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Post by Antti Jokinen on Sept 1, 2017 22:00:34 GMT
The problem with TOM is not the TO, it is the M. They (the debtors) do owe something. But they do not owe anything in particular to me in person. I have a right to take whatever it is they offer. I think you have misunderstood me. TOM and IOT are two separate things. 'They' in TOM is, like I said, everyone else. It doesn't refer only to the actual debtors, the ones with debit balances. Likewise, 'they' in IOT is everyone else, not just the people with credits. You aren't that far off, though. For some time in 2014 or 2015 I was trying to make sense of the system by thinking in terms of some kind of "indirect IOUs" that were flowing around. By this I mean that there was still a linkage between debtors and creditors, so that a debtor needed to redeem, by giving up goods, his indirect IOU -- which he had issued when he made a purchase using a bank loan -- from a creditor (say, a note-holder). But then I concluded that it is not about this kind of indirect debt relations. There really isn't any such link between debtors and creditors (unless a bank goes under, but the One Bank never does). Often debtors sell goods to debtors and creditors buy goods from creditors. (This is of course very obvious, but I think it is sometimes useful to think very hard about obvious things.) About describing phenomena... What you say is that you think it's good to have different theories. Right? We can't separate the language from the theory. I have created a language to describe phenomena, and certain expressions from other theories are either nonsensical or invalid if we try to bring them into that description (or framework). And yes, you as a natural person can owe me, a natural person, a record of a transaction (a credit entry on my account, to be precise). I don't see a problem with that.
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Post by JP (admin) on Sept 2, 2017 5:44:22 GMT
Ok. And are you saying that all monetary systems from time immemorial have functioned in the way set out in your post (i.e. from ancient coin-based systems to medieval gold-backed note systems to post-1971 fiat standards)? Or just our modern system?
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Post by Antti Jokinen on Sept 2, 2017 11:20:50 GMT
Here we need to be careful. My intention is not to make any definitive historical claims. As you well know, the early history of money is not known. I find it plausible that a monetary system might have emerged in a similar fashion to what I describe in my posts, but my argument doesn't hinge on it. My intention is to present an alternative, underlying logic when it comes to the modern system. I do believe that the same logic fits nearly all monetary systems, and definitely a system with a commodity standard. For instance gold standard can be explained, within my framework, as an attempt to achieve price stability by fixing the price of one good in terms of the unit of account. But it's not that simple, and sometimes we find ourselves in a mess when we try to understand the role of gold. So I would like to stay out of that discussion, for now. Instead, I wish we could at the first instance concentrate on how my description fits the current system.
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Post by oliver on Sept 2, 2017 12:49:53 GMT
You're thinking in terms of stake holders in the system? In that they owe it to themselves to keep the system running by selling and buying from each other at stable prices irrespective of their respective financial positions. If so, that's getting dangerously far away from the usual meaning of the word 'owe', imo. And you still haven't answered my question about who these stakeholders are, exactly. Do subsistence farmers count? Children? Foreign residents? Overseas residents who use the currency? Future generations? OK, so there can be a debt of things and a debt of debt simultaneously. One word, two things.
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Post by Antti Jokinen on Sept 2, 2017 19:25:15 GMT
No, I don't use the word 'owe' in the sense "owe it to oneself". But I fully understand your concern. If I participate in a system / an economy where I'm supposed to give (at least) as much as I take (~balanced lifetime budget), and until now I've taken more than I have given, it makes sense to say that I'm in debt. I assume you agree. Now, if my position is the opposite, i.e. I have given more than I've taken, how should we describe this? I'm sure we can find many ways to put it. So far I've been saying that I'm owed goods by others (this might be clearer expression than 'everyone else'?) -- and yes, these are any current or future participants/stakeholders in the system. If I buy goods from another creditor, I've received what was due to me, but it is clear that this particular person didn't owe me anything. Perhaps we could say that the system owed me those goods? Anyway, as a creditor I'm in a position to receive goods from others without giving anything in return, and without incurring a debt when doing so. That's what being a creditor is about, by definition. If we don't want to use the word 'owe', then we could perhaps say that I was entitled to receive those goods? It's in that meaning that I used the word 'owe'. Some of us are entitled to take goods and some of use are obliged to give up goods, but any transaction where a creditor is on the receiving end and a debtor is on the giving end is coincidental. What matters is the overall balance between people who are entitled to take goods and people who are obliged to give up goods. It's not a debt of debt, as the credit entry made on an account (regardless of the account balance, credit or debit) is not a debt. We could say that as your personal debtor I'm liable to make that credit entry on your account happen. I've made a promise to you, and instead of delivering goods I've promised to make that credit entry happen. In the big picture, I view this as private recordkeeping, instead of shared, public recordkeeping. What we are used to call a "money loan" is about moving from the public ledger to a private ledger. My debit balance on that private ledger is still a record of my obligation to give (i.e. sell) goods to others -- and that's what it often takes for me to be able to get your account credited (unless I move my debit balance to another ledger, public or private). Likewise, your credit balance on that private ledger (which could be a mental ledger, if we have made an oral agreement only) is a record of you being entitled to receive goods from others -- it's just that you have taken a bigger risk by allowing it to be recorded on this particular ledger, instead of a bank's ledger. (What I say above has very wide implications, as it suggests that any credit balance, even equity, is this kind of record. It also suggests that any debit balance, even the ones related to real assets legally owned by a company, is a record of an obligation to give up goods. As weird as it sounds, this seems to make sense. But perhaps we shouldn't go there yet.)
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Post by Antti Jokinen on Sept 3, 2017 11:42:32 GMT
I'll continue a bit, Oliver, because I think you have raised an important point. The problem with using the word 'owe' in case of TOM is already apparent in a multilateral gift economy (without explicit recordkeeping), and especially so. If I have given a lot more than I've taken, it is still not considered appropriate for me to claim that I'm owed goods by others. It's the others who are in a position to acknowledge that fact by giving goods to me, while all parties involved accept that I have "earned" those goods. In our system of explicit, public recordkeeping we are closer to a debt, because there's no hiding from the fact that these are not gifts -- the assumption of quid pro quo is very explicit, while in a gift economy it is implicit. But if you think of a shareholder in a company which is considered a 'going concern' (say, General Electric), with no resolution in sight, then who owes and what to the shareholder, and can the shareholder redeem that which is due to him? ( Here's a related article by John Kay.) I'm not saying, like some do, that "money" is like equity. The former is a nominally fixed quantity while the latter isn't, just to name one difference. But it seems that both share this feature of being backed by something (i.e. not being fiat), yet not being actual debt as long as we assume a going concern? And of all things, a monetary system like the one in the US must fit that assumption, as there's no resolution in sight.
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Post by JP (admin) on Sept 3, 2017 14:58:55 GMT
I do believe that the same logic fits nearly all monetary systems, and definitely a system with a commodity standard. For instance gold standard can be explained, within my framework, as an attempt to achieve price stability by fixing the price of one good in terms of the unit of account. But it's not that simple, and sometimes we find ourselves in a mess when we try to understand the role of gold. So I would like to stay out of that discussion, for now. Instead, I wish we could at the first instance concentrate on how my description fits the current system. Ok, we'll focus on the current system. But permit me just one question before I go in that direction... You said that people at the One Bank have credit balances and debit balances, a credit balance being a recognition that something is owed to the person, and a debit balance indicating that something is owed by that person. I have no problems understanding this idea since it's basically a LETS (and one of my quirks is that I always need examples of real things to understand things). But if we try apply the TOM idea and think in terms of a metallic coin system, a credit is obviously the coin itself. What represents a debit balance? A negative coin? I'm coming up empty in terms of examples.
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Post by Antti Jokinen on Sept 3, 2017 20:16:46 GMT
Your question is very relevant when it comes to the current system, so I'm more than happy to try to answer it. And I'm sure you can make me much wiser on this topic, as you are familiar with an amount of historical examples I can only dream of. I take you to mean a token system, where the coin has a face value higher than the market value of the substance it is made of. First I would like to mention that I don't see any reason, from a theoretical point of view, why a central bank couldn't issue coins that would work the same way as its notes work today (are there any examples of this, by the way?). In that kind of setting the debit balance would be in clear sight. But this is obviously not what you had in mind. Usually coins are issued directly by government (treasuries). As far as I know, it used to be -- when coins had more purchasing power than today -- so that a treasury issued coins to finance its expenditures. Someone who provided goods to the government would get coins in return for his goods. I don't see that coins differed that much from tally sticks in this role, other than that the former had higher intrinsic value and the material itself was thus harder to come by (see my reply to you on Twitter on why objects with higher intrinsic value were used in the first place; another reason is that governments in the earlier centuries commanded much less trust than they do now, so collateral was more often required). In case of split tallies, the debit balance was very concrete in the form of the 'stock' kept by the issuer (the 'foil' was the credit balance, comparable to the coin). The stock represented public debt. In case of coins, the debit balance was slightly less concrete as it was only in book entry form (we could find all the tally stocks recorded on a ledger, too, I assume). That entry represented public debt. I think it usually was/is a record of a government liability, debited credited on the account "Treasury currency in circulation" or similar. (edit: as you see, I think it's actually a credit balance, but because we are talking about the government ledger, we find public debt on the RHS of balance sheet; it's the opposite in the case of the One Bank, where public debt is a debit balance -- like Treasuries on the Fed's balance sheet) * So, instead of the One Bank's ledger, we are looking at the government's ledger here. Two different bookkeepers, but the logic is the same. * I've earlier told you that I think that coins are not recorded as they should be in the modern day US. My current view is that they should be recorded in the same way as other liabilities, like Treasury bonds. See this discussion of ours; also this comment.
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Post by oliver on Sept 4, 2017 8:50:36 GMT
I agree with most of that and I'm OK witht the word 'owe' if you equate the class of current debtors with the class of current creditors. One group owes the other, so, from an individual perspective, one can say TOM or IOT, even if the TOM is not legally enforceable in the same way that IOT is. The part about creditors/debtors selling to other creditors/debtors is a distraction, imo. It's obvious and doesn't change anything about the general statment that all net debtors owe all net creditors at any point in time. I understand that you don't like thinking of banks as the sole implementers of budget discipline in the sense that, in a functioning society (most) individuals will have an intrinsic motivation to more or less balance their budgets over a life time. Although inheritance is also an important factor, I'd say. Maybe more so here in Switzerland than up north. Trust in the system is what carries it forward, I suppose. It's just that when talking about debts and owing, the focus is on that which is enforceable even if it's a minor factor in comparison. As for debt of debt, I think I may have not made myself clear. I'm not talking about public vs. private record keeping. I was wondering whether, in looking at the relation between debtors and creditors as well as between each class an the banking system, it was legitimate to talk of debt twice, even if in real terms only one good is owed. Can I owe creditors goods and owe the bank proof of a credit at the same time? Can I call both debt? I think, as long as we do not confuse the two, the answer, although not 100% satisfying in linguistic terms, is yes.
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Post by Antti Jokinen on Sept 4, 2017 11:03:02 GMT
To me it sounds like we would be confusing that which we are keeping records of (i.e. debts of nominal quantities of goods and services) and the records themselves. In the One Bank world as a debtor you are liable to make sure that the bank gets informed about your transactions (if you want your debit balance to decrease, that is). Sure, we could say that you 'owe' this to the bank. But it is still about the bank accountant making an entry to reflect your giving up of goods to get rid of debt -- not about you having got rid of your debt to the bank. You owe it to the bank to keep it informed about your transactions, and the bank can push you to get rid of your debt (of goods) recorded in its books. You don't owe the bank "proofs of credit" (whatever that is) worth, say, $100. I do admit that the difference might sound quite subtle, especially because we are so used to think in terms of debts to the bank. But I argue that this language wouldn't make much sense within the framework I'm proposing. If we allowed this kind of language, we would be on our way to think that we owe the bank "money", wouldn't we?
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Post by Antti Jokinen on Sept 4, 2017 19:46:26 GMT
I agree with most of that and I'm OK witht the word 'owe' if you equate the class of current debtors with the class of current creditors. One group owes the other, so, from an individual perspective, one can say TOM or IOT, even if the TOM is not legally enforceable in the same way that IOT is. The part about creditors/debtors selling to other creditors/debtors is a distraction, imo. It's obvious and doesn't change anything about the general statment that all net debtors owe all net creditors at any point in time. I don't think we are on the same page here yet. I've been trying to say that there's no link between the two groups -- debtors and creditors. Creditors are not creditors of the debtors, nor are debtors debtors to the creditors. Unless the One Bank is wound up, but that is assumed to never happen. A creditor will never know who the debtors are, so he cannot seek them. He just buys goods from someone whose position he is unaware of and stops being a creditor. Likewise with a debtor. He just sells goods to someone and gets rid of his debt. I'm unable to find justification for the sentence "One group owes the other". In what way is it true? I understand if this sounds somewhat confusing. I'm saying that for every creditor there must be a debtor (credit = debit), but that there's no creditor-debtor relationship between these groups. And why I do this is probably because the TOM is not legally enforceable, as you say. That's why the debtors don't owe goods to the creditors, but to others, whether these are creditors or debtors at the moment the goods are delivered. The IOT is legally enforceable, but not by a creditor.
