Category: Economy 2.0

Civilisational Wealth, Currency, Democracy 2.0, Economy 2.0, Thinking Money

Physical Money

Steve Kelsey 19 mins read

Money 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. read more

Civilisational Wealth, Democracy 2.0, Economy 2.0, Money, Thinking Money

Transactional Logic

Steve Kelsey 39 mins read

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. read more

Civilisational Wealth, Economy 2.0, Thinking Money

Interesting times

Steve Kelsey 5 mins read

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. read more

Civilisational Wealth, Economy 2.0, Resistance, Seeing Forever

Insight economics

Steve Kelsey 5 mins read

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. read more

Civilisational Wealth, Currency, Economy 2.0, Money, Thinking Money

Community Coin – a thought experiment

Steve Kelsey 10 mins read

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. read more

Banks, Economics, Economy 2.0

Chaos Monkeys – Part 2

Steve Kelsey 10 mins read

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. read more

Banks, Economics, Economy 2.0

Chaos Monkeys -Part 1

Steve Kelsey 6 mins read

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. read more

Civilisational Wealth, Economics, Economy 2.0, Thinking Money

Economics for a civilised world – Part 4

Steve Kelsey 2 mins read

The Price Transformer

The price transformer determines how much of the imaginary wealth equates to the concrete value of real wealth. Price is established during a complex process which involves the following elements

  • The real wealth element, intelligence applied to base matter- conventionally defined as the manufacturing cost.
  • Plus the ‘market’ elements
  • The size of the market-  how many people need the product?
  • The perceived need- is the product an essential medicine or a toy?
  • The Supplier premium- is the supply rationed?
  • The Marketing premium- the price premium delivered by various psychological manipulations?
  • The Competitive premium, how dominant is the company manufacturing the real wealth element?
  • The state of the economy.
  • All of the market factors play a dominant part in setting the price to be paid for the wealth ‘on sale’.  They have no direct connection with the real wealth element of the price and some, e.g. the Marketing premium, are purely psychological. 

Today Brand and Marketing often play a controlling role in setting the price to be paid and can be responsible for the significant premiums that can be charged over the real wealth element.

In conventional economics, price is given great significance, defining the value of a product to the consumer. However, price is entirely subjective and breaks any objective link between real wealth and the market. We have seen this systematic mutation of reality before. read more

Civilisational Wealth, Economics, Economy 2.0, Money, Thinking Money

Economics for a civilised world – Part 3

Steve Kelsey 2 mins read

Money = Imaginary Wealth

Money is potential or imaginary wealth (iW). Money is variously described as a credit or an IOU for resources or the labour that converts resources into wealth. Note that the terms ‘resources’ and ‘labour’ are a convention and are colloquial synonyms for matter and energy intelligently directed by the labourer.  

Money is an invention and has no objective reality. it cannot be assigned a value until until it is converted to real wealth. This is counter to the convention where money is believed to denote value, but money has value only in relationship to real wealth. Money was reinvented many times all over the world. Money is a form of virtual wealth that can be traded for the real thing  at a future date. In this sense money is future wealth, but to be realised the virtual wealth has to be accepted by any provider of real wealth. The acceptability is governed by the wealth provider being able to repeat this process with a third party. Elaborate systems have evolved to ensure that virtual wealth maintains its value over time relative to real wealth.  read more

Civilisational Wealth, Economy 2.0, Money

Economics for a civilised world – Part 2

Steve Kelsey 2 mins read

Wealth and Work

Energy over time is work. 

E x t = Wk

The amount of wealth created in an hour depends upon the context the work is done. 

As we have seen, the wealth created by hour of work by a brick plant is less than that of an ICU fabricator because the amount of Applied Energy, our analogy for intelligence, involved in the fabrication of a brick is much lower than the energy required to produce an ICU. 

Productivity

Before industrialisation the amount of intelligence that could be applied to base matter in an hour was limited to the activity of one person. Industrialisation has increased the amount of intelligence that can be applied to base matter many times over. We call this measure productivity. A highly optimised system would seek to maximise the productivity per person to increase the wealth that one person could create. Assuming equitable distribution of wealth, if everyone had a productivity ten times greater than a single person is capable of we would all be ten times wealthier. It is this increase in productivity that has allowed us to enjoy far greater wealth than our ancestors. read more