The fundamental theorem of plane suggests you need to non-collinear vectors to define a plane. 3 non-coplanar vectors can define a space. Thus to increase the spanned subspace of any entity, we need equivalent independent entities which serve a similar purpose in a similar context. Id est, to vectorise money, we need more and different money.
If you can’t follow anything — you’ve missed the first lecture. TL;DR: The current capitalist system is antedated. A very desirable evolution would be if we upgrade our fiat currencies to vectors rather than scalars.
So the question I want to discuss here is:
Can a multi-currency model work?
Of course. The world is a multi-currency model.But who is going to be the overlord of these new currencies here? I wish to dedicate an entire post to that discussion later but it is difficult to proceed without discussing it briefly here.
Since the key idea was to preserve individuality, how about every individual mints their own money? Bit much? How about governments independent of central banks? It seems like a really catchy and rather ‘current’ idea so I’ll let you ponder over it. How about we invite the Church to the party? Let them roll out their currency. It adds a lot of sense to the ‘independent vectors’ vision. What if different big enterprises roll out their own currencies? This sounds more vogue. We’ll discuss this in this post as it appears to be the most generic template which can be scaled from an individual to the globe.
If you’ve been wondering all this while how the heck are they supposed to print money — I’ll suggest you google a rarely heard term called ‘Cryptocurrency’. There are just too many blogs blabbering about it and they’ll convince you well enough that you yourself can start minting your own currency whenever you want.
To analyze the practicability of a multi-currency model, let’s start by asking ourselves, why don’t we have a universal currency? Why does each country get to have their own currency? Why can’t we agree upon a universal currency? There have been attempts towards it but among other reasons, Uncle Sam wasn’t much fond of it.
The first and perhaps the biggest reason is that every fiat currency has an overlord, a central bank, and a global currency with a single overlord would mean just too much centralization. Like it or not, money is the biggest thing that drives the world and it is crazy how we make and manage money. Everything in the world would be subjugated to the all mighty World bank.
Beyond the demerits of a global currency, are the many merits to each ‘economy’ having its own currency.
“I promise to pay the bearer a sum of two thousand rupees” — Governor,Central Bank
When trading your G&S for a given currency, you qualify your trust in its issuer. It is essentially buying stocks of a country’s economy. You believe that any time in the future you can barter the money for an equivalent amount of G&S. There is a belief imbued in possessing currency of a certain economy — a belief that it’ll be worth its denominated price in the future too. There’s patriotism in avowing this trust in a nation, and in practicing its trade via its entrusted currencies. It’s its liquidity that makes us forget how every time we buy (sell) something, we evaluate and compare the worth of the 2 commodities — what we bought (sold) and the money we spent (got).
The same trust can be transferred ‘as it is’ to a currency issued by any other authority as long as you are assured of its production transparency (Forget crypto, we do buy and sell stocks, don’t we?). So we can all agree that simultaneous circulation of multiple currency is not only acceptable, but is very much in practice, albeit in a less liquid form. The real question is : Will the common folk ever be ready to calculate the risk vs capital gain of a portfolio (multiple currencies) trade on trivial commercial exchanges?
No. Not even when there are only a couple of fiat currencies accepted in the market (and I plan on painting a world where there is a possibility of infinite currencies). That is because, the currencies are still representatives of a common capital. The additional vectors are simply a computational overload. If we consider that different currencies have different nature of volatility, then it is not simply a computational overload, but a genuine menace in profit evaluation. No bloke would want to sketch a risk vs gain manifold in an N-dimensional hyperspace and then compute the optimal price. More intricately, the optimum result would be a pareto-optimal curve wherein the evaluator will have to pick a point of his immediate preference in every trade. This is the real headache (bottleneck) of such a system.
But, what if this “capital gain” equation was irrelevant or barely relevant? What if these currencies do not represent a common capital? What if there was more meaning to each of them than mere monetary merit? Say one of them is a token of your belief in love; another represents your conviction in spirituality; how much you prefer apples over strawberries; a bet on Johnny Depp’s capacity in underwater basket-weaving; your love for Angel Priya’s right earlobe AND her pottery skills. Each currency is a token of your patriotism towards its own economy — to what it represents. You can’t compare a man’s bet on ‘Katy Perry squirting COVID-19 vaccines out of her elbows when her cheeks are pinched’ to ‘Monero’s worth in Costa Rican colones’. They both have different meanings to them. Apples and Oranges baby!
How or what these meanings could be for the different currencies I dream will be the topic of my next post. Stay tuned.