Examining that idea a fresh look at the relationship of money to debt gives an alternative monetary architecture that might be an easier horse pill for the established banking system to swallow.
This alternative retains the fundamental structure of my proposed digital dollar system.
Here is a brief summary about the system I have proposed and explained in various entries to this blog:
Every single digital dollar is serialized (IPv6 code) with a unique serial number and is denominated with the value of one dollar. It exists in a cloud. Server at Fort Knox , just for fun. The monetary system is administered by a Monetary Authority.
Each single unique digital dollar always knows it's current owner as well as every previous owner in a block chain since its creation. Once created it lives forever. It knows it's owner by each unique owner account number (another block of IPv6 identifiers) Owner accounts are administered by an Account Authority. It does accounting. It assigns and maintains a Financial Entity ID sytem. Every citizen is a de facto financial entity. All other entities are registered by the Account Authority to use the monetary system.
Money is static. It does not move. The account owning an instance of money (one serialized dollar) is variable.
The Account Authority processes monetary transactions among user accounts in aggregate value of each unique transaction. Each transaction has a block chain history. The Account Authority passes user account transaction information to the Monetary Authority which applies total transaction amounts to changes in ownership of each unique single digital dollar.
The total dollar value of money in the Monetary System always equals, to the dollar, the total value of all money owned in the Account Authority system.
Whew! Always re-explaining the system then getting on to saying something about it. So this is what is different this time.
The crux of the matter is to take away the power of the banking system to create money out of nothing by loaning it into existence then extinguishing it to nothing as the loan is repaid. (But gimme the interest and fees, thank you very much.)
A system that does this does not have to be a debt free system. Debt is a creature of the finance world and that in my system is in the domain of the Accounting Authority. It exists there because the Account Authority not only accounts for real time current ownership of dollars in the Monetary System of each and every account entity in the Account Authority system but it also has this responsibility: To maintain a Contractual Debt accounting system defining who owes what to whom and what contractor relates to. Maybe a sub-function of the Accointing Authority. Maybe the domain of an independent Contractual Debt Authority.
Here is the hybrid system that provides for debt accounting but unbundles money creation from debt and makes debt a function of what money does like everything else that money does, not the creator of money from nothing. It is the sugar that makes the medicine necessary to cure the debt based banking system bring it to account by strictly limiting it to the Accounting domain.
The Banking System becomes reborn as the Accounting Authority System. In its reincarnation it continues in its prior fo and function except it no longer creates money from nothing to live for the period of a contractual loan and be extinguished to nothing as it is repaid.
This is the new conceptual hybrid:
The money a bank loans, currently called
Horizontal money in MMT is drawn from money held by the Monetary Authority (digital serialized unit dollars each with a value of one from an IPv6 block reserved for that purpose). It is placed into circulation by a contractual loan.
How the payback of the loan to return the same uniquely identified unit dollar to the block of dollars reserved for loan creation in the Monetary Authority system is handled is nothing less than brilliant! (Probably has a something for nothing fatal flaw in it but I like it). All I have to do is have a stroke of genius to make that magic trick happen.
By default, all dollars in the Monetary Authority system that are not horizontal dollars from the block reserved for Accountimg Authority loans are vertical dollars spent into the Accounting Authority system by the government. They exist forever in circulation unless the government chooses to withdraw them from circulation and hold them in suspension to control the money supply.
Vertical or horizontal money in the accounts of financial entities all spends the same as far as the account entity is concerned. When that account entity makes a payment on a loan however, this is what happens transparent to the payer:
The total on hand balance in an financial entity account will relate to unit dollars in the Monetary Authority system that will happen to be both vertical and horizontal dollars. When contractual debt repayment is flagged then horizontal dollars identified by their IPv6 block number are chosen first from the payer's account to return to the loan purpose block. (The equivalent of placing in suspension for future use as done in the situation of taxes applied to vertical money. (Yes, I will get to the analogous problem of choosing dollars in the situation of tax payment. Figuring this one will help figure that one!)
The remainder of dollars in a financial entity account to complete repayment on a loan are vertical dollars that do not go out of circulation (unless by tax). Pay attention to the trick here.
All unit dollars in the Monetary Authority system (vertical and horizontal) have a block chain history that makes them independent of time line circulation interruption caused by suspension as a function of debt repayment or taxation.
There is no constraint on the limit of dollars held in suspension either vertical or horizontal for reintroduction for use. Therefore debts paid back with vertical dollars (after all horizontal dollars in a user financial entity account have been applied or vertical dollars in the case of taxes) can be swapped between suspension status tax/debt categories at the monetary authority level to create the necessary exchange buffer.
This is all transparent to the account holder. So is the existence of dollars and how they are processed beyond the account level. Visible and probably more understandable at the micro and macro level to anyone who wants to know how it works.
No comments:
Post a Comment