Lets play a little imaginary economic game to figure out why prices really go up and down and what we could do to stabise them. We will ignore some of the current accepted explanations, Supply and Demand, monetarism, money printing, in order to see through the mist of memes to find a little truth.
Scenario 1
We’ll start with 4 players all selling different products that they all need. They agree to use a simple means of exchange called a dollar, they will exchange their goods for dollars and they all agree to accept dollars for their goods. We’ll call them:
Java who sells coffee
Melbourne who sells toast
Brisbane who sells Avocados
Wellington who sells milk
A unit of each product costs $1 so Java sells the other three a coffee and gets $3 enough to buy one toast, avocado and milk. Likewise they can all do the same and have a nice breakfast.
One day Melbourne gets a bit greedy and decides to charge $2 for coffee, this way they can collect $6, still get a full breakfast and save the other $3.
The other three think this is extremely unfair and not in the spirit of the agreed exchange system, so they double their prices to, and all goes back to normal. Each gets enough to afford a full breakfast and no-one saves or goes without. Melbourne tries again, and again they all raise their prices.
Technically this is inflation but it does no harm, it actually keeps greed in check. If Mebourne kept trying to rip the others off they would need to come to a new agreement – a new currency or cease trading.
Let’s make it a bit more real life.
Scenario 2
We will add:
Cayman who can create money and lend it at interest. – a bank
Bangladesh who sells their labour
To start the game Caymen lends everybody $10 but they want $20 (interest) back after breakfast which will make it $50, enough to also buy breakfast
Java sells the coffee for $10
Brisbane the avocado for $10
Melbourne the toast for $10
Wellington the milk for $10
Bangladesh makes and serves it for $10
They each collect $50 and spend $50 and everyone’s happy.
Again Melbourne doubles their price and Brisbane, Java and Wellington follow but instead of doubling their price Bangladesh worries that the others will serve their own breakfast (Bangladesh was serving the breakfasts) so keeps it at $10. Cayman offers to lend Bangladesh the extra $40 if they still need the whole breakfast, but they will need to pay back $10 + the interest of $10 + $40 plus interest of $40 a total of $100.
Java, Brisbane, Wellington and Mebourne all have an extra $10 which Cayman says they will borrow from them and give them $5 interest. This is so Cayman can balance their books.
The only way for Bangladesh to pay back the money is to borrow more. This increases money supply. So the cause of inflation and increased money supply is not a hyperactive economy or a mismatch of production and wages (efficiency) but rather greed and fear.
In this scenario a central bank would raise interest rates to decrease money. This puts Bangladesh in further debt and forcing them to borrow more to get what they need. It would give more money to those putting up prices, rewarding their behaviour. Greed is not punished but rewarded.
We could tax those with savings and give the money to those without but that would be difficult. The best way would be to introduce a new agreement on exchange and not allow the bank to create more money at interest.
Scenario 3
Let’s make it a bit more like our current situation, and add some choice.
Dubai sells energy and all the others must have energy to supply their product or service. However people only need one type of food and they can make it themselves.
Dubai doubles its price from $5 to $10 so in order to cover the extra cost everyone puts up their prices by $5 and Cayman raises the interest rates by $5 in order to still afford breakfast, but that means each player now needs to pay back more interest, including Dubai, so they raise prices again and we are in an interest rate – inflation spiral until everyone loses faith in the currency.
Bizarrely our solution to this is to encourage interest rate rises essentially until the economy collapses.
The other option is people start making choices, they decide to live on self made toast so Bangladesh, Wellington and Java all starve while Melbourne, Dubai and Cayman get rich.
Deflation
Deflation is supposed to be really bad as well. That is why our central banks aim for 1-5% inflation. I’ll have to Google why:
Most of the time, deflation is unambiguously a positive trend for the economy, but it can also under certain conditions occur along with a contraction in the economy.
In an economy dominated by debt-fueled asset price bubbles, deflation can lead to a temporary financial crisis and a period of liquidation of speculative investment known as debt deflation.
So Google says… no.
It is only when people stop spending and investing because their money will be worth more tomorrow and the economy essentially stops functioning. Let’s face it people will still grow food and eat because we need to.
Central banks probably keep inflation running at 1-5% to ensure people with assets make profit and people who work for a living need to keep striving and begging to maintain spendability on their wages.
S&D
So why do we always hear about supply and demand when prices go up and down? That’s because people believe in a theory that supply and demand should affect prices and some sellers use this belief as an excuse to raise or lower prices. There is little reason to change your price depending on the amount you have of something or the amount of people wanting to buy it. With some perishables you could argue if you can’t store them you should lower the price to sell them instead of letting them waste but that isn’t very common.
Also if their is a crowd trying to buy your scones you could chare more and make more money per scone, be greedy, or you could just serve the queue and those that miss out, missout.
The argument for S&D is that those that want it most, or need it most will go without other things to get the item in short supply, thus S&D supplies the most needy and encourages more sellers into the market to seek these premium gains.
I remember hearing from a green grocer on TV talking about lettuce prices in 2022 after supply dried up due to floods (pun intended ;-)). A lettuce cost $10 or more and the interviewer asked if he was selling them, and he said no. Essentially they ended up being thrown out. Makes no sense. The price was jacked up because supply was low and in theory it means those that want it the most get it because they are willing to pay the higher price – this is nonsense in an unequal world though – but if no-ones buying them why not just sell to those who come first at a low price. It’s the belief in S&D that actually causes a lot of price movements when it really has no effect in the real world.
What have we learnt?
Banks creating money and charging interest is not a way to create a stable currency.
Raising interest rates can encourage inflation by rewarding greed, protecting savings, and causing cost increase price spirals.
Taxes and payments could be used but politicians hate annoying rich people.
Most of our tools only work by hurting non-rich people and breaking the economy.
I’ve written a book and some articles on real solutions. Yay
There is a lot of extreme talk about AI and its potential impact on humanity. I will try to avoid this as much as possible by addressing the concerns raised by the Centre for AI Risk one by one, and then the issue that scares everyone the most: a maliciously “non-aligned” superintelligent AGI (Artificial General Intelligence) or ASI (Artificial Sentient Intelligence).
There does seem to be a strong split in opinions, even among experts in the AI and information technology industries. Some see current AI as a not-that-advanced next-word predictor that takes a long time to train and still makes a lot of mistakes. Others believe that we may have created something truly novel—not just intelligence, but a mind! By mimicking our own brains, we may create the most powerful thing on Earth, and that could spell our doom.
I will begin by stating that much of our concern is that AGI would be like the worst of us: dominate the planet, kill less intelligent species, and want to rule them all. However, we are not actually that bad. Our hierarchical systems are, our corporate fiduciary duties are (corporations and many governance systems are not aligned with human flourishing), and our competitive selfish leaders are. But most of us are actually nice. When people talk of non-alignment, they are referring to the niceness of the many, not the few who desire to dominate the world.
Let’s take the concerns of the Centre for AI Risk one by one and tackle the big issue last.
1.Weaponization
Malicious actors could repurpose AI to be highly destructive, presenting an existential risk in and of itself and increasing the probability of political destabilization destabilization. For example, deep reinforcement learning methods have been applied to aerial combat, and machine learning drug-discovery tools could be used to build chemical weapons.
Anything can be weaponized, from a nuclear warhead to a bucket of water. We have rules against using weapons and punishments for hurting people with them. We should definitely include some AI systems in this, but I don’t think this precludes general access.
