Unconfusing the ‘isims’

I ran into Garry Leech’s article on CounterPunch: Why America’s Next President Will Not Be a Socialist. I’d been wondering what the heck Bernie was about and was grateful it was somewhat explained. I got about half way through when I realized that he made a distinction between socialist, social democrat, democratic socialist, and capitalism.

I found it odd because, to me those are all descriptions of the same system. I understand socialism to mean governmental or collective administration of the means of production and the distribution of goods. In other words, when the government regulates businesses it is socialism.

For example, when government forces a percentage of your incoming money flow to be paid to it that is the oligarchic collective of Congress removing individuals’ choice to spend her money as she wishes and uses violent force to spend her money as the oligarchy sees fit. The state administers production in that case, which is socialism.

http://unabridged.merriam-webster.com/unabridged/socialism

Capitalism is ownership and trade of valuable assets called ‘capital goods’ in the market. Capital goods are money, stocks, bonds, and real world physical property of all types.

Socialism is also a system or condition of society or group living in which there is no private property. Employees in corporations or bureaucratic government offices exist within socialism while at work. This is because the shareholder collective of the company or the oligarchic collective of the state representatives owns the property.

The employees never receive title to the property that they work with. Employees spend their time at work mixing their labor with the real world raw materials that others own. From the employees’ perspective there is no private property. There is socialism.

Together the individual employees make up the company and the shareholders/voters rent the company of individual employees during business hours. The shareholders/voters own the raw materials and the produce thus placing the employees in a condition of socialism while at work.

The problem is that the employees do not own the raw materials that they work with. Use their labor to improve them and then sell their produce at market prices. Instead, employees agree to be ‘slaves’ while at work.

Most people work at jobs they hate because government rules and regulations (socialism) oblige them to make payments. And because capital in the form of loans has obliged them to make payments.

So, my point is that socialism is from the perspective of a person at work while capitalism is from the perspective of the same person determining how to allocate her 401(k). Both exist simultaneously now regardless of political talking heads.

Theft and confiscation of a percentage of an individuals incoming money flow is a criminal act. Individuals shall voluntarily choose to make payments. Corporate dividends to shareholders have been obliged payments which employees shall be able to choose in the future. Income taxes identically have been obliged payments that employees shall be able to choose in the future.

You seem to have mistaken Socialism for a Republic. A Republic is a community of generally equal individuals who voluntarily form a government in which supreme sovereign power resides in individual citizens who are entitled to vote. Sovereign power is exercised by elected representatives responsible to voters.

A republic would combine both of today’s distinct political and economic spheres. A republic is Democracy without majority domination of the election process. A republic is a not the oligarchy that we have today. In a republic every voter is also a representative and in that case there is no need for periodic elections of Representatives to be in the oligarchy.

There is no oligarchy because the republic’s rule of law applies to everyone equally. Everyone is a representative who makes policy by exchanging divisible ballots in the market any day of the term. Ballot provision in a republic is continuous rather than periodic making the republic more elastic than democracy.

How to Maintain the Dollar’s Value and the Inflation Tax

A Standard Measure

While you may have never sat down to think about it, the Dollar is a measurement unit. Like a ruler measures length a Dollar measures value. They are both standards that we all commonly agree to use to make measurements with. If you want to tell somebody how long something is you may tell them how many Inches it is. If you want to tell somebody how valuable something is to you, you tell them how many Dollars of value it has. Having a standard unit to measure value with is an essential part of the process of human exchange.

There is a difference between measuring length and measuring worth. If you and I were to walk up to a door we could easily both agree on the size of it. But, If you spend your time making doors and I need a door we could easily disagree on how much the door is worth. This is because worth is a matter of individual personal opinion.  You want to sell it for more and I want it to buy for less. The price that the door exchanges for is a consensus agreement of worth between you and I.

So how much a Dollar is worth depends on the individual who possesses it and the service he is trying get from another individual in the market by spending it. As the number of Dollars a person possesses increases the significance and worth of each Dollar seems to decrease from that person’s perspective. What seems like a small amount of money to a Billionaire seems like a fortune to average people. The Dollar’s worth is truly in the eye of the beholder.

An Intermediary Credit

The point of a market is to use Money as an intermediary in the exchange of services. In an ideal barter system two people would meet to interchange services of equal value and be on their way, maybe never to see each other again. The reason we have a standard Dollar unit to measure value with is so we have a means of tracking who owes who service when we meet in the market in the future. When a Dollar flows from person to person in exchange for valuable services it is a credit. Lack of a Dollar is a debit or a state of owing your service to somebody who possesses Dollars.  

