Food for More Thought

While working on this model I constantly come up with new ideas. Creating incentives for local/conscious consumption was one of them. That one is a clean extension of the model. Some however could change what emerges quite substantially and trying to add everything would only lead to confusion. This section aims to avoid that. Everything written down here should be seen as food for thought. Things to consider. Ways to expand our perspective, which is always a good thing when working on something for a long time.

Everyone their own economic bubble

Have you ever been to countries where the exchange rate gives you the feeling you’re spending tons of money? Take Indonesia for example where (today) you get 13305.99 Indonesian Rupiah in exchange for one US Dollar and then pay 25000 Rupiah for a juice. It does something to our thinking. Although those 25000 Rupiah are only $1.88, it feels like you’re spending more. And it will probably lead to spending less. It does so for me anyway. I’d be happy to hear what it does to other people.

Say this assumption, that these seemingly higher prices, in the local currency, leading to less spending is correct. What if we could use that trick to our advantage?

In the CMee model you could. You could create your own economic bubble by determining your own basic income, demurrage fee (with a minimum above 0, say 0.1%) and savings limit.

No matter which parameters you choose, there is always a point where your basic income would match the demurrage fee you need to pay. This can be easily calculated. Say you chose the following:

  • Demurrage fee 0.2%
  • Basic income 15 000 C$
  • Savings limit 200 000 C$

The equilibrium point, where the demurrage fee becomes equal to the basic income is 200 000 C$ + 15 000 C$ * 100 / 0.2 = 7 700 000 C$

If I would chose the parameters used throughout the website:

  • Demurrage fee 2%
  • Basic income 2 000 C$
  • Savings limit 25 000 C$

then my equilibrium point would be 25 000 C$ + 2 000 C$ * 100 / 2 = 125 000 C$

These equilibrium points can be used to calculate an exchange rate between your economic bubble and mine. If I were to sell a cup of coffee which would cost 3 C$ in my bubble then it would cost 7 700 000 / 125 000 * 3 = 184.8 C$ in your bubble. It’s like visiting a country like Indonesia where prices seem high but are not really. This might lead to less spending although I admit that is an assumption based on my personal experience.

Also something to consider is, should this assumption be correct, whether it will last.

Everyone determines the basic income, savings limit and demurrage fee … for others

Instead of fixing the basic income, savings limit and demurrage fee, we ask every participant 3 questions:

  • How much basic income do you think others would give?
  • What savings limit do you think others would impose on you?
  • What demurrage fee do you think others would impose on you? It has to be larger than 0.

It is important to pose the questions this way because it changes our thinking.

Then the average of all the answers is taken for everyone. This question can be asked again say every year and adjust. Or we could add another question:

  • When would you like to re evaluate your answers?

This would lead to some slight instability  in the parameters but as Nassim Nicholas Taleb describes in his book Antifragile, this could actually be a good thing. It would also turn over control of the parameters to its users and not to a central authority, which I believe is a good thing.

From a basic income to a licence to create money

What if we don’t create money for a basic income but give everyone a license to create money themselves?

What would happen if we give an unlimited license? ‘Common sense’ might give us the idea this would be a disaster but is that so? More money created would lead to more money destroyed through the demurrage fee which might balance out the effect. Again I refer to Nassim Nicholas Taleb’s book Antifragile for this. You would also only create the money you need because you don’t need savings with an unlimited license to create money. How much money would you create? On average per month? What would you do with it?

What if we give a limited license? How would that work? Could you accumulate ‘uncreated money’ from previous months? Or would it be lost? Or would that uncreated money reserve also be subject to a demurrage fee of its own? How would these options affect your behaviour? What would you do with the created money?