[p2p-research] excellent contribution on flow money by Martien van Steenbergen
marc fawzi
marc.fawzi at gmail.com
Thu May 21 11:15:15 CEST 2009
Ryan
It's all this game playing that needs to stop You're aware if it and
describe it well. Why perpetuate it? It's possible that a feast is worth
exactly the amount of total median energy it takes to produce it (based on
'raw resources + labor + skills' costing model for prepared food) plus a
fixed profit margin (for reinvestment/growth)
I do not find a single correct and complete argument that tells me why it's
impossible to price things for what they cost in raw resources + labor +
skills plus a fixed margin of profit.
If you can present a coherent fully logical and logically provable argument
as to why such pricing model would be unfeasible then that would be a
surprise for me. I believe it is a lot of tedious accounting but not
fundamentally flawed to price things at median cost in energy plus some
margin.
Marc
On Wed, May 20, 2009 at 7:24 PM, Ryan Lanham <rlanham1963 at gmail.com> wrote:
> Martien,
>
> 1. Please let me know if you still have mail problems. I don't think I
> sorted them out.
>
> 2. I think your system involves a pricing fallacy. It is that prices of
> goods and services can be accurately valued. They cannot. We don't know
> what your blog is worth or what an hour's work building a wall is worth.
> That's because we don't know what demand is for those things. Much as I
> would love for something like this to work, it won't.
>
> Here is why:
>
> A. Money is a dynamic system. The reasons people "own" money is that we
> store consumption until when it is advantageous. If I offered you a feast
> immediately after you had a large meal, it is nearly worthless to you. But
> tomorrow, you may want that feast very much. The makers of feasts count on
> their own skill at calculated just how many feasts will be wanted today or
> tomorrow.
>
> B. A pure measurement system would always look at fairness from the point
> of view of a centralized plan. That cannot work because it will not satify
> point A above. That is, there can be no standard set of "scales" nor any
> standard "centimeters."
>
> C. Money is already a p2p system in the way in spends. It's just not a p2p
> system in the way money is created. My recommendation to the micro-currency
> crowd is to focus on money creation--how does money come into the system.
>
> Most of he research focus now on this list is on trying to create infinite
> consumption or infinite earning machines. These are like perpetual motion
> machines and will not work.
>
> The dynamics of supply and demand are very difficult to challenge without
> coercion. People simply want to make their own decisions when they wish to
> make them. If you allow those things, then the question becomes one of
> price.
>
> Price is inherently tied to the supply of money as well as demand. It
> isn't about measuring production where money is interesting, but in
> measuring the nature of where money comes from in the first place.
>
> Ryan Lanham
> rlanham1963 at gmail.com
> Facebook: Ryan_Lanham
>
>
>
>
> On Wed, May 20, 2009 at 2:32 AM, Michel Bauwens <michelsub2004 at gmail.com>wrote:
>
>> This contribution seems to have been rejected by the mailing list
>> software, so I'm forwarding, it's an excellent explanation of what is wrong
>> with a system based on compound interest.
>>
>> I'm really looking forward to seeing the other side of the story,
>> especially the results of Ryan's research on the topic,
>>
>> Michel
>>
>> ---------- Forwarded message ----------
>> From: Martien van Steenbergen <Martien at aardrock.com>
>> Date: Wed, May 20, 2009 at 1:50 AM
>> Subject: Re: [p2p-research] Fwd: [ox-en] No more money trickery propaganda
>> please
>> To: Michel Bauwens <michelsub2004 at gmail.com>
>> Cc: Stefan Merten <smerten at oekonux.de>, p2presearch at listcultures.org
>>
>>
>> To throw some more oil on the already bright fire...
>>
>> Compound positive interest is a system wide exponential pump that
>> increasingly flushes money from the poor to the rich. It compells us to grow
>> beyond sense. It results in Obsessive Compulsary Growth Disorder, if you
>> will.
>> This can be proven by mathematics, simulation and experience (as we all
>> feel right now).
>>
>> Don't get me wrong, growth, development, evolving is good. But only
>> asymptotinc s-curved growth, not only exponential unlimited growth.
>>
>> If you want to destroy a community, introduce a monetary system where
>> money can be owned (‘saved’) and with compound positive interest. Introduce
>> it in such a way, that people are willing and able, eager even, to play this
>> system. Mankind has succeeded in that.
>>
>> Our current monetary system is like a cancer with metastasis into the
>> smallest corners of our system. It cannot be treated. No irradiation, and no
>> cutting will help. In fact, it will only fuel its self-destruction. Future
>> monetary crises and crashes will happen more frequent, faster and will be
>> deeper. The worst has yet to come, Schopenhauer would say.
>>
>> Compound positive interest also makes each and everyone extremely
>> short-sighted. The economy at large warps itself into short-term profits and
>> utter efficiency. Exact the opposite of sustainability, durability and
>> long-term wealth (in the non-financial meaning).
