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Author Topic: Universal Dividend  (Read 18377 times)
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August 16, 2010, 07:20:08 AM
 #141

But I am in favor of giving all people as much of a standard minimum dignity as possible no matter their situation.

I favor the same thing, but within limits of course. I'm sure "as possible" means you have your own limits.
In general though, I think this dignity should be furnished by many small groups, rather than a few huge ones.

So we can agree on what we want to happen. Maybe we disagree on how it should happen. Maybe not.

I'm not talking about Basic Income, but rather compromises reached by congress working together or not working together. I'm quite satisfied with what congress comes up with because we elected them and they're just doing the best they can for the most part. Now that's not entirely true, because I'm much less satisfied when Republicans have the majority, but even then I wouldn't say I'm terribly dissatisfied. It's just that I'm quite polarized and like it when we (Democrats) are in power, making our progress. So nationally, I'm quite satisfied right now and I don't want banks or the Federal Reserve or the government to fail.
I'm in complete agreement with you here too!

I like it better (more of the time) when the republicans are making "progress", than when the democrats are in power. But I don't dispair in either case. I choose to be here. I've traveled but this is home.

Even with the Dems in power (soon to be out :-)) I don't want anything to fail. That is like rioting and burning your own neighborhood when your team loses. It's silly.

In general I think the Fed has been hugely successful in their actual job, which is to prevent deflation and keep inflation stable. Others have failed at their jobs, but the Fed has not.

But Bitcoin is very interesting in that it offers a playground of sorts to try out fiscal theory without risking the wellbeing of millions or even billions of people.
In total agreement. That is why I stay around!

Bitcoin is cheap philosophy experimentation. We could launch inflating, deflating, and stable money for the cost of a used car.

But the last thing I want is The Fed experimenting with philosophy.

Again, sorry for the grief!


I like your thinking on this.The states were supposed to be doing this so that if one system gave you grief you could just move to another state to a system you agreed with.The Federal government has quashed this and now everyone has the same thing whether they agree or not!There is also no wild west left where the pioneers can escape to to try a new life.I think the internet and bitcoins gives us a way out to try new things and experiment freely.
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August 16, 2010, 05:49:13 PM
 #142

The states were supposed to be doing this so that if one system gave you grief you could just move to another state to a system you agreed with.The Federal government has quashed this and now everyone has the same thing whether they agree or not!There is also no wild west left where the pioneers can escape to to try a new life.
Agreed! If you have only one of any important enterprise than by definition it is "to big to fail". As such, whatever it does tends to get rationalized as "necessary". There is no trivial way to rebut the rationalization because there are no easy comparisons to make.

From my point of view, it is much much better to have 50 independent state governments each making their own decisions.

The important thing is we have 50 simultaneous experiments in which to compare any subject. But is is not a competition, there are only winners. A state being less successful in one area, wins by being able to easy adopt proven ideas from a state that has actually demonstrated more success. No state will be "smarter" in every area of government. In effect, each state gets the benefit of trying 50 experiments, at the cost of trying 1.

When I say I am a conservative. This is what I mean by the term.

The opposite view is one which states philosophically, "For any given problem, there is one person who is "smarter" than all others on the subject. We should find that person and put them in charge of solving the problem." By a false implication, they consider that the "optimal approach".

I tend to see those I call liberal as having that point of view.


I assert that on any given subject of governance, the best out of 50 solutions decided on by "average" individuals, tends to be better on average than solutions chosen by the "best" individual.

I think this point is well supported by evolution. Which works not by survival of "the fittest", but by death of "the unfit". Better one bad approach die so that 49 can live. I think Spock said that. :-)

----
By the way, it is fun to watch the Europeans learn this lesson as they gradually submit to their federal government.
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August 16, 2010, 06:01:58 PM
 #143

By the way, it is fun to watch the Europeans learn this lesson as they gradually submit to their federal government.

While at the same time North American governments try very hard to teach their citizens to obey without questioning, and succeed at doing so by surrounding them with notions that outside America every country is lagging behind someway or another.

