Money as Rent - a grassroots currency solution

[wizardwatson]

Greetings internets,

Well I said I would come back and post something when I had a complete plan for a monetary system and I've finally finished all the core stuff. I've written the basic idea down, a lot of the details still need to be elaborated.

The working paper is here:

http://docs.google.com/Doc?id=d9wmkc2_38fbk2hff5

I want to stress working paper because I am no writer by any stretch. Also, it isn't really short so for those who like sound bytes and short intros here's the gist:

Basically I'm proposing a currency system that is backed by the Land. By "Land" I am referring to the "economic rent" producing Land in the Georgist sense. The "rental dividend" rate functions as a base interest rate. Owners of Land mortgage property to put currency into circulation. Holders of currency earn the rental dividend at the going rate for as long as they hold it. All mortgages pay the same rate. All currency holders earn the same corresponding rate. It is a sound money system but it is not gold-based.

I believe this system or one very similar could solve the business cycle problem if it was in widespread use.

Any thoughts?

[wizardwatson]

Quote of Robert H. Hemphill, former credit manager, Federal Reserve Bank of Atlanta.



This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash, or credit. If the banks create ample synthetic money, we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defect remedied very soon.

[wizardwatson]

Once or twice a year someone who ought to know what he is talking about comes out with a statement of the number of pupils who are currently studying the economics of Henry George. It will not be long before some of these neophytes will be holding down chairs in Congresses, legislatures, and city councils. Others will be teachers, writers, editors, lawyers. And all of them will be voters. What may they not accomplish?

I am reminded of a letter from a man whom I regard as one of the greatest living Georgists. He is a ranking economist and sociologist, and I am sure that you have heard of his educational and political activities. Every public library of any size contains at least a couple of his books. In his letter he quoted an acquaintance - not an economist and not a Georgist - who had recently remarked to him: "Sure! I've read Henry George. I think he's fine. His theories are as sound and logical as they can be. But I can't deny that his disciples - Georgists, is that what you call them? - do get me down a little. To be honest with you, I think they're all nuts!"
...
He speaks very highly of Henry George and of his principles, yet he thinks that others who accept these principles are nuts. Isn't there a contradiction here?
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How are we to explain this man's position? Are we to conclude that George's theories have a different meaning to him than they have to us? I cannot see how. For Henry George is almost unique, in that there just are no variant interpretations of what he wrote, or so it seems to me. If he is known at all, he is understood.
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No, it is my opinion that this chap was speaking of the type of single taxer who somehow fails to see that any reform will have to be built against the background of our economy as it actually is today. He was restating a fact which we have all heard again and again, but which we really cannot hear too often: that the social scientist who is not a realist is little more than a dreamer.

Are Georgists Nuts? - Marshall Crane (http://www.cooperativeindividualism.org/crane-marshall_on-georgists.html)

[wizardwatson]

Some Henry George quotes from famous people.


"IT WAS A LAY ENTHUSIASM FOR HENRY GEORGE which led me to economics." - Frederic Von Hayek


"There's a sense in which all taxes are antagonistic to free enterprise -- and yet we need taxes. ...So the question is, which are the least bad taxes? In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago."-Milton Friedman


Henry George was as guideless as a child, and as earnest as a martyr.

Have you ever read Henry George’s “Progress and Poverty”? If not I will send it to you. It ought to be read by every thinking man & woman. I have not quite finished it but will by the time you let me know if you have read it or not. You will perhaps find it rather dry reading at first, but I think you will get interested in it, and as I have done become a convert to his theory. - William Jennings Bryan


The earth belongs to the people. I believe in the gospel of the Single Tax. - Mark Twain


I have already read Henry George's great book and really learnt a great deal from it. Yesterday evening I read with admiration -- the address about Moses. Men like Henry George are rare, unfortunately. One cannot imagine a more beautiful combination of intellectual keenness, artistic form, and fervent love of justice. Every line is written as if for our generation. The spreading of these works is a really deserving cause, for our generation especially has many and important things to learn from Henry George. -Albert Einstein


George's blend of radicalism and conservatism can puzzle one, until it is seen as a reconciliaton of the two. The system is internally consistent, but defies conventional stereotypes. - Mason Gaffney (not really famous but I love this quote)


In the preface to his Brave New World (p. viii), Huxley wrote:

If I were now to rewrite the book, I would offer a third alternative ... the possibility of sanity ... Economics would be decentralist and Henry Georgian. - Aldous Huxley


The earth is given as a common stock for men to labor and to live on. ... Wherever in any country there are idle lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. - Thomas Jefferson


Who reads shall find in Henry George's philosophy a rare beauty and power of inspiration, and a splendid faith in the essential nobility of human nature. - Helen Keller

Well, except the Jefferson one obviously.

[libertea]

This is hard to understand, especially the part about the instant coffee. I will check out some of the resources to try to get a better understanding.

[wizardwatson]

This is hard to understand, especially the part about the instant coffee. I will check out some of the resources to try to get a better understanding.

I am working on simplifying the explanation, it's basically a privately run network of contractually connected land banks. But land banks have been buried in history. I've been carrying on discussion here as well:

http://www.progress.org/cgi/webbbs/config.pl?

Thanks for checking it out.

[Arklatex]

What's wrong with gold? Why land over gold.

[Elwar]

I had an idea similar to this several years ago, instead of using gold as the backing for the currency we use land.

Here's the discussion that came from it at the Free State Project:
http://forum.freestateproject.org/index.php?topic=8175.0

Someone suggested that a Reit (real estate investment trust) without dividend payments to shareholders might be a close comparison.

[wizardwatson]

I had an idea similar to this several years ago, instead of using gold as the backing for the currency we use land.

Here's the discussion that came from it at the Free State Project:
http://forum.freestateproject.org/index.php?topic=8175.0

Someone suggested that a Reit (real estate investment trust) without dividend payments to shareholders might be a close comparison.

It is basically the same idea. It is weird that people keep coming up with this concept. Someone always points out the 'finite' amount of land without realizing that 'land value' which is what the currency would be based on, rises in sync with the productiveness of the society. I think it would be ideally flexible moreso than gold.

There is a big hurdle though, and that is how to make it decentralized and yet universal. People talk all the time about decentralized this and decentralized that, but most are talking out their asses.

Doing with money and property what is done currently with p2p software is an unsolved problem. I've looked. There are a lot of 'almost there' solutions, but there are some graph theory related problems related to transacting over multiple nodes in a decentralized environment.

It's kind of hard to define the problem in a few short sentences though.