Going away with money and making a currency that counts to unity always.

Going to the beginning of the problem and taking a different way to solve it, instead of money and currency.


Note: Money Vs Currency

The difference is not money (gold and silver) has value, and currency doesn't have. Actually, they both don't have any value, as it doesn't serve our need. The real difference is we can't create money with time and effort.

To take the decision now, we need to understand the past and break the reproducible patterns that don't work in the past, to have a better future.

Require (something) because it is essential or very important rather than just desirable
Need is something that is required for us to thrive. Our actual needs are the concrete object like food, clothing, mobiles, computers, services like education, electricity, water, air and endless list.
Some of it like air and water, which doesn't require any exchange (we do sell purified water), as they are sufficient in amount and we get it least effort.

It is something that you wish/desire and it's not necessary for thriving of a species. It's about ignorance. Greed and ignorance make you misuse of resources, wasting resources, polluting the environment for pretty gains.

Need and greed may look similar, but they do the opposite thing. One helps you to thrive, other leads you to extinct.

Whether it's to fulfill your need  or greed, all requires time and effort (with exception to air and water, at least for now because we are going on polluting it). We need to work for it, to fulfill it, we need to spend time. But the problem is an individual can't do all the work to attain its need/greed. To make the system efficient, a different person take a different task, all working towards each other need/greed.

So here the term exchange comes into play. If person A is working to produce pulses, and person B is working to generate clothes. A can give some pulses to B and B can give some clothes to A, and the result is both of the need is taken care of.

But this exchange system has many problems. The most important problem is it's not portable, can't be stored easily and are not countable.

So here money: gold and silver coins came to play.
They are made of same sizes to make it count. They are fixed in numbers, as you can't produce it by using your time and effort.

Money became an interface of exchange. For example, person A doesn't require clothes, but person B requires pulses, so person B (who is producing clothes) can give some gold or silver coins instead of clothes to person A, and take pulses from A. As gold is storable and portable, person A can use it for buying other things later with other persons.

Because the total amount of gold in nature is limited, we got another problem. Our population was growing. We need an efficient way to distribute the money, which requires further division of gold coins. So finally  cheaper copper, nickel and paper notes were born. But the problem with it is, you can produce it by using your time and effort. We have the printing press that can make a nearly infinite number of notes. So, a number of paper notes or amount of digital money (which doesn't require any effort and time even to produce it) to be made available in the market remains in hand of govt of different countries. So all our economy comes down to faith or trust in government.

In an inter dependable economy within different countries, if any one country breaks the rule, the impact will be seen around the whole world.

The mechanism is well explained in the video.

If you increase the number of currency, the prices will rise as the resources or supply are limited. The price I mean, the amount of currency you need to exchange an object that has value. So increase the number of currency will lead to inflation, and a decrease in number will lead to deflation when the market starts sensing it.

Seven stages of Empire about wealth transfer.
The video also explains why gold always wins at last.

The videos also talk about credit cards, how currency is created when you make a loan.

So what's the solution?

Here are some of the ideas. No reasons why it won't be practical in the world of technology and internet.

We need a global market (may be a country to get started), with everyone having an account in it, where we can do real product exchanges. As you can see all the trouble started with unable to do concrete product exchanges directly. At that time, the interface was a portable money, here interface is the global platform (a website, API etc) where we can make direct product/services exchanges.

We already have the platform like amazon or Flipkart, snapdeal (as in the case of India), but these platforms still use money as an exchange.

So, what the currency here. Again the currency is a count. But the important thing is total amount is 1 or 100%, that never grows in the count. Even if you take a loan, total amount should be always one.

But the algorithm work is to divide the 1 into fractions and assign it to products and services.
Assignment of prices will be based upon demand, the supply of products and services and should be more equitable.

It will also make universal basic income possible.

This algorithm will be bit complicated and should be based upon local market and global market.

So, in order to assign prices to product and services (price discovery) and make the algorithm work we need to feed it with inputs variables of supply and demand.

Knowing the supply is easy, mostly a quantitative measurement.

But demand is complicated, because demand is what affect mostly to the prices, and also future of the supply. Leaving some basic demands, demand is most often based upon perception. It's a qualitative measurement.

To know the demand/perception, people should crowdfund some amount of money for the projects whose product or services are not available yet.