Heh, sorry, I had to put some fuel in the fire, but I suck as a troll. Seriously though, our federal government? Europe, as a community, is a total failure. Each one of us, big or small, is so much convinced we have to best solution/society/enterprise/tax system/"add your own here" that the only thing we agree on is that we should all be granted subsidies... the exact distribution of them is obviously something we will never agree on for the reasons stated. So I really fail to see where you are getting your kicks from Smiley
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August 16, 2010, 07:17:43 PM
 #144

Quote from: FreeMoney
Look, if you tell people that you are going to be debasing the currency and that they can use it or not then that isn't stealing. So it's wrong to call the method in the OP stealing.

But I don't want to invest into a system where my contribution is able to be watered down and given to everyone every year forever. It's also my guess that other producers won't want to get involved either.

I wouldn't like to be in a money system where money globally inflate, and I receive nothing too. BUT you missunderstand Universal Dividend which is NOT such a thing. ALL members receive the Dividend.

In fact you must understand the real effect of Universal Dividend on your own goods.

Imagine you have a f fraction of the total money. You receive a 5% dividend, that is to say your money is then f + 5% / N where N is the number of participants.

Your PERSONAL (Local IS NOT global) inflation of money is (NEW MONEY - OLD MONEY) / (OLD MONEY), that is to say :

...

So your PERSONAL inflation MONEY rate DEPENDS exactly of the money you own, il you own exactly 1/N of money your personal inflation rate IS TOTALLY EQUAL than GLOBAL one, and you "lose" nothing in this point of view. If you have LESS money than 1/N than your personal inflation rate is HIGHER, and it's progressively LOWER if you keep more than 1/N fraction of money.

This is a lie.

Originally the premise was that new people (who did not have anything) would be given money and this would make it more fair.

So which is true?

Either value is taken from people with existing holdings (in order to add value to those who previously had nothing) or nothing is given to people who have nothing.

It is one or the other.  It is impossible to be both.
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August 16, 2010, 07:20:37 PM
 #145

No one just "gets money" unless that creator of that "money" decides to give them some.

So DON'T create money please. Because this is a ponzi scheme.

A ponzi scheme takes from the most recent joiners to give to the previous joiners.

I don't see that in any of these discussions.
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August 16, 2010, 07:22:22 PM
 #146


I say ANY Money System that is not symtricly created in space and time is a ponzi scheme.

You cannot just arbitrarily change the meaning of words and expect to have rational discourse.
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August 16, 2010, 07:29:18 PM
 #147

For example for Gold backed money, experiment shows it has been rejected long time ago yet, like Newton Theory was rejected after Einstein revolution.

That is probably more true than you expected.

Newton's theory is not rejected.  Newtonian physics explains perfectly well what can be observed above an atomic scale, such as things we interact with every day as well as planetary orbits.

Einstein added another level of depth or precision to physics, taking us down to atomic units and predicted what was not possible to observe with the human eye.  It did not invalidate Newton.

And while gold back money may have been rejected, it was rejected by those who wanted to exploit the monetary system for their own gain.  Gold backed money prevented that exploitation.

Isn't that what you are trying to accomplish?
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August 16, 2010, 08:16:35 PM
 #148

While at the same time North American governments try very hard to teach their citizens to obey without questioning, and succeed at doing so by surrounding them with notions that outside America every country is lagging behind someway or another.
Yes, that is not much of an exaggeration.

But you neglect to mention that many of our citizens hold European/Canadian systems as the pinnacle for "social programs". I can't tell you now many times I've heard, "Why can't we have free health care like the Canadians or the Swedes or etc. Why can't we have open acceptance of recreational drugs like the Dutch. Why can't will all have Ménage à trois like the French."

If the federal government wants us to change they say "shouldn't we be more like them?" If they want us to stop questioning them they say, "WTF! Do you want to be like them?"

