Free Currencies

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= free currencies embody this fundamental and universal claim that any citizen, any community, any organization has the right to create tools for wealth to flow. No individuals, no community should be dependent on monopolistic and private currencies, unless they have decided so.

Definition

From the Transitioner at http://www.thetransitioner.org/wiki/tiki-index.php?page=Free+currencies


"A free currency consists in a set of rules and processes that define the issuance, evolution, circulation and redemption of a free, open, sufficient and democratic currency. It belongs to the commons just like any free software? or creative commons? production.

It is designed, developed, tested, documented and released collaboratively, any part of the software and dynamic can be transformed and improved by anyone, and then proposed to the community." (http://www.thetransitioner.org/wiki/tiki-index.php?page=Free+currencies)


Why the name "free currencies"?

"Free" as in freedom. Nothing says that currencies should be a monopoly controlled by the few. All communities have the right to create the currencies they need so that integral wealth can flow and grow.

"Free" as in cost. Why would one have to pay to buy what is a public commodity? Of course there will always be infrastructural costs to make it work, but they are marginal. Thus the cost should not include a premium that a monopolistic issuer can extract.

"Currencies" because this is the most universal term, whereas "money" is a particular form of what currencies can be." (http://flowplace.webnode.com/faq-/)


Discussion

Jean-Francois Noubel [1]:

What is the difference between "money" and "currency"?

"Money, as we know it today, is a very specific form of currency. Money's intended purpose is making exchange easy and universal within the community that uses it. It's a unit of measure, a unit of exchange and a store of value. Thus one kilo of potatoes can be exchanged with an hour of gardening or a gallon of oil.

However, there are many other forms of wealth that are central in our lives, but they can't be expressed with money (see "wealth"). Trying to express the whole spectrum of wealth with conventional money, as is done today everywhere, degrades universal wealth into a tradable form of it. This places humanity into a mercantile paradigm in which everything can be sold, bought and owned, and this is a huge epistemological mistake. Non-tradadable forms of wealth need to be expressed in a more universal, more encompassing language of flows, not with conventional money. This is what currencies, in our broader sense, are made for. They are symbolic tools we use to express and manage currents within the whole spectrum of wealth. Currencies can function systemically in a number of independent capacities: as a unit of measure, store of value, token of status and a medium of exchange, etc." (http://flowplace.webnode.com/faq-/)


What is wrong with conventional money?

"Conventional money is scarce because it concentrates in the hands of a few and leaves everyone else short of this indispensable means of exchange.

Entire communities -- people, villages, cities, regions, companies, NGOs, public services, countries -- are undermonetized. They do have wealth --competencies, resources, time, love, genius, assets, entrepreneurship skills, culture-- but exchanges don't happen. Not because of lack of wealth, but because of lack of transactional units: money. Conventional money is concentrated somewhere else, offers and needs are not fulfilled, poverty follows. This is very much like an ecosystem without enough water.

This phenomenon of wealth condensation on the one hand, and desertification on the other is called the Pareto principle. This vicious circle increases the gap between rich and poor. At least 80% of humanity lives with less than $10 a day, and almost 50% of humanity lives with less than $1 a day

Close your eyes and imagine the wisest persons you may know on Earth. Now ask them them to play a Monopoly game. If they play by the rules, no matter how wise or good these persons are individually, one will end up rich and the rest will end up poor. The Pareto effect is built into the rules of the game, and has nothing to do with the wisdom of the players. Our conventional monetary system has this same property of wealth condensation.

Taxes are meant to redistribute wealth in an equitable manner, but today no tax strategy has ever overcome the Pareto effect. It's just as if the Monopoly game goes on as normal except that every once and a while some of the monopolists properties are given to the poor players. All this does is slow down the general path of the game, or, if the redistribution is large enough, put someone else at the top. But the principles of condensation/desertification remain." (http://flowplace.webnode.com/faq-/)


How do free currencies solve what's wrong with money?