What about loans?
Here we require the help of the bank, that decides the reliability of the person. Same way it's done now.
Usually, people make a loan for buying expensive products or invest in businesses and bank gives them a loan and sometimes creates money(currency).
If it's a big loan, the idea should be big. So it can be done by crowdfunding.
For small loans, money can be given from deposits instead of creating more currency.
Sometimes bank can give a big loan, but it has to go the stringent criteria that it will create the necessary impact, such initial loans to telecom operators for installation of their equipment, till it becomes sustainable. Again it should only be given from bank deposits, not from tax.  Should be done by govt permission.

Only default amount can be kept for longer time. If more amount of money is present in the wallet it will go to the deposits and becomes unusable by the person. To get your money back you need to go the bank based upon the policy. It's also applicable to loan holders.

This keeps the all the money in usable form, without the need of creation of new money.

What about govt run projects? Should taxes be there?
Govt work is to make right policies and bring ideas that help the community as a whole. They can collect tax from us for govt run projects. But transfer they do to the service provider should be online.

Also, what about subsidies that help the expensive product to thrive initially till its cost go low (e.g. solar panel)?
It can be paid through taxes.

What about monthly salary govt/private sector give?
Basic free services like education, railways, roads can be paid by using taxes. The government should take only those services that are basic necessary.
A private company can pay the employees by the money of service users.

So, we have 4 kinds of money here, used for exchanges, deposits (savings), loans, taxes.

There is another problem, we need a reward and punishment mechanism for deposits and loans i.e. interest. If we don't reward for deposits, people will not come for it. If we don't punish for loans, everyone will go for it.

We need an optimization algorithm that disallows creating any money due to loans and deposits.
We have two kinds of deposits, short term and long term. Short term (term should be not more than six months) deposits shouldn't be used for giving loans. If time goes beyond six months, you lose the liability of anytime withdrawal. All large withdrawals, loans, and loan deposits should be done in cycles of time so that we have enough deposits in the vault. If you don't have deposits, don't give a loan. We can't make the withdrawals random.

A simple simulation for students to go through about loan and deposits https://github.com/amiyatulu/bank/blob/master/deposits_loan.py

Also, interest rates for deposits and loan can be different and should be based upon whether we want to increase or decrease the total deposits in the vault that is unusable. If total deposits become more, manipulate the interest rates, so that people make more loans. Keep the money circulating.

The ratio of deposits and loans must be more than one. Taxes should go directly to govt account, where money is distributed to employees and service provider. Taxes account and big loans  should come under auditablity all the time. Also, money can be stored for a longer time in tax account.

So, all these require a testing with simulations by proving real data inputs to understand how the market will work.

We already made API for currency. But it only requires API for all services and products, whether govt or private sector all should be integrated with the API similar to present e-commerce API. Money should be paid to the services they give as an individual and company (company again transfer money to individual for the services they give). Services do change with time, so data should be updated in it.

To make everything accountable, we need 4 core principles: responsibility, explainability, accuracy, auditability, and fairness.

All these can be achievable by this method as all data are available to us.

We have only ONE available for division, so divide it efficiently.

So what's the purpose of money/currency?

Its purpose was to "work" for serving each other need (not greed). But with time this "work" is getting done by automation through computers and factories. So, with time the purpose of money should also change, as we have not done it or if we will not do it, we are facing its consequences or also face its consequences in future. Because all money gets concentrated with people that run these factories and common people are left without any purchasing power.

Upgrading our skills/work to meet our current or future need is most important. So better policies and investment is required for it. We can't allow our education to remain same if our work that we need is changing or has changed.

Some of the questions I have is, how it will affect the prices of the usual commodity like food, electronics, and other essential things. We can't make it dynamic (at least it never grows) because it will impact the psychology of the people. As GDP or supply increases (again the count grows), the prices should come down, as the total count of currency is 1. If the demand and supply reach equilibrium the prices will be stable. And I find no reason why some will decrease the supply if all data of demand is available except in the case of calamity. In this way, we will get a predictable pattern, and always know what is happening to the demand and supply chain. But if we increase the count of money or sometimes demonetize it with respect to increased GDP or other factors without knowing how much money to increase, it becomes completely unpredictable for people to make a decision and they will always take bad decisions which will be chaotic for the nation. Trying to do a simulation with about 50 people to test the result and how it can be done in an efficient way.

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