# A More Advance Monetary System



## ToBeInspired (Jul 17, 2013)

The current monetary system is quite simple. The use of specific items with denominations following a simple numeric value system. I like how there is a limitless possibility of potential increase. My curiosity centers on the development of a system that does not use a numerical value. Instead of having a currency system based off of denominations it would would have to some other means of factoring value I believe. I wish to replace coin/paper with skills/talents. Without some sort of guideline or structuring it would be illogical to set a value upon these intangible items. Each person would value them at a different level and as such create friction with the reader. 

A mathematical approach may be appropriate. Or maybe a history expert could explain to me the trade system that ancient civilizations used before a coin system was created. I simply need that little spark to light my cognitive fire. How do I set a value something that doesn't have a fixed value? Do I even need to set a value? Is there a way to circumvent this? A trade or auction system potentially? Each of those don't really work though... I'm not sure what I'm expecting. 

Is it possible to create a reward/exchange system potentially? That way there doesn't have to be a specific values as a such but there can be levels or stages. Once you reach a certain point - exchange A for A or B for B. Get B + B to = A. As in a class system... hmm. Maybe a pyramid working.

    A
   BB
  CCC
 DDDD
HHHHH

I used H since it fit with 5. Of course it normally makes sense to project in doubles as in 16 H = 8 D = 4 C = 2 B = 1 A or of course I could just extend the gap between each ranking to signify the difference as opposed to doubling anything. Of course all these thoughts follow a linear pattern... maybe my thoughts are running in the correct direction.

I will be brainstorming this until I am satisfied with what I come up. Any help would be useful. The specific skills or talents do not matter, what I am using it for does not reflect upon any answers, and I am open to all ideas. I can always expand upon them myself if it gives me motivation.

The pyramid system still seems to be reflecting on what I'm trying to avoid... setting denominations on things that are not able to have an accurate set value. Which is why I'm asking help I guess. Any knowledge on other systems used in the past or in the current world that I may not be aware of are more than welcome.

Thank You.


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## FleshEater (Jul 17, 2013)

Wouldn't this be a less advanced system?

At any rate, what you're discussing seems like the trading and bartering you see a lot in films or novels portraying the American west. I think it's simple, if someone needs their car fixed, they must barter with the mechanic, offering something they have and he wants. 

It happens now a day, too. My tattoo artist was going to give me $700 worth of ink/work for a .357 Smith and Wesson revolver. I never traded though. 7 hours of work is a great deal, but giving up a firearm is just too hard.


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## Kehawin (Jul 17, 2013)

I am terrible at math concepts, so couldn't really follow along with your brainstorming.  But I do know that in most cultures that didn't have coinage, there was still a value base.  Whether it was gold (our "gold standard" was the original basis for our currency) or wheat (or some other crop) or what have you, most cultures basis for value in bartering was tangible.  As Flesheater showed, bartering is still used by many today, and often is services for products, or services for service.  Think of when you want to move, and you offer your friends pizza and beer for their help.  Most cultures have had the same sort of thing, eventually being standardized by some valuable commodity.   In order to create a system that is not based on a commodity, you would have to find some way for apples and oranges to be compared.

This is something I have tried to figure out for my own WIP as well, and my working solution at the moment resembles a socialist-type system collected and dispersed by an official based on labor and time demands of each service or item.  Sort of a fixed trade value with no haggling allowed.  It isn't finance, but at least its a non-coinage based financial system.

Hope that info helps some?


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## ToBeInspired (Jul 17, 2013)

I think that I'm not explaining it properly then. A bartering system is not extensive enough. Our monetary system can be used as a means of reward or compensation. It needs to be an entire system. Something that could replace our current system in real modern times. I want to replace coin/paper with skills/talents. However skill/talents would not have a numeric denomination like coin/paper would. As such I need a way to fix that problem. How to set a value to an item with no set value. A barter system does not do that. It simply is a guesswork situation. I'll give you this for this. Each party gets what they want, but it's not an even exchange. In a large-term basis it doesn't work. Imagine a government running off a bartering system... it's just not going to work for what I have in mind. I've been looking at advanced math theories to circumvent this problem. I believe I may have made a little headway, but the reading is going to take a while. I won't be certain for a while.

