Stop Me Before I Vote Again

Is there a way to make the buffering more effective?

Well, it may seem kind of counter-intuitive but in an ideal world you would probably want to eliminate them altogether. The buffers are kind of a (small) necessary evil

The solution would be something like a completely digital currency based on a combined credit/debit card.

Roughly speaking, it would work something like this:

You would get paid say 5% on all positive balances, and pay 5% on all negative balances. Your positive balances would automatically be lent out to other people. Your negative balances are borrowed from other people. Your limit would be determined as a ratio to your income. The system could be intermediated by a government run banking system, where the interest rate is set so as to equate saving and borrowing, or increase borrowing beyond saving if you want to increase the money supply. In periods of extremely depressed demand where no one wants to borrow, the government could simply credit money to everybody's accounts with the stroke of a key.

The idea is to avoid having people save without lending, as that type of saving reduces demand in the economy. By having the money available to be lent out to someone else, rather than being stuffed under a mattress, you avoid the decline in aggregate demand. FDIC was a step towards establishing the type of system I sketched out above, and put an end to the old kind of banking crises.

This kind of system was proposed a long time ago, but the conversion would be difficult. For one thing, the effect on the black/grey markets could be devastating. People also like the anonymity of cash and might have some privacy issues with such a system.

A generous response, thanks.

Would demurrage help with the excess savings? Maybe combined with some kind of sweetener for allocating it to socially useful projects? And, if the question is apposite, could that be done in a way that doesn't trigger privacy issues?

Your last paragraph, by the way, opens a can of worms that I find fascinating. Ideally, I'd prefer an economy that was entirely grey and black, but perhaps that's a topic for another day.

"Would demurrage help with the excess savings? "

I guess that would mean not only reducing the rate to 0% (giving no incentive to save, and maximum incentive to borrow), but actually making the rate negative (penalizing people for saving and paying people to borrow, say lending them 100 and only asking for 95 back in a years time).

I think that might work, but people would probably be pissed. It would probably be pretty difficult to convince people to let the government destroy their hard earned savings.

I think that the best way for it to be allocated into beneficial projects is for the government to borrow it on its own account and spend it. The government would also have its own account in the system and act as borrower of last resort, in the classic Keynesian fashion.

As far as the black market issue goes, I like to think that going to a digital currency could have the positive effect of forcing some sanity into the drug, gambling and prostitution laws, while at the same time curbing tax evasion, fraud and corruption. I'm sure that people would still find ways around it though.

Yeah, I would bet they'd be pissed off, come to think. I mentioned it because of a comment you made regarding pensions plan, that it would be better to make social security bigger and pay out more, rather than try to whack-a-mole with the misfeasance and malfeasance plaguing the pension funds. Savings wouldn't be all that important if there were a guaranteed backstop, like a social security payment sufficient to live on. That would be made much easier by a digital currency. Although I can just imagine the amount of stress it would cause when glitches crept in.

under gosplan II

you retain cash but run a rate of inflation
the digital system has that nice advantage it's indexed

household savings is an anachronism...already
---

returning to reality
the buffers are crucial and in and off themselves socially costless
part off the cloud of digits suspended over the exchange system suspended over
the production system
----
if we had a central clearing house for all this and a set of perfectly kept books

uncle full employment
could keep elements of the underlying production system
cooking along indirectly by playing tthe balance sheets like a vast credit/cash
pipe organ
since there is not visible meta structure
meta agency over the hi fi digital cloud
we get weather fair and foul spontaneously generated

i know fb will move on to internal credit/money
versus outside uncle money

the inside money is the source of various credit cyclones typhoons droughts
floods spouts and other such
greatly more then "frictional" forcings

all of which task and twist
the morphings of the production system below

"credit and insurance are a social unity in contradiction with itself "
some one said that somewhere

fdic is indeed the baby shape
of all things progressive

one has now a payment grid
forget households for a moment
and just consider firms or private corporations or what ever
all business outfits owing each other for
various items
right now this system of interlocking payables and receivables is limited largely
by itself
in the form of bank lines of credit

consider a payment system that is insured
universally like fdic insures deposits

uncle as the pope of credit

flow is everything here
the system can never rest
the circle of value
drives the circle of production

flows as heros and villains
but stocks get to play
queen maker
and
dunce maker

"in a closed system like the global economy"

the only economy IS the global economy

in a private profiteering age
of multi national
every where they wanna be
limited liability
exploitation devices

a planet
where its not just all about
trans border raiding and looting

but about building and maintaining
earth wide networks of
privately owned and operated
corporationally constituted
market hegemons

what of the bordered regions ??

they tell the struggle story

through limits to entrance and exit
that both contain and immpell
and expell these basic units
of the ongoing
global corporate metastases

consequence:
in the policy sphere its all about
locality
all about "national liberation "

usually at peak intensity
inside problematic
teetering on the edge of evolving
from proto hot spot zones
to main frame hot spot zones

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

fb is ful of hope
because he has revolutionary insight

that ought to be
the holy grail here

un supported
patch work " minimum programs "
bring only dispare

the delusions
of reform must fall away first
before a revolutionary insight
and
the restoration of limitless possibility

perhaps that is what oxy and flug nutz
and their bosky ilk might gain

if only
they tried thinking about these
fairly simple paradigms

a break thru in conceptualization
a reborn delight in the mundane
a revisioning full of possibility
not sardonic doldrums

pink acedia is
a cardinal sin among cardinal sins