When you spend a Dollar you are issuing a credit to the individual who has provided a valuable service to you. Giving your Dollar credits to somebody else places you in debit because now you owe services to someone in the market in order to re-earn the money you spent. The amount of Dollars you possess determines your level of debitedness or cerditiedness. It is these relative level of Dollars in the spender’s possession that influences the rate at which Dollars will flow. Worth of a Dollar is in the eye of the beholder.  

The value of someone’s services is a matter of individual perspective, but after negotiation between both individuals, an agreement is reached. The seller’s services are worth a value roughly in the middle of both the buyer’s opinion and the seller’s opinion. The price is set and that price defines the rate at which the credit will flow in exchange for services.

So, in an ideal barter market, money is a standard measure of value that every individual accepts and is an intermediary credit that keeps track of who can get others to owe them, but there is one other factor that is imperative. Over time, prices should be stable.   

A Stable Measure

If we are all going to agree to accept a standardized medium of credit to measure our values with then that money unit should remain the same throughout time. If I use a ruler today, 1 year from now, or 100 years from now the length of an inch will always be the length of an inch. An inch is a predictably stable unit of measure. In comparison, our standard unit measure-of-value, the Dollar, has been anything but predictable or stable in our past. This is because: the rate of Dollars an average individual receives has been exponentially increasing (in general) over time.

 

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Dollar value since 1913; Imagine if this was the physical length of an Inch since 1913.

Imagine if the graph above was a depiction of the change in the size of doors produced using a standard yet changing or unstable Inch as a length measurement. Doors would have gotten smaller and smaller over the years. Some years increasing, some years decreasing, some years by a lot, others by a little. If the door jam was built in one year you would have to specify what year’s Inch the door jam was built in so that a fitting door could be produced with today’s Inches used as measurement. Absurd.


Exponentials are all about a percentage per unit of time. If you have an income of ten thousand dollars a year ($10,000/year) and receive a one percent (1%) raise every year then the rate you are paid for your services is increasing exponentially at a predictable one percent (1%) per year.  From the perspective of the person hiring you, prices are increasing one percent (1%) per year. So-called “inflation” is one percent (1%) per year. You end up with a exponential “hockey stick”.

For arguments sake let’s say that over time you are unchanged. You’re not getting more productive. Your services don’t produce more widgets in a day and the widgets that you produce aren’t getting any better. The demand for you services is also unchanged. A year later you still perform the same function you specialize in. You still do it well. In that case, a percentage increase to your income rate is the same as a percentage decrease in the worth of a Dollar from your boss’s perspective. If everyone’s rate increases one percent per year (1%/year) then the worth of the Dollar will decrease exponentially over time making the unit unstable.

When the rate of Dollars all spenders have available to flow increases then prices increase. Each Dollar looses value and price inflation makes up for it. At the macro level the ratio of two amounts determines the average worth of a dollar to the collective: that is the total number of Dollars in existence and the total number of people in existence.

average worth of a dollar to each individual in the collective = the total number of Dollars in existence / the total number of people in existence

Assume, for simplicity’s sake, that everyone in the market’s collective has an equal amount of money. If the quantity of Dollars increase or population decreases, or both, over time then each Dollar is worth less to each individual over time. If the quantity of Dollars decrease or population increases, or both, over time then each Dollar is worth more to each individual over time.

A Limit on Debt

Of course this assumption that we all posses an equal amount of money is never the case in a properly functioning market. Extreme equality in the amount of money belonging to each individual would indicate that nobody owed anybody else anything. While that might be some kind of ideal, if it ever existed in a real market it would most likely be for a very brief duration of time or indicate a problem. If individuals are to use money, which measures someone’s debit or credit, to track who owes who in the market, then some people will have less Dollars than the average (debit) while other have more Dollars than the average (credit) in their account.

 

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The average $ separates the credited class from the debited class and sets a limit on individual debitedness.

At any point in time the average collective quantity of Dollars in existence per person can be calculated. When this average increases then Dollars decrease in worth to someone somewhere which leads to “inflation” as they bid prices higher where eventually spent. When the average collective quantity of Dollars decreases then Dollars increase in worth to someone somewhere which leads to “deflation” as demand falters causing prices to drop.

 

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This average is a powerful reference. It offers each of us a reference point. Not only does it demark a distinction between having a debit and having a credit. It is ultimately an indication of how much money is really “enough”.

In order to explain, let’s start with the imaginary world in which every person in the market equally owes everyone else nothing. Nobody has bills to pay. Nobody makes any money. No money is ever spent. Everyone is equal, self sufficient, and trades nothing with everyone else.  

