Hi! Xavier Shay and Steve Hopkins will be doing a session at Trampoline. At this stage (apart from a fair amount of reading we've been doing) this is all we know for sure. We also know that the presentation will address some of the following themes.
1) Currency
2) Trust
3) Transparent economic systems
4) Peer-to-peer and trust
We will update all of this space more and more (and probably link to our presentation when we have one!) so that you can follow along and let us know whether we're talking about the right things.
Cheers till then!
Xavier and Steve.
[xavier] I'm treating this page as a discussion page, so have labeled my thoughts
Thoughts from emails so far:
The biggest problems we have are people ones - a government that takes misreports key figures and spends too much debt.
The Clinton administration did a great job of not spending a budget surplus, Bush came in an doggedly implemented all of his election promises at great expense, plus a war, to undo all this good work. In the past 5 years(?) congress let lapse a law that required all new gov spending to be backed by a new source of income, so spending could blow out again. Social Security is in big trouble in the coming years because it hasn't been designed to cope with the expected influx of elderly - more so because a lack of real resources. The government can print money, but that doesn't help it if there's not enough nurses*.
The fed reserve is run by economists who generally understand what it takes to make sound monetary policy. Even though they're a separate entity, they can still be undermined by politicians who aren't economists.
These aren't failures in the money system per se, they're just people being stupid, selfish and/or shortsighted. This will be the downside of any system, I imagine. GFC was the same problem. Risk spread from treasury bonds (no risk) to junk bonds (high risk) used to be 23% (23% higher interest rate on the riskier investment) - it had dropped to 4% before everything went haywire, which is ludicrously low.
Will the internet and increased transparency and engagement help prevent these sorts of failures in the future?
Inflation isn't necessarily evil. It encourages liquidity (discourages hoarding) which I think is probably a good thing. A free market does create greater stress levels though (creative destruction cycle - if you're inefficient you get replaced), and hoarding is stress free for some people, so this is why a lot of people aren't fans. I believe it's an acceptable trade off for an efficient economy - I embrace change more than most though.
- money as it stands today, deregulated, with the ability of govts to print it at will, is little more than a promise of future growth. This therefore relies on continued economic expansion to operate.
- understanding money is perhaps not so important as understanding what wealth is? I read a fascinating book recently simply called "How The Economy Works" by Kevin J Wilks. Found it at North Fitzroy Library, shoudl be availabel thru Yarra Library network. His argument is basically that wealth is surplus value created ultimately by the input of energy into society - originally was primarily photosynthetic energy from agriculture, but that has since been eclipsed by fossil fuels
Trading in kWh is an intersting concept, but remember money is just a tool to measure common value - it could be anything we want it to be. The only reason we place value on a bit of paper or plastic from the govt instead of a pile of stones or shiny bit of metal, is because we trust that it is valued the same by others.
a comment on "The fed reserve is run by economists who generally understand what it takes to make sound monetary policy. Even though they're a separate entity, they can still be undermined by politicians who aren't economists.
These aren't failures in the money system per se, they're just people being stupid, selfish and/or shortsighted."
(a) who do you think was being selfsih & shortsighted? everyone, I think. From the bankers to the mums & dads. That;s how our society works - we place greater value on short-term gain than long-term. Our financial insitutions are geared towards continouusly generating short term profits, and use the discount rate mechanism to achieve this - it's a mathematical way of saying 'the future will take care of itself"
(b) All very well to say that politicians don't understand economics, but the more I delve into this it seems to me that economics is not grounded in reality. There really are physical limits to this world we live in!
Interesting to hear a mainstream economist talking about the end of growth:
http://www.guardian.co.uk/environment/2009/sep/11/stern-economic-growth-emissions
I'm not yet convinced on the need to curb growth per se, but definiately growth in linear material & resource consumption needs to finish up. The only way we will continue to grow is to live in a system which is powered by renewable energy and our systems of consumption are cyclical, without creating waste.
[dan donahoo] Random Thoughts
Great topic. I guess I come from a practical persepective. I happened upon LETS through an interest in permaculture and systems design. So, I'm less interested in "How" question and more interested in the "Why". More experienced in the micro than than the macro.
So some thoughts:
1. Why do we need one new economic system. Surely, what we have through a whole range of activity in society are systems of exchange (call it energy exchange) if you like that operate outsiode systems that anyone can capture. So, is it about re-inventing a whole new system, or tweaking the smaller systems so when the large system falls over - you are ok, there is something to fall back on?
I'm interested in this from the idea of communities and economy's in transition - from one state to another, usually brought about by a significant event.
My example for this is why we re-established an re-invigourated Mount Alexander Local Exchange Transfer System. In Castlemaine, the main employer (despite an influx of treechangers) is the Bacon Factory. It employs over 1000 people, it is the life blood of the rest of the economy - what would happen if it closed down (and ever time there is a takeover that is a possibility - there have been a couple in the last 10 years).
What would happen is a whole bunch of people in Castlemaine would turn to Centrelink. Begin loooking for other jobs that aren't there and eventually heading elsewhere. Yet, all of those employees and their families have a range of skills and abilities. A LETSystem wouldn't be the "new economic nirvana", but a local economy that would allow them to trade and barter their skills to complement their unemployment benefits while looking for work. This could be anything - from a car service to pluming or electrical services to baby sitting or food.
So, there is a LETS community in Mount Alexander of 100 or so...it bubbles along with trading days and so on...and it will be there in case of such an event to be used by people who otherwise might just regard it as one of those weird hippy things.
2. I think the most interesting thing is looking at how the electronic environment could facilitate the tracking of transfers. Obviously we are moving well towards this. But, alternative economies could set up their own trading systems run through apps on iPhones, or in the way Second Life does and smaller local economies and their "currency" could develop their own value in the larger economies and a dynamic state of trade could occur that way. Yeah - so i'd be interested in discussions that look at multiple economies of different sizes and for different purposes moving forward.
RBA Glossary http://www.rba.gov.au/Glossary/detail.asp?term=ADI
Economy eating itself - http://www.rollingstone.com/politics/story/30481512/wall_streets_naked_swindle/print
Supply & Demand in a POW camp - http://www.albany.edu/~mirer/eco110/pow.html