>>
>> It's extreme focus on efficiency makes the system as a whole brittle and
>> oversensitive to small changes. Flourishing systems have their dynamic
>> balance somewhere in the middle between chaos and order—chaordic—with a
>> slight preference for the chaotic side. Chaos is creativity searching for
>> order. Likewise, order (efficiency) is destructivity searching for chaos.
>> The sweet spot is an area (not a point) in the middle.
>>
>> This short-sightedness is due to the economist's Net Present Value<http://en.wikipedia.org/wiki/Net_present_value> calculations.
>> Suppose you invest €1000 to obtain an annual revenue of €100 during a period
>> of 15 years, so €1,500 in total you might think.
>>
>> An economist however will tell you that €100 in a year will be worth €91
>> now (with an interest rate of 10%). The €100 in year 2 will be worth €83 now
>> and in year 3 €75, and so forth. The €100 in year 15 is worth a meager €24
>> now. All in all, in 15 years, the total Net Present Value of the revenue
>> will be €761, resulting in a loss of €239. In other words, not a profitable
>> investment.
>>
>> This affects our behaviour to short-term financial gains. Combined with
>> the interest pump from poor to rich, this leads to an instable and brittle
>> system.
>>
>> Enter ‘flow money’ (a.k.a. demurrage of liquidity tax). Technically, flow
>> money is a negative compound interest. Using exactly the same calculations
>> and formulas as our economist did in the previous example and an interest of
>> –10%, the first €100 is worth €111 now, the 2nd €123 and the 15th €486,
>> adding up to a total of €3,857 and a profit of €2,857! Break even is during
>> year 7.
>>
>> Together with the effect that your balance trickles away (into a larger
>> commons fund), this affects our behaviour in such a way that we will:
>>
>> 1. tend to spend our money sooner rather than later (since our buying
>> power now is greater than tomorrow), resulting in a lot of employment
>> opportunities, no more unemployed; and we'll chop the forest later rather
>> than now, since we don't want the money now as it will seep away;
>> 2. prefer sustainable, durable, resilient an dlong-term projects over
>> short-term ones; it gives all of us vision; we can see clearly now;
>> 3. closing the gap between the rich and the poor; in fact there are
>> only wealth people and som very wealthy people; and our planet replenishes
>> itself too.
>>
>>
>> If we can also get rid of the capacity to ‘own’ money, and we only use
>> money for payment and measuring products and services, than no one is poor.
>> Use money just like we use centimeters. We're never short of centimers (or
>> inches or lightyears for that matter). Everyone is as wealthy as their
>> activity in the community, small and large.
>>
>> Your monetary balance does not matter anymore, since it is of no value to
>> own money; you can't even own it. What does matter is the number of times
>> you touched zero when trading (either or not changing sign), since at
>> precisely that moment you have contributed to the community the exact amount
>> as the community contributed to you. You are in balance with your
>> environment (that serves you so good and abundant).
>>
>> Every time you touch zero, your ‘trustwidth’ increases, since you just
>> proved to balance your consuption woth your contribution. The trustwidth is
>> parameterized by your turnover until now, a (damping) factor and a
>> connectivity index (derived from the relative number of others you traded
>> with; to avoid kartel and free riding). Just like with flow money, your
>> trustwidth diminishes, decays, over time. So you need to stay active and add
>> value to your environment to keep up your trustwidth.
>>
>> The trustwidth (like bandwidth) are the ‘credit’ and ‘debet’ limits for
>> safe trade. Of course, if you like risk, you can go beyond someone's
>> trustwidth, but you know that you risk losing your extra investment.
>>
>> It's just like scaling up micro credit to meso and macro credit. With our
>> current technology level, it is a relative pievce of cake to implement a
>> global digital chartal spreadsheet system (which is all we need;
>> mind-boggling cheaper than all these expensive banks and their emplyoees who
>> don't even understand their own products anymore).
>>
>> This (non-monetary) balance is essential on all scales as well. Just as
>> the individual needs to balance receiving and giving to the community, the
>> import and export of countries should enjoy a dynamic (chaordic) balance.
>> Overshooting in either direction destroys your credibility als a good
>> citizen or global player. Too much import increases your ‘debt’ to other
>> countries, your promise to do something back. Too much export hoards
>> employabilty, depriving other countries from adding value and wealth to the
>> world at large.
>>
>> The balance and trustwidth are similar to energy economics (a topic on
>> this list some time ago if I recall correctly).