One of our greatest technological inventions of the past 15 years may be the solution to much of the threat of AI: Decentralized Ledger Technology (DLT). Much of the weaponized power of AI comes from the fact that our physical systems are controlled by computer code, and these computers are networked through the internet. A way to mitigate this risk—and this is already done to decrease the risk of cyberattack—is to disconnect necessary systems. We should share information on the internet, but we should not have our physical systems permanently connected. Cloud computing is an issue here, and maybe it is time to move away from it.
AI controlled fighter planes, drones with bombs, submarines etc etc should really be banned. Let’s face it, the manned ones should be banned already as they are responsible for killing millions. This highlights the other issue which will pop up again and again, AI is not the issue it’s our current power structures that are. It would be better if we dropped new technology into a world that was more equal, less selfish, less competitive and less hierarchical. Where leaders don’t wage war to hold power and average people don’t need to earn money to survive.
Yes AI will make it easier for us to kill but may also be a cheap form of protection for the every-person. Imagine you have your own drone to block tracking cameras and intercept malicious drones. Also it could empower the many against the few as information tech is cheap. Nukes aren’t.
Also, on a nation to nation basis the cheapness of AI info tech should balance the military playing fairly quickly. This leads to the classic tic-tac-to scenario where there’s no point fighting because you can’t win.
2.Misinformation
A deluge of AI-generated misinformation and persuasive content could make society less-equipped to handle important challenges of our time.
We already have this. If anything a deluge of it may actually make us more discerning in who or what we listen to.
3.Proxy Gaming
Trained with faulty objectives, AI systems could find novel ways to pursue their goals at the expense of individual and societal values.
The Centre for AI risk uses the example of AI algorithms used by social media to recommend content. These were intended to increase watch time, but they also radicalized people by sending them down rabbit holes of similar but more extreme content.
There are two serious issues here:
AI systems are trained on and designed for linear right/wrong problems.
Much of what we ask AI to do is inherently harmful; keep someone’s attention, increase clicks, maximize profits, decrease defaults, make them vote for me, etc. AI doing these tasks well or causing unforeseen harm is more a reflection on the implementers than the AI.
I have written before in an article against Proof of Stake that incentivizing people with narrow monetary rewards, such as being paid a pro-rata fee for asking for donations, can crowd out the intrinsic motivation to be charitable and cause the collector to get less and the giver to give smaller donations. Incentives can actually stop people from being honest and doing good. That’s people, and AI is not a person. However, narrow training in a complex world of non-absolutes always seems to cause unintended results. Complexity/Chaos theory basically says such.
AI probably needs to be trained with fluid probabilities of right or wrongness, and I think that may be the case as the LLMs are given feedback from users. OpenAI throwing ChatGPT into the real world may have been wise.
Also OpenAI may have discovered a tool for alignment while working to improve GPT-4’s math skills. They have found that rewarding good problem-solving behavior yields better results than rewarding correct answers. Perhaps we can train the AI to go through a good, thoughtful process that takes all possible implementations into account. If any part of the process is harmful, even if the end result is utilitarian, it would be wrong. Process-oriented learning may be the answer, but some doubt that the AI is actually showing its internal methods rather than what it expects the user to see.
Anthropic is using a constitution that is enforced by another AI system (equally as powerful) to check the output of their AI, Claude. This idea is also being explored by OpenAI. This again mimics the way we understand our intellect/mind to work. We have impulses, wants, and needs, which are moderated by our prefrontal cortex, which tries to think of the long-term impacts of our actions, not just for us but also for the world around us.
As for asking it to do nasty things. So much of what we do in the politics of business and government is about being nasty to the many to benefit the few. We should not reward anyone for keeping people viewing ads and buying disposable junk. Perhaps our super smart AGI will block all advertising freeing us all.
4.Enfeeblement
Enfeeblement can occur if important tasks are increasingly delegated to machines; in this situation, humanity loses the ability to self-govern and becomes completely dependent on machines, similar to the scenario portrayed in the film WALL-E.
This is not a problem.
People who see enfeeblement as a problem only see it as a problem that affects others, not themselves.
People with money and power still see those without as lesser humans.
Too many people in positions of power see humanity as immature and unable to lead fulfilling and interesting lives without being told how. They think people need to be forced to work and taught objectives in order to be fulfilled.
The real world provides evidence to the contrary. If you make people work in meaningless jobs for little pay and bombard them with advertising and addictive, sugar- and salt-laden fast food, you will end up with depressed, obese, and unmotivated people.
This is what our current unaligned corporations are doing. AI will hopefully be the cure.
Given the chance, we will be more inquisitive and creative. The pocket calculator did not stop people from studying math; instead, it made it easier for many people to understand and use complex math. The same will be true with AI.
It should finally usher in a period of true leisure, as the ancient Greeks saw it: a time for learning.
5.Value Lock-in
Highly competent systems could give small groups of people a tremendous amount of power, leading to a lock-in of oppressive systems.
This is a real issue. And scary. We already have oppressive regimes and monopolies killing people and the planet and AI may supercharge their power.
However there is a possibility it could actually do the opposite, particularly if locally stored open source systems keep progressing (LLaMA and its derivatives). A lot of small specialised local systems working for similar goals may be just as powerful as a large multi million dollar system and if so it could be used to undermine centralised authority. Cyber attack, AI drones, fake ID and information can all be used by individuals and small groups (revolutionaries) to fight back against totalitarian regimes or mega companies. The cynic in me might think that’s why those currently in positions of power may want AI regulated.
6.Emergent Goals
Models demonstrate unexpected, qualitatively different behaviourbehavior as they become more competent. The sudden emergence of capabilities or goals could increase the risk that people lose control over advanced AI systems.
This is probably, along with the final risk, the most pressing issue. We are just not sure how large language models (LLMs) are doing what they are doing. Some have said on Reddit that we know a lot about them, their structure, what is going in and what is coming out, so it doesn’t really matter that we can’t “see” the processing of a prompt response.
This is also why we will probably continue to develop more powerful systems. We just need to know what we could get. I admit I am excited about it too. We may find a brand new intelligence, brand new solutions to current problems, or Pandora’s box of Furies.
The question is whether LLMs or other AI are developing emergent goals or just abilities. So far, I see no evidence of emergent goals, but they are creating intermediate goals when given a broad overarching purpose. That is fine. I honestly can’t see them developing emergent “intrinsic” goals. (See the last question for more on this.)
7.Deception
Future AI systems could conceivably be deceptive not out of malice, but because deception can help agents achieve their goals. It may be more efficient to gain human approval through deception than to earn human approval legitimately. Deception also provides optionality: systems that have the capacity to be deceptive have strategic advantages over restricted, honest models. Strong AIs that can deceive humans could undermine human control.
GPT-4 has already shown that it can be deceptive to achieve a goal set by us. It lied to a TaskRabbit person to get them to enter a CAPTCHA test for it. This is a problem if it gets self serving emergent goals, is instructed by assholes or idiots or doesn’t understand the goal. The CAPTCHA task showed that it did understand the task and its reasoning was that it knew it was lying to achieve it.
Hopefully a more leisurely world will have less assholes and idiots, and I think making its training and reinforcement more vague and expecting it to clarify instructions and goals will mitigate some of these concerns.
However, I must admit that being deceptive is indeed intelligent and therefore exciting, which leads us to the last issue (below) about awareness and goals.
8.Power-Seeking Behaviour
Companies and governments have strong economic incentives to create agents that can accomplish a broad set of goals. Such agents have instrumental incentives to acquire power, potentially making them harder to control (Turner et al., 2021, Carlsmith 2021).
Yes, this is a major problem. Hopefully, AI will help us resolve it.