Edit: I didn't want to have to set values myself, since readers could interpret certain skills/talents to be of higher or lesser value than I assign, but that's my last resort I'm afraid. Thanks though Kehawin. I'm afraid my straight-forward approach of thinking is causing problems this time. I'll have to expand my way of thinking it seems. I'm afraid I may have to just use one of the options I've already disregarded. Hmm... I'm going to keep reading for now.


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## Lewdog (Jul 17, 2013)

This is really hard to do with trades because it is going to depend on certain variables that you haven't told us.  Take for example the middle ages, a weapon smith or blacksmith would be more valuable than say a cook.  Then of course any member of the clergy would always be at the very top, as the church would get nothing but the best.  Now you would also have the variable of need.  For example a blacksmith would need coal, wood, or ore from a miner, more than bread, because he could use the materials to make something to sell for a much higher price than the bread.  If you follow what I am saying at all...so you can't really create a structure like you are talking about based solely on the trade.


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## popsprocket (Jul 18, 2013)

Flesh Easter is right, sounds like a less advanced system to me.

There's a reason that society has progressed to Fiat currency. Currency that only holds value as currency is a far more stable means of trade than anything else.

In a system where people's skills are used as a kind of barter system, you have one natural disaster and suddenly builders are so valuable that only a few can 'afford' to employ their services. Every year at graduation time you have thousands of new lawyers (and every other profession) coming out into law firms and suddenly there's an over supply and their value falls.

Those are two extreme examples, but I think you'll find it hard to keep a system like that stable enough for it to be called "more advanced".

I'm also concerned about how you acquire things using your skills as a basis for your worth. Does that mean that a carpenter goes and does a small job and next time s/he goes to the supermarket they are able to walk out with two bottles of milk and a loaf of bread because that's what their last job was valued at?


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## DPVP (Jul 18, 2013)

it sounds less advanced if you ask me and unusable. cultures around the world adopted money as we know it for a reason.

if you wanted something different you could have people payed by bonds that mature into a specific asset. so you could pay your maid in a zero coupon bond with a 2 month maturity that pays out a sheep. or maybe she will take the 3 year note that has a coupon of a bushel of corn a month. 

or you could have  individuals issue bonds against their own wealth. granted it whould be hard not to have money in a case like that for them to pay coupon or principle on latter.

im studying for the series 7 if that's not noticeable.


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## ToBeInspired (Jul 18, 2013)

Again I do not want a barter system. I'm trying to create a more advanced system. All thoughts are just brainstorming for later use once I get the template down. If it was easy to create a more advanced system I would of been able to just use the ones already created as a reference.

I'm saying ABC, but there's 23 other letters in the alphabet. I'm hoping to finish the rest of it. I'm not seeing much hope coming out of this. I'll either figure something unique out or I'll have to revert to something simple.


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## FleshEater (Jul 18, 2013)

I'm not really following the alaphabet reference. Sorry.

The problem with placing a set price or set value on trades, is that not everyone in that trade is as good as the next. 

The only logical step there needs to be in modern currency, would be to allow the use of gold and silver as a means of usable currency, i.e. buying goods at the store with them.

A gold standard currency is the best there is. The problem is that no one understands how it works, so governments have dismissed it, they've printed too many pieces of paper, and destroyed the whole system.


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## FleshEater (Jul 18, 2013)

Another big flaw in this, is that if you have a trade that I need service from, but I have nothing to offer you (because you have no need for my trade or skill) then I'm out of luck. Hence why the barter system comes into play. I might not have a skill you want, but I could find something you'd want that I could acquire.


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## Outiboros (Jul 18, 2013)

ToBeInspired said:


> Again I do not want a barter system. I'