A Broader Definition of Currency « webisteme
Money and currency are considered synonymous, but a broader definition of currency gives an interesting perspective on the current financial crisis, as well as the next wave of currency innovation. The Difference between Money and Currency In a recent panel discussion called “Monetizing Intangible Capital” at the Future of Money conference (Feb 2011), Art Brock drew an interesting distinction between money and currency which I had not heard before. Brock suggested that a currency could be regarded as any symbolic representation of value, issued according to a set of rules: I use the word currency distinct from money. Normally in every day speech we collapse the two. According to this view of currency, money is just one type of currency which is fungible, enabling it to serve as a medium of exchange and a store of value. Brock suggests that one of the functions of a currency, in this broader sense, is to “change the way value flows.” Why do we need currencies? When currencies go wrong
The History of Credit & Debt – Keeping Track « How to Get Out of Debt
The Beginning The credit and debt system began before the written word. Approximately 9,000 years ago man invented counting tokens to keep track of trades and obligations. In fact, the art of writing was invented to record our financial dealings. Keeping Track While the early counting tokens may have been a form of money, we don’t know for sure how they were used. Before the days of the first recorded contracts and financial transactions, people used cattle, grain, silver or anything else they could agree on as currency to be used in a trade. Over 3,000 years ago in the city of Uruk, people kept tabs on who owed what to whom on clay tablets like the one shown. Uruk was situated south of Baghdad, on an ancient branch of the Euphrates River, in Iraq (known in the Bible as Erech). These early writings appear to be contracts and fiscal records. Map of the Mesopotomia region Map of Modern Iraq
The Future of Money is Abundance « webisteme
We now enjoy an abundance of information goods unparalleled in history, thanks to the negligible marginal cost of distribution allowed by the internet. This has in turn disrupted old markets for such goods, and spurred exciting business model innovations. Forward-thinking companies are now working out ways to share value for free, and to leverage the resulting gains in attention and reputation to make money in the marketplace. While businesses react to a logic of abundant production, and work out how to adapt their models, there is another area which has received less attention: abundance-based currencies. By ‘abundance’ in this context, we don’t mean ‘free’ in the sense of ‘free beer,’ but rather ‘free speech.’ Abundance-based money Abundance-based money has existed for a long time. In the late middle ages in Europe, local forms of currency were based on deposits of grain. There is quite a profound lesson in both of these monetary systems. Demonetisation Abundance-based currencies
The coming first world debt crisis
Jubilee Research at the New Economics Foundation (NEF), the team that spearheaded global awareness of a third world debt crisis released provocative new research in September 2003 which argues that the “first world” is approaching a major debt crisis. These findings appear in the first of NEF’s annual reports on the global economy, Real World Economic Outlook – which shadows the IMF’s annual World Economic Outlook. The report predicts that a giant credit bubble, created by central bankers and finance ministers (the engineers of decades of “easy money”) has now reached a “tipping point”. This point – at which the “bubble” of financial assets exceeds GDP by nine times – has triggered financial crisis elsewhere. Another “tipping point” would be a rise in interest rates – not unlikely for economies like the US and UK which have massive foreign deficits. The financial system: unbalanced, unfair, unsustainable Winston Churchill’s storm warning A cycle of illusions How did we get into this mess?
The Economics of Abundant Production « webisteme
Before the web, the business model for producing and distributing informational goods, such as music, books, films and journalism, was much more straightforward. Such models relied on the coincidence that a physical medium was necessary in order to share the information good in question. Written journalism could only be transmitted in print, for example. With the rise of the internet, these dynamics have begun to change. While this is a great opportunity for an explosion in free content, it also raises questions about how people who contribute to the information goods commons, for free, can earn a living. The paradox of the information producer The paradox of a person who produces information goods and shares them for free, is that their activity is enabled by participation in an economy based on scarcity and market transactions. However, the paradox of the information producer today often goes further than dependence on a market mechanism. Solving the paradox Social capital
Rising Income Inequality & Shifting Identities – The Specialist & The Omnivore
*Please note that this is not a political commentary. I will leave the political punditry to the people who think politicians are actually capable of accomplishing something. I have recently come across a number of debates about income inequality so I am going to try to contsruct some context around this issue. A recent article from The Economist notes that income distributions have become more unequal in the large majority of developed countries: American society is more unequal than those in most other OECD countries, and growth in inequality there has been relatively large. Reports such as this provide easy fodder with which to demonize your favorite economic villian, but before we jump to conclusions it will prove worthwhile to pause and ask a few questions: Why Do We Care About Income Inequality? Income is a proxy for well being. The Costs and Benefits of Specialization Benefits The most basic formula for creating monetizable value is specialization. Costs The Result Shifting Identities
