Written by By Davian Views (Traditional Industrial Ecologist)


[Previously published: Parts onetwo, three,  and four)


All change is good? One of the tedious things about cash is loose change. As Jubbly coins have a memory, loose change is avoided. For example, if you buy an item for J54.60j and tender six J10.00j coins, the change of J5.40j is stored in your Personal Transactor or the sixth coin or both, depending on how the system is configured, e.g. if amounts less than J1.00 were stored in the Personal Transactor and amounts more than J1.00 were stored in the coin.

The flowchart above illustrates the transaction types allowed by the system. It is not difficult to increase the transaction types allowing secure transfers of Fiat currency to duplicate the available transactions, giving members the choice of using Barter currency and or Fiat currency in their transactions. This would make the system more attractive, particularly in the early stages, when there are less places to spend Barter currency.

Barter Currency Collateral.

The success or failure of a Barter Currency is determined by the quality of the produce backing the Currency; it will be scrutinised and tested by the users, any weakness will be highlighted and exploited by competitors. There are no shortcuts, or salient details that can be ignored. Accepting this paradigm ensures that over time, detail, efficiency, and kudos will grow. In relative terms this is not difficult because current players are in the main, very sloppy.

Setting the standard to which others have to compete by defining “Good Practise”, that broadens and deepens over time, raises the expertise barriers to entry into the market place. As an illustration, with hindsight the deposit protection applied to Bank deposits rotted the entire industry, by removing the need for prudence in depositors when deciding where to park their money. This over time lowered industry standards and enabled the more degenerate institutions to prosper at the expense of the prudent institutions.

The criteria and objectives of a Barter currency are different to that of a Fiat currency. A Barter currency acts as a resource float for the Bread and Butter economy. It serves a geographical area defined by a River Basin, or in the case of larger rivers, that would subdivide into a network of “Tributary Basins”. There would also be the population size dynamic that combined with the geography will define the optimum size for the most energy-efficient Bread and Butter economy. At present optimum is not known, but if you used a figure of 100,000 then the U.K. would have some six hundred BABEs.

Just because you are aiming to become more self-sufficient, does not mean becoming insular. There is always the optimum balance dynamic that allows you to specialise and trade over a wider area for mutual benefit.

The current system favours having a few big players, who by their size dominate the market. This is as true in the City of London as it is on the High Street. When the Family Silver was sold off in the 1980s by Maggie and Co, there was plenty of talk about introducing competition, in the Utilities, for example, there were initially twelve energy companies, but takeovers had reduced the “Market” to an Oligarchy of four with a large proportion of the power over these companies held by their parent companies overseas, within less than twenty years. As usual nobody said Boo to a goose.

If you are going to try to create six hundred LEAF BABEs, then there needs to be in your structure, a means to prevent them morphing over time into something that was not intended. The John Lewis partnership in its recent battle with the Carpetbaggers, remained intact, up to a point. The partnership structure was preserved but expansion was planned and implemented. In my humble opinion, they failed to take into consideration, the balance between infrastructure and expertise. While it may be relatively easy to expand locations, Expanding a quality labour force to go with it takes time and effort. The expansion into Retail Parks and Motorway Service Stations, was also a move to unfamiliar ground, where the competition is more familiar with the “Tradescape” than they are. This may well invite another visit from the Carpetbaggers in the not too distant future.

A market is a sensitive place, and it works properly when there are many buyers and sellers who are of a size that does not dominate. A good example from nature is a forest; if a forest has 10,000 trees of varying sizes, from saplings to mature trees, it works well. If however it is dominated by our four giant trees, casting a giant shadow across the land, the other trees cannot develop to their full potential, so the forest does not work well. This is why in nature, there are limits to the size that trees can grow to. You never see a natural forest with a few giant few trees that dominate the landscape. Markets that function well are similar to a natural forest, in that the players are within a range of similar financial sizes. The same principles are applied to casino games where the tables have maximum and minimum bet sizes, allowing High Rollers to play together on one table and the less Well Heeled on another table.

There is always a temptation among players to Game the system, as recent events in professional sport have demonstrated. The internet has been a valuable tool in this regard, allowing money to be wagered from multiple sources within seconds to favour a particular result. Unlike the finance industry, culprits have been caught, prosecuted and jailed. This demonstrates considerably more vigour and vigilance than the finance industry in response to wrongdoing, and for considerably less money too. Criminal gangs are considered less systemically important, than those engaged in god’s work, no doubt !!

Before expanding this point on structure, it is important to illustrate how a Barter Currency would be constructed by looking at the ingredients that give tangible value to a Barter Currency.

The key to understanding a barter currency is that the currency transcends the goods and services that it is the medium of exchange for. To put it another way, a barter currency is the essence of what it represents.

You could have a barter currency that was underwritten by matter. To do this you would look at the periodic table of elements, note that there are about one hundred. You then take the proportion of the total represented by each of the elements. From this you could work out the amount of each element in a kilogram of matter. Then you could name the barter currency as a KOM (Kilogram Of Matter). Whatever you used your KOMs to purchase would be different in the proportions of elements it contained and so the difference between each compound would give a different intrinsic value, cost and price in terms of KOMs.

This is still a strange idea for most people to get their heads around. I look at the reasoning behind “Bitcoin” but to me sophisticated encryption and the finite numbers that define how many Bitcoins can be produced, defining its rarity and so its value, do not give me a sense that by owning a Bitcoin I would be owning something of tangible value. If Bitcoin went bust, would I own the unique number represented by my particular Bitcoin? If the Pound Sterling went bust, would I own a proportion of the assets belonging to the State? No, because the Bank of England is a private institution, and not owned by the state, so I own only the metal, well not really because if I tried to melt down the coins to get at the metal, I have defaced a coin of the realm and could go to jail.

If I owned some JUBILEE however, and it went bust I would own the collateral that the JUBILEE was underwritten by, thanks to the law of Bailment. A JUBILEE representing some of Farmer Browns potatoes for example. Hence my preference for owning something tangible, which you do with a Barter Currency.

[Part 6 will follow tomorrow] 
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