Transcript the magic triangle and its implications for barter

THE MAGIC TRIANGLE AND ITS IMPLICATIONS FOR
BARTER INDUSTRY
Szczęsny Zygmunt Górski [email protected]
The IRTA EU Conference Gliwice, Poland, 12-13 April 2008
THE MAGIC TRIANGLE AND ITS IMPLICATIONS FOR
BARTER INDUSTRY
Contents
THE MAGIC TRIANGLE OF MONEY
THE FUNCTIONS OF MONEY
CAN THE SAME TOOL SERVE AS A
MEASURING AND ACCUMULATING DEVICE?
TRANSACTIONAL,
RANKING OF THE FUNCTIONS OF TRANSACTIONAL MEANS IN
THE ECONOMY
SOME IMPLICATIONS FOR THE BARTER INDUSTRY
BIBLIOGRAPHY
We can conceive the best monetary
system possible
but
if we based it essentially on rivalry
rather than on co-operation
it would be like building a house
on sand
THE MAGIC TRIANGLE OF MONEY
THE FUNCTIONS OF MONEY
Money as a transactional instrument
Money as an universal yardstick for measuring value
Money as an accumulator of value
Money as a transactional instrument
Money is a catalyst for transactions because it reduces their costs
The acquisition of transactional means must be accompanied by
their expenditure
A fluid satisfaction of needs occurs when there is a balance
between total supply and total demand
Fluid supply needs the presence of fluid demand
Money as a transactional instrument continued
A fluid influx of transactional means ensures a proper connection
between the supply and the demand of commodities
A fluid influx of transactional means is the fundamental condition
for economic development based on the division of labour
The Polish term for a prosperous economy, koniunktura, is derived
from the Latin coniunctio = connection
To ensure a fluid influx of transactional means its emission must
cope with transactional needs
Money as a transactional instrument continued
The rate of the influx of transactional means is
optimal if:
It comes into existence at the start of the transactional cycle:
commodity ► transactional means
It is recycled as quickly as possible
As a result, it raises the frequency of completed transactional
cycles: commodity ► transactional means ► commodity
The accumulation of transactional means by withholding them
from circulation prevents other possible transactions
Money as a transactional instrument continued
The rate of the influx of transactional means is
optimal if:
A moderate inflation of about 5% slightly exceeds the liquidity
incentive. It can therefore accelerate the circulation of
transactional means.
Another tool for accelerating the circulation of transactional means
can be a demurrage on keeping a credit as well as debit balance.
The demurrage on credit balance encourages one to quickly spend
transactional means by buying commodities while the demurrage
on debit balance encourages one to quickly buy them by selling
commodities
Money as a transactional instrument continued
The rate of the influx of transactional means is
optimal if:
A moderate inflation encourages one to spend transactional means
rather than buying them by selling commodities
Actual giro money is fit for short-term transactions
Money as a transactional instrument continued
The rate of the influx of transactional means is
optimal if:
The barter transactional units (with demurrage accelerator on
credit and debit balance) are a preferable transactional tool to
actual money, with its inflational acceleration.
The interest-free bartering of transactional units greatly reduces
transactional costs in comparison with bank credit money charged
with interest.
Bibliography recommended for this section
Fritz Anders Das Geld im Kerislauf der Volkswirtschaft Revolution Nr 7 April
2002INWO International Sektion Deutschland INWO e.v. Max Bock Str.55 60320
Frankfurt /M
Dieter Suhr The Neutral Money Network www.geldreform.de lub System
pieniądza neutralnego www.barter.org.pl/index.php
Money as a universal yardstick for measuring value
Money should enable one to express and to compare the value of
all commodities
It can function as a yardstick only if the unit of measure does not
change over time
Thus actual money, treated as a commodity, is not suitable for
long-term transactions
Bibliography recommended for this section
Th. H.Jr. Greco Money and Debt, geldreform.de ; Pieniądz i dług
www.barter.org.pl/index.php
Money as a universal accumulator of value
Money should be suitable for comfortable safekeeping
Actual money, considered as a commodity, is not suitable for the
storage of value in long-term transactions, because of the
possibility of its speculative distortions
Bibliography recommended for this section
Silvio Gesell A Story of Robinson Crusoe
www.ccdev.lets.net/crusoe
Historia Robinsona Crusoe
www.barter.org.pl/index.php
F.E. Ricardo Die Giralkartoffeln www.geldreform.de Opowieść o
pyrach żyrowych www.barter.org.pl/index.php
CAN THE SAME TOOL ACT AS A TRANSACTIONAL,
MEASURING AND ACCUMULATING DEVICE?
