Month: November 2008

Sustainable Money

I listened during my commute today to an interview of Jay Hanson of dieoff.org and warsocialism.com, in which he talks about the inherent limits to our economic growth, sure nuclear holocaust if we stay the current course and societal changes that may save us.

I know some of you may discard the above as scaremongering socialist progaganda, but Jay actually describes himself as a succesful computer engineer who loved capitalism, but got to realize its inherent limits and decided to study the problem in details and try to come up with a practical solution.

I took a lot of notes, but the first basic idea is that capitalism, and in particular our money system, is incompatible with a sustainable society. The money we use, fiat money, is by definition infinite, but it is a claim/promise on resources that are finite, so sooner or later we hit a wall: our money claims a smaller stake over the available resources and we get poorer. The U.S. founding fathers used economic growth as a tool to solve problem, but today, our economical growth IS the problem, so we can’t find a solution for it via economic growth. “We’re stuck”.

The second basic idea is that we compete to accumulate much more money (as claim on resources) than we really need because as social animals, we desperatly seek status. It’s not the $500M we want, it’s the largest sailboat in the world. We won’t be able to change the fact that humans want status and would kill for it, but we can possibly change the kind of status we strive for itself, through cultural evolution.

A development on his conclusion is that we need two kinds of money:

  • One that is essentially a rationing on remaining resources. In his ideal society, 5% of the population would work 2 years in their life to produce all the food, housing, healthcare and clothing, which would be allocated in equal ways to each person in the population, would expire and would not be exchangeable.
  • One that is the status money. Since most of our time could be spent playing, studying, creating art, etc. we could be rewarded for it via the status we would earn from it.

The similarity of this second money to the Whuffie concept is quite stricking. In many ways, the Web is where we spend more and more of our time creating digital artifacts. The resources there are close to infinite. If we could build a way of measuring our status there, we would have something similar to what Jay proposes.

Greg Weldon on CKNW Money Talks

Greg Weldon of WeldonOnline shared his views on CKNW yesterday at 9AM. If you have never subscribed to his money monitor, metal monitor or ETF monitor, I strongly recommend you give it a try via the free trial. Greg is one of the few independent financial analysts I respect. He correctly predicted this crisis long before our government officials, central bankers and financial media got out of their denial. He provides extremely specific short-term and long-term analysis.

Here is a quick summary:

  • We are not out of the woods. The stock market has lower to go even though we may see bear market rallies in the order of 20/25% with the U.S. election “acting as a catalyst of hope”. What we are experiencing is a reversal of a 40-year credit expansion. The U.S. consumer is howing increasing sign of stress: more unemployed, longer unemployment, much more partially unemployed. There is no sign for a major wealth reflation on the horizon.
  • What to do from a personal investment standpoint: Be much more personally involved. The old investment models like the buy and hold mentally don’t apply anymore. Be more flexible, diversified and have a nimble investment approach. Be involved in all asset classes, globally and be much more specific. Long in some assets and short in others at the same time.
  • So far the massive efforts of central banks haven’t been very successful, so we don’t know if this situation will end up into hyperinflation or ugly deflation.  There is still a lot of fire power held by central banks, so we can expect a much bigger effort in terms of monetary policy (see upcoming G20 meeting mid-November).
  • At some point, if/as more and more bail-outs are provided, the credit-worthiness of the U.S. could be questionned.

Using ATM to send cash – no bank account or card required, only a cell phone.

If you haven’t read this at bankwatch or banktech yet:

Privier’s New ATM Service Requires No Card, Account

The service is a cash-to-cash service targeted at the unbanked population. After registering a mobile phone online as well as other personal information, a user can go to an ATM, deposit cash, enter a mobile phone number, and receive in return a 10-digit withdrawal code that he can send to someone else.

This is essentially an authorization delegation mechanism, and as such it reminds me of OAuth, which allows authorization delegation for APIs on the Web.

The main issue here is adoption: the service is only valuable if the receiving party can go to an ATM that supports the technique, so my understanding is that this will have a real value when it is deployed by a large ATM network operator, or when it is supported accross networks via a common protocol.