Heh, sorry, I had to put some fuel in the fire, but I suck as a troll. Seriously though, our federal government? Europe, as a community, is a total failure. Each one of us, big or small, is so much convinced we have to best solution/society/enterprise/tax system/"add your own here" that the only thing we agree on is that we should all be granted subsidies... the exact distribution of them is obviously something we will never agree on for the reasons stated. So I really fail to see where you are getting your kicks from Smiley

Bring the FIRE! Woot! :-)

The interesting thing most Europeans don't seem to realize is that in the US. Texans know their system the best. Californians know theirs is way better and Texas sucks. New Yorkers think "WTF? They let those people govern themselves? I thought we were in charge?" And we all think, "Who the hell are these Washington people to tell us what to do. They are not even good enough to be a state."

Really, it is the same here. Each state knows with all certainty that it is better than all the others. We dislike the way other states do things, but we tend to dislike their ways less than we dislike the way "outsiders" do thing. So we don't tell you guys about our internal squabbles.
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August 16, 2010, 10:00:52 PM
 #149


But you neglect to mention that many of our citizens hold European/Canadian systems as the pinnacle for "social programs". I can't tell you now many times I've heard, "Why can't we have free health care like the Canadians or the Swedes or etc. Why can't we have open acceptance of recreational drugs like the Dutch. Why can't will all have Ménage à trois like the French."

If the federal government wants us to change they say "shouldn't we be more like them?" If they want us to stop questioning them they say, "WTF! Do you want to be like them?"

I've never been to Sweden or Canada, but I can tell you that we pay a lot for our "free" health care, in form of mandatory taxes. Of course, the ones who can afford just pay those taxes *and* the private health care. It is certainly better for those of the lower income spheres, as they at least get the basic health care for free, but the invoice is still paid up by everyone.

On a related note, I have been to Paris a couple of time and didn't get any 3-way action. It's just like minting bitcoins, I guess, you just have to be lucky Smiley

Bring the FIRE! Woot! :-)

The interesting thing most Europeans don't seem to realize is that in the US. Texans know their system the best. Californians know theirs is way better and Texas sucks. New Yorkers think "WTF? They let those people govern themselves? I thought we were in charge?" And we all think, "Who the hell are these Washington people to tell us what to do. They are not even good enough to be a state."

Really, it is the same here. Each state knows with all certainty that it is better than all the others. We dislike the way other states do things, but we tend to dislike their ways less than we dislike the way "outsiders" do thing. So we don't tell you guys about our internal squabbles.

Well, I don't think that is accurate, really. I may be more on the inside, as I have worked with / for US people most of my professional life, and have good friends scattered along most of the states, but we do know about the rivalries between 'neighborhoods', which you call states or parts thereof. Even the TV shows depict that all the time, and at least in Portugal we have every American show, and then some. The truth is that while that is changing slightly, we have always worshiped the States and everything that comes from that side of the pond, to the point where it's just nonsense. I love the States, and if it wasn't for immigration rules (I'm too proud to let my life be investigated just so I can live there, although I have nothing to hide) I'd probably be living there. I already pretty much work there!

I don't know what your relation with Europe is, but believe me there is a world of a difference between the American States and the European Countries. Lets just say that Americans have a tendency of uniting against any external foe (an action I usually dislike, based on the way this is done, but the heart is certainly in the right place). We, Europe Countries, are each other foes for better or worst, and the fact that every one of us is taught how amazing we were in 'the times of our kings' and history is measured in thousands of years around these parts, the 'cultural bias' we tend to hold very dear for some reason makes us very unlikely to see our fellow Europeans as the same as us. It's sad, really.

And again I get as off-topic as I can, just like on almost every other thread I comment on! I'll get myself banned eventually :p
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August 16, 2010, 10:58:05 PM
 #150

I don't know what your relation with Europe is, but believe me there is a world of a difference between the American States and the European Countries.
I was exaggerating a bit for effect. There is of course no comparing several millennium of competitive rivalry with a couple hundred years of mostly "coopetition".

But I have been to Europe several times, and had the good fortune to work with and live among Europeans both there and in the states. (IRL and internet) Your point is well taken because the British refuse to even call themselves "European" unless they are talking to an American. To them, you people are the Europeans. They use phrases like, "I'm going over to the continent." If you are an American that seems hilarious.

