Flutterby™! : Imagine 2009-09-14 21:33:52.374546+00

Imagine

2009-09-14 21:33:52.374546+00 by meuon 15 comments

Imagine a country where the government backed currency becomes less used for day to day common transactions than a new currency backed by either/both cell phone usage units (minutes) and energy units (Joules, gallons of Gas, kWh, Btu.. etc..). Basicly: Technology/Services/Energy as a medium of barter exchange. It has a lot of issues.. but I'm seeing it being done in several places among the common population and I'm trying to wrap my head around the issues as the concept of "money" becomes more and more abstract.

I think as interesting as the units is the medium: paper money seems to be dying for a lot of reasons, and the "smart card" seems to be replaced by the cell phone or other device. There's a lot of cultural shift going on in that...

#Comment Re: made: 2009-09-14 23:51:34.844413+00 by: Mark A. Hershberger

I wish it *would* hurry up and move to the cell phone. But I'm not sure how comfortable I am with my cell phone carrier also being my bank. I'm sure I could get used to it, though.

Not "bank", more like "wallet". I can't go into much detail, but I'm looking at some transaction logs from elsewhere, and am amazed at the amount of transactions that are funds transfers from account to account, rather than purchases of units. They are using it as a medium of exchange for small purchases.

I once heard a BBC story about an outfit called Safaricom, which runs its own phone-based money transfer service in East Africa. They also have systems where you can transfer phone minutes to your mom back home, and she in turn can transfer them to a dealer in the marketplace in exchange for some chickens. The reason this is falling to the phone company is that in the 3rd world there are no stable reliable financial institutions for the working folk. Here in the USA I would just send my mom a check, or use a credit card to pay for a gift. Abscent that infrastructure, Safaricom is filling in the blank with its own infrastructure. A parallel currency has been created. We may never bother with that over here, since we have a system in place, but in poorer countries it is advancing commerce.

#Comment Re: made: 2009-09-15 16:00:39.345179+00 by: Mark A. Hershberger

petronius: The first place I heard about such systems was in the Netherlands -- I don't think their banking system is as bad as what I saw in East Africa. Though, when I was in Uganda, I was tempted to open a bank account so that I could get the promised 10% interest.

meuon: those sort of account-to-account transfers are already available (but not on my cell phone!)

I have a credit card number that Paypal generated for me that is tied to paying for my cell phone bill every month. No one else can use the card. And there is no money in the Paypal account. The card is charged and Paypal debits my bank account. I've read many of the Paypal horror stories, but as long as I'm not relying on them to pay *me*, I've been doing ok.

#Comment Re: made: 2009-09-15 16:44:22.5295+00 by: meuon [edit history]

mWallet is one of the many interesting versions of a mobile phone wallet.. I'll be back on this topic when I get done absorbing a lot of raw data.

The interesting thing to me, was this was not an intended purpose of the system I'm taking apart and studying, it's a side effect.

Interesting concept, but how do you really back up a currency with energy? Most storage devices/substances are fairly bulky. Unless you use human unfriendly items, value is not volume concentrated. What does a couple of trillion dollars worth of oil look like? Where do you store it? What happens if there is a fire?

Could nuclear bombs be used for backing currency? C4, dynamite, TNT or some of the more exotic explosives? They certainly pack a lot of ergs in a small place. We could have a commodities exchange, though perhaps not actually allow anyone to accept delivery of the contract. We could have a new basis for valuing real estate, a parcel with slope would be more valuable than flat land.

#Comment Re: made: 2009-09-15 18:41:24.54108+00 by: meuon [edit history]

That's the funny part... no need to "back it up" if the conversion happens when you need it and the supplier is reliable.

Banks are the same way.. we can't all walk into the bank and demand our money at the same time.

So then the currency is not backed up by any more than the "full faith and credit of..."

m, it seems to me that the Federal Reserve "doles out money" (gross oversimplification) based on, at some core level, how productive they guess the American worker is going to be. There's a function in there about how much the money is going to circulate before it ends up paying for that final good, which is why there's such a huge feedback loop and unpredictability in money supply.

The electric company, similarly, is taking money from consumers based on how much electricity they think they can generate at some point in the future when the consumer is going to demand the electricity. The Fed controls demand by interest rate, the electric company controls demand by price per kilowatt hour, but in the end they're both doing pretty close to the same calculation.

#Comment Re: made: 2009-09-15 21:50:55.255156+00 by: meuon [edit history]

"full faith and credit of" - Yeah, that what it seems like. Understand you aren't making car payments or house payments this way, You're buying a 6 pack of beer. Low risk short term wallet.

And the USA Fed is fairly steady (I don't understand why), but in these places, the government money is not.

I suspect the Fed doles out money in a rather different way. When the M3 total money supply numbers stopped being published in 2006 there was great suspicion that it was being manipulated for political purposes. M3 has always been an important statistic for anyone interested in the economy or investing. The excuse given by the administration at that time, that it was of no significance, was nonsense.

www.ShadowStats.com is a subscription site that attempts to estimate a variety of economic statistics. They do have some freebies on their front page. One of them is the estimated growth in the M3, as well as their estimates for inflation, unemployment, GDP etc. Their consumer inflation estimates certainly seem more realistic to me than those currently pandered by our government. We know that various administrations have tinkered with inflation estimates with the effect of reducing the reported numbers.

The estimated M3 graph shows an interesting story that says something rather different than mere adjustment to meet either the long or short term needs of the nations economy. Take a look at the rapid growth of the M3 until early in 2008. Then its rapid decline. Why that happened is anybody's speculation. But I wouldn't be surprised if the intent was to hand the winner of the 2008 election economic difficulties. "Something about drowning the government in a bathtub I believe." My speculations are often wrong, but the M3 graph, if reasonably correct, shows Fed manipulation for some purpose.

M, yeah, I should have said "it seems to me that in theory the Federal Reserve is supposed to..."

Ah Meuon, now you are speaking my language. A kWh has real value and in the 21st century it's something that is "more" tangible in the sense of economic impact than gold. So if currency is backed by or 'IS" energy your dealing with some pretty hard currency and I don't see why network bandwidth (cell minutes whatever) would not also be a reasonable currency.

Don't think for a second governments will stand back and allow industry to control the defacto currency though. Remember that coupe in Thailand a couple years back? One of the first things the guy with the tanks did was nationalize the cell networks and communication satellites. This doesn't seem to alarm my colleagues so much but it does worry me quite abit ...I guess it's a brave new world and I need more soma