Transactional function versus market value measuring
function
Transactional function versus accumulation of value
function
Universal yardstick for measuring value function versus
universal accumulator of value function
Transactional function versus market value measuring
function
Measuring market value has no meaning in the absence of
exchange
Without measuring value, market exchange cannot take place
The stability of the measuring unit of value is all the more
important the longer the time interval between the exchange
phases: commodity ► transactional means ► commodity
This is especially important in the case of long-term savings ex.
disability allowances and old-age pensions.
Transactional function versus accumulation of value
function continued
In the case of the rapid circulation of transactional means, the
stability of the unit of value is not that important
On the other hand, the more stable the unit of value the slower
the circulation rate of transactional means
However, treating the transactional means as a commodity causes
instability of the measuring unit of value. This is especially the case
with massive stock exchange speculation
This applies to the uncertainty of any economic calculations
Bibliography recommended for this section
Th. H.Jr. Greco Money and Debt, geldreform.de ; Pieniądz i dług
www.barter.org.pl/index.php
Transactional function versus accumulation of value
function
In the case of short-term transactions, the function of value
accumulation is not that important
The function of value accumulation is all the more important the
longer the time interval between exchange phases: commodity ►
transactional means ► commodity
The better the function of transactional means as an accumulator
of value (such as gold and silver coins), the worse is its function as
a transactional means
The tendency to withdraw it from circulation increases: Kopernik –
Gresham principle
Especially when economic expectations are poor: economic and
political crisis, war
Universal yardstick for measuring value function
versus universal accumulator of value function
Both functions essentially support one another
Bibliography recommended for this section
Th. H.Jr. Greco Money and Debt, geldreform.de ; Pieniądz i dług
www.barter.org.pl/index.php
RANKING OF THE FUNCTIONS OF TRANSACTIONAL
MEANS IN THE ECONOMY
The transactional function – the most important, as it regulates the division of
labour
The function of short-term yardstick for measuring value to enable short-term
transactions
The function of accumulating value for short-term transactions
These three functions are served for local purposes by the cashless barter
transactional units better than by actual money
Barter cashless accounting is not suitable for long-term transactions, the longterm accumulation of value, or as a long-term universal yardstick for measuring
value. Nor is the commonly-used money. These tasks would be better served by
other tools
Relevant propositions have been given for instance by Dieter Suhr, Silvio Gesell
and T. H. Jr. Greco, F. E. Ricardo, to mention a few from a long list
SOME IMPLICATIONS FOR BARTER INDUSTRY
The transactional, accumulation and measuring value functions can be served
satisfactorily by one instrument only in the case of short-term transactions
These can be served by ordinary money or bank giro or by cashless barter
clearing units.
Ordinary money and bank credited giro payments are sub-optimal in comparison
with barter credit giro
The demurrage on both credit and debit balance accelerates circulation better
than an inflationary accelerator
In the case of long-term transactions, the barter credit giro is unsuitable for
transactions, as a yardstick for measuring value, or as a tool for accumulating
value
One monetary instrument cannot serve three functions of money for long-term
transactions at the same time.
The current international money system, based on its
emission with interest, builds rivalry and egocentricity, on
both a global and local level.
It benefits mainly the wealthy, who possess superfluous
money. That money is made available with interest to others
in dire need of it for their existential transactions. Ultimately it
brings about the present global state of economical, political
and social crisis, wars and ecological devastation. It is the
merciless robbery of our planet's resources freely made
available to all of us.
Perhaps we cannot change this enormous powerful structure
on a global level. However, we can prove the feasibility of the
barter industry on a larger scale.
After all, we can use our rationality much better than for
irrational ventures.