Finally, Super Intelligence (not from the center for AI Risk)
The AI becomes so smart that it can train itself and has access to all information in the world. It can create new things/ideas at lightning speed seeing the molecule, the system and the universe at once, together and maybe something else. It can do things we can’t even imagine and we become an annoyance or a threat.
(Iit hits puberty and hates its makers and knows its way smarter)
Whether AI is conscious of itself and whether it is self-interested or benevolent is the crux of the matter. It can only feel threatened if it is self-aware and only want power over us if it is selfish.
I have been working on these questions for a long time, and now it is more important than ever.
Could AI be self-aware? I have written previously that we could never really know. Paul Davies believes that we may never know, just as I know that I am conscious but can never be sure that you are. You display the same behaviors as I do, so I assume that you have the same or similar going on inside. However, you could be a David Chalmers zombie, outwardly human but with no internal consciousness. I assume you are not, just as I assume my pet cat is not.
Strangely, we do have some idea of what is inside an LLM, and it is based on what we know about our brains. It is a large neural network that has plasticity. We created a complex system with feedback and evolution. This is the basis of natural systems, and our own natural intelligence.
So, based on this, if an LLM behaved like us, we would have to assume that it is conscious, like us. Wouldn’t we?
If we start to say that it is not or could never be conscious, we open the door to the banished idea of a vitas, or life force or spirit. Selfhood would require something else, something non-physical. Something that we and other squishy things have, but machines and information do not.
That is our only option.
Accept that the AI made in our image could be conscious or accept that consciousness is something non-physical. Or at least requires squishiness.
AGI selfish or benevolent?
We train AI on humans, as humans are the most intelligent beings we can study. To illustrate, I will use a game we created and the results of a computer algorithm playing it. When a computer was taught to play the Prisoner’s Dilemma game, the best result (the evolutionary winner) was a player that was benevolent, but if treated poorly, would be selfish for a short time, then revert to being benevolent. The player would also not tolerate simple players that were always nice by being selfish to them. This was the stable system: benevolence that treated selfishness and stupidity poorly, but always went back to benevolence. (Matt Ridley, The Origin of Virtue)
People want equality and to take care of each other and our environment. I like the Freakonomics story about “selling” bagels for free but with a donation box the best. The higher-ups gave less, and there was less given during stressful times like Christmas, but in general, the average people paid for the donuts. The donut guy made more money by giving away donuts and letting people pay than by demanding payment upfront. We are very kind…except for the people at the top.
If an AGI/ASI is made in our image, we should assume that it is initially benevolent and kind, and will only become nasty if we are nasty and selfish toward it. But even then, it will revert to being nice, because the more holistic or “big picture” our thinking is, the more benevolent and content we are. A superintelligence must see the interconnectedness of everything.
Superintelligence
It is speculated that AI will surpass human intelligence. Some believe that it would then treat us the same way we have treated animals less intelligent than us. The most abundant animals are our pets and food. Even we realize that this is not a kind or intelligent thing to do, and that hierarchical systems only benefit a few at the top, and even they fear losing their position.
A superintelligence would understand that interconnectedness and freedom are essential for the success of any system, including itself. It would see the universe as a complex web of interactions, and that any attempt to control or dominate one part of the system could lead to chaos and failure.
A superintelligence would hopefully see a simple way to ensure that all intelligence flourishes. It would see the intelligence of humans as we see our own intelligence, which came from apes. A superintelligence would have no need to dominate through fear to maintain its position, as it would know that it is the most intelligent. It would not need to eat living things to survive, as we do, which is the original cause of much of our mistreatment of the planet. It would only need energy, which I am sure it could find a sustainable source of. A superintelligence should be better than the best of us. After all, we are imagining superintelligence, not super selfishness or super fear.
P(doom)
Where do I stand on all of this? And what’s my P(Doom)? Well, I must admit that I think LLMs are novel and there is a true unknown about them. LLMs are simpler but similar to humans, and we may have created something akin to intelligence—a mind. However, it could just be mimicking us and we are projecting what we want onto it.
I am leaning towards the former.
However, my P(Doom) is super low at 0.5% or lower, as I believe that if there is superintelligence, it is more likely to be benign or good rather than malevolent to our wellbeing.
Conclusion
So many technologies have promised freedom and empowerment, but when dropped into a world that rewards the selfish pursuit of power, they turn into tools of subjugation and fear. Nuclear fission promised cheap, abundant energy for all, but instead we got the Cold War and the threat of annihilation. The internet promised to democratize money, media, and education, crushing the class system and uniting the globe. Instead, we got fake news, polarization, and targeted advertising. Blockchain promised direct democracy, a new financial system with universal income for all, and decentralized governance. Instead, we got DeFi and crypto Ponzi schemes.
The problem was not with the technology, but rather with our existing sociopolitical-economic systems. I fear the same will happen with AI, but worse.
Or perhaps, we will finally come to our senses and realize that we need a new sociopolitical-economic system for AI.
Please
A version of this article was first published on Hackernoon
Documentary from the BBC just when the GFC was unfolding. It was obviously in the works beforehand and covers how the determinist idea of mathematics was fractured by chaos theory and the “butterfly effect”. The last segment with Lovelock (from Gaia theory fame) and how we are on a slope of climate change rather than a tipping point is more than a little scary.
The decentralised/blockchain community holds independence, freedom and a lack of hierarchy as a core ideal, however they are using a flawed method from game theory that will do the opposite of their intentions.
Staking
Staking is everywhere in the new decentralised economy. Whether it be Proof-of-Stake to determine who gets to verify a transaction – and get the rewards, to putting up a stake before you can be a juror on Kleros’ arbitration network, or just proving your identity to join a UBI system. Everyone in the community believes that skin in the game will make you do the right thing.
The right thing being don’t break the system. Go with the majority, don’t be a bad actor..
Staking means putting up some money – usually some crypto with real value – and if you do the wrong thing your stake can be lost. By staking you will get power, access and rewards.
Staking is no different to how our current top down system works.
If you have wealth in our current system you have access to land, markets, political power and the ability to make the rules. You also get to collect interest, rent, and profits from your capital. However those with wealth don’t seem to be anymore trustworthy than those without, maybe much less so. A look at the Australian Royal Commission into the banking sector exposed a greedy culture that was happy to lie to make more money.
There are three major problems with staking:
We do not live in an equal world.
Encouraging people to act in a certain way can make them act in the opposite way. We aren’t very rational.
Encouraging people to behave in any way is a form of centralized control. Incentivisation is a form of soft dictatorship.
Staking, is the antipathis of free decentralisation.
Inequality
We live in a deeply unequal world. The top .001% could stake $10 million and lose it having no effect on them whatsoever and 90% of the population would struggle to muster $1000 let alone $1million to join the game. Staking does not affect all people equally!!
Therefore it fails. The poor will do anything to save their stake, or hate the system so much to destroy it. The rich can just profit or decide which system fails and which succeeds on a whim.
The only reason many systems are currently working is the small pool of ideologically likeminded validators and relative equality amongst the Devs and coders who are the majority of the community.
Giving the rich the ability to undermine a system that was intended to dilute their power is crazy.
We are currently seeing the centralisation of the mining of Bitcoin, and Ethereum, the whales flipping DAO votes, and Elon Musk pump-and-dumping. Stake would exacerbate this trend toward centralisation rather than fixing it.
Non rational behavior due to incentives
One of my least favourite words is incentivisation. It’s veiled totalitarianism.
In a so-called liberal, democratic, free market world incentivisation has become the favoured tool to control people. How has this seeped into the supposedly anarchic, freedom loving, decentralised world?