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Post by oliver on Sept 5, 2017 13:46:51 GMT
I don't think we are on the same page here yet. I've been trying to say that there's no link between the two groups -- debtors and creditors. Creditors are not creditors of the debtors, nor are debtors debtors to the creditors. Unless the One Bank is wound up, but that is assumed to never happen. A creditor will never know who the debtors are, so he cannot seek them. He just buys goods from someone whose position he is unaware of and stops being a creditor. Likewise with a debtor. He just sells goods to someone and gets rid of his debt. I'm unable to find justification for the sentence "One group owes the other". In what way is it true? I understand if this sounds somewhat confusing. I'm saying that for every creditor there must be a debtor (credit = debit), but that there's no creditor-debtor relationship between these groups. And why I do this is probably because the TOM is not legally enforceable, as you say. That's why the debtors don't owe goods to the creditors, but to others, whether these are creditors or debtors at the moment the goods are delivered. The IOT is legally enforceable, but not by a creditor. So a debtor can pay down his debt by selling to another debtor while a creditor can get rid of his credits by buying from another creditor. I can see that. There is no compulsory behavioural relationship between the two classes.
But there is a relationship between them over time, namely through the lifetime budget balance or some other limiting factor.
I'm not sur it's helpful to think of debtors owing to everyone and creditors beying owed by everyone. It's an aggregate relationship over time.
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Post by JP (admin) on Sept 5, 2017 14:59:32 GMT
Your question is very relevant when it comes to the current system, so I'm more than happy to try to answer it. And I'm sure you can make me much wiser on this topic, as you are familiar with an amount of historical examples I can only dream of. I take you to mean a token system, where the coin has a face value higher than the market value of the substance it is made of. I actually had in mind a medieval full bodied coin system. Coins weren't "issued" in these systems. Instead, the monarch leased the mint to a private mint master, people brought their raw gold to the mint, the mint master hammered it, and the people then left with the same amount of gold in coin form. The mint master collected a fee, part of which went back to the monarch. What does a negative balance look like in this system? On to the One Bank. In a LETS, creditors don't have a claim on the LETS itself (i.e. the LETS administrator), nor do debtors owe anything to the administrator. Rather, debtors owe something to all members of the LETS system, and creditors are owed by all other members. The administrator's only job is to track balances, police the system, and make upgrades. Likewise, if I have a negative balance at the One Bank, that doesn't mean I owe the One Bank anything, does it? It means I owe all the members of the One Bank system something?
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Post by Antti Jokinen on Sept 5, 2017 18:43:05 GMT
But there is a relationship between them over time, namely through the lifetime budget balance or some other limiting factor.
I'm not sur it's helpful to think of debtors owing to everyone and creditors beying owed by everyone. It's an aggregate relationship over time.
See what JP says about LETS above. How do you see the relationship over time? I'm a creditor now, but soon I'll buy a house and become a debtor. Vice versa with you, I assume ;-) This is a system for tracking the balances of individuals, so that we can try to enforce a lifetime budget balance on each (and yes, as you said earlier, inheritance makes this more complicated). I don't see there is any aggregate relationship between any two groups of people. The only aggregate "relationship" is between credits and debits, at all times. I'm not sure how important this distinction is, though. Perhaps we can live with the disagreement, at least for now?
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Post by Antti Jokinen on Sept 5, 2017 18:55:56 GMT
Good lord, JP, why didn't you ask about Bitcoin, then? It's the same thing. That kind of full bodied coin system is exactly what Bitcoin tries to imitate, isn't it? We cannot call both credit balances and gold coins / Bitcoins 'money'. If we do, we'll end up where Nick Rowe is. He's trying to come up with a definition for 'money' that covers both. (I consider this one of his "Sisyphean tasks".) Right. I'm tempted (I think this is right) to add that you don't just owe all the current members of the OB system something, but all the future members too. By this I mean that you can pay back your debt by selling goods to anyone who wishes to join the system.
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