Welcome to the Better Money blog. I am Douglas Jackson and I will be the principal author of most posts. I'm gratified by your willingness to visit and I earnestly hope to provide material worthy of your continued attention.
This blog, as is obvious from the title, is about money. The thesis is that money needs to be, and can be, done better. It describes a system of Better Money, a system informed by critical analysis of historic and contemporary monetary regimes. The system is designed to eliminate embedded flaws and to resolve contradictions that have tended, in my opinion, to undermine all antecedent monetary systems.
Better Money is not a call for monetary reform. Implementation of this system does not require any sort of consensus to proceed. It will be undertaken as a commercial venture, a private sector Monetary Authority. The technical bits are already in the final stages of development and the nascent operating entity is in the process of securing required licenses.
I will be making multiple seemingly extravagant claims regarding the profound ramifications that may result from the emergence of Better Money. Money, done right, can advance the welfare of mankind. Conversely, when it gets messed up, people suffer. Were a prolonged monetary collapse of sufficient severity to occur it would lead to a breakdown of society.
To begin, I ask you to indulge me by contemplating an analogy. The point of the analogy is to highlight the elegance of systematic solutions, solutions that derive from a level of abstraction that balances forest-level analysis with the underlying realities of trees.
Consider carbon.
Diamonds are comprised of carbon. They manifest an orderly crystalline form, a “diamond cubic”, in which each carbon atom is covalently bound to four other carbon atoms in a tetrahedron. Graphite, fullerenes, carbon nanotubes and amorphous carbon are other pure play carbon allotropes – carbon atoms bound to other carbon atoms. Though these variants are each complex in their own distinct ways, it does not require a great leap of imagination to attribute their properties to fundamental properties of carbon.
Proteins and other organic macromolecules are another story. They are mind-numbingly diverse and complex, yet all embody carbon atoms, reliably and consistently behaving as carbon atoms have since around the time of the big bang.
Relative to enzymes or hormones, carbon is simple stuff, yet all of life as we know it has evolved dependent upon carbon as a fundamental building block.
Money, to society, is as carbon to biological systems. If carbon somehow got out of whack—stopped having 6 protons or the like—life would cease.
All through history, money has been like the carbon in Bizarro world. It is currently just enough out of whack to lead to seemingly intractable distortions.
- Extreme inequalities of wealth are often traceable to an overgrowth of financialization. Arcane exploits of financial engineering stem from discretionary monetary policies that create uneven playing fields, enriching the tricky and well connected.
- Governments worldwide find themselves trapped in a cycle of unsustainable debt accumulation.
- Government monetary authorities are forced into defensive gambits necessitated by the efforts of trading partners to devalue their Currencies for competitive advantage.
Money is broke and does need fixin’.
Better Money offers solutions to ameliorate these and related problems. Ordered from the lowest hanging fruit to the most grandiose and ambitious, Better Money:
- Improves upon remote payment systems which are currently too slow, too expensive, with inadequate security and often inaccessible to the unbanked.
- Levels playing fields, diffusing power and thwarting elites seeking to game the system.
- Attenuates disruptive fluctuations in the supply of money and credit via an automatic mechanism for making timely and appropriate adjustments.
- Enables market forces to better serve as external constraints to aid governments otherwise helpless to rein in debt accumulation.
Better Money addresses these problems but it cannot put Humpty Dumpty together again. Specifically, Better Money will not enable excessively indebted nations to grow their way out of their current debt burdens. There may be no averting a disruptive Jubilee in which debts are effectively restructured or written off via inflation. But Better Money can serve as the foundation for a better, credibly sustainable, future.
We didn't start the fire
Virtually every brand of conventional money is already years into strenuous efforts to debase it. There is a generally overlooked reason why this serves only to occasionally jostle the relative exchange value of existing Currencies while conventionally reckoned price inflation by and large remains elusive. That reason is that there is no credible alternative. The dollar, euro, yen or yuan cannot decline if the other Currencies relative to which they are valued are locked into a competitive struggle of devaluation.
It is not the goal of Better Money to precipitate a crisis. Its emergence may however, inadvertently, serve as the catalyst—the external benchmark of value—that enables all conventional Currencies to manifest the price inflation that central planners so desperately seek. This blog will address this and numerous other potential side effects of emergence, at every stage focusing on how best to mitigate harm.
Who am I writing this for?
General public
In the past few years, especially since the economic events circa 2008, I have perceived a generalized increase in awareness and concern regarding the US dollar and its future as the world's dominant reserve Currency. Monetary terminology such as "QE" or "ZIRP" have become topics of conversation for regular people who previously would have been content to leave such arcane matters to government experts.
I hope to provide information and insight that is interesting and useful to anyone concerned with monetary topics. The perspective I offer is definitely unique. I am not an economist and I lack formal credentials. Instead, as related here, my views represent the twenty year learning curve of an industry pioneer.
An issue you, the reader, will need to come to terms with is whether, or to what degree, to discount this content as a verbose infomercial. It is true that I hope you will find my arguments convincing and that you end up matriculating to the commercial system that is currently being implemented. But I hope to also arm you with knowledge and an analytical framework enabling you to make informed judgments regarding my claims and those advanced by the promoters of other putative innovations.
