Collar on a Dollar

Devin Smith posted a comment at the NewEconomics.org

He often composes hypothetical situations approaching fantasies to illustrate economic concepts or problems.  This is one of them.  I like his "what if" approach to the subject, it produces some creative thinking through unconfined created thinking.

I started to write a simple reply to post to the discussion of his comments but like all my simple intentions it soon grew to unmanageable size as it ran off into side tracks (to follow the tracking metaphor.

The following is my reply in all if its diversity and redundancy of unedited thought piled upon unedited and revise thought.  I copied and pasted the effort here just to be a place to put it until I get around to organizing it or my thoughts about it...................

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Good point illustrated with the conceptual device of the radio collar.
Good thing that you skipped the part on how it was devised and cut to the chase to make the point.  A tracking device collar could be made but a single dollar does not have a unique virtual existence identity upon which to hang it track it.  The concept of being able to do that is fascinating.


Why not put  a collar on all dollars for macro tracking as well as micro tracking?  That would be Money in Wonderland.  A system that was anything we wish it to be for any good reason. 

Devin skipped the "how to do it" part and cut to the chase to make a good point.  How to put a radio collar on a dollar is simple.  The problem is there is no unique conceptual identity to put it on.  There is no unique single dollar identity.   They are all just a horse with no name.  A single dollar cannot be uniquely followed.   This is how to put a radio collar on a dollar and track it. 
1. Give each single digital dollar unit a unique serial identity.
2. Make that digital dollar unit a fixed independent higher level record with relationship  to a bank account record.
a.  Each digital dollar knows its relationship to a single unique bank account.
b.  Each bank account knows that it has a matching relationship between its total on hand balance in an account and the existence a unit level digital dollar in the money supply.
3.  As payment transactions occur banks send a message to the central digital dollar repository to change ownership of a specified total number of dollars from the current identified owner account to the identity of a new owner.
4  The dollar money supply system receives the message, selects at random the individual dollars it knows to be associated with the specified account, and changes the account association of each digital dollar to the specified new account owner.
They can only be followed in aggregate amounts unless they are only an account where dollars exist as a sum total on hand balance.Create a higher level conceptual money system structure above the account level.  In the current system digital money moves from account to account in transaction total amounts that increase/decrease a variable amount expressed as an on hand dollar balance.  At the new higher level, money is a fixed unit value of one uniquely serialized dollar and the account each single dollar is currently associated with is variable.  Both levels work together with the banks continuing to maintain accounts for end user customers but in addition "exploding" account transactions totals back to changes at the higher level from current owner of each dollar to new owner.  For example:  100 dollars spent from a bank account is exploded to 100 single unique digital dollar computer records that always knows its current owner account relationship and has  method to change ownership when a message is received from a bank to make a change in ownership.

To set up the fantasy system for the tracking hunt let's say that all our spending money is equal to the national debt.  Maybe 16 trillion dollars.  That money,  on the plus side of balance sheet,  is our spending money.  It collectively sits in bank computer accounts.  Because we got it in return for something but have not spent it yet, we call it our personal and collective savings.  The lump sum total of savings sitting in the account is the on hand balance total sum of all individual dollars in each unique account.

Money is currently spent in lump sum transactions by going from one unique account to another.  Total from me to you, my account to yours.  Everybody's account to somebody else.  Money moves from account to account.  Tracking it all might seem impossible like chasing feathers in the wind or finding a needle in a haystack.  That impossible task is entirely possible in the information age.  We can catch the feather or find the needle.  Try Google.  It works because everything we want to find is already indexed at the lowest granular level (a word) for search.  How much is indexed and how fast does it flow?  Big and fast.  It can be done if structured as a system to index everything in its domain at the lowest possible value level unit (word) which conversely becomes the top level entry point for search and discovery. 

