proposal: Phantomise digital Perpetual Coin (PC)

[michak]

I think I misunderstood the concept of perpetual coin:

I imagined that perpetual coin (PC) would not be issued at all, and hence not be in circulation.
No one would have any or be able to make/issue them.
They would not exist at all. (So far my misconception)

Now, I would like to hold on to my idea. I think it is even better than issuing PC.

They  are a unit of measurement, like the centimeter. Nobody is issuing centimeters.
Ofcourse, the meter has a well defined value from physical quantities. As do kilogrammes and seconds.
But for money, this is not necessary. A vague emotional notion of value is enough to function in a human economy.
It's value will be defined as: "same as last time"

See the following example; the value of the PC is determined by the pricing of goods and services expressed in PC, and the value of CC is expressed in PC both nominally as practically on the online exchange.

 

Suppose we let 1 PC = the buying power of a US $dollar at 1st January, 2011.
(Or any basket of World currencies).
All we need to do to give 1 PC this value is: tell ourselves so.

We then price our goods (e.g. bread) in units of PC.
Suppose 1 bread = 1,50 PC.

Nobody has PC, so nobody can buy bread.
It may be bought for any CC though, e.g. Carpenters-CC, at the actual exchange rate of Carpenter-CC/PC times 1,50 (the price of the bread)

But the bakery issues the red coin (Credit coin, CC) in denominations of PC 1,50.

example:



CC-Identifier: Anton_Rulez
Issuer: Anton's bakery Inc., Manhattan
Date of CC issue: 12th June, 2011
Nominal CC value: PC 1,50

Description of unit: standard bread, wholegrain, 800 grams
This vouchers Unit percentage: 100%
Guaranteed bread price in return for this voucher: PC 1,50 at Anton's Bakery, Manhattan, only.

CC & voucher expiry date: 30th June, 2012

Bonus period: 1st-31st August, 2011
Bonus value of this red coin: 10% (minimum value during bonus period: PC 1,65 at  Anton's Bakery, Manhattan, only )

[Jordan]

Nice idea, but. . . How are new products (or differentiated products) that have no perfect equivalent in the product list from 1st January, 2011, become valued in CC? Also what if someone develops a new way of manufacturing an existing product that substantially lowers the cost - they end up being able to reap a huge profit at the expense of the consumer - even if (when) they have competition. Using that edge they'd be able to buy up all their less capable competitors. This is sort-of what top-down government (legislative government aka "the state") does to us today by regulating the marketplace - they give advantage to the industrial producers that then monopolize the marketplace.

My educated guess is that by floating PC such that people can actually purchase a product and thus give the product a value (through haggling!) is the way a free market works. 

So for example the local baker doing things the traditional way has to charge a price that can cover his costs. In the free market he can specialize his products to compete with the industrial baker down the street who is able to make his bread at half the cost due to economies of scale. But how do people specialize and differentiate without a free market?  You'd need a perfectly trustworthy body to set the prices for the new products - but there can be no such perfect body and the only way to come close is to take the body of all humanity as a whole competing for goods and services in a free and open market. Further how could a smaller body, a subset of the whole of humanity, give a correct price for a product anyway? How many variables could they account for?  The free market is a vast super-computer that can account for unknowable numbers of variables - any body would have a finite limit and the variables it could account for would be subject to the biases and potential deliberate manipulation by this  subset of the population, this top down 'state' government.

Don't mean to sound mean or to be harsh on ya - it's great that you thinking about these ideas!  But do get into history and philosophy too. Money is our greatest tool for cooperation - as such it has been manipulated by many to steal wealth from society, every detail of it's use must be contemplated with utmost care.  And perhaps I've just missed something in your proposal - if so, I do humbly apologize!   

[michak]

I am confused.

When I wrote "Suppose 1 bread = 1,50 PC." I did not intend to be a fixed price, I intended that this was the free market price at the time of issue of CC.

I am assuming that bread-CC has several uses:
- it can be used by third parties for the value it is worth to them
- it can be declined by third parties
- it can be used to by bread at Anton's
- during the bonus and/or voucher period, at Anton's, it can be used to obtain one bread, whatever the current bread price may be. (This is a risk Anton takes).

So I do not see what function PC would serve, except as a tool, a centimeter. It does not have to be in circulation. In fact, if it were in circulation, it might get hoarded which would lead to power imbalances... (Can I read more about PC somewhere?)

[jtimon]

I completely agree with this. The perpetual coin should be only defined, not issued.
In fact, I think that if issued, there's no way of warranty the price stability.

Nice idea, but. . . How are new products (or differentiated products) that have no perfect equivalent in the product list from 1st January, 2011, become valued in CC?

