more in 1900 than the same dollar can in 2014.
Consider what money currently does and make sure that any new economic system does at least that.
Money must provide a Medium of Exchange (MEX), a Measure of Value (MOV), Divisibility (DIV), Deferred Payment (DPY), Liquidity (LIQ), and be Resistant to Counterfeiting (RTC). Money can be controlled via Demurrage and Controlled Inflation (DMR). It can be used to buy existing or used to generate new Capital (CAP). Money must have a method of being issued (ISS). It can be declared by the State (STA) as Legal Tender (LTN) and collected as a Tax (TAX). It is used by the Legal Entity (LGE) and Citizen (CTZ) to meet expenses. Money can be used to buy and/or develop Capital (CAP).