>>
>> My quest is to find:
>>
>> - the extremely elegant formulas that take any financial transaction
>> log and calculate the trustwidth between which a player can safely trade;
>> - how to connect two ecowebs that have so far been developing
>> independantly and suddenly touch;
>> - design an immune system that keeps the system as a whole healthy,
>> even when (severely) attacked;
>> - the distributed, decentralized, peer-to-peer layers of
>> infrastructure and humanstructure that make it feasable and completely
>> self-everything (organizing, healing, supporting, etc).
>> - the way to have a holarchy emerge that use a cascade of flow money
>> for ever larger commons activities, up to the global level, while
>> embellishing local wealth and unfolding.
>>
>>
>> Succes en plezier,
>>
>> Martien.
>>
>>
>> P.S. I've been plannig to write this up for a long time; I just now took
>> 30 minutes or so to flow it out of my head into typing; so it's still quite
>> rough.
>>
>> On 19 May 2009, at 09:22 , Michel Bauwens wrote:
>>
>> Stefan,
>>
>> you persist in wanting me to say that a cushion produces interest, obvious
>> nonsense
>>
>> again, I do not want to enter in that game,
>>
>> obviously, if you had read the sentence as it was intented, in context and
>> given the long previous arguments, you would have understood that keeping
>> meant, keeping in the bank, in order to get interest, in other words the
>> opposite of your nonsensical misinterpretation, which for some mysterious
>> reason, you want to hold on to, even after repeated denials and explanations
>> of my part. Assuming that you misread it once, what can be a possible
>> explanation for holding on to that misinterpration after so many
>> corrections????
>>
>> (the reaction of a normal person would have been: "sorry to have
>> misinterpreted your phrase and having gotten into a irrational fit, I
>> apologize, now let's move on and learn from each other's arguments")
>>
>> so let me repeat, perhaps this time in very simple terms, what the
>> essential argument is, about the role of interest
>>
>> So, let's assume we have a negative interest rate, as was the case for the
>> Worgl shilling, in the first renaissance of high middle ages, or in ancient
>> Egypt.
>>
>> What happens for example in egypt is that you bring your rice to a depot,
>> you get some 'vouchers' in return, but they loose some of their value every
>> year, because of the price of stockage, and also, a certain profit for the
>> mediator. In the middle ages, if I recall correctly, every four years, you
>> had to change five coins for four. Same principle.
>>
>> In this context, hoarding money makes no sense, because it loses value
>> over time, it 'rots', just like real commodities do. Historically what
>> people would do is to re-invest in the productive economy, and the high
>> middle ages are known for their high rate of technical innovation i.e.
>> sometimes called the 'first industrial revolution', relatively high living
>> standards such as a five day working week with extra 'blue monday' as day
>> off for the family, long skeletons in cemeteries indicating good heatlh,
>> etc.., a doubling of the population in 3 centuries, reclaiming and expansion
>> of large swaths of formerly unproductive land). This system puts a break in
>> the accumulation process, because accumulation loses value. The market is
>> kept in check and does not outgrow the rest of the economy. Since your money
>> is worth more today than say in ten years, you invest it, and this is in
>> part the explanation for the crowdfunding of the Gothic cathedrals. This is
>> actually what good money is intended to do, not to be used in speculative,
>> non-productive activities, but to be used in the process of production
>> itself, to enhance the living standards of all.
>>
>> Now say you replace this system with centralized royal money, with a
>> positive interest rate. It now becomes interesting to keep your money, to
>> hoard it, not in a cushion of course, don't be silly, but in the bank; or
>> better yet, to become a banker yourself and to lend the money out. This way,
>> without working yourself, you are getting rich while those that work have to
>> pay a rent to you. This system strenghtens the tendencies for accumulation,
>> created the conditions for increasingly centralized royal power, and created
>> the deteriorated social conditions that started in the 14th century.
>>
>> But the systemic effects of compound interest are wider than that. If you
>> lend out that money, and I have to pay your back approximately double in
>> twenty years, which is about the going rate for buying a house now (or at
>> least it was when I bought mine), even with inflation, you are going to need
>> substantially more money than you have now. The result is that it destroys
>> any possibility for a balanced growth economy, since that extra money has
>> only two possible sources:
>>
>> - either you get it from people who have it in a static economy, in which
>> case you create absolute poverty
>>
>> or:
>>
>> - you create a growth economy, i.e. capitalism, in which noboby can stand
>> still, and so, you get the extra money from the ever-growing pie.
>>
>> Please, PLEASE, do not start now talking again about your cushion, and
>> read again the section about keeping, without taking it out of context,
>>
>> Michel
>>
>> On Mon, May 18, 2009 at 5:19 PM, Stefan Merten <smerten at oekonux.de>wrote:
>>
>>> Hi Michel!
>>>
>>> Now I am really upset!
>>>
>>> 2 days ago Michel Bauwens wrote:
>>> > read the sentence again, use your brain,
>>>
>>> I find it ludicrous that *you* ask *me* to use my brain. Obviously you
>>> stated nonsense and now *I* shall use my brain? COME ON!!!