Just for reference, I've never been to Portugal or Spain, but I have family members who have travelled there many times and loved it. I've been to Italy, Switzerland, Austria, Germany, France, and England. And had the great fortune to work or live with people from Italy, Romania, Hungaria, Russia, France, England, Belgium, and I'm probably forgotten some.

I suspect you are an exception, but there is a tendency among European travelers to come here, visit New York and then they fly over and visit LA. (The most european thinking parts of the country.) Upon return the report back to their friends, "I've been to the states!" Which is true, but misses some of the character of the continent. Hell they didn't even meet anyone with a gun rack in the back of their truck! How can they say they've been here! :-)

It is like Americans going to London and Edinburgh and saying, "I've been to europe. And guess what! Those people are so much like us! Most almost speak our language!"
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August 17, 2010, 11:28:49 AM
 #151

Hi,

BitCoin seems a very great project, we started to think the same idea (no center money system tool) in the LiquidBank project in France.

However we think limitating money is an error, money shood increase in regular basis of 5%/year given to each participant in the collectivity, accordingly with long term economic growth.

Could you take some time to read in French the "Universal Dividend" Money System ? http://fr.wikipedia.org/wiki/Dividende_Universel

Or by Google Translation : http://translate.google.com/translate?hl=fr&sl=fr&tl=en&u=http%3A%2F%2Ffr.wikipedia.org%2Fwiki%2FDividende_Universel

Please let us know about the monetary system you propose to use.

I suppose BitCoin is a tool able to be used for separates money systems ?

Thanks for the reading material.  I'll look into it.


As to the bolded:  That is the big fallacy promulgated by the Monetarists which is nonsensical.  There is no logical reason why the money supply must increase at the same rate as economic output.  What is needed is greater resolution (divisibility) of the monetary unit.  With a more diverse market for goods of ever increasing quality and decreasing costs of production (to their commodity value lower bound, obviously) there is a need to refine the comparison of one item to the other in terms of the medium of exchange.  It is the arbitrage between the perceived value of the two items that the market is seeking to reduce to zero.  Any monetary unit with an arbitrary limit on division (say the dollar at $0.01) will fail as a means of comparison without revaluation.  This is ultimately why the Monetarists adopted the slow but steady inflation scheme as their preferred method.

Bitcoin has built into its structure nearly limitless divisibility.  Satoshi currently has 8 decimal places programmed in, but that number can be changed at will due to market pressures and the open-source nature of the software, if we're ever so fortunate to get to that point.

Ta,
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August 17, 2010, 12:19:36 PM
 #152

Quote from: agaumoney
This is a lie.

Originally the premise was that new people (who did not have anything) would be given money and this would make it more fair.

Not at all. It's about how creating money : for all, or for some ? In a time-space (global) perspective only dm/m = Constant => m = Exp (ct) is a solution.

Quote from: agaumoney
So which is true?

Either value is taken from people with existing holdings (in order to add value to those who previously had nothing) or nothing is given to people who have nothing.

It is one or the other.  It is impossible to be both.

This is the classical asymetric mistake.

Who bring value ? The old on a money system, or the newcomers in the money system ?

Who decide ? You ?

From the newcomer point of view the old ones own possibly no added value, from the old ones newcomers possibly own no added value, from a Universal Dividend point of view no Human Being has power to decide for the others what is value and is not (but human being itself, as only universal value of any economic system).

Money is NOT value. Joining a money system has nothing to do with value, but with a common tool for EXCHANGE value, in a fair way between members.
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August 17, 2010, 12:35:00 PM
 #153

Quote from: agaumoney
For example for Gold backed money, experiment shows it has been rejected long time ago yet, like Newton Theory was rejected after Einstein revolution.

That is probably more true than you expected.

Newton's theory is not rejected.  Newtonian physics explains perfectly well what can be observed above an atomic scale, such as things we interact with every day as well as planetary orbits.

Einstein added another level of depth or precision to physics, taking us down to atomic units and predicted what was not possible to observe with the human eye.  It did not invalidate Newton.

I'm sorry it's not what you beleive. Relativity Theory is about structure of Time Space at very LARGE scale, and not at all about atomics, which revolution (who invalidated Newton too) is Quantic Physics.