"Flowplaces and their flowing free currencies allow the making of sufficient --and not scarce-- currencies for tradable wealth :

  • If the currency condensates in one place (which can happen because of an intense economic activity, which is very common), it doesn't need to leave the rest of the social ecosystem. There will simply be issuance of more currency where it lacks, or consumption of it where there is too much. This principle can be understood like for air or water: when an emptiness happens, new quantities are sucked up. When an excess happens, the surplus is evacuated.

Regulation of the monetary mass has always been a puzzle for countries and economists. It was necessary to build centralized organizations to analyze the market and make decisions for everyone, provoking the mistakes and abuse we know. At the age of Internet, regulation mechanisms of the monetary mass can become distributed at every level of the system. Every player becomes a regulator of the global monetary mass. No more need for centralized authority. On the other hand holoptical structures are necessary for this.


  • Sufficiency implies the monetary mass of the community is always proportional, and an expression of, the capacity to exchange and produce. There should never be too much or not enough.


  • This rule also applies to people: if you have wealth to create or exchange, then you will immediately and freely, have the necessary monetary mass to perform the transaction. No more, no less. What counts is that the "wealth balance" is always positive for everyone. The currency is the tool that will enable this."

(http://flowplace.webnode.com/faq-/)


Are flowplaces and its free currencies a way to avoid taxes?

Absolutely not. Taxes are not tied to a given currency, but to a country and its citizens, regardless of the currency. Transactions conducted using tradable wealth currencies in a flowplace remain taxable if the law that governs the jurisdiction of the transaction says they are. Thus, in the flowplace we will make it is as easy as possible to implement the national tax system in the rules of currencies that need them. But note that other tax systems can also be designed, because the players in many currencies may want to redistribute some wealth among themselves regardless of particular jurisdictions! Aren't governments going to be upset with free currencies?

Governments may or may not be upset by free currencies. There is one very typical scenario where governments embody the old paradigm and do everything to keep it in place. By doing so they stir up creative forces that open innovative paths towards new paradigms. Once upon a time slavery was legal and defended by States on the basis that large parts of the nation's economy was based on that slavery. Today's economy is built on money and there will certainly be many people to say that there is no possible future without keeping money in its current form.

But there are other scenarios too. In the face of great difficulties, governments do sometimes embrace change that visionaries bring forward that show a path forward. We believe that free currencies encompass more universal values and will provide a better and safer economy for citizens. De facto they carry the founding values of the Universal Declaration of Human Rights! In the end, which government will want to stop this evolutionary wave? Eventually free currencies will become the norm.


Aren't the banks going to be even more upset?

Like governments, there are many scenarios on how banks will respond. In practice, banks will soon lose their monopoly on issuing expensive money. Many of them will be very upset and will do everything in their power to maintain that privilege. But more and more leaders inside the banks themselves understand the deep systemic problems built into debt issuance of money, and are looking for ways out.The original purpose of banking (as a profession), is that it is to help people wisely manage and invest with their savings. It is a relatively recent historical addition that banking has become a for-profit business which makes money by issuing money.

Some banks will hopefully be more clever and visionary than others. They will see a wonderful opportunity to create new, useful services in the free currency world. They will return to their original mission statement and become trustworthy again.


Are you against the banks and the governments?

Not at all. We work for a fair world in which human rights, transparency and accountability are applied. Rather than fighting against the current order, we prefer to actively search for innovations that work and will thus inspire change. Our deepest hope is that governments and banks will see an opportunity in the free currencies and flowplaces, so they can evolve and do what they are meant for.


Won't free currencies cause inflation?

Inflation is a property of a single currency. It occurs as a response of the currency users, when the currency fails to accurately track the value that the currency is supposed to be tracking. Particular free currencies may indeed be inflationary if their rules of issuance don't work well.

So, some free currencies may indeed be inflationary. But fundamentally, free currencies as a whole will solve the problem of inflation by virtue of creating a competitive space for currencies. If people have free choice to choose the currencies they want, they will choose the ones that actually do help build wealth for them, which will be the ones that don't have inflationary tendencies built into them unlike conventional money.

Example

More Information

  1. Alternative Currencies
  2. Currencies
  3. Wealth