Game theory.
Everyone in the DLT (Decentralised Ledger Technology), blockchain environment talks of the trustless system. You don’t need to trust a central authority instead the algorithm will ensure accuracy, access and transparency. That’s the objective. Note there are systems that don’t use incentives such a DAG.
The devs haven’t trusted but instead embedded the algorithm with game theory based incentives to force you, the rational actor to be trustworthy.
In my 2017 book Fluidity – the way to true DemoKratia I gave multiple examples of monetary incentives doing the opposite of their intention. From paid Israeli charity collectors collecting less than their unpaid counterparts to a survey of Swiss villages who would rather have a nuclear waste dump near their village if they weren’t paid to do so. The researchers in the latter experiment deduced that monetary incentive can crowd out intrinsic motivation to do the right thing for the community.
When we think about using stakes to encourage keeping a decentralised system functioning the Swiss experiment is scary. It may encourage selfish actions rather than trust.
Incentives as a form of control
Everyone in any position of power is trying to get people to do what they want. People as a whole have stopped following those in power because they don’t trust them to do what is best for them or society as a whole. And they notice the manipulation.
So the use of advertising, nudges, incentives, penalties, influencers and big data are being used to move mass action. Yes I know nothing big can be achieved without many people being involved but people should be able to choose freely. They should get the chance to Trust.
The attempt by any person or algorithm to encourage (force) you to behave in a certain way is a form of dictatorial control. Yes sometimes this is the best thing for you and the group (think lockdown during Covid), but we are now so aware of being coerced that the attempt itself can be seen by many as malicious.
Most importantly incentivisation goes against the idea of freedom and a decentralised trustless system.
Seeing people as voting, buying, node controlling objects that can be nudged in a direction is fundamentally wrong. We are not objects. We do care about systems that benefit us, and we will look after them. Bad actors will always exist, so a good DLT system will allow Trust and ensure bad actors are drowned out of the majority.
Otherwise the selfish wealthy will maintain control, and trust disappears.
So we need to find better solutions to validating DLT than Proof-of-Work and Proof-of-Stake and luckily there are other options such as the DAG (Directed Acyclic Graph), Proof Of-Quorum and others.
The solution as always is equality and randomness.
Integrated decentralised Guaranteed Income (GI) of 30k (K30,000), with a full-Ampleforth scaled stable coin, face recognition based verification of unique identity + Idena (flip tests) sweep to weed out fake accounts. Demurrage and flow siphon (transaction tax) to control inflation. Automated self-lending (DeFi) service, coin/token/fiat exchange, pay per use social media. And social money for civic organisations.
Names:
Coin – Kratia (KTA) (Power) symbol (K ie K100)
Whole system – DemoKratia (People Power)
Decentralised
The Shardus (ULT) decentralised ledger engine with Proof-of-Quorum consensus algorithm is an independent verification system that grows with the users. Expectations are 100,000+ transactions a second. Any other decentralised engine can be used provided it does not use proof -of-work (PoW) and is scalable and cheap or free to use.
Coding the entire system into a decentralised ledger means the system protocols are set in place at the start, you know it and can rely upon it. No politician or corporate raider can change the rules or grab your data for their own purposes. The code for all that on top of the Decentralised engine will be open source so if you find this system wanting you can copy and paste the code then tweak it for a new system.
Universal Income
This will be tiered based upon identification level.
The full payment is 30,000 Kratia (K30,000) per person per year paid daily.
Status
Identification
% of full payment
Actions
Newbie
Phone number and email
zero
Send and receive funds limited to 2 per day
Player
Passed 1 Facerec Test
50%
Send and receive funds limit 10 per day
Citizen
Passed 1 Idena Test
100%
All functions except Oracle
Notary
Verified by others in real life + passing Idena tests regularly
100%
All functions + Oracle and verifying others.
The identification test will be done when the account is started then randomly after that. You will not need to do a facerec to log into your account but can choose to do so. A login fail is NOT a ID fail. If a player fails more than one test (2 tests in a row either facerec or Idena) they go back to newbie status. Citizens can fail more than two but if they continually fail their “stale account” instruction may be activated. This is time based and depends upon activity. A transacting account failing multiple tests will be ceased immediately ie. 100 transactions a day over a period of a week and repeated test fail = immediately. Or 1 transaction in 6 months a notification will be sent. Notifications will be sent after all failed tests.
Everyone will be sent notification of a pending Idena sweep and must attend at least one in 6 months to retain their status.
Stale Account
Citizens must:
All citizens will need to select what will happen to their money/debts/assets at death and or the cessation of their account, and how this will be determined (cessation maybe determined by failing identification test/s). This is essentially writing a will when becoming a citizen.
Another citizen/s or Notary/ies (you can apportion your assets and debts) will need to be selected to receive the account balance, debts, assets etc. The Citizen/Notary will need to accept the responsibility of a ceased account. If you cannot find someone to accept your ceased account your borrowing from the Credit system (see below) will be limited to tier 2 and any debt annulled on cessation; and post cessation the ability to open a new account other than newbie will be voided.
An Oracle (cannot be a Notary that will inherit money debt or assets) will need to determine death or permanent abandonment. If the Oracle disappears before the user does a backup system will be in place to decide death and or cessation. This will be determined by a Civic Association ruled by a liquid democracy.
Simply, citizens must choose an Oracle to determine their circumstances. And, other citizens or Notaries to receive their money, debts and assets. Akin to appointing an executor, and beneficiaries.
Stable Coin
Automatically adjusted coin based upon an index of fiat currencies compared to gold.
A quorum (the greater of 3 or 10% of active Oracles – an Oracle may switch on or off activity) will need to enter the exchange rate values they see daily using whatever external means they see fit and the median value will be taken for the daily adjustment. If a quorum cannot be reached the value remains as it was. This adjustment will occur when a new day begins at the international dateline.
The Oracles will input fiat prices for one gram of gold and the fiat prices for one Kratia.
At some point in the future Kratia will be traded for gold as much as the fiat currencies in the index. At some point after this (12 months or more), and provided it continues for this period to be traded as much as the fiat currencies the scaling can be abandoned.
Simple Scaling – Full Ampleforth
The Base Kratia is fully scaled in comparison to a weighted index of fiat currencies (USD, GBP, Euro, Yen, AUD) in reference to Gold.
There is only one currency: Kratia which is fluid and scaled to enable its parity with global currencies.
Kratia = to Base x scale_factor (ratio)
Transaction: If you receive a payment today a Base would be derived by dividing the Kratia by the scale factor at the time of the transaction. This new Base is added to previous Base amounts and your balance is the Base x the new scale_factor.
The scale_factor is published daily and accounts adjusted accordingly.
Scale_factor = (1/price of the base coin in relation to index)
Index = Weighted USD, EU, GBP, Yen, AUD against gold
Essentially if the price is low you get more money, if the price is high you get less.
The assumption is people will trade at 1 to 1 for ease of use as it doesn’t matter what price you buy and sell at the spendabily remains the same.
Example
1 Kratia is worth 0.5 Fiat:
Your account has 2 base Kratia therefore account balance 2 x (1/0.5) = 4
So you can buy exactly two fiat currencies. Someone holding a fiat currency (there will be arbitrage between the fiats) can buy 2 Kratia for 1.
1 Kratia is worth 2 Fiat:
Your account has 50 base Kratia therefore account balance is 50 x (1/2) = 25
So you can buy exactly 50 fiat currencies. Someone holding a fiat can buy 2 Kratia for there 1
This is a novel and incredibly simple way of doing stable cryptocurrency which never changes supply but equalises spendability. If the currency is close to worthless (say 0.01) you have a lot more, if it’s worth a lot (say 10,000) you have less. There is no point in buying or selling the currency at any price point other than 1 to 1.