Money is a credit that is created by giving a Dollar as an intermediary to another person to track the debit of the spender. The Dollar is the ability of its possessor to hire another person in the market by spending it. As I spend money to buy your services I issue credit to you. Every Dollar I spend on you places me a Dollar in debit and gives you a Dollar of credit.

For simplicity, let us assume that we are the only two individuals interested in market activity. You did something valuable for me and received payment of my money in exchange for it. This effectively tracks the fact that our barter is only half complete. The implicit assumption is that sometime soon I will reciprocate by doing something of equal value for you. At which time you will repay the credit back to me thus nullifying my debit.

In practice, knowing the average amount of money in existence per individual in the market allows each of us to determine our level of debitedness or creditedness. If you have less than the average then you are in debit. An indication that you owe your services to others in the market. If you have more than the average then you have a credit. An indication that you have produced more than you have consumed. You owe the money you have to others in the market.

And this is may seem like a paradox. I have said that both the people who find themselves in debit, and those who find themselves in credit, owe those in the opposite class. Everyone is in debt of one type or the other. Those in debit owe services or real-world work. Those in credit owe money to those in debit in exchange for their services. 

A Term on Credit

The paradox is a nomenclature issue. In most financial talk the terms debt and credit are used loosely and interchangeably. For example, it is common to say that a borrower with a $100,000 mortgage loan is in debt. The reality is that the borrower of the money receives a credit of $100,000 the day they sign the loan documents. Technically, it is the lender who is in debit.

When I spend I go into debit and issue a credit to you. The credit that I issue to you is a loan. So, I could say that I splend (both spend and lend) to you. The implicit idea is that you are doing something of value for me now that is in my interest, and soon I will equally reciprocate by doing something in your interest. The ideal market is a meeting of both of us at the same time to barter. We use the credit loan that we call money to add a practical time delay in the reciprocating exchange.

Splend

Ultimately,  the idea is to use the standard credit between billions of individuals in the market, but for now, we keep this simple by remembering that it is only the two of us who wish to trade in the market. You owe the money I splent (both spent and lent) on you back to me. When you prepay the loan back to me I will provide my services and fulfill your interests. Your credit will be extinguished and my debit will be worked off. If you don’t prepay the loan then as you make amortized payments your credit will be extinguished and my debit will be forgiven.

The important idea is that every time we spend money it is an implicit loan of credit. These days there is no explicit loan term specified in a contract when money is spent. The result is that, theoretically, I could be waiting forever for you to return back to me the credit that I’ve previously issued to you. In a market with more than only you and I, theoretically, everyone could choose to never hire me thus leaving me perpetually in debit. That practice is far from an ideal barter market because reciprocation never occursHow soon reciprocation occurs is a matter dependent on your need for my services and my ability to take the time to produce for your interests.

When money is owed it is called a loan. Any time somebody spends money they issue credit and grant the temporary use of it which is a loan. When I spend money I specify the services that I want in exchange from you. Spending is a loan of money at interest meaning that I specify in a contract how your services will benefit me. For example, If you are a baker then I may specify what type of cake I wish to receive. The interest is whatever service you, as the borrower, agree to provide to me, the lender, in exchange for the money I splend. Often the contract specifies when the ordered interest is to be delivered in the future.

In addition to whatever interest was ordered, loan contracts have a term that specify the slowest rate that the lent money (often called principle) shall be repaid. The term defines the maximum amount of time that the lender will be without her money.

Term = 1/Rate

Money is a Loan

Money is a standard unit of measure that is an intermediary in exchange and the amount of money an individual possesses tracks her level of debitedness or creditedness. When money is spent it certifies a loan contract between lender and borrower. This means that money also is a standard loan. Specifically, that money has a standard term.

Practically, what this means is that the value of your money only lasts so long. If you have a credit it’s worth will diminish over time as the transaction becomes stale. If this sounds like “inflation” to you, you are correct. “Inflation” will also diminish the value of your money over time. For example, If there is a price inflation of 25% per year then the value of the Dollars in your account will diminish 25% per year.

I lent $100 to you when I spent my money to buy your services. I needed what you produce because your specialty met my needs.  Your services are the interest I will receive as specified in the loan contract we agreed to when the transaction took place. The term of the loan is a standard that has been commonly agreed upon for all money in the market. Four (4) years, for example. The principle, the $100 I am splending, is completely due in 4 years. It is due at a periodic rate that is automated by the governing financial firm because all transactions begin a loan at the standard term. The period could be yearly. That would make the rate 25%/year. The period would be as short as a day thus creating a more continuous flow allowing every day to be significant market day.

