I’ve been fascinated with money for a number of years now. Money is a social technology that mediates and directs our time and attention, our relationships with each other, and our relationship with our environment. I would even go as far as to describe money as the dominant form of artificial intellegence. With all of this in mind, I regularly ponder how money might be redesigned to better suit our needs in this time.

Minting

Pretty much all of the economic recovery post-2008 went to the ultra wealthy. This has to do with the way we mint money. We might call our money distribution net the trickle-down theory.

Money is created in the United States by the relationship between the Federal Reserve and their member banks. The largest banks get more of the new money, and loan it out to massive projects. The scale in itself results in most of the wealth remaining with the ultra wealthy. But also, with the Federal Funds rate close to zero since 2011, banks get to profit from the spread between the interest-bearing debt they create and the “free” money they’re pulling in from the Fed.

In our economy, money pays for people exclusively. At no point are their non-human financial costs. When we cut down trees, the forest doesn’t get reimbursed. When we burn fossil fuels, the atmosphere doesn’t get payed. When we slaughter cattle, herds don’t make a profit. Conversely, governments and corporations are composed of exclusively human components from the financial perspective. It may not look this way from reviewing balance statements, but all dollars end up with someone at some point or another.

With this in mind, it’s clear that, although the current system does get new money out into the world, it inevitably results in wealth inequality, and frankly, ineffecient allocation of financial capital. You could call the system a relic predating the Information Age, just like the electoral college system, developed in a day when getting votes reliably from one part of the country to another was best done with a delegate on horseback.

Unconditional Basic Income, on the other hand, very effectively distributes financial capital throughout an entire population. Basic Income is a form of social security where a citizenry receives a regular stipend large enough for them to survive off of, replacing all other forms of welfare. This is opposed to our current model, where we deem necessary a class of the chronically impoverished, preventing inflation through the “liquidation” of labor. Or, more at the heart of the issue, a belief that human dignity shouldn’t be divvied out like reward to the privileged few, but that a firewall belongs between sustenance and achievement. And from a belief that, when their needs are met, humans will give back generously to their communities through their passions

A challenge here would be in the variability of payments. Regulation of the money supply would balance between taxation and payouts. Eventually, following the intial currency issue and widespread adoption, Basic Income payouts would be comprised almost exclusively of “old” money already in circulation, harvested . This is because a sustainable economy is a steady-state economy, but that’s a conversation for another day.

Backing

The US dollar is a fiat currency, meaning that it is backed by our trust in the US government. In the global community, I’d suggest that there is a strong correlation between the dominance of the US Military and the use of the dollar as the world’s primary reserve currency.

So what limits the total volume of money in circulation? Well, relatively-speaking, the government, the Fed, and the loan volume of its member banks. But there are no absolute limits, or direct ties between the abstractness of the creation of money and the tangibility of natural systems.

Critics of fiat currency and its loosy-goosey nature often pine for the old precious metal standard: gold. But gold has numerous failings. Firstly, increasing supply requires an intensive extraction process that can’t be conscidered environmentally friendly. Second, gold in itself has little utility, although it is a good conductor and doesn’t corrode. Third, it is easily stolen, as it is high value-per-volume.

A better alternative might be a land-backed currency. After all, land is one of the most fundamental forms of wealth.

According to William Greider’s “Secrets of the Temple,” the Populist movement of the late 19th century actually proposed a land-backed currency, that in a twisted way, was incorporated into the creation of the Federal Reserve three decades later [in a way that had nothing to do with land].

Even better, what if the land backing the currency was tied to certain non-extractive [or possibly even regenerative] land practices? There are already massive tracts of preserved land in the US with varying easements [some still strikingly permissive]: the National Park System, the Bureau of Land Management, private land conservation groups [such as Trustees of the Reservations], Community Land Trusts [such as Mount Grace], Agricultural Preservation Restrictions, and others.

Maybe there could be a further distinction made in land backing a currency, along the lines that the land itself could not be sold, as it is reserve for the financial system [just as banks have cash reserve requirements limiting their lending]. I have already discussed a license for such an ownership model called the Gift License, which might mesh with a land-backed currency. Agrarian Trust has thinking along the same lines, in their vision for the de-commodification of land.

Cryptocurrency

Money is already almost exclusively digital by total volume [although I won’t discredit the importance of having some portion of the economy operate via low-tech methods such as cash]. We’ve developed a sprawling system mediated by third [our banks] and even fourth parties [payment processors] for keeping our digital money safe [Visa, PayPal, Apple Pay, and Dwolla, to mention a few]. But this ecosystem isn’t digitally native, and the translation has been messy, cumbersome, and still has numerous holes and shortcomings.

With this understanding, why not launch a new national currency specifically designed for digital transactions that is open source, encrypted, and condusive to peer-to-peer transactions, inspired by BitCoin’s blockchain innovation?

Firewalls

One failure I often observe with most “alternative” currencies is that they’re easily exchanged with other currencies. The failure here is that it’s not that much of an alternative if you can just swap back and forth; problems in one economy quickly spread to others. One of the advantages of a model incorporating some of the elements I’ve described above is that it could enforce firewalls between this new currency and existing currencies [as issuance wouldn’t be tied to loans through banks, the traditional distribution model which allows those with wealth to access more new funds]. The advantage here is that it is truly an alternative, and doesn’t automatically inherit all the failing of our current model [namely, wealth inequality, but there are other issues as well].

Implementation

Certainly, their are numerous hurdles to establishing such a system, political and technical. But as “Hamilton” reminds us, there are times for ambitious new models [such as the US Constitution] that eventually become the international standard. And this may be one of those times.