On a cool bright day in September 2008 the banks began to explode. In a chain reaction that spread from Northern Rock in the UK to Lehmann Brothers in the...
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Civilisational Wealth
Wealth is the application of intelligence to matter. The more intelligence we can add to base matter the greater its value. The more widely...
Thinking Money
What’s wrong with money? Just because something is working it doesn’t mean you can’t fix it. The following is a record of my current thoughts...
A Physics based Economics
The search for a physics based economic model, a thought experiment. We start by defining wealth as intelligence applied to base matter. There is no...
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Physical Money
Steve KelseyMoney Design for the 21st century
Introduction
The current fiat[i] monetary system is disconnected from wealth creation. The financialization of an economy reduces wealth creation by diverting investment from wealth creation functions to financial operations, where the goal of increasing money via the trade of financial assets for profit, subsumes the goal of creating wealth[ii] [iii] [iv]. These distortions interrupt wealth creation limiting the rate of a civilizations’ development and limiting the probability space[v] of a civilizations’ long-term survival. To maximize wealth creation, we need an alternative system.
Transactional Logic
An Exploration of Imaginary Transactions
Steve Kelsey. London.. 19th January 2022
Introduction
The transactional logic that determines the efficiency of wealth creation and the growth of our civilisation emerged at an early point in human history and has evolved into the complex system we see today. This model has evolved over time, becoming more complex and increasingly abstract as it has been applied to global scale activity, and now runs our world. There is nothing natural or inevitable about the transactional logic that controls wealth creation, it is the product of human thought just like any other invention. It has been very successful, but there is scant evidence throughout its long history its logical foundations have ever been put to the test. That there is a need for experimentation in transactional logic is certain. The current transactional logic artificially limits the efficiency of wealth creation and therefore limits the survivability of our civilisation at a time when we are facing major challenges. In this thought experiment I explore the logic of transactional models and the alternatives that might challenge this singular paradigm.
Interesting times
Its Sunday afternoon just before lunch on a shiny winters day in London. That’s not a conventional time to let revolution loose on the world, but it’s 2020 and as we have all learnt this year the unthinkable is just a thought away. So its time for an opening salvo on some of our supposedly foundational beliefs.
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Why do we have interest?
Interest has been with us since the pyramids and probably even before that. Danegeld earned interest. The Lombards of Old London Town charged eye watering levels of interest that made that new-fangled Bank of England’s rate of 8% seem practically socialist, if they’d had socialism back then.
Insight economics
I have been working on this blog for a few months now, exploring new concepts for economics. On the journey I have had a few insights that, as time has gone by, have acquired greater power to explain how our economy really works and direct us towards better models. In this short blog I am going to summarise these key insights and how they interact.
1. A Physics based economics
There is a simple and powerful way to define wealth in physical term. Wealth is intelligence applied to base matter. It is measured by the energy used to embed intelligence in base matter. Viewed through this model we can see the fundamental role energy has in building our economy and civilisation.
The Cascade
We live in the cascade. It has given us everything, civilisation, wealth, knowledge, health and long lives. The cascade is all around us and yet we hardly notice it as it makes our lives better.
So what is the cascade? It is the flow of intelligence in the world. It isn’t something we own, all species have intelligence to a greater or lesser extent, but in us it is particularly strong, the reason we survive and thrive.
We learnt to embed intelligence in base matter and the result was civilisation, technology, the ability to reach beyond our world. We learnt how to pass intelligence to the generations to come and the result was accelerating growth. The cascade taught us how to make matter that stores thought, plays music, captures sunshine and shines it into living rooms on the far side of the world. And now we are learning how to make matter that thinks, matter that can join us in the cascade.
Community Coin – a thought experiment
In this thought experiment let’s speculate on what a civilisational wealth based economy might look like.
Civilisational Wealth is intelligence applied to base matter. Physics doesn’t have a definition of intelligence yet, nor a means of measuring intelligence as a physical quantity, and so we need to use an analogue. Although we can’t measure intelligence as a physical property we can measure energy intelligently applied to base matter. A unit of Civilisational Wealth is X energy intelligently applied to Y matter and is measured in Joules per Kg.
Work is the process of embedding intelligence in base matter. Work produces Civilisational Wealth.
When Two Tribes go to War
Some years ago I met a Chaplain from the Chicago Police Department. The Chaplain’s job was just as tough as you might imagine. He worked in the 1980’s in the 4th District, the south side of Chicago, which is not a gentle part of town. He wore a uniform, and he carried a badge but no firearm. His job was to pick up the pieces when it all went wrong. It was his job to tell police families someone would not come home that night. It was his job comfort the families of murder victims. It was his job to hold the hand of the officers who were not going to make it. He was in London to share his experiences with a group of company directors
P2P Politics
Brexit was a triumph for a new form of politics. This mutant offspring of a love affair between Neo-feudalism and data science points towards a politics where representation is replaced by information and analysis. This bizarre child, bleating jingoism as it stomps all over the British economy, is an unfortunate advertisement for the new politics but there can be little doubt that it represents the future. And that could be a good thing, if we are smart.
Brexit was delivered by data science. Over 50 million Facebook profiles were filleted for data-points that could be mapped to political views allowing propaganda uniquely tailored towards exploiting individuals fears to blitz the accounts of voters on the final day of the Referendum. For data science and propaganda the Referendum result was a triumph. The problem with Brexit was the objective. I don’t mean leaving the E.U., I mean the use of social media and big data techniques to impose the private goals of a few onto the population by manipulating their anxieties. This is a perversion of what could and should happen when big data meets politics.
Chaos Monkeys – Part 2
The financial market is designed to fail.
Looked at as a network design our financial markets are optimised for efficiency. Optimising for efficiency in the financial markets is not optional, it is the inevitable result of competitive pressure. Markets that are fast to react capture the early opportunities and transmit their risks through the network, markets networks that are slow to respond lose out on the best trades and end up with all the risk.
Perversely, the efficiency of the financial market and its various sub-networks, which are designed to transmit risk efficiently across the network, are equally efficient at transmitting failure. We see this in operation on our news feeds as falling values roll across the world from exchange to exchange, New York to London to Tokyo responding as one.
Chaos Monkeys -Part 1
Why is our economy so unstable? Why do crises overpower our best systems built by our best minds? Or, if you reject the notion of intelligent control in our economic systems, why does a highly evolved system evolve towards chaos rather than stability?
To begin to understand how these instabilities arise let us look at the most recent.
The principle cause of the 2007/8 Global Financial Crisis was deception.
It started with the US Prime market where high-risk low value assets were bundled and re-bundled to obscure their origin and then marketed as low-risk high value assets. That was as crazy as it now sounds post 2007, but there was an underlying principle behind this method that makes a claim for respectability.