Asking the Big Basic Income Questions
Stefan Hilts

The economy runs on credit

Looking at a list of national external debt by country shows some interesting and not so intuitive things

The U.S. of course has the most debt, but the debt per capita is kind of average for what one would expect are wealthy nations, about the same as Germany, Spain, Australia, half the U.K.

A number of small but wealthy countries have twice the per capita external debt as the U.S. or more. China’s is about two percent of the U.S. and Russia only about three times that.

The majority of countries though, have per capita debts that many Americans might have in their checking accounts, or in their wallets, many under $200

Aside from a couple outliers it appears as though debt accompanies prosperity.

Perhaps the most instructive is Luxembourg, with the “world’s highest GDP (PPP) per capita, according to the United Nations in 2014,” and per capita external debt of over three million dollars. (noting that Luxembourg owns far more debt than it owes) Debt is clearly a source of wealth

One might simplistically conclude that poor countries simply need to borrow a whole lot more money… simple

Seems a reason they don’t is because they have bad credit, and where the U.S. pays an average rate around two percent, lower for new, and some government securities are paying negative rates, countries with bad credit have to pay upwards of ten percent, (and agree to restrictions, and support for things they wouldn’t otherwise,) mirroring the same problem poor people have. Another reason is that there isn’t enough money to borrow.(coming back to this)

I mentioned to someone that currencies are not backed by gold any more, just by the promise of the issuer, and was a little surprised that was unknown to many. Demonstrates how specialized the tolerance for economic information is among humans. It is a subject I dislike immensely.

So they call it fiat money, because it is just made, and fiat is nothing at all but belief, and agreement. We believe this paper, and the numerals in our accounts are meaningful and have value. We agree to work for and pay for things with the currency, it is specified in contracts.

When people are told how money is created they often just don’t hear it. Banks write checks when people get loans, and fiat, it is made. That isn’t for all banks mind you, and rates too high is the same as no money available, and they are restricted to some multiple of the money they have on deposit.

This can be difficult to believe because it seems like something made up by a child, or some older criminal, or out of frustration and pragmatism, because it has been working. It is difficult to regard the process as anything but a scam, collecting interest on fiat, nothing.

I can’t see getting enraged about it or anything like that, it has been working. It’s been working because nothing (fiat) is a more appropriate basis for currency than gold, or any commodity. Commodities change price, currency is best stable. Commodities have to be stored and protected, and the hoarding increases the price of the commodity… I understand that it’s just business, and brilliantly successful, I just want a cut, and for me to get mine, everyone must be enfranchised.

Back to not enough: Not enough money for poor countries to borrow, so they can be, not poor, so how much is enough?

From a Basic Income perspective, working backward from a thousand dollars a month, at a sustainable rate of 1.25%, a million dollars per capita would produce enough income to provide that. Krishn Ramesh pointed out last year that in the world there is about $51,600 per capita (nearly the same as the U.S. per capita debt.) That is much less than a million.

This means that it is not possible for everyone to work hard and succeed financially, because there simply isn’t enough money in existence

As crazy as it might seem to charge interest on nothing to create money, it seems to work, and to actually provide the opportunity for each to succeed we need to create more, and we need to get the more to each.

Many believe that a sovereign country may simply create all the money they want, but the reason loaning fiat money into existence doesn’t cause inflation is the accounting. Giving each the equivalent of a million dollars would be folly, because that could not be secured and soon many would have none.

Fiat though, since it is nothing, can be inexpensively and securely distributed to each in the form of a Share that is held in trust with the bank where it is claimed. While the Share may be transferred to another bank, it is existentially connected to a unique set of biometric data. The notion of loaning money made from nothing seems a little less crazy, and more sustainable, when the nothing is defined and limited, and the interest goes directly, and equally to each.

When we define fiat as the right to loan money into existence for sovereign debt:

We limit the amount of fiat available to that million dollars (whatever) per capita

Each adult human may claim a Share for deposit in trust

Each bank holding these Shares will be entrusted with investing this fiat

Since the value of this fiat is significantly more than existing wealth, the power derived from existing wealth will be reduced, and competition will be significantly enabled.

An example would be in the sale of a company: A large corporation seeking to acquire a company will have access to a large amount of money, and the leverage that provides, but with each adult an enfranchised individual sovereign, each employee will have access to secured loans against a portion of the value of their Share for home, farm, or secure interest in employment. In this way employees would be able to compete for the ownership of the company they work for, and certainly any group of people presenting a project to local fiduciaries and actuaries could obtain funding if found worthy

To slow concerns about the vastness; the functional reality would be that a structure of secure accounts is established. It’s a good thing to have anyway, we can use it for our votes. I suspect their are enough interested parties that redundant space could be found, and it is largely a banking function.

The rule is established, new sovereign debt, and any that can be beneficially converted, gets borrowed from Shares, and each person starts getting paid.

When all the current sovereign debt is converted each will get something like USD $20/ month.

Now consider all that research and data you will pour over, and how applicable it is to a global system.

Some more than other, but twenty bucks a month is a valid global experiment, that will produce valid global data, and that we desperately need…

…enfranchisement is a right…

…and where it goes from there will be determined by the most free market I can imagine

Thanks so much for your kind indulgence

One clap, two clap, three clap, forty?

By clapping more or less, you can signal to us which stories really stand out.