Both invalidate Newton Theory. But Newton Theory is still acceptable theory between certain frontiers as a correct predictive theory, but fail in many aspects like Mercure Perihely problem as one of the most know historically (but also about what is space, time, don't predict Big Bang, Black Holes, Time change with speed, constant light speed for all observers etc. etc...).
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August 17, 2010, 05:17:58 PM
 #154

Quote from: agaumoney
This is a lie.

Originally the premise was that new people (who did not have anything) would be given money and this would make it more fair.

Not at all. It's about how creating money : for all, or for some ? In a time-space (global) perspective only dm/m = Constant => m = Exp (ct) is a solution.

Quote from: agaumoney
So which is true?

Either value is taken from people with existing holdings (in order to add value to those who previously had nothing) or nothing is given to people who have nothing.

It is one or the other.  It is impossible to be both.

This is the classical asymetric mistake.

Who bring value ? The old on a money system, or the newcomers in the money system ?

Who decide ? You ?

From the newcomer point of view the old ones own possibly no added value, from the old ones newcomers possibly own no added value, from a Universal Dividend point of view no Human Being has power to decide for the others what is value and is not (but human being itself, as only universal value of any economic system).

Money is NOT value. Joining a money system has nothing to do with value, but with a common tool for EXCHANGE value, in a fair way between members.

Value is not a thing, it is a personal judgment call.  Everyone will value everything differently and the most anyone could hope to say is that  A > B > C where A, B, and C are different things.  But for another individual C > B > A and both are perfectly valid value judgements.  There is no unit of "value". 

So, money is just another thing which people value differently relative to other goods and services.  If people didn't have different value judgements then why would they even bother to exchange anything as the exchange would not represent an increase in their own perception of value?

A price is just the average rate at which people tend to exchange two goods.  People tend to desire an intermediate good that has universal demand to facilitate their trade.  Thus money is nothing other than the good which is easiest to barter with and prices are just a side effect of average exchange rates.









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August 17, 2010, 05:26:16 PM
 #155

Money is NOT value. Joining a money system has nothing to do with value, but with a common tool for EXCHANGE value, in a fair way between members.

So when you give me money you give me nothing of value?   Why would I trade something of value for nothing of value? 

If money had no value then giving someone money is pointless. 

If you argue that money is just a temporary "credit" and its value is realized when it is "spent".  Then giving someone money is equal to giving them what ever they decide to buy with that money.

Thus your system money is used to facilitate exchange of value from those who hold the money to those who receive the new money from nothing.


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August 17, 2010, 05:36:59 PM
 #156

Galuel,

I am curious about your views on the relationship between Universal Dividend and Local Exchange Trading System "credits" as a currency. My specific question is, in your view would a UD need to be paid to make the system "fair" to new/future participants?

In a LETS system, there is no initial currency and no inflating currency. There is simply an accounting of services provided. So for example, say 1,000 people decided to start a LETS system. Each person's initial share of credits is ZERO.

Now suppose they say that a 1 haircut = 1 days ration of food = 1 LETS credit. So if a farmer gives a barber food in exchange for a haircut they are both even. Their balances do not change. But say the farmer needs to go to the dentist today, so he doesn't have time for a haircut. However the barber still needs to eat. So the farmer gives him food anyway. The barber's account balance is now -1 credit, he owes his service to the community. And the farmer's balance is now +1 credit. The community owes him whatever equivalent service he might want.

In a LETS system, there is never any inflation or deflation. There is also never a shortage of actual currency because there isn't any. It simply accounts for how much each person has cooperated with the community. In effect the system is "delayed gratification neutral" there is no advantages to saving in LETS credits for the future. There is no advantage in spending all you have now. One day's food today, will never buy you 2 haircuts tomorrow, nor will it buy you 1/2 a haircut tomorrow. (Ignoring for the moment any attempt to keep 1 LETS credit equal to 1 unit of a national currency. Because, I don't know why this is useful for the LETS definition.)

A LETS system characterizes each participant's cooperation using two publicly displayed values. 1) your current balance. 2) your total trading volume. The second characterizes your commitment to the community over the long term. The first characterizes your recent behavior.

So say a long term member of the community, (measured by his large trading volume) gets sick, it maybe necessary for his balance to go negative for an extended period of time. However, the community can decide to continue rendering him services because they feel comfortable that upon his recovery, he will again provide his valued services to the community.

However, say a new person joins the community and he decides to take a lazy approach to life. If he produces little for the community (measured by a low trading volume). If he decides to slack off and his balance turns negative, others are perfectly justified in saying I will not render my services to you. I am not confident you will provide anything in return to the community.

-------------

In such a system, I can see no possible way for someone to justify a universal dividend. However, I expect they some would justify it anyway. I'm curious as to what those reasons might be.
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August 17, 2010, 06:10:35 PM
 #157

@Red

Here are different kinds of LETS. There are Credit Limited LETS, with for instance 1000 for each, -500 / +500 limits of money for each individuals, and of course UD.

BitCoin as (his first money system that should take another name than the P2P tool itself) is a limited Credit LET like.

But SCEC is much more near a DU since it give a fixed amount of money to each participant (so much more than 5% / year, but with decrease in time).

In fact to reach 5% / year, with a fixed amount of money f, it needs :

f / (f * y) = 5% => Y = 1 / 5% = 20 years to reach it... See graph

Of course LETS users understand quickly what is a DU, but they stated often from just a few years with few participants, the initial fixed amount of money is enough without visible problems, since 5% / year, only double the monetary mass for a 15 years period (1,05 ^15 = 2).

It depends generally of the SEL system, number of members, period of existence etc... Each money system has his own history of experience.
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August 17, 2010, 06:48:07 PM
 #158

I have read about LETS before.   Unless the system is tied to a commodity (like a national currency or gold, silver, bitcoin) they are nothing less than a centralized accounting system for individual IOUs.   They require some kind of "price fixing among services" in order to reduce the "number of unique units of account".   For example a hair cut by Galuel may not be worth the same as a hair cut by Red.

If you accept that the credits are denominated in some commodity, then what LETS becomes is a socialized interest-free 0% reserve lending system.  Everyone knows that the credit cannot be redeemed now and they have no promise of when it may be redeemed in the future!

If you instead argue that credits are denominated in the services of the individual issuing them, then you either have price fixing or 1 unique currency per person.  

In such a system every individual (if smart) would max out their credit in exchange for real goods/services and then revert back to a commodity based money for all remaining trades in an effective play on the "something for nothing" scheme.  This is similar to spending a universal dividend but not accepting payments in universal dividend currency.   All credit is unsecured with no means of compelling repayment outside of social shunning or taxes as the debt is not to an individual but to the "community".   Because it is interest free it can be carried "forever".  

The interest free nature of the credits violates economic laws regarding the time-value of goods/services.  

It is interesting to see that such systems have been setup, but most appear to struggle or fail and none thrive.

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August 17, 2010, 07:10:41 PM
 #159

@Red

Here are different kinds of LETS. There are Credit Limited LETS, with for instance 1000 for each, -500 / +500 limits of money for each individuals, and of course UD.

BitCoin as (his first money system that should take another name than the P2P tool itself) is a limited Credit LET like.

But SCEC is much more near a DU since it give a fixed amount of money to each participant (so much more than 5% / year, but with decrease in time).

In fact to reach 5% / year, with a fixed amount of money f, it needs :

f / (f * y) = 5% => Y = 1 / 5% = 20 years to reach it... See graph

Of course LETS users understand quickly what is a DU, but they stated often from just a few years with few participants, the initial fixed amount of money is enough without visible problems, since 5% / year, only double the monetary mass for a 15 years period (1,05 ^15 = 2).

It depends generally of the SEL system, number of members, period of existence etc... Each money system has his own history of experience.

I am confused about your post, but it is clearly my ignorance not a defect of your communication skills. Most of my confusion is for abbreviations I do not understand.