All Dollars you borrow cancel your debitedness, and once all debitedness has all been canceled, build your cerditedness. Since, in this example, both you and I began possessing the average amount of Dollars you now have a credit of $100 and I have a Debit of $100. A day later you splend the same $100 back to me reciprocating the barter exchange. I perform my specialized services. Acting in your interest, I meet your needs. That essentially prepays the $100 loan I gave you yesterday. The creditedness I gave you is extinguished and my debitedness is worked off.

Then, you decide to order another $100 worth of my goods. I accept the loan in exchange for my service in your interest. This turns the tables placing me $100 in cerditedness and you $100 in debitedness. If I decide I don’t need your services for the next 4 years I will repay my loan (automatically through the system) which will diminish my creditedness at 25% per year (due to the 4 year term) and my daily principal payments will forgive your debitedness at the daily equivalent rate of 25% per year. Your promise to work for me, or others, is perishable

It’s a Republic

Establishing a policy which keeps the average total Dollars in existence per person in the market constant would essentially produce a stable standard unit of value. There would be one of these stable standard units in existence per person thus keeping the value of the Dollar stable.

Does the concept of one (fill in the blank) per person remind you of anything from another subject? In a republic every person gets one (1) Ballot every term. So, the average number of Dollars per person can be aptly named a Ballot. This is especially true because when you splend you are deciding who will fulfill your interests in the market and that splending establishes a contract that makes you the constituent of the representative you have chosen to fulfill your order.

Realizing the correlation between Ballots and Money by recognizing that it is individual people who give money it’s worth provides us with the liberating concept I shall call the The Ballotization of Money. Keeping the unit of value-measure proportional to the population would maintain the value of the Dollar and keep prices generally constant. But, in a world in which this proportion is unpredictably changing exponentially over time we can still use the concept of a Ballot to determine the dividing line between debitedness and creditedness. The Ballot is the unit that defines just how much is “enough.”

Establishing a policy that sets the term of a money’s credit standard for all Ballots places a limit on the amount of time that every market participant has to reciprocate exchange. The barter-like interchange of equally-valued services should be completed sooner rather than later because both credit and debit are naturally subject to continuous decay. The promise to work you issued by splending, called debit, goes stale at the rate established by the term. Both your debitedness and your representatives creditedness are diminished at this rate. Just as any republic sets a standard term for the amount of time a constituent delegates her sovereignty to a representative, the standard term of the credit unit called a Ballot can be set to four (4) years. This standard term on the credit we understand as money acts like an inflation tax, the proceeds of which produce a equal base income, the principle payments, for each individual who is entitled by the Republic’s rule-of-law to a Ballot at a continuous rate of 25% per year.

Who For?

To live by the law of the Elastic Republic is to have liberty. Elastic Republic is designed for people who have the liberty to volunteer their time to work on projects. The Ballot market provides every member the ability to be a part of a organized community that is “bigger then me.” It is the ability to support the leaders who I believe in by both formally choosing them as leaders and by accepting a position in which my specialized services benefit my chosen leaders cause.

 

Will there be a Bitcoin 2.0?

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According to Mike Hearn, a Bitcoin Developer in the news, “…despite knowing that Bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly. The fundamentals are broken…” He goes on to describe the problems with the ability of the system to handle the growth in the number of payment transactions and the developer community’s inability to reach a consensus on the fundamentals of the system’s design. Basically the dispersed nature of the Bitcoin system has allowed some large players to avoid changes needed to make the system accessible to more people. As a result the Bitcoin system struggle to function as a reliable payment system.

The Bitcoin system utilizes a huge amount of resources encrypting the transaction history. This was the fundamental concept behind Bitcoin: (1) make sure money can’t be “spent twice” and, (2) avoid handling disputes by making the transaction history unchangeable via supercomputer encryption.  So, is it any wonder that now that the system is becoming popular that the largest, most powerful Bitcoin miners have more sway on how many transactions the system will allow per second? Bitcoin fundamentals say that every new transaction needs to be added to the list of past encrypted transactions and then encrypted again!

Needless to say, It is possible to process and keep track of transactions without blockchain encryption. Obviously, Visa, Paypal, and all other payment processing companies process transactions without encrypting the the transactions that occur every ten minutes. Placing that burden on payment processors, called miners in the Bitcoin system, will obviously make their costs higher than competitors that don’t need to upgrade their supercomputers at the rate of Moore’s Law simply to continue to function.

