http://humanifesto.org/yehoshanah/2004/demurrage_surplus_reputation.htm
- Title: Demurrage Surplus Reputation Currencies
A Creative Commons.
Hi Tim, I am excited you're now interested in taking this further. Even if it is to assist me with your valuable feedback. I am appreciative of your involvement. All the more so if you can contribute valuable open source code. It would be wonderful if you could you assist me in establishing an open source project contributions library and a related creative commons.
Demurrage:
Definition: n 1: a charge required as compensation for the delay of a ship or freight car or other cargo beyond its scheduled time of departure 2: detention of a ship or freight car or other cargo beyond its scheduled time of departure.
Currency Demurrage:
In the case of currency, demurrage refers to a managed rate of currency depreciation. Demurrage depreciates the available quantity or the exchange rate, of currency held in a single account or some accounts or all of the currency accounts. Demurrage might be considered a form of management brokerage, service fee or taxation but in the case of demurrage currency, fee collection is not its primary design purpose, as you will see below.
A Utility for Exchange
The rationale for currency demurrage is to design a utility that encourages exchange. The influence of demurrage on a currency is two fold. The influence on an account holder is to encourage the exchange of the presently held value rather than delay its exchange which will result in holding a depreciated currency of lesser value. The influence on the currency backer is to reduce the backers debts with the account holders. A currency backer would seek to issue its currency and reduce its debts through currency depreciation and an account holder would seek its added value in the short term and exchange it with another account holder or seek its redemption with the currency backer.
Encouraging Green Economics
Demurrage currency encourages its traders to store value in quality long lasting items or in services and skills that are an investment in future welfare or prosperity. Exchange is encouraged for an item of immediate consumption or even for an item of lesser value but with a slower rate of depreciation or a lower cost of maintenance required to prevent spoilage. Therefore demurrage currency would not be used as a preferred method of value storage but rather as a preferred method of value exchange. In other words Demurrage Currency is designed to facilitate the exchange of an agreeable representational value rather than its long term storage.
Incentive to issue and back demurrage currency is continuos.
As the currency held in accounts is depreciated this simultaneously increases the currency backers ability to fulfill its existing and reducing currency promises. This release of debt assists the backer to issue more currency for future redemption. The currency backer can also afford a higher trade risk and offer a higher initial currency value than a non depreciating currency, knowing demurrage currency will continue to depreciate while not redeemed. Even when the currency moves between the account holders it still depreciates, until it is redeemed or put into bond on a fixed term with the currency backer.
Incentive to acquire demurrage currency is short term.
While currency that has in built depreciation is less attractive to a potential trader that does not wish to redeem or exchange the currency in the short term it is very attractive to the trader that requires added value or seeks further trade offered in the short term.
Reputation adds value and attracts further trade
An important factor contributing to currency value is reputation. Reputation is the relative conception or misconception of a currency backers trading history and the expectations in the present and for the future regarding the backers likelihood of fulfilling its promise. The web of reputations, its communicated transparency and accountability will influence the exchange rate of the backers currency value. Therefore the development of a functionally extensible and efficient currency, able to communicate a backers trading history and its offers of future promise, will have a direct influence on the backers currency value and the movement of its trade.
What does the currency actually stand for?
The currency backer must manage its currency float in relation to its ability to back it. An account holder choosing to accept currency must consider the currency backers ability to provide its redemption. Everyone is encouraged to ask for an accessible and transparent accounting of what the currency actually represents, where it has been and where is it likely to go.
Establishing agreement
Currency demurrage occurs in accordance with an agreement and in well determined increments within a specified time frame. By agreement, I refer to the acceptance of offer and the ongoing expression of consent, made by each and every account holder, each having accepted a depreciating currency, as a promise from the currency backer, in return for that which they have traded.
Surplus, Reward, Loyalty and Feedback - A Cash Flow Margin
Demurrage currencies could be funded initially from trade surplus and the benefit of increased exchange. An organization that can free up any to all of its income above its essential running expenses can then dedicate that surplus as a credit to the same customers, members, suppliers, employees and share holders that have cooperated in creating that surplus. Other methods can be used to issue currency when it has proven itself stable and attractive.
Establishing Surplus and Currency Issue Transparency
Surplus allocation and the application of currency issue can be communicated transparently in every offer and consented to with every trade. This system proposes sharing access to surplus by rewarding currency traders with prepaid bonus credits, bulk purchase bonus credits and post paid loyalty reward credits.