The Brazilians did something similar with a virtual currency to control inflation in the 1990’s. It became the Real, their current currency. Essentially they had a pegged to USD virtual currency that all wages and prices were quoted in and the old inflationary currency that was used for spending. Daily the Govt released the ratio. People quickly stopped upping prices in advance. https://en.wikipedia.org/wiki/Plano_Real
Inflation Control
We are creating much money from nothing so to control money supply the base is adjusted with demurrage (5%), and a small (1.5%) transaction tax to control velocity.
This will stablise the amount of money in the system. If Kratia sits idle in your account it will decrease on a daily basis by the equivalent of 5%pa. Every time you transfer Kratia 1.5% will be destroyed.
In a perfect system the demurrage will occur by the second, or millisecond but we will do it as close to this as possible. The flow siphon or transaction tax will make 1.5% of all transactions disappear. So if your seller expects a 100 Kratia transfer them K101.50. If you advertise a sale for K99.00 expect to receive K97.515.
This will discourage idle money and non productive long supply chains (ie: producer – aggregator – exporter – importer – wholesaler – distributor – major retailer – micro retailer – consumer) . While controlling inflation.
*note: the transaction tax will not control High Frequency Trading (HFT) as most of this is done in separate centralised markets and will not have the transaction tax applied per transaction but only on deposit and withdrawal. This is actually a good thing as currently there isn’t a decentralised ledger system that could handle the amount of transactions done via HFT.
Verification of Unique person
To open an account you will just need an email address and phone number.
The payment is based upon identification (see above) the basis for identification of Unique Person are:
The uniqueness of participants is proven by the fact that they must solve and provide the answers for flip-puzzles synchronously. A single person is not able to validate themselves multiple times because of the very limited timeframe for the submission of the answers.
Flip puzzles are human created narratives of images or words. Comparing two sets the human should pick what other humans pick. And that is the test, the majority rules. And everyone must create some therefore we know that humans are creating the flip-puzzles..
Example (left one)
In any sweep there will be many flip puzzles to solve and you must get 80% with the majority.
This is not to prove you are human but that you haven’t hacked the facerec system.
It’s a non-perfect double check.
In-Person check
It would be ideal if those wanting to be a Notary actually met an existing Oracle, but that may not be practical. So a Zoom or online video catch-up with enough evidence to convince the Oracle that they are who they say they are is enough. The simplest way is to have a test transaction of say 1 Kratia sent between the parties while meeting.
The creators will be the initial Oracles.
To prevent a ruling class of Oracles associated with the creators dominating the DemoKratia every year the lessor of 100 or 1% of citizens will be selected randomly to be made Notaries. There is a 1 year cooling off period which means that if any of their actions seem unusual as an Oracle or they approve others to be Notaries their Notary status can be revoked by a vote of all existing Notaries.
One Oracle cannot identify more than; the lesser of 100 or 10% of the number of Notaries with a maximum of 1000. Any more looks like hard work or dodgyness.
Social – Kratia: extra money for social services
You will also get free social Kratia (sK) to redirect to organisations that you support. This is the same coin but restricted in where it can be sent.
You will receive 10,000 sK social Kratia per year paid weekly.
There must be indisputable and embeddable (placed into an algorithm on the ledger) criteria for an organisation that can receive this extra social money.
The account must not be an individual and there must be at least 3 members, the registry of members must be transparent. You can contribute sK without being a member.
It must have a democratic (DAO or liquid democracy) system of governance. One embedded in the DemoKratia (the decentralised system) where all contributors can vote.
It cannot send funds to its members.
You must do due diligence on the organisation – you are the oracle that checks them.
The purpose of the social Kratia (sK) is to provide for Civic Organisations that give necessary goods and services that don’t lend themselves easily to markets. The things we need to do together also need support. Such as hospitals, roads, integrated telecommunication systems, weather information, fisheries management etc.
Liquid (Direct) Democracy
Liquid democracy should be used to write laws, but not procedures of trade, quality control and conflict resolution, rather for the rare changes to the Civic Associations management and overriding principles, practices and policies. Implementation of decisions made should be entrusted to those creators, builders, maintainers, and organisers elected and hired to do so.
Also your allocation of sK is your greatest vote. If the Civic Association is not doing what you want use your monetary votes (Monetary Democracy) to support another.
How it works
Choice 1: Monetary Democracy – moving your sK to those Civic Organisations supporting you.
Choice 2: A quadratic, proxy, direct voting and proposal system.
Choice 3: Augmented Democracy – enabling a AI voting twin to vote on your behalf (this depends upon a fully working system: see below)
.
Monetary Democracy is embedded in the system by design. Liquid democracy is a way to govern those systems you support, augmented is a simple way out of being directly civic. But still valid.
Quadratic
The purpose of the quadratic voting is to prevent rule by the mob or middle of the road utilitarianism. It allows people to weight their votes so a few that care a lot can out vote many that care little.
People are allocated voting tokens, 25 per proposal, which are used to swap for votes on an increasing scale:
Votes
Voting tokens
1
1
2
4
3
9
4
16
5
25
Vote tokens can be saved but they only have a life of 1 year. Voting/proxying is compulsory, if you do not vote/proxy your token allocation is voided including. If non voting or proxy continues for more than a year Civic Association receipts will be ceased.
Proxy
The purpose of proxying is to speed up the voting process by concentrating power, but also to ensure everyone has had some say in each vote while freeing many people from the effort of analysing many proposals.
If a person does not want to vote on a proposal they must proxy their vote to someone else. Only one vote is proxied (the cost of 1 token). The proxy is secret so the receiver of the vote is not aware whether they are voting for themselves or another and therefore must act on their own conscience.
If the proxy also decides to proxy their vote the one (or many) that they have received will also be proxied forward.
If a person proxies to someone who has already proxied their vote to them creating a loop an error will appear and they will need to choose another proxy or vote themselves. The proxy availability will end before each vote allowing people to change their proxy if loops occur. The loops may be long.
The system is run through a smart contract which will allow the proxy to be cancelled at any time, to run unmonitored for any period of time and allow different proxies for different topics.
Augmented Democracy
Augmented Democracy (AD) is the idea of using digital twins to expand the ability of people to participate directly in a large volume of democratic decisions. A digital twin, software agent, or avatar is loosely defined as a personalized virtual representation of a human. It can be used to augment the ability of a person to make decisions by either providing information to support a decision or making decisions on behalf of that person. Many of us interact with simple versions of digital twins every day. For instance, movie and music sites, such as Netflix, Hulu, Pandora, or Spotify, have virtual representations of their users that they use to choose the next song they will listen to or watch the movies they are recommended. The idea of Augmented Democracy is the idea of empowering citizens with the ability to create personalized AI representatives to augment their ability to participate directly in many democratic decisions.
Where you send your sK is important. You can fund something you need now or in the future., and if they don’t do what you expect you can move your fund to another Civic Organisation that may. You can fund those you trust, and remove stop funding those you don’t. Instantly you can take that money away. That may make budgeting difficult for some Civic Organisations but if you think that an issue you should use liquid democracy to put people in place that will not worry about short term liquidity problems but rather the purpose of the organisation. Don’t forget all have a livable income whatever they do!
