Archive for the ‘money’ Category

Thomas Greco in Vienna

Wednesday, November 10th, 2010

Yesterday evening Thomas Greco was in Vienna. We were a mixed audience coming from different fields all interested in the money problem.
Thomas started by introducing himself and his history. He has an engineering background and worked as a college professor. Got “yanked out of the matrix in 1974”, seeing that not everything we see is as it appears. Started asking questions about problems like war, poverty, exploitation and how to solve these problems.
One day he had a book in the mail “In the Wake of Inflation Can the Church Remain Silent?”, he checked the few references and found (some of) them sound. The question why they allow the money-system to exist kept gnawing at him and he got in touch with the author, they eventually became good friends. He helped put out a second edition of the book. His questions were why the church doesn’t mention usury and why social justice if not part of their program.
He participated in several land-trust, school of living and other projects and his focus narrowed down to money and banking. Over the time he helped starting several local currency projects and wrote several books which document what was learned (a joke was that much was learned from failed projects). The first two books can be downloaded from, the third is available as an EBook-Excerpt, for the fourth there is an excerpt at google books. I’ve read the fourth and can recommend it as one of the most systematic treatments of our current money system problem I know. Books are:

  • Money and Dept: A Solution to the Global Crisis (2nd ed. 1990)
  • New Money for Healthy Communities 1994
  • Money — Understanding and Creating Alternatives to Legal Tender 2001
  • The End of Money and the Future of Civilization 2009

Tom then proceed to outline the history of money: It started out with barter exchange, the first form of money was commodity-money, various commodities like tobacco (cigarettes), flour or grain, nails and precious metals like silver and gold (highly valued in small amounts, portable, durable) served as money. What follows is symbolic money: the first bankers were goldsmiths depositing gold for their customers, the receipt from the bank about the deposit of gold served as a place-holder for the gold. When goldsmiths discovered that they could give receipts not only to people depositing gold, but also to people who came to borrow it, credit money (the 3rd form) was born. The last form is credit clearing where we keep only an account for each member and incoming money is added while outgoing money is subtracted. The main problem of credit is interest which exploits people.
Then a discussion where Franz Nahrada claimed that money is always an alienation ensued. Thomas explained that the farther the relationships among people are, the higher the need for money: In the family we don’t need (and don’t want) money. With a close neighbor we expect some reciprocity (we keep in mind if the other person is always taking). For dealing with people you don’t know we need some kind of formalized structure. But he agreed that a closer community relationship is a good goal. It was mentioned that experiences without money (where you lose your wallet and have to find your way without money for some time) can be a lasting positive experience, on the other hand money may cut through relationships…
In the discussion I asked about Toms view about demurrage, a negative interest rate on money. He answered that demurrage is an unnecessary “stamp scrip” (so called because some demurrage currencies use stamps that have to be bought and affixed to the banknotes) first introduced by Silvio Gesell and that it’s unfortunate that demurrage is the only one of his proposals that is generally remembered. Demurrage currencies where successful in a time where any kind of exchange medium would have been successful. The problem demurrage tries to solve, the prevention of hording (mainly of paper currencies) could be solved by reallocating excess money to (new) businesses. I noted that Gesell also had this in mind when he argues that when depositing excess money in a bank for re-lending, he proposes that there should be no demurrage. (I’m still not fully convinced that demurrage might not be a good tool at times) We agreed that a shortcoming of Gesell is that he can only envision a central banking system while Thomas recommends the separation of money and state (I also think this currently is our best option). There is also a blog post on demurrage by Tom.
During the discussion Tom remarked that due to the “Bubble and Bust Cycle” of our current money system, banks always have to find new ways to indept the people. When he studied, there were no student loans. This is a new idea that came up in the 60s. In the 90s we had the dot com bubble and the recent crisis in 2008 added a lot more dept to the private sector. He thinks we reached the end of the line, the dollar will probably be inflated out of existence. One of the outcomes of a hyper-inflation like Weimar in the 1920s is that the middle class gets wiped out. They still have savings but these won’t buy anything. Maybe the plan for after the inflation is a global currency. A question about the timeframe for these predicted events was answered that it’s hard to say, but China already has satisfied its appetite on US government bonds now buying gold. Maybe an America-wide new currency (Amero) or a global currency will be the plan. This would wipe out everyones savings and re-start the game, hopefully not everybody will go along with this.
In the later discussion I asked — when Tom had talked about the Government and the central banks cooperating — that up until now I had seen the private banking as the problem and the state more in the role of a victim. Tom replied that they are cooperating and that this cooperation was introduced in the early days of the Bank of England (when the king needed money for war). In a blog post When will the dollar die? Greco also outlines a facet of that cooperation: “National governments are unique in being able to play this role [of borrower of last resort] because of their collusive arrangement with the banking cartel.”
We also had some discussions on emerging trends, barter exchanges (which aren’t really barter in the original sense of the word). Tom said that if businesses are not involved early on in an alternative currency project, it is bound to fail. Barter exchanges that only involve retailers can work to a certain degree of circulation. But for a robust system, manufacturers, employess are needed to close the circle. Not all suppliers are within a region, so we have to get regions to cooperate. Mistakes that have been made by some local exchanges (which is detrimental to their own business and the whole “industry”) are:

  • competition with members (taking the best things for themselves)
  • too much credit for themselves (debasing their own currency)

Tom also mentioned Argentina during the discussion which had a strong social currency movement in the early 2000s with dozens of trade exchanges. The system (nearly) collapsed due to mis-managed, my question if this was induced by outsiders was answered that there were accusations of counterfeiting by the central government or other authorities but it is unclear if this is true. When he visited Argentina, there already was counterfeiting in some of the largest exchanges and they didn’t do anything about it. Now they have better safeguards.
The following links are taken from the discussions (no particular order, Tom is not affiliated with any of them as far a I know but knows some of the creators as “cooperatively minded entrepreneurs”), during the discussion I noted that we would need a common protocol among different barter and community currency enterprises, so that not everybody builds his own “walled garden” which was agreed… I’ve written about that problem before when writing about cloud computing.

  • Cyclos, a system for manageing lets trading circles
  • an newly started web-based exchange (this takes ages to load for me with layers upon layers of javascript, that by default isn’t enabled when I surf with noscript, so not a site I’d ever use)
  • , another trading system
  • community exchange network
  • a proprietary platform where a lot of money was invested, it’s a cashless trading platform which might eventually become open source
  • an online barter exchange
  • one of the biggest US barter companies
  • a social network by Sergio Lub
  • one of the first social networks with 60.000 people worldwide participating, has levels “identified” (a real person), “sponsor” (trust someone to sponsor other people) and “networker” (full access to the system).

At the end we watched the short film The Essence of Money (4:13) that outlines how money works. In my opinion it’s also a good illustration how a distributed money system — where every player in the game can issue his/her own money — could work. With todays electronic systems we maybe can come up with a solution that is distributed: compare this to file-sharing systems that started out as centralized systems like Napster and evolved into distributed systems like Gnutella today. The film Money as Dept was recommended, there seems to be a sequel, the original seems to be available in several places on the net.

Linuxwochenende 2009

Friday, October 23rd, 2009

Dieses Wochenende ist wieder Linuxwochenende im metalab, ich werde wieder einen Vortrag zu Open Money halten, ausserdem einen Lightning-Talk zu Generierung von Morse-Code als MIDI-Datei (was für einige Anwärter auf die Amateurfunklizenz vielleicht interessant ist, auch wenn das Code-Requirement inzischen gefallen ist.)

Cloud computing, Vendor Lock-In and the Future

Tuesday, August 4th, 2009

Cloud Computing is becoming increasingly popular — and it is a danger to your freedom. But we can do something about it.
First, when the term Cloud Computing was introduced, it meant a set of low-level services like virtual machines, databases and file storage. Examples of these are Amazon Elastic Computing Cloud and related services. Since these services are quite low-level, they can be replicated by others, an example is the Eucalyptus project.
This means if you aren’t satisfied with the service one cloud computing provider offers, you either can change the provider or — e.g., using Eucalyptus — roll your own.
But increasingly cloud-computing is a relaunch of the old Software as a Service paradigm under a new name. This means that applications like Textprocessing, Spreadsheets, Wiki, Blog, Voice and Video over IP, collaboration software in general is made available as so-called “Web 2.0” applications — now called “Cloud Applications” on the web.
When using these services, there is a severe risk of Vendor Lock-In — since the applications may not be available elsewhere, you cannot easily switch the provider. Worse: From some of the Web 2.0 Services like social networks (e.g., Xing, LinkedIn, Facebook) you can’t retrieve your own data. Xing for example has a “mobile export” for data, but this works only for paying customers and only exports address data.
And people have started to realize — e.g., in this facebook group — that multiple incompatible applications — escpecially in the social network sector — puts a large burdon on customers to update multiple personal profiles on multiple sites.
But although it has been noted by the Free Software and Open Source community (e.g., in an interview with Richard Stallman and by Eric S. Raymond in his blog) it has not been widely recognized that cloud computing or software as a service — in particular in the form called “Web 2.0” — creates a vendor lock-in worse than for proprietary software.
For your social networks this may mean that when you retrieve your data (remember, you helped them build that data!), the social network may throw you out as it happened in that case mentioned by Henry Story and later updated here.
The solution to this problem? Don’t get trapped in a data silo. This may still mean that there can be software as a service offerings. But the software needs to be free (as in free speech). So we can still switch to another provider or decide to host our own service.
But companies won’t do it for us. As Doc Searls notes in Silos End: “These problems cannot be solved by the companies themselves. Companies make silos. It’s as simple as that. Left to their own devices, that’s what they do. Over and over and over again.”
So this can only change if customers make and demand the change. A good rule-of-thumb for software as a service is on the page of the Open Cloud Initiative in the article The four degrees of cloud computing openness. While being a customer of a closed/proprietary cloud with “no access” is clearly a bad idea, open APIs and formats don’t work too well — you don’t have the software to work with your data. So the only valid options that remain are Open APIs, Open Formats and Open Source, and in some cases Open Data.
Still most web applications — like most social network software — are of the completely closed type. There are no open formats and no open APIs. So check your dependencies: What web-applications are you depending on and what is their degree of cloud computing openness?
A word on the license to guarantee openness in cloud-computing. As mentioned in the above-cited interview with Richard Stallman, the GNU General Public License is not enough to keep software in a cloud open. The cloud provider could take the software, make own modifications (which you will depend upon) and not release the modified software to you as a customer. Again you have a vendor lock-in. To prevent this, the GNU Affero General Public License has been designed that prevents closed-source modifications to hosted applications.
Finally, for all sorts of social software — not just social network software but everything that creates more value for more people, usually by linking information — should follow a distributed peer-to-peer approach. We don’t want this data to be a siloed application hosted by a single company. And if there are multiple companies hosting the data we already see the problem with multiple social network providers.
So we need standards and distributed protocols. And the implementation should follow a peer-to-peer approach — like seen in filesharing applications today — to make it resilient to failure and/or take-down orders of hostile bodies (like, e.g., some governments). Lets call this “Web 3.0”.
Examples of such social software are of course the social network sector. We already have a distributed protocol for social networking based on the Friend of a Friend Semantic Web Ontology. With this approach everyone can publish his social networking data and still be in control of who can see what. And the data is under user-control, so it’s possible to remove something.
Another example of social software is probably Money (in the sense of micro- or macro payments in the net). Thomas Greco in the book The End of Money and the Future of Civilization asks for separation of money and the state. A future implementation of money may well be based on a peer-to-peer social software implementation.
These social software needs security solutions. We want to model trust-relationships. Parts of the puzzle are probably OpenID and a newly-proposed scheme by Henry Story called FOAF+SSL mainly used for social networking 3.0 but probably very useful for other social software solutions.
So lets work on solutions for the future.