Regulators and law enforcement
In the mid-90's when I launched e-gold, regulators exerted themselves to find grounds for their agencies to ignore it. Law enforcement was equally inaccessible. From 1999-2001, as growth in e-gold usage was accompanied by the worldwide emergence of independent exchange services, criminal abuses, especially relating to Ponzi schemes and credit card fraud, started to appear. Strenuous repeated efforts to engage with law enforcement agencies were rebuffed.
Since then the world has changed. Now the first impulse of regulators and law enforcement is to find a role for their agency as the void created by e-gold's dismantlement has led to a proliferation of innovations competing for attention.
My intent therefore with regard to this audience is to provide detailed information addressing how the solution my team and I have developed complies with the spirit and (exceeds) the letter of legal and regulatory requirements ranging from anti-money laundering safeguards to prudential considerations.
Academics and policy makers
My assertion here is that the propositions I will advance and the arguments with which I will seek to defend them are logically coherent and informed by reasonable analysis of historic and existing institutional models. Basically I want to make it indefensible to dismiss my views as the ranting of a monetary crank. My hope is to anticipate and respond to potential criticisms at least to a level sufficient to establish my bonafides as a voice to take seriously.
There is another reason for seeking engagement. Academics and policy makers tend to be reactive instead of proactive. This isn't a bad thing but rather reflects the fact that it is hard to predict the future. It would be a waste to devote attention to a phenomenon that never ends up materializing.
The problem though is that there are likely to be aspects of the emergence of Better Money that entail disruptive effects. I want to head off ill-considered knee jerk reactions when these finally appear on the radar screen of Issues To Pay Attention To. I've put a lot of thought into consequences and how to mitigate the potentially rough spots. I assert that timely engagement is desirable.
Consider this possible alternative. Perhaps the Better Money system ends up being suppressed. The problem is that several aspects of it are likely to be implemented by someone anyway. That someone, however, is unlikely to have thought through consequences as assiduously as my team has. They may be a more conventional enterprise that places a higher priority on expedience and competitive advantage than ethical concerns. Worse yet, it may be an entity for whom the disruptive aspects are ends in themselves.
One way or the other, the days of exorbitant privilege are probably numbered. Better Money is designed with the goal in mind of assuring that what comes next advances the welfare of mankind rather than unleashing new pernicious hazards of powerful elites jostling for preeminence.
Method and content
Navigation
The information I will be trying to convey does not lend itself well to an orderly linear flow. Everything relates to everything. Nevertheless I will normally have a <next> link at the bottom of each post in the Monetary Musings section, partly in an effort to avoid orphaning content.
Categorizing content
If I can manage to construct a sitemap or other form of hyperlinked outline, the categories will be as below. Of course the challenge is that many posts will fall under multiple categories. For example, in explaining some element of the Better Money system I will likely compare and contrast it with solutions previously implemented in other systems such as (especially) the US Federal Reserve System.
Terminology
Throughout this blog I will be following a convention (used in many contracts) of using capital letters to signify defined terms. There is a Definitions section. I cannot presume my definitions will be universally embraced as standards; they are simply offered in an effort to afford greater precision in the context of this blog.
Description of the Better Money system
I will be going into detail with respect to the what, why and how. Some content will more or less function like an expanded FAQ for the particular commercial system being implemented.
For example, the deployed system includes rigorous sub-systems for identification and due diligence of participants. I intend to lay out the reasoning behind incorporating that level of scrutiny for credentialing prospective users.
Other descriptive posts will explain novel features such as the Disputed Spend mechanism that balances the need for payment finality against the need to address actual erroneous or unauthorized Spends.
Background information
In order to understand the logic underlying Better Money it is helpful to have some background information. This background information can be classified as:
Monetary theory - observations exploring the abstraction people refer to as money. A quick example: lately a number of alternative systems have been promoted that involve monetary tokens ascribed value only on the basis of their scarcity. I compare this to the concept of Monetary Liability.
Antecedent systems - An expedient way to explain Better Money is to compare and contrast it with antecedent monetary regimes. I put the greatest emphasis on the Federal Reserve but there are many aspects of how the Fed works that are unfamiliar to most people. So I describe the gist of them. Similar considerations come into play with the "gold standard" or, for that matter, the basics of banking in general. There are also a number of existing systems that are relatively unfamiliar to the public but which comprise vital financial infrastructure relating to payment systems, Currency exchange and securities transfers.
Analysis of alternative systems and proposals
The alternatives I'll examine will tend to fall into two categories: mainstream-ish proposals for monetary/payments/financial reform, and, alternative private sector initiatives.
It would be natural for you to read my analyses with a grain of salt because of my partisan bias toward the particular solution I am advocating. So my challenge is to proceed with at least a plausible semblance of objectivity. It will be up to you to decide which propositions make sense to you. Ultimately, at least with private sector initiatives, commercial success will tend to winnow out the valid from the invalid.
As for the former category, changes in government issued money, your opinion doesn't much matter. You can only influence how government money evolves via the choices you make with respect to private sector monetary innovations.
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