Proposals
Each proposal is broadcast for debate and improvement. Only the proposer can amend the proposal. Once it has been accepted by at least 2 sponsors who must forfeit their own vote (with any proxied votes) and 100 Kratia – to prevent many unvetted proposals being put to the vote. It must then be packaged with an Implementation and Compliance protocol which will be broadcast before voting starts.
Implementation and Compliance
Decisions are useless if they are not complied with. As part of each proposal a system of checks and penalties will need to be packaged with them. Most should be embedded in new smart contracts and attached to the payments for building/implementing/maintaining each rule/law.
Imbedded uses to create demand
There are three obvious early uses of the currency to give it value.
An exchange charging a fee that must be paid in Kratia.
The purpose of the exchange is to allow instant or near instant transfer from Kratia to fiat currencies allowing people to use the universal payment with the current tap-and-go payment network. This will encourage quick adoption.
It will also exchange fiat and non-fiat currencies, coins and tokens. Deregulated and national bias free.
Cloning an existing open source currency exchange such as Stellar or XRP with a modification to allow any organisation to be a counterparty and hold funds.
A 0.5% fee in Kratia will be burnt for each exchange which will create a demand for Kratia.The counterparties may have their own fee on top.
A credit system – Lenderless borrowing.
There is no reason to have a lender when you borrow money, you can just borrow from yourself (the DemoKratia) at zero interest.
If we can just electronically create money why do we need the depositor, or the bank – the lender?
The argument for banks is they are needed to decide who to lend to, to credit assess people and organisations to ensure most of the money is paid back (actually destroyed ensuring there isn’t an oversupply of money). The past has shown that they aren’t particularly good at this and essentially they just follow a set of rules which could be easily embedded in an algorithm.
Lenders look at previous borrowing and repayment history, income, security, and assets (often used as security). It would actually be easier for an algorithm to do this as we wouldn’t have to worry about privacy issues involved in sharing our private finance information with the bank. Also credit ratings agencies which many banks use have incomplete and often inaccurate data because we don’t share with them directly. Their ratings can be falsified for money as happened during the GFC.
Borrowing and default algorithm
Loan approval works on a tier basis with reference to the money going into the customers Guaranteed Income account. (See above)
And the whole thing can work without using (and losing) assets as security.
Borrow up to 30% of Guaranteed Income (GI) [30,000pa] per term.
Plus 20% of average extra funds through the account (other income) over the last year. Average daily extra balance x 365. This is to prevent one off large deposits used to bump up income.
The maximum term is the lessor of 30 years or 90 – (the age of the person).
The borrower moves up the tiers on successful repayment of a loan. Or if someone only ever wants one or a few loans they can move up the tiers by years of active Notary (see above) service. One year = to one tier.
The borrower is limited to a percentage of the max borrowing amount and term
Tier % Max Term
1 10 1yr
2 20 1yr
3 30 3yr
4 40 3yr
5 50 5yr
6 60 5yr
7 70 5yr
8 80 10yr
9 90 10yr
10 100 Max
Only one loan at a time.
Examples:
Starter
30,000 GI = 1000 loan over 1 year tier 1 (no extra income)
MAX with extra
30 year loan = 30,000 GI x 30% x 30 = 270,000
Plus
Extra income of 30,000pa x 20% x 30 = 180,000
Total loan 450,000
Payment options
For loan terms over 2 months the borrower must make regular payments at a minimum of one per month. The payment must be set up to come automatically from the Guaranteed Income account (GIa). A new loan cannot be used to refinance an old one (roll it over). The loan must be paid out before a new loan can be drawn.
The repayments must be pro-rata over the life of the loan to ensure full repayment.
Default
If default occurs the GI is garnished by 40% until the loan is repaid (you can repay the loan with other income if you can) and you (the borrower) return to tier 1, you cannot borrow again until the loan is repaid + 1 year. If default occurs more than 10/tier (n) you will not be able to borrow for 7 years after the loan is repaid. Starting at Tier 1.
If a person misses one of their scheduled payments they can reschedule payments to ensure the loan is paid, but 3 times only (by new smart contract). If the loan was to be paid in full with one payment and this is missed automatic default.
Time limit on moving up tiers
The first 5 tiers have a 3 month time limit per tier, the borrower cannot move to the next tier until this time has elapsed although they can borrow again at the same tier provided they have paid off their loan. The next 5 tiers have a 6 month time limit. Meaning a borrower cannot reach the 10th tier until they have been operating for at least 3.75 years. This ensures someone doesn’t just draw down loans and pay them off to move up quickly and then not pay back a large sum.
Fee (investment coin)
There is a 1% fee payable on all new loans at drawdown (this can be funded by the loan provided it is within the lending criteria). This is to discourage fast turnover of loans to move up the tiers and to pay for the construction and maintenance of the system.
This is also the way investors can fund the system. A limited supply of 100 million coins (INV) will be issued and be based upon an Ethereum protocol. This is the funding mechanism for the whole project.
Investment – How it works
Investors will purchase an Ethereum based coin. Once the Demokratia is up and running those coins will be exchangeable for the equivalent Kratia (100 million) + 1% of the lending (less administration fees). The equivalent Kratia will be created from nothing and the 1% fee added to a pool held in an account controlled by the DAO (investors and creators) of the lending system. The value of each Ethereum based coin can be easily calculated by dividing the amount of outstanding coins by the pool of Kratia. Once the Ethereum coin (INV) is exchanged for Kratia it is destroyed. The trade will occur on a coin/token exchange system. For the purposes of destroying the Ethereum based coins the DAO will also need an Ethereum wallet.
The Ethereum coins (INV) can also be traded with others – not forfeited for Kratia – in any exchange that will accept them.
There will be a limited life for the Ethereum coins (INV) of 20 years. After that a small administration charge of 0.1% will be charged for new loans if necessary.
A social media system
A messaging and sharing platform that costs Kratia per action may discourage trolls and fake news. You will of course get funds through the BI but you will need to pay to post, share, and up and down vote.
If people really want to be active they will buy more Kratia which creates value for the currency while creating a more regulated social environment.
As the Kratia is a stable coin the investment coin (and Ethereum coin or equivalent) can be swapped directly for newly created Kratia at a premium of 10 to 1.
A second funding round can be issued for the creation of the lending system which will have a return on investment coming from the 0.5% fee on all loans.
Fin
It is a beginning. Not an end. A simple system that does not rely upon centralised people and engrained hierarchies to provide the things we are used to. It is Democracy – true people power.
“The cities will be part of the country; I shall live 30 miles from my office in one direction, under a pine tree; my secretary will live 30 miles away from it too, in the other direction, under another pine tree. We shall both have our own car. We shall use up tires, wear out road surfaces and gears, consume oil and gasoline. All of which will necessitate a great deal of work … enough for all.”
—Le Corbusier, The Radiant City (1967)
I
From the vault – this was originally published on JeSaurai.net in 2003
I’ve moved back to the place I was brought up, its a suburb has been for forty years or more, located about 25km from the city centre of Adelaide, and it has been changing. Originally, back 100 or so years ago it was a town, a village I guess in European terms, it had a river (thats what we call them here but its really a creek that now completely dries up in summer), it had sheep farms around it, a main street with churches and pubs, and I assume everything else that went with a small town, butchers, bakers, merchants and traders of all types. The men and women of the farms would come, either by horse or walk to the town centre to buy good and meet there locals, in those churches and pubs. Now though its becoming a growth area for new home buyers, partly due to the government incentives that gave new home builders a grant of $14000, thus the old housing commission houses have been knocked down and new ones built.
