How Would It Work

My friend who sometimes reads this blog, at least the entries she understands, asks about my post on intuition:

"what does "giving birth to it" look like, and when do you start?"


When it arrives it must be an elephant considering the gestation period.  There is a pony somewhere in this big pile!


I have some idea about the structure of a new monetary system.  I do not understand the current one.  It is a "how do I get from here to there" situation.  I always like to say "know where you are going before you get there".  However, that is the beauty of models.  Make them up and go somewhere with them without really going there, where ever that is.




Apply my model of what money is and see what it does.  Apply it at the lowest level and see how it works up to the top level.  Bottom up assembly by looking at how it would work for me and my money as an individual system user.  That is the focus of following entries.  This is a description of the top of the Digital Dollar System.

I contend that the end user interface with money at the individual human being level will not change or change enough to notice the difference.  There will be increasingly greater change at the institutional level as the magnitude of the institution increases up to macro government and private enterprise institutions, primarily banks and their banking systems in relation to the M2 money supply and its interface with finance matters dealing with "near money".




The Model: 

The total universe of  M2 money is composed of Digital Dollars that are uniquely serialized at the unit level of One Dollar.  Every digital dollar is associated with a uniquely identified financial entity that is an authorized system user.  Digital Dollars are a medium of exchange, a store of value and unit of account.  Function as a medium of exchange happens when the ownership of a Digital Dollar is changed from the current owner to a new owner.



Implementation of the Model is accomplished in accordance with the Chicago plan that moves is from a debt money system to a 100% debt free real money system.  There will still be loans and debt in this system.  They will however be based on the existence of real virtual money.  The model establishes the fact that once created by the assignment of a serial number to a conceptual unit of one never goes out of existence.   The government has the right of

1.  Serial number assignment creating new Digital Dollars.

2.  Spending new Digital Dollars into circulation.

3.   Withdrawal of existing Digital Dollars from circulation (Tax) in accordance with fiscal and monetary responsibilities related to the nations money supply by exercising its authority to
     
      a.  Hold withdrawn Digital Dollars in suspension from circulation for any length of 
           time.

           and/or:
     
       b.  Reintroduce Digital Dollars to the circulating money system by spending them 
            into the economy in accordance with rules and regulations controlling 
            government spending.

All savings of Digital Dollars are by definition unspent income and by definition exist collectively as a Revolving Fund that moderates an mediates the fluctuations of receipts and expenditures over time.  By system design all Digital Dollars conceptually and in reality of temporal time pass through a revolving fund even if that time is micro seconds.  There is a mandatory minimum amount of time that a Digital Dollar must be held in the revolving account that is a function of administrative system control as well as market making requirements.

Note that government tax authority removes Digital Dollars from the money supply for purposes of  enforced Social Security savings.  It places these withdrawn Digital Dollars into a revolving account of sufficient size to support meeting current expenditures for the purpose of paying benefits in accordance with laws governing payments of SS benefits.  In this role, Digital Dollars held in the SS savings account act as a store of value existing as a revolving fund. 

All savings, defined as unspent income, exist in a revolving fund.  The entire monetary system is a fundamentally a closed loop system of stocks and flows.  It must me a tight system with no leakage of digital dollars.  Leakage is defined as a Digital Dollar going out of existence. Replenishment of existing stocks of Digital Dollars lost by leakage is by definition system fault because by design they exist forever once created.

The prior statement implies world money.  Everybody on a digital monetary system the same as ours but having sovereign control.  That is more than I intend to build into the model at this point!!!!!  However, acknowledgement of the fact that there is an implied World  Money system begs the question of how it would work??

Brief answer to the question with an order of magnitude dangling ends:

Digital Dollars of the United States of America can never go out of our monetary system.  They may be owned by any financial entity we authorize as registered system users, any human being in the world is authorized to be a system user and becomes a user with registration through their recognized government monetary control agencies. 

All foreign financial entities outside the USA other than human beings may or may not be authorized as system users in accordance with their public or private enterprise rules and regulations and acceptance of those rules and regulations by the USA in mutually binding agreements.