I agree that Bitcoin is "like" the "limited credit LET" you describe.
I don't know of SCEC and the site appears to be in Italian. I'm not sure what "much more near a DU" means. Is DU = UD?
I'm not sure I understand the point of the graph. Given the scale and resolution, I can not derive the functions behind them.
Do they say, create a linear amount of currency until you reach a total amount of X in year 13. (parabolic part of the rate graph)
Then create a parabolic amount of currency 5%? (linear part of the rate graph)
I don't know SEL. Is that an abbreviation for "selection system"?

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However, everything you have written here is addressing a case that I did not propose. I know that the example I gave is not bitcoin-like at all. So I'm unconcerned with how this relates to the bitcoin project.

The example LETS I described uses a zero initial starting balance. And it allows each participate to review the behavior of other participants and individually decide if they want to advance them credit in each particular transactional situation.

For example if Fred had a negative balance and he asked me for Food because he was starving, I might give him food on credit (increasing his negative balance). However if Fred asked me for beer in exactly the situation, I might decline him the credit. Each transaction is an individual judgement. Not a community mandated one.

Modifying your statement, I'll call it:

It is a Negotiated Credit LETS, with for instance 0 for each, -inf / +inf system limits. However, it is not community mandated to trade in EVERY negative balance circumstance. Transactions where both participants balance remains positive might be mandated. (No arbitrary discrimination in trade) But transactions that increase an individual deficit must be negotiated between the participating parties.

It is for this particular case I'm interested in understanding the benefits/justifications for UD. I do not see any.
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August 17, 2010, 07:40:42 PM
 #160

This is a unique post in which I agree with most everything you've written! :-)

I have read about LETS before.   Unless the system is tied to a commodity (like a national currency or gold, silver, bitcoin) they are nothing less than a centralized accounting system for individual IOUs.   They require some kind of "price fixing among services" in order to reduce the "number of unique units of account".   For example a hair cut by Galuel may not be worth the same as a hair cut by Red.

If you accept that the credits are denominated in some commodity, then what LETS becomes is a socialized interest-free 0% reserve lending system.  Everyone knows that the credit cannot be redeemed now and they have no promise of when it may be redeemed in the future!

Agreed. It is an accounting system for services rendered to a community over time. There has to be some sort of standardized unit to facilitate trade. Also to allow people to compare prices to the services quality of differing vendors.

I can't see a way to bootstrap a system without initially declaring at least some standard prices as universal benchmarks. Kind of like declaring a meter as the distance between two marks on a rod in Paris. But an amateur haircut might be worth (.85) of a professional haircut (1). And a stylist might charge (1.15) times a professional haircut. Everyone could compare the prices and determine if the difference in service warranted the difference in price.

If you instead argue that credits are denominated in the services of the individual issuing them, then you either have price fixing or 1 unique currency per person.  
I won't argue this. I don't know of any LETS system that argues such pricing would be helpful.

In such a system every individual (if smart) would max out their credit in exchange for real goods/services and then revert back to a commodity based money for all remaining trades in an effective play on the "something for nothing" scheme.  This is similar to spending a universal dividend but not accepting payments in universal dividend currency.   All credit is unsecured with no means of compelling repayment outside of social shunning or taxes as the debt is not to an individual but to the "community".   Because it is interest free it can be carried "forever".  
What you argue is clearly a potential behavior, and arguably the most likely behavior. But It is not necessarily the "smartest" behavior, unless you started from the not unrealistic point of view that the entire venture was doomed to failure at some point.

The interest free nature of the credits violates economic laws regarding the time-value of goods/services.  
I don't think it actually does. Since there is no commodity backing anything, and there is an ability to generate credits/debits on demand. There is nothing which need change in value based upon supply, demand, or expiration. If everyone endeavored to keep a zero balance in credits, then all potential time-value relationships would still be respected among different commodities. In my example, the LETS credits are decidedly not a commodity. That is the spirit in which the terms inventor meant them to be.

It is interesting to see that such systems have been setup, but most appear to struggle or fail and none thrive.

Yes, that is quite interesting.

However, it makes it a useful tool in which to formalize the rules in which one system succeeds and a different one fails.
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