It is time, once again, to reconsider what features an alternative online currency should have. Bitcoin has proved that it is possible to get millions of people to trust a alternative currency system. That is quite a feat. What if the system was based on trust between individuals in the market? Ultimately, a payment system is there to process and track the exchange of a currency between individuals who trust each other enough to be transacting. Rather than encrypting the ledger why not make it easier to access and read? If the people exchanging actually trust each other then maybe there is no need to hide anything.

Next: Elastic Republic

 

The Ballotization of Money

A Ballot is a unit of value measurement, like a Dollar or a Bitcoin. Each Ballot represents one human’s values. The ‘exchange rate’ is:

One Ballot is All Dollars in existence divided by the population of citizens.

 

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A Ballot is a definition of how much money is ‘enough’.

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A Ballot defines the distinction between being in debitedness and being in cerditedness.

 

OK, So how many Dollars is a Ballot?

Well, that depends on which version of the money stock you use.

December 2015: $3,835,800,000,000(MB)/322,536,000 people =

$11,892.63(MB)/Ballot

December 2015: $3,146,400,000,000(M1)/322,536,000 people =

$9755.49(M1)/Ballot

December 2015: $12,424,400,000,000(M2)/322,536,000 people =

$38,520.97(M2)/Ballot

December 2015: $137,40,200,000,000(MZM)/322,536,000 people =

$42,600.52(MZM)/Ballot

A Rewrite of the US Constitution?

If a Constitutional Convention were called, with the potential for a complete rewrite of the US Constitution as happened in 1789, what would you advocate? How would you educate your fellow citizens? Edward A Ipser Jr

The US Constitution established a way for the English Colonies to unite in war against tax theft payable to the English Empire. Today, we struggle to defend ourselves from taxation and prosecution by the same entity.

Let’s face it, Americans are quite fond of their ability to vote. The Ballot is held up as sacred, not because we use it to choose representatives, but because it is an “ideal” representation of equality under law. Having a Ballot supposedly means that your opinion will matter and since there is one Ballot per person your opinion is equal to all other individual’s opinions.

First, the Ballot needs be recognized as a currency. Ballots are a prevalent medium of intellectual exchange or expression because they are widespread. Each of us use them to vote and by voting each of us choose to express the wish to delegate each of our individual sovereign authority to a representative independently chosen.

Second, the minimum number of representatives shall be equal to the number of Ballots which is equal to the number of people who are citizens entitled to vote by law. When every voter is a representative every citizen represents voters’ interests. The US Constitution limited the number of representatives thus creating oligarchy:

  • despotic power exercised by a privileged clique.
  • autocratic control of any group or organization by a small faction.
  • a group or organization that is controlled by a privileged few.
  • the faction in control of such a group or organization.

Third, with every citizen acting as both a voter and a representative, holding periodic elections becomes insane because everyone knows that everyone is already a representative. What is left undetermined is specific agreed upon policies between individuals.

With a limited number of representatives a few people needed to be chosen periodically which made election day a necessity. On election day a majority rule democratic process is applied to the ballot market thus allowing majority opinion to determine who will occupy the few spots in the oligarchy.

When everyone is a free representative everyone is able to enter into policy arrangements with other individuals on any day of the term. The term is still a limit on the amount of time a ballot will be away from the voter. The term is a law that, like Ballots, applies to everyone the same.

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In fact, the term is inherent to ballots and describes a ballot’s behavior. At the end of every term no matter what representative possesses a ballot, or the office that the majority of ballots afforded her, 100% of her ballots are taken from her and distributed equally to every voter.

Since there is no limit to the number of representatives, the ballot market is open everyday rather than only on election day. For a 4 year term there are 1,460 days in which the ballot market functions. 100% /  1,460 days = 0.068% / day. Choosing can take place everyday that the ballot market is open, therefore, 0.068% of the ballots a representative has are taken from her each day and provided, by law, as ballots to every individual voter.

Having the ballot market open everyday, rather than only on election day, requires that ballots be divisible. Hundredths, or cents, are chunks that are too big. Ballots will need to be divisible to the 6th decimal place, at least, so that microBallots or a millionth of a ballot can be exchanged.

A ballot market eliminates socialism caused by committees making decisions for collectives of people which they ostensibly represent. This is because individuals set rules and regulations for their individual representatives by splending (splend=spend+lend) microBallots in a market. While many individuals may independently choose identical contracts, rules and regulations are not set by committee for a collective.

Like minded people make independent decisions which aggregate. Collectives are ruled into conformation by violent force. Free individuals must be able to refuse to support a leader both as a constituent and a delegate.

Next: How to Maintain the Dollar’s Value and the Inflation Tax