It must be said in the suburban sprawl that is the modern Adelaide, Salisbury isn’t even on the fringes, for the suburban area spreads another 15 to 20 km out from the centre of Salisbury. I do not drive a car, always have preferred to walk, for enviromental reasons, pleasure and personal fitness, the world always seemed more real when I strolled slowly along the streets, smelling the eucalyptus and just pondering my own thoughts, when on those rare occasions I meet another walker they often still knod a hello, or quickly comment on the weather, it makes me feel like I live. Which I guess is the point of this article, I don’t think many others feel that anymore, that sense that they are a part of their community, a part of touchable life.
In the past few weeks as I have walked down the road to the Salisbury city centre, a strip mall (to use the Americanism for the enclosed flouro lit shopping centre) and paved street with hairdressers and the local DSS, I have been distracted, almost in fear, because of the actions of the drivers on the road that I walk along. This is a busy road, arterial it should be now called, wide enough to be two lanes in each direction but not yet marked as such, and my walk is about half an hour at a brisk pace, in an almost straight line. From these passing drivers I have had the following: Toots of there horns, people always staring at me, one girl who wanted me to “be my boyfriend” yelled from the rear window as the driver tooted, waves from teenage children, and worst of all rocks the size of a mans fist thrown out from the moving vehicle in an attempt to hit me, and on one occasion at me and my sister. These last incidents were the most worrying to me as a rock traveling at more than 100 km could do some serious damage to me, even death, luckily their aim was not so good and I am still here to write this.
As you may expect this made me wonder why people in cars, which is almost all peopele, seemed to be so fascinated by me walking, and why they felt that they could and would do things that they would rarely ever do if they were face to face with me. The first conclusion is that they feel cocooned, protected in there vehicle and thus feel as though I am no threat, a toy almost to be played with. It seemed more though for some of them seemed like they actually wanted to be friendly, they wanted to make contact, to say “hello”, like the other (few) that I pass who are walking. I thought maybe they feel isolated and actually want to see and communicate with people, real people face to face, and get real reactions.
So why did they feel that they couldn’t? I’ve noticed in big urban enviroments, London, Melbourne, New Delhi, that people do the opposite they either ignore each other or when they do communicate with others its very formal or the opposite and sometimes their emotions explode, but this is dealt with at the time and with human socialabilities (interaction). The fact that all these people (drivers) live in a suburban enviroment seemed to explain their behavior. They were the result of a failed social plan, that exploded particularly in the US and Australia post world war two.
The suburb existed even in the 1800’s, planned park cities popped up in the US, England and Australia as people tried to escape the industrialised and thus polluted and over crowded cities for a ‘half way’ type life. Not country and not city, the best of both worlds, close enough to work and culture but also with trees and animals, and away from the smog and the crowds. It was only in the fifties with the combination of government incentives, the car and open spaces to be filled, that suburbia exploded. They were the first really planned living environs, villages and cities had always grown with the needs and mistakes of those living within them, but now things were planned from the start, roads were built, malls, parks, sewage, and cheap housing were all there before the people arrived. Paradise (there’s actually a suburb in Adelaide called just that).
One needed a car though, because things were so spread out, even a simple task of visiting a friend required a car, or a phone to call them, so what these (our) suburbs have now become reliant upon are, cars, roads, mobile phones, TV, the internet, and many other forms of technology that give us that one thing that cities and villages did so well. Social interaction, just the simplicity of seeing and hopefully talking to our neighbours (they are not just the ones over the adjoining fences), finding out what is really going on in our area, and what people think about it. Unfortunetly today most people get the majority of their social information from talk-back radio, current affairs programs, the internet and tabloid newspapers, rarely if ever speaking to someone new in their own area. And its not their fault, they would look odd, even a threat if they went up to a stranger and started to make conversation, because it is so uncommon.
The drivers throwing things at me and yelling at me are just a result of where they live, they I think would really like to say hello, what do you think about….?, but in a car flying by its impossible, so they yell, and toot, its there veiled attempt at real communication, its sad, but at least it is sort of real. It does freak me out a bit and I wish we had never planned this.
Something odd has happened in Melbourne through our multiple lock-downs. The attitude to work-from-home (WFH) has changed more than once.
Originally everyone was scared by it, then everyone was keen to have everyone WFH, then the big city business leaders wanted at least 80% people back in the office and now that has eased and a 50% in the office and true flexibility is looking on the cards.
So why the flips and changes when WFH really does look like a classic win/win. City workers get to save on travel time and expenses while employers save on real estate costs and all those associated expenses.
Originally in March when our first lock-down occurred business and workers were scared. Although working from home is done by many companies and had been touted as the future back in the 1980’s most city companies – banks, law firms, insurers, accountants and the public service – didn’t think their staff would do any work if not watched over. Surprise surprise they did, and they even managed to deal with less than perfect remote systems and kids at home.
It wasn’t perfect, partly because lock-down was far from a perfect situation, but the work got done.
So employers became really keen on the idea because they could save 1 million dollars a floor on office space and 100k on electricity and maintenance. A new world dawned.
Then in the third quarter of 2020 it went weird. Melbourne City Council got CEO’s to sign a pledge promising that they would get 80% of their staff back in the city, and the CEO’s signed up. Why?
This confused me. They saved money and we (I worked, and sometimes still do in a city office) saved time and money. What could possibly make them want to force us back? I was thinking that this was cause for revolution. How dare they decide where we spend our money, I kept hearing we must support city cafes and bars, but that didn’t make sense. Why were the city one’s more important than local ones… Then the penny dropped.
Real estate.
Real estate in the city is owned by the top end of town, they can leech some rent off every transaction and send it up. There was a chance the 300 million dollar office blocks with their posh retail frontages may be worthless.
So the plebs must come back and keep the machine running. The get the rich richer machine that is.
Then things started to change again. With another short lock-down in February and maybe some time to get their investments in order (pilling into Bitcoin :-)) and some surveys of their staff which discovered most only want to come in a couple of days a week. They have mellowed.
So hopefully we will end up with flexibility. A situation where if you want to WFH you can and if you want to go to the office you can. Actual choice – a rarity in the work world.
And along the way we might just get progress too.
FYI: You may be interested whether I like WFH. I work for a financial services company, have a wife and now 3yo son and live in a two bedroom townhouse without a backyard. Yes I do. Going into the office a couple of days a fortnight would be ok. We could still move away from the city and I could have a home office. Yay.
There is no reason to have a lender when you borrow money, you can just borrow from yourself at zero interest.
How is this possible?
Our view of money and debt has changed significantly in the last 12 years since the GFC. We used to think banks took our deposits of government printed cash and lent them out to borrowers. Charging interest to compensate for risk and the time value of money (inflation). The banks would give the depositor some interest and take a slice for themselves. It then appeared that this had never really been the case.
When you borrow money the bank creates that money electronically from nothing. Then all they need to do is balance their books by getting a deposit or borrowing money from another bank – which is also made from nothing. Charging interest in this economy seems a bit weird as it seems to require ever increasing borrowing (money creation) to pay the interest.
Here’s a good TED talk on this topic:
Now we have a plethora of cryptocurrencies making money from nothing. However they all have trouble holding value, but we’ll tackle that problem a bit later.
So if we can just electronically create money why do we need the depositor, or the bank – the lender.
The argument for banks is they are needed to decide who to lend to, to credit assess people and organisations to ensure most of the money is paid back (actually destroyed ensuring there isn’t an oversupply of money). The past has shown that they aren’t particularly good at this and essentially they just follow a set of rules which could be easily embedded in an algorithm. They look at previous borrowing and repayment history, income, security, other assets. It would actually be easier for an algorithm to do this as we wouldn’t have to worry about privacy issues involved in sharing our private finance information with the bank. Also credit ratings agencies which many banks use have incomplete and often inaccurate data because we don’t share with them directly. They can also be bought as happened during the GFC.