Issuing Sufficient Currency
Once the currency has shown to be stable and attractive this system would also encourage the issue of currency by offering employees and suppliers currency rewards as partial payment for their essential services. Another method for issuing currency is a form of multilevel marketing by rewarding positive feedback from currency traders that have shown to increase currency trade among new and old currency account holders. The surplus and reward credits thereby continuously establish the funds required for a managed demurrage currency.
Designing Reward
The rate of depreciation may also be determined by several variables such as the loyalty reward rates by which a currency account holder received credits. Other variables might extend to the amount of prepaid bonus credit held, or the bulk purchase bonus credit or post paid loyalty reward credit, or the overall amount of the currency held, or the amount of movement or the lack of movement of the exchange currency. The adjustable currency depreciation rate is linked to whatever the currency designers and users, propose and consent, to encourage or discourage.
Designing Currency
In order to understand the direction and implications of developing a currency system, consider a comparison with the national management of import and export ratios, interest rates, tax subsidies, government funding and the supply and servicing of legal tender and fair trade. Consider Stock Market trading and related services, with its various registers, analysis indicators, graphic ratios and in depth company profiles. Consider the Media industry, advertising markets, multilevel marketing and good old word of mouth. Consider the full scale extension of democratic choice. Consider the history of cultivating civilization and a map and compass for navigating towards its future.
Where has all the money gone?
The amount of currency depreciated might be completely deleted or transferred to be held for another usage. In the case of a backed currency, deletion of the amount depreciated would release the associated debt which the currency backer would have been liable to redeem had it not been deleted.
Using the depreciation for shared benefit
With the depreciation transferred but not deleted, this amount becomes available for any transparent accountable usage, for example, the improvement of the currency management and the development of the currency organization, specifically the responsibility of the organization to back the currency in which it has made its promises. The depreciated currency might also be transferred for a purpose related to increasing currency reputation such as charity or contributing to the creative and public commons.
Tracking moving money
The mechanism for a transparent accountable demurrage currency needs to be developed together with the mechanisms for tracking every completed exchange, every level of offer and response, and the mechanisms for historical reputation feedback and with further consideration towards a non depreciating currency bond held with the currency backer. Moving further into the currency system development will seek facilitation of currency syndication, with multiple levels of account, offer-response and loyalty association.
Investing in the currency backer - the bond and share market
The currency bond is a non depreciating share in the backed currency and may extend to a share in the organization backing and managing the currency. The bond market would move towards full transparency and dependable accountability. Bond offers and acceptance are in accordance with agreed fixed terms with its entry to the bond from its own currency platform and exit from the bond back to the currency. If the bond and its currency platform are allowed to differ in value then speculation trading between them requires transparency to warn of its risk. Trade and development associations will be more able to effectively coordinate trade credit, investment funding and share holding with this progressively accessible, transparent and accountable system.
Syndicate - Association through Reputation.
The currency system would benefit from Syndication of currencies, rewards, bonds, accounts and cooperation during bulk transactions. Syndicate associations might be best developed as an extension of the currency reputation and feedback system, as currency transparency develops its working protocols for extending historical and analytic representation. Increasing standards for syndication will encourage a more accurate currency analysis, towards a fully transparent and accountable market place.
Transparency removes deception and needless speculation.
Transparency is the full, accurate, and timely disclosure of information. To continuously determine the values and variables underlying currency, its participants require an ongoing attentive response to the provision of accessible and reliable information. Responsible participation would evolve to provide and demand progressively higher standards of transparency. Transparency would then progressively serve every cooperative value and remove the leverage afforded by deception and the misguided speculation that surrounds a lack of full and accurate disclosure.
Open Source Demurrage Surplus Currency
As an extension of the creative commons, an open source model of currency would encourage a wide variety of trading and development organizations to employ a compatible system of demurrage surplus currency. The evolution of this currency system is geared towards setting higher standards of transparency and accountable exchange. It is designed to encourage exchange and at a variety of levels of cooperation and organization, with freedom of choice at a small scale and yet hospitable association towards a larger autopoiesis.
A Living Model.
This system serves a socially and ecologically sustainable ecosystem, conscientious, local to global, with value metric accountability. It is a system designed to evolve with participation and yet be sustainable in its representation of an open and common market more truly free from misrepresentation. Open Source Demurrage Surplus Currency is designed for cooperative exchange among active participants, choosing to learn how to share their values, with principled progress in green ecology, a transparency of information and a democracy of consent.
Yehoshanah
2004, Dec., 17th, 16th, 15th, 14th.
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