>>>
>>> > and use the full context of the
>>> > dialogue to understand that interests makes it indeed interesting to
>>> keep
>>> > your money in the bank.
>>>
>>> If you give money to the bank then you do **NOT** keep it. This very
>>> sentence you wrote just makes no sense. It's nonsense again. And it's
>>> propaganda again because it is only said this way to invoke a feeling
>>> of injustice in simple-minded people. It hides facts to make a certain
>>> ideology look more logical and "just". It may not be your intention -
>>> and frankly I hope it is not your intention. But it is the intention
>>> of those you have this propaganda from.
>>>
>>> If you give your money to the bank in fact you may get your money back
>>> *under certain conditions* being part of a contract. If you are in bad
>>> luck you may even not get it back at all, however - as people learned
>>> during the latest financial crisis once again.
>>>
>>> If I *keep* my money there is no such risk. I just keep it.
>>>
>>> It is very easy to see that there is a major difference here. In fact
>>> it is the difference between a pre-capitalist fortune keeper - who
>>> really keeps her fortune - and a capitalist - who applies her fortune
>>> by giving it to others to make profit.
>>>
>>> > Explain to me how you would get interest under your
>>> > cushion, I would be very very curious.
>>>
>>> Sorry, it was *your* claim that keeping money raises interest. If this
>>> would be true then I can keep it under my cushion with the same
>>> effect. I'm just taking your statements serious.
>>>
>>> Taking statements serious is a simple necessity in a scientific
>>> approach. To think about what a statement actually means is a very
>>> simple test of an assumption against reality. It is basic scientific
>>> work - by which you are obviously shocked.
>>>
>>> > I'm trying to put the conflict behind,
>>>
>>> I have no conflict with you. To me all this feels very much like
>>> shadow boxing on your side.
>>>
>>> > but if you descend to such levels of
>>> > ridiculousness, it makes it very difficult.
>>>
>>> I'm really sorry Michel, but that it all but ridiculous. The question
>>> whether you can keep your money or need to give it to someone else -
>>> usually mediated by a bank but also in the form of shares - to get
>>> interest is the all-or-nothing question here.
>>>
>>> > Please, let's put that behind
>>> > thus.
>>>
>>> You are free to correct your statements so they make sense and - at
>>> best - match the observable reality. It would be far better than to
>>> leave the community just because someone says you are preaching
>>> nonsense.
>>>
>>> Frankly I'm curious how long it will take that you at least agree that
>>> you can *not keep* your money and get interest for it. In science that
>>> would be simply to recognize the observable reality and modify your
>>> basic assumption according to it. As you wrote above you are still not
>>> ready to modify your basic assumption - though you are now replacing
>>> your basic assumption with sentences which are inherently
>>> contradictory.
>>>
>>> With a scientific approach the next step would be to question what
>>> happens with the money you just gave to others. That would be the
>>> research step. And it would be easy because it is well-known that
>>> banks give money to capitalists in the form of credit. In turn the
>>> capitalists then apply it to labor force and machinery to produce
>>> products they can sell for a higher price than they had themselves for
>>> the input. The logical conclusion is that interest is a share of the
>>> profit of a capitalist. The amount of interest is directly coupled to
>>> the amount of expected profit and the risk involved to actually make
>>> this profit [1]_. In other words: What you are trying to accomplish
>>> with your [named above] stuff is what actually happens in capitalism
>>> all the time. It's in fact the very core of capitalism.
>>>
>>> .. [1] Of course in a fully expanded exchange system at the end of its
>>> life cycle like contemporary capitalism it is a bit more
>>> difficult. It's a interesting task to research that. But the
>>> general principle stays.
>>>
>>> I, Christian and others explained all that over and over again and it
>>> is really not hard to understand. In fact it needs no theory at all.
>>> It's all observable reality. But you constantly ignore this. Feel
>>> free. But don't be shocked if others call this nonsense or - when
>>> combined with an attempt to evoke certain feelings in simple-minded
>>> persons - even propaganda.
>>>
>>>
>>> Grüße
>>>
>>> Stefan
>>>
>>
>>
>>
>> --
>> Working at http://en.wikipedia.org/wiki/Dhurakij_Pundit_University -
>> http://www.dpu.ac.th/dpuic/info/Research.html -
>> http://www.asianforesightinstitute.org/index.php/eng/The-AFI
>>
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>>
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>>
>>
>> --
>> Working at http://en.wikipedia.org/wiki/Dhurakij_Pundit_University -
>> http://www.dpu.ac.th/dpuic/info/Research.html -
>> http://www.asianforesightinstitute.org/index.php/eng/The-AFI
>>
>> Volunteering at the P2P Foundation:
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>> http://p2pfoundation.ning.com
>>
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>>
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