What I Want for America

This is a response to this post at New Economic Perspectives that I composed but did not send.


Thornton;

Your objective is stated in the end:  "will you try to understand how the financial system really works?"  That is the hard part!  You made an attempt at explaining it and moving people toward this position stated in the beginning:  People who understand how this country’s financial system works know the American dream doesn’t have to die.

In the lead paragraph you state 10 specific things that "People who understand how this county's financial system works" actually know as facts with supporting reasons why they are facts that substantiate the conclusion that "the American dream does not have to die".  There are 9 major positive things cited that the financial system can do. The 10th thing these "People who understand" know is that the collective deliberate misrepresentation of what the financial system does hurts America.  They know the truths  of what the system can do and well as the misleading untruths of what it does.

Your explanation of the financial system is good. I understand it clearly because I can separate out everything you say about what money is from everything that you say that money does.  At the most fundamental conceptual level there are only two aspects to any thing.  What the thing is and what it does.  That applies to the most simple and complex systems.  Call it system design, architecture, relationships and system functional operation over a time line.  What a thing is designed to be determines what it does.  Understand the structural design of money and we understand what it does.

I suggest there is a benefit to clearly distinguishing and presenting the financial system in terms of what money is (base money and credit) and what money does (operation in the economy).  An understanding of what it is leads to what it naturally does. What a system thing is, like an operating system or human body (as complex as it is) is one thing, what it can do in terms of all its applications is a million things.

Base money is what money is.  Credit is an inflated extension of base money. I liked your expression of the base money concept as the accumulated national debt since 1790.  That is why I submitted a post comment.  You replied to that post: "...the article may even have gone too far in mentioning base dollars. Trying to sell the fine points of them would surely end the discussion."

Money is base dollars and its derivatives.  If we understand what base dollars are collectively and as an instance of the the collective class then we can understand what money does. What money does is a function of what it is.  Most people focus on what a thing does, first, foremost and most important.  Especially in this information age.  If you define simply, extremely simply what money is then everything it does falls into place.

Base money is not a fine point.  It is the starting point.  The base of anything is not a fine point.  We do not call the base of everything that exists and the actions those things do a fine point. 

Base money is national debt as unfortunate as the word debt is as used in describing it.  All we need is a conceptual paradigm shift from national debt to national asset.  A shift from debt money to real money.  Base money that simply is money, with no balancing debt side to it.  Once national debt is shifted to national asset base money then all debt money can be shifted to national asset base money.  There will be no such thing as credit money at the base system level.  Credit is not money it is simply one of the functional applications of base money.  Credit does not create base money.

A rather simple but perhaps most dramatic paradigm shift in history will happen when people comprehend what money simply is and therefore what money simply does.  that is accomplished when all the finite universe of money is defined as a single units of value with the denomination of one digital dollar having a unique serial number maintained on a secure system computer accessed through a secure system network by uniquely identified users of money in a financial system.  Base money.

That is what money is and its relationship to users.  That relationship is implemented through transactions between uniquely financial system users over a communication network involving changes of ownership called transactions involving variable quantities of uniquely serialized digital dollars with the denominated unit value of one used as a medium of exchange.  The exchange transaction is accomplished by changing the ownership association of a digital dollar from the current owner to a new owner.  All digital dollars in the uniquely serialized finite universe are subject to expansion and contraction control as necessary by a control authority which is subject to all financial entity users of the system that are in the class category of human being citizen.  It s our money.

For Joe Six Pack it is as if all money was single serialized paper dollar bills in his pocket with a unit value of one having Joe Six Pack's own unique name on it.  Instead of carrying all those paper dollar bills in a back pack and crossing out his name on each bill and writing in the name of a new owner of the one dollar bill in exchange for a six pack, the total amount of the exchange is sent over the network and the name of the new owning financial entity is entered on each uniquely serialized dollar bill previously owned by Joe.  All Joe has to carry is an iPhone iWallet.  Computer in the network do all the transparent work in the exchange to make the result happen.  Just like the entire system that bring the football name to Joe on the wide screen.  He can learn how it all works but as long as he sees the real score of the game as it is played and it is correct, he does not care about how the system that brings it to him.

Just some thought.  Base money is not a fine point.  It is what the system is built on.  The concept has to be so simple that Joe six pack understands it but also as well defined in open source detail as our current operating system and application programs.