An Approach to a Better Money

1) Not Transferable

One of the basic characteristics of POM (Physical Object Money) is that it is transferable. A better money would not be transferable. Individuals need to be able to spend the money they have but they do not need to transfer their money to someone else. This probably seems strange to anyone who has experience only with POMs. Please let me explain.

When you buy something in a store, to whom are you transferring the money? Odds are you have no idea what person or persons actually will own the money. And you probably do not care in the least. Yes, the money is being transferred but you are not interested in that aspect of the transaction so long as you are able to spend your money to buy what you want to buy.

Clerks don't care whether the money is transferable so long as they get paid for their work. The accountants and managers and janitors and others who work for the store are only concerned about whether they get paid. The stockholders only care about their dividends and whether the price of the stock rises or falls. The government only cares about getting its share of the transaction in taxes. People have no interest in the actual transfer so long as they get paid.

In general, the parties in money transactions do not care where the money comes from so long as they get it. Therefore, the transferable nature of POM is an accidental artifact of POM's having an existence independent of its function as a medium of exchange and a standard unit of account. Being transferable is not an essential aspect of a medium of exchange nor of a standard unit of account.

So long as individuals who work are paid for their work and so long as each person who has money can spend it, the money need not be transferred from one to the other.

2) Dependent Existence

A POM is created before it is used as money and continues to exist after each transaction. Ancient money from the Roman Empire and Confederate paper money still exists yet those coins and bills are no longer money. They are worth something and could be traded for money but they are not money. A better money would come into existence when earned and cease to exist when spent. In that way the amount of money available could be kept in balance with what was available to be bought. Your money would be uniquely yours. No one before or after you would own that same money.

3) Moral Money: Controllable Money.

It is desireable for a money to be moral. That is, one should not be able to use money to motivate immoral behavior. This implies that the society is able to control how money is used. Money that is used to reward only moral actions would be a moral money.

Please note that the society is able to control. That does not mean that the government is able to control. Society controls our behavior far more effectively than any bureaucracy can hope to. That control is mostly exercised without one really noticing. It is not exercised by thugs carrying guns. There is no provision in a good money for government controls. If a money depends on government controls it will almost certainly fail. POMs illustrate that nicely.

4) Fixed Value

The value of a unit of money should remain constant. This can only be the case if prices do not change. Since POMs cannot be controlled, prices cannot be kept constant. Many POM economies have tried to fix prices and all have failed. If the value of a unit of money is not constant, the money is not a good store of value because money that is worth a lot at one time may be almost worthless later.

5) Not a Zero Sum Game

POMs simulate a zero sum game. A better money would make people feel interdependent rather than independent. A better money would make people expect to cooperate rather than compete. The people of industrial societies are mutually interdependent. No part of an industrial economy can function alone. The work necessary to keep us alive is done by thousands of specialists. Just as five competing basketball players cannot win against five cooperating basketball players, so our economy suffers from competing when it should cooperate. We should feel that we all win and lose together.

6) Three-Party Transactions

A good money would have all transactions involve three parties. Three party interactions can be very stable. If the three parties (we will call them A, B, and C) have a balance of power, they can engage in a non-zero sum game indefinitely. For example if A has power over B and B has power over C and C has power over A (sort of like the old game of rock, scissors and paper) and A begins to abuse B, B can use their power over C to get A to stop the abuse. The card game of "hearts" offers another example of how three party interaction can be stable. When played with three players of different skill levels, the two lesser players can "gang up on" the better player to keep the score in the game balanced. As one player gets ahead the other two stop competing against each other and compete against the leader until a new leader emerges. Thus it takes a great skill disparity among the players for one to consistently win.

7) Hard to Counterfeit

A good money is hard to counterfeit.

These are seven characteristics we want in an improved money.