Commodity-Anchored Currencies
Discussion
Linking Currency Value from "Commodities Produced" to "the Capacity to Produce Commodities"
Joseph Potvin:
My own 'life's work' in ERA is an attempt to solve this unimplementability bundle of problems by reframing from "commodities produced" to "the capacity to produce commodities".
In the ancient Sumerian silver:barley system, ... the worth of silver varied with the capacity to produce barley. It was one Michael Hudson's articles or books which first opened my eyes to that. Then I dug into the 'primary' archaelogical literature on it, enough to find that there's (unsurprisingly) some diversity of perspectives on how the Sumerian system worked.
(For example, I learned that Hudson's reference to the silver 'shekel' actually pointed to the Akkadian adaptation, after they conquered the Sumerians.)
Bernard's Terra, based on the prices of a basket of "commodities produced" is, by my reckoning, just as unimplementable as all th other "commodities produced" designs. We can observe how things have actually 'not' played out. I think the jury's out on my notion of "the capacity to produce commodities". I've always said that I do also expect ERA to fail -- I have a paper entitle "The Definition and Management of Improbable Projects". But the only way to guarantee ERA's failure is to not give it my best effort. So, I'm "all in". But I point to the Sumerians and wider Mesopotamia, and to the past 125 years with the Anany Korona -- its resilience despite profound political disruptions."
History
Via Joseph Potvin:
- the ancient Chinese 'ever-normal granary', i.e. commodity-anchored currency:
In: The economic principles of Confucius and his school [Doctoral dissertation, Harvard]. https://archive.org/details/economicprincipl00huan/page/n3
For updates on this kind of approach, see the work of Joseph Potvin at the Xalgorithms Foundation https://xalgorithms.org
Joseph explains:
"in the article I'm writing presently, I contrast what I refer to as
- the ancient & pre-modern 3-function cowrie currency archetype (decentralized market-negotiated or central policy-managed [e.g. Taylor Rule] unit value based on scarcity),
- versus the ancient 4-function barley:silver currency archetype (algorithmically adaptive standard unit value based on empirical data reflecting the primary productive capacity in the currency zone). The 3-function archetype ignores stability, favoring 'financial athletes' (speculators) over supply chain realists."
(source: email)
Example
- see the design of the Earth Reserve Assurance
More information
- to check out: the Forint:AranyKorona system in Hungary