There's no fixed table of prices for each product, only for today's dollars in the case of that definition. Prices must be always freely negotiated.
Although If you define the currency as a weighted basket of commodities, for example, you can calculate the price in PC of each of the commodities listed by knowing its price in another currency (and also know the price of that currency in PC).

[21s2001]

Nice discussion. I agree with both PC should be like "floating centimeters" whose length depends on humanity value of what a "centimeter" is worth in length.

I just write, because I miss a more detailed example (a kind of brief simulation) like the first post. Just to grasp quickly the operational idea and to have a hint on the possible implementation and so on.

Best wishes.

[michak]

if you agree with both, could you give an example?

My view is, that we are used to pricing in Euros or Dollars. We are accustomed to that.
If we agree that a Credit Coin has about the same value, the rest is negotiating.

About inflation: I think there is a certain usefulness for it.  It is not easy to lower prices, psychologically.  House prices are going down and people refuse to sell at the lower price.  With inflation, you do not need to lower and raise prices. You can simply raise prices or keep them the same: then inflation will do the trick for you.

On the other hand I hate inflation, because it makes long-term planning and long-term comparison so damned hard.
So I think I would like to develop a currency which does NOT inflate. But I'm not sure.

[jtimon]

About inflation: I think there is a certain usefulness for it.

Even if you like inflation, it would be better to define a constant one than to rely on Bernanke's easy finger for that.

I'll put some examples.

A) the credit coins are denominated in dollars.

1) Alice the baker price her bread at 1 leaf = 1 USD (payable in credit coins)
2) Bernanke injects some trillions in liquidity that commercial banks get and spend all around. All the prices rise as a result.
3) Alice price her bread at 1 leaf = 1.2 USD (payable in credit coins)

B) the credit coins are denominated in terras, defined as a weighed basket of commodities.
For our example, 1000 terras are 1 barrel of oil + 1 kg of aluminum + 100 Kg of grain...

1) Alice the baker price her bread at 1 leaf = 1 terra (payable in credit coins) At this point 1 terra= 1 USD
2) Bernanke injects some trillions in liquidity that commercial banks get and spend all around. All the prices rise as a result. So the price in dollars of 1 terra must be calculated again because it is a function of the price of the commodities in the basket. We get that 1 terra = 1.2 USD now.
3) Alice price her bread at 1 leaf = 1 terra (payable in credit coins).

There's no need for someone to store all the commodities and issue the terras. It's just for pricing and for contracts.
"My price is 1 terra, you can pay me in USD, credit coins, bitcoins or EUR, but you can't pay me directly in terras because you can't own them".
Since there's nothing to be stored, we don't need to restraint ourselves to commodities, we could also services such us "20 hours of unqualified labor in the US", 10 Kw of electricity, 1000 km of travel by plane...
But the definition must be accurate so that anyone can make the calculations looking at certain markets.

We could even define the perpetual coin as...
1 PC = 1 usd from 1970, accounting for CPI using the shadowstats metrics rather than the official and changing ones.

I hope the proposal (as I understand it) gets clearer now.

[michak]

(my request for an exampje was intended for 21s2001 )

Dear jtimon,

that sounds workable to me. When do we start?
Do you know of any bakery which is willing to start this?

I am speaking with a shop in Alkmaar, the Netherlands, to try and think something out.
But they are hesitant, and wary of legislation. (Government repression...?)

Micha

[jtimon]

There's lots of people using mutual credit through systems like LETS or Ripple. Mutual credit systems often use "hours" as the unit of account instead of the national currency. An hour is defined as "an hour of unskilled labor", but prices are negotiated as usual. There's nothing stopping these systems from using a more abstract and formal definition (such us 1970 dollars or terras) as the unit of account, but since mutual credit is typically used among local communities, "hours" are perceived as fair and simple enough.
I invite you to try this web and use it with your friends and neighbors:

https://villages.cc/

villages is a Ripple implementation. Ripple is a generalization of LETS (doesn't necessarily have the local restriction) and a concept very similar to the "credit coin".
I leave here a few links more that may interest you:

http://ripple-project.org/
http://www.youtube.com/watch?v=f9KqSgRZYgg
http://en.wikipedia.org/wiki/LETS
http://en.wikipedia.org/wiki/Time_banking
http://www.complementarycurrency.org/ccDatabase/

[21s2001]

Thanks to both.
Sorry perhaps I explained not very well myself.

I like the example of the PC it is very clear.(thanks jtimon)

But the example I was asking (a more detailed idea of how to manage a CC in a system of participants) I think I have gotten from the links jtimon has put. In concrete this one:
http://www.youtube.com/watch?feature=endscreen&NR=1&v=ySzqM5dpF7s
Thanks a lot. If I have more questions I will come here.

Happy new year to both.