Money From Thin Air

Dan Kervick posted this excellent discussion on 3 June, 2013 at New Economic Perspectives: of where bank money comes from:  This is the link:  Do Banks Create Money From Thin Air.

In a couple of days there are 150 comments on his initial discussion attempting to define the question more exactly through questions and opinions.

On 6 June Dan's discussion was cross posted by this link at Naked Capitalism website.  More discussions in the blog entries attached to that cross posting.

These two sites are my two top favorites on the web.  Intelligent people discuss complex thing on these sites.  Perhaps the best discussions on the web.  Regarding Dan's post it is ironic that an intelligent discussion finds it so difficult to define exactly how the creation of money works.  It is a problem domain of numbers like the computer world but the only documentation of the domain is embodied in law and theory described by opinion of how it all works.

It is ridiculous, laughable and unbelievable that there is no definitive mapping of the information structure and processes of the money system equal to that of the computer operating system structure and programming methods that create applications operating within that structure.

The situation is like blind people describing an elephant.  In a situation like religion that is the nature of the problem domain.  (Or does the elephant speak to us to describe itself?)  But...but....money is numbers!  Numbers that seem to be applied to mystical structures and methods that cannot be understood!!!  A mystical structure that dominates us.  A structure operating behind a curtain.

Dollars have no unique identity at the most basic unit level (single serialized virtual digital dollar with a unit value of one that once created lives forever). No unique identifier that makes it different from all other dollars in the money universe.  It is the same as all people in the world having no name.  They are all identified by aggregates of where they live, what they do.  Individually they cannot be tracked at the individual level to where any one person is or what that person does.

At the Naked Capitalism site the discussion picks up and extends the discussion at the New Economic Perspective site regarding the profits of the Fed remitted to the government.  Give every single perpetually existing digital dollar a unique serial number and maintain a record of who "owns" that dollar at any given moment (plus who ever owned it at any given time) then we will know where it is, where it came from and why "ownership" changed.

In this proposed structure the dollar is given an identity that never changes, exists forever in a managed universe where the number of unique digital single dollars is controlled for appropriate objectives.  The current "owner" (also a uniquely identified financial entity) of the single digital serialized dollar changes with transactions.  Transactions are dollar aggregate values.  The computer system figures out which unique single serialized dollars to which the change in ownership is to be applied.  That is transparent to the owner.

In this money structure all money is traceable.  Just like all telephone calls made today.

Dan Kervick:  My thanks to you for everything you write!  If money had more substance than thin are to build a system structure upon then you would not have so much explaining to do nor would there be as many differing comments on what you explain. 

Our current money system is one that is structured more on belief than fact.  Empirical observation of stuff created from thin air to establish fact is difficult at best, impossible systemically.  Who really knows?  Only those that benefit most from such  system and they are not telling, nor do they want the facts to be known.  The rest of us just try to guess.  Some like Dan get it right, as best they can.  Lacking clarity of structure like the natural world or the computer operating system and application programming virtual world, nobody really has a chance of figuring it all out and therefore gaining control of it to serve our common good.