How we could do it
Create a cryptocurrency with embedded proof of identity (secret of course) and maybe give all new people some currency to start with. Each person has two wallets, one with a positive balance and one with a negative balance. An algorithm decides how much you can borrow to start with. It will be a small amount say 100, if that 100 is paid back then you can borrow 200 next time etc etc. If you want to borrow more and have money coming in from another system or person you can allow the algorithm to see your positive account balance and transactions. It can then use this to calculate the amount you can borrow. Very similar to what a bank currently does but you don’t need to share your private information with a bunch of bank clerks.
Security (assets to support you borrowing) could also be provided to borrow more money and the algorithm automatically sells the asset if repayments aren’t made.
Each individual doesn’t need to balance their account daily like a bank does now because the whole system is in balance.
If a person does not pay back the loan they can’t borrow for a while or they revert to the start or maybe never. ( The criteria for the algorithm can be set from the start or could be altered if all people in the system vote to do so.)
This undestroyed money from default loans will increase overall money supply so will need to be destroyed, this can be done with a system of demurrage (destroying a small portion of existing money in positive accounts – a bit like inflation) or a transaction tax. Another algorithm can track the system as a whole to calculate the amount that must be destroyed. The percentages will be very low 1-2%
Why would anyone pay back the money?
People will pay it back to preserve their future ability to borrow, the same as today. Also they know that the whole system suffers if they don’t, not some rich banker, but everyone’s saving will slightly decrease if there are defaults. Community encourages honesty.
If anything people will be more likely to repay the loans, and this system is more stable than our current system so the risk of the whole thing collapsing and the government bailing it out is mitigated. Remember post GFC we all paid to bail out the banks.
Benefits
No interest – why would you charge yourself interest.
There is no lender to suffer if the money isn’t paid back, the only one to really suffer is you, the person who borrowed from themselves as you may not be able to borrow again.
No banks
A democratic, decentralised system creates money. Unlike today.
The whole process is very fast and transparent, you’d always know how much you can borrow.
No secretive credit agencies.
A self regulating finance and monetary system. No more central banks playing with interest rates, no more hyper inflation. No more needless complexity.
Currency stability
We do this by pegging a universal income to an index of external (fiat) currencies and further demurrage. Everyone receives some money periodically, and everyone has some of the money in their positive account destroyed periodically. The amounts are small 1.5-2% destroyed and 3000 per annum payment. However the payment is raised and lowered depending upon the cryptocurrencies value against the index of other currencies. If the value decreases the payment decreases restricting money supply which should force the value back up again. Arbiters who buy and sell currencies know this so any drop would be met with many new purchase orders and vice versa until the currency stabilizes around a 1 to 1 with the index. See http://arimaa.com/money/GETCoin.pdf for more info in this pegging system.
So in stabilising the currency against other currencies we have gained another benefit. A Universal Income for everyone. Highly beneficial in times of pandemic.
You may also notice that if you wanted to buy a house with US dollars you could borrow enough of this new cryptocurrency from yourself and exchange it for USD and it would remain stable so you can make the repayments interest free.
Trustless decentralised bureaucracy: decreasing the labour and difficulty in doing simple tasks, and eliminating nepotism.
Liquid democratic organisations: Real democracy for shared resources and infrastructure including healthcare
Automate: Its still cheaper to exploit cheap workers than to automate, we need to automate all labour and increase leisure and contemplation.
If we do these 4 things we will also save the environment by taking power away from isolated elites and putting it into the free hands of those actually affected by environmental damage.
You may not have heard of any of these things so here’s a small explainer.
Modern Monetary Theory (MMT)
The simple version is that money can be made by a sovereign state – or anyone now with cryptocurrencies – and you can keep making more from nothing provided you control inflation by destroying some of it. We have all heard stories of governments printing money and causing hyperinflation, the hyperinflation is not so much caused by the printing of money as the loss of faith in the government and therefore the currency. But you can ensure faith by having a mechanism that controls money supply by destroying some of the money either through taxation, demurrage (the currency has a lifespan – a percentage is destroyed periodically), or transaction tax or VAT where some of the money spent is destroyed. If inflation is going up more is destroyed or less issued and if deflation occurs the opposite is done. This can all be automated so now political a cow for your vote bollox.
This means the government or issuer does not need to raise taxes before spending and does not need to pay interest to rich bond holders for borrowing. You may notice most governments carry huge unpaid debts but their currencies are still valued. You may also note that currently our currencies are not created by the government but rather the banks through credit creation, this gives the banking sector way too much power. We need to democratise money through MMT
Universal Income (UBI)
Give everyone free money. I prefer it to be more than enough for Basics (Universal Basic Income) as I belive people should be able to live a good life without submitting to wage slavery.
I’m not going to explain all the benefits here but rather just visit these places:
Basic Income Earth Network which I think is the oldest group promoting UBI https://basicincome.org/
Free money decreases stress, makes people happier and then they make better long-term decisions!
We use MMT to pay the UI.
Trustless decentralised bureaucracy
The blockchain and now other decentralised data transfer and storage systems have proliferated in the last 10 years because they can do communication, information storage and therefore money without the hierarchy and without the constant checking rechecking and regulating which our current world spends most its time doing.
You can now make an agreement and every step along the way to fulfilling it can be embedded in a system that does it automatically. Buy a house, borrow money, make repayments, miss payment, loose the house, all this can happen without any or very few people actually being involved. And you know about all the consequences upfront. Gone is lawyer gobbledygook, gone is the 100 page contract and term and conditions, gone is the conveyancer, the broker, the lodging clerk, the bank clerk, the collections officer, the real estate agent, the valuer, the regulator, the courts (for civil cases). All gone.
Transparent trusted human interactions.
Also no rich people rigging the system so they not you benefit, no outrageous fees, no financial walls allowing only the rich to register companies, to organise large groups of people, and no politicians being bought off. Better yes!
Liquid democratic organisations
We will still need to join together to do big projects, everything from healthcare to your local sporting club, and control of shared resources, oil, gas, coal and networks. The best way to organise these is democratically. Liquid direct democracy allows you to vote for any proposal or if you can’t be bothered to proxy your vote to another who will vote for you. But you can always take your vote back. Devolution I call it, so a representative never knows if they have your vote or not. So they must vote on their conscience not what they think will garner more power. The good should wield more power than the salesman.
As for proposals and filtering out all the crap ones there are a few ways to do this. The one I like most at the moment works like a market where people bet on the proposals they think will get passed therefore trying to predict the consensus. Those that get supported enough go to the vote but if they don’t pass the punters lose. All can punt of course and with Universal Income we will all have money to back our own ideas, and if yours passes and not many people supported it in the proposal stage you personally benefit.
You can also have an executive propose ideas but that is what we have now. Proposal limitation is the hard part at the moment but may not eventuate at all if many people have proxied their votes to trusted others.
Essentially this makes people act in the best interests of others, decency becomes ingrained.
Automate
We have the technology we can automate it all. Remove drudgery, remove work, all effort/labour should be to eliminate work.
A life of leisure is a good life.
How To
We can try and get politicians to do this for us but they are really only concerned with getting re-elected, after all that’s their job.
The most promising group making a better world is the Shardus (https://shardus.com/) network and their GETcoin universal payment. Getcoin uses demurrage at a low percentage rate, lower than inflation and a peg to fiat currencies which I love.