Vorträge mISDN und Open Money

Tuesday, April 21st, 2009

Auf den Linuxwochen hatte ich einen Vortrag zu mISDN, Abstract und Folien auf meiner Homepage. Auf dem Linuxtag in Graz werde ich nächsten Samstag den Vortrag zu Open Money (natürlich in aktualisierter Form, es tut sich ja einiges) halten.

Update on open money

Friday, November 21st, 2008

Some time ago at linuxwochenende I’ve outlined my current state of reading on alternative money projects and implementations. Slides (mostly english) are online and there is even a video of the talk (in german, see linuxwochenende link above for torrent or html download). The funny money in the title refers to a paper by Ted Lewis, “Why Funny Money Will Have the Last Laugh”, Computer, vol. 33, no. 5, pp. 112,110-111, May, 2000 (all citations on the web seem to disagree on the page numbers I’ll have to dig out my copy and see what the page numbers really are) which is probably not very exciting today but got me interested in the subject.

Now I’ve discovered some more interesting bits I want to document here.

I’ve recently discovered OpenCoin via the peer to peer foundations feed. OpenCoin seem to be among the first who tackle money with a scientific approach to money protocols *and* release their code as open source. They’ve started by formulating requirements which are referenced in two preliminary papers on existing crypto protocols:

In these papers they outline the cryptography to use for their implementation and check these against their requirements. These reports are very preliminary (still contain serious typos for example I’m missing a “not” in section “2.2 Anonymity” in the report on Chaum’s Architecture that distorts the meaning of the whole sentence).

More serious may be that the don’t consider newer approaches to money protocols — this may be due to patent and security considerations: Chaums work is older than 20 years. Protocols that have withstood some time of not being broken might have a higher chance of not developing a serious failure in practice… but it may also be an indication that the field is very wide.

And another sad fact: The web-page of the project is not very lively — the last entries on the wiki are from march this year. Seems that they applied for funding from LGA (London Development Agency) and received that (as indicated on the main page) but never published anything after that. Or maybe they anticipated to receive a funding which never came.

Another interesting project — which actually produced software that is used in practice is Cyclos by the Dutch Social Trade Organisation STRO (used to be called Strohalm).

This is a more traditional approach to a system where a trusted organisation manages a local currency like LETS or barter systems. Also microcredit systems are managed with this system according to their web site.

I’ve recently discussed about money alternatives with Clifford — one thing we couldn’t agree on was if one needs the state as the central authority for issuing money. I argued that there are already many projects (some of the mentioned in the linuxwochenende talk above) doing this today. Cliffords answer was that they’re all backed by the existing money system. I’m undecided on this issue but tend to believe that a local community can agree on a currency without a state. It may even be possible to do something like Terra (a good intro to Terra is on p2pfoundation ). At least we can start now that the existing money system still works (Sort of. Or not. Maybe.).