For tracking purposes let's introduce a higher level point of entry to the money system by  putting a unique radio collar device ability on every uniquely identified single unit digital dollar (lowest granular level) in the system.   Each and every one of the 16 trillion dollars.  Money does not "move" at this level. It is a fixed record unit associated a bank account where it exists as a sum total variable number.   Unique dollar units report changes in their ownership association to specific unique accounts at the lower level.  Money moves in total transaction amounts at the account level but it sits as static fixed unique unit dollars at this higher level associated to accounts and their transactional changes to on hand balances.  Money units report changes in ownership related to the unique accounts it moves among at a lower level. 

Money is easy to track in its lower level account applications if it is given a unique unit serialized identity, related to the unique account where it exists in sum total equal to its units at the higher level.  Devin's tracking is premised on the current system where money moves from unique identity account to account.  What he really wants to know and illustrate is not where it went but what it did by reporting back as it moved from unique fixed account to fixed account records and finally died.  Nice conjecture and illustrates a point but not how to do it.  This is a theoretical "how to do it" system structure.  Macro and micro tracking.

This belabors the point.  Skip it if you get it so far:

Here's the set up that makes tracking all money work to tell us what it is doing based on a key fundamental change:  Instead of the bank account being the primary top level fixed record through which money flows, money itself becomes the new higher level primary fixed record through which accounts flow.  When money is a higher level fixed unit record the variable bank account related to it changes.  At that level each single dollar is a uniquely serialized digital one dollar bill on a virtual central computer.  Each and every and therefore all digital dollars are associated with a variable current owner's account at a bank of the Fed or at the Fed.  In effect, the owner has their name on that digital dollar through the bank account.  To the end user continues to spend money from their account as usual.   To the bank, account maintenance also entails a requirement to change the name on each central fixed record serialized digital dollar unit from current owner association to account to new owner account association.  The sum of unit dollar ownership changes equals the total account transaction sum.  The digital dollar never moved.  The spender perceives that it moved to another account, the bank knows that the on hand balance of money is variable at the fixed account level but that higher fixed unit dollar level ownership is variable.  In reality,  ownership of money changed at both the account and digital serialized unit dollar level.  Serialized granular unit dollars managed at the operating system level that is how money is kept track of at the application system level.

Tracks are merely the history of where the thing being tracked (unique serialized digital dollar) has been, step by step with a time stamp on each step foot print, ending at the point of real time of where it is standing when it is found in a static position (current owner associated with a single digital dollar.

The final step in the setup is to associate lump sum money spent from the account in payment to what it was paid for with the change in digital dollar unit ownership related to the transaction total.  This final step performed by the bank to the central digital dollar record is transparent to the account holder.  That fixed digital serialized dollar registered to a new owner can then be related to a track record change in ownership to the next owner and what thing was bought in the exchange.  Specific things bought at the transaction level or generic groupings of things bought at the macro level.  If serialized digital dollars were chosen randomly to equal the total amount of the account balance lump payment change then they would be a random sample of where each dollar came from.  Meaningless information at the micro level but significant information at the macro statistical analysis level.

Tally Ho!  Happy hunting.  It is a Money in Wonderland system knowing where every single dollar is, (a fixed place) who has that dollar in saving at any given time, (their account) who it came from (their account) and what it was exchanged for and when.  Did the parties to the exchange get a good micro level deal?  They probably thought so.  Did the public get a good deal from the macro operation of the money supply system?   That is what tracking will tell us. Maybe it would tell us that we are currently lost in a real, crazy Wonderland.

"Follow the money" is a meme that sets the frame for the accounting system.  Money is traced through accounts.  Accounts in that system are the genetic structure of money.  What we attempt to do is follow money through accounts.  It is hard to track that way and we get lost in the forest with only guesses about which way it went.  What money does from birth to death is vital information to track.  More important:  Money has an ultimate demise at the account level extinguished by the repayment of debt.  At a higher level money is a persistent uniquely identified single positive unit medium of exchange that is meme genetic to follow.  At this level it does not die at the end of the trail.  It can be tracked forever because debt is its lower level application not its reason for being, nor something to which it owes it ultimate end as the core concept of the debt based operating system.  The current system to which we will owe our ultimate end if we do not establish a higher level of operating system structure and control.