Wednesday, November 9, 2011

Welcome to PieEconomics

Government spending always reallocates wealth.

But how many people know that taxes do not have to reallocate wealth?

Look at the pie chart that is the PieEconomics logo. Government spending creates excess money that causes unwanted inflation, indicated in yellow. When this inflation is removed through taxation, total wealth in the system shrinks back to just the blue area of the pie chart. A modern tax system would not reallocate wealth, as illustrated by each slice of the pie retaining its same percentage of the whole, after the yellow portion (inflation) is removed.

This means that with the right type of taxes it should be painless to balance the budget... every year.

This is only one of the principles of PieEconomics.  Here are others:

* Electronic currency based on the Bitcoin model

* All money would be in private hands, with no need for banks.

* With the budget always in balance, the government would create money as it spends, and retire money as it taxes. Government would never actually own money and could never be in debt.

* Costs for current government services could never be passed on to future generations to have to pay.

* Direct voting, empowering local governments, and streamlining Congress, would create a feedback loop drastically curtailing government spending.

* Recent trends toward oligarchy and excessive wealth concentration, potentially enabling rampant corruption, would be moderated.

Advances in technology and networking make solutions more practical than ever before. The PieEconomics essays are located at the top of this blog.  Start with the first essay titled Legal Tender Based Upon Bitcoin.

Wednesday, October 19, 2011

Decentralized Barter a Tower of Babel?

If the current system of legal tender ends in collapse, we might find ourselves in a system of decentralized barter. But letting the free market determine what money is may not be a viable permanent option:

Dealer: "How would you like to pay for your new car?"

Customer: "With physical silver and gold; it's in the trunk of my old car."

Dealer: "Not so loud! Be discrete when talking about metals. After the robbery last month, we only accept digital forms of liquidity now. It's enough having to keep track of the car business, without having to deal with guns and safes."

Customer: "Well, I've got various forms of digital currency; one type based on silver, another based on gold, and another based on a basket of commodities. I also have one that is not backed by any type of commodity."

Dealer: "Right now, I can accept your silver and gold based currencies. I'm still trying to negotiate better terms with the others you mention."

Customer: "I used to hold the majority of my liquidity with the AbsoluteGold brand of digital currency, but I lost it when they were shut down for being a fraud. It turns out that their auditors were also part of the fraud. How much do I owe you?"

Dealer: "When I checked an hour ago, the current amount in silver was five hundred digital ounces."

Customer: "I can just about cover that with my digital silver. Wait! I heard the price of silver just dropped a lot. I guess I'll have to pay part of it with my digital gold."

Dealer: "When we are ready, I'll go ahead and hit the "tender" button on the digital invoice. That will freeze the relationships between the various forms of liquidity, for the next ten minutes."

Customer: "As for the sales tax, what forms of liquidity are they currently accepting?"

Dealer: "Have you heard about the intense lobbying by the various liquidity providers?"

Customer: "With new forms of electronic barter popping up every day, they have to juggle a lot of accounts among the various forms of liquidity collected as taxes and paid out as government spending."

Dealer: "I guess this new, free market, decentralized liquidity system has become quite complex. The old system of a government approved legal tender worked very smoothly and promoted prosperity for a long span of time, until government borrowing and spending went out of control. By the way, I am looking at your car out in the parking lot. Why is the trunk of your car open?"

Customer: "Stop those thieves! They are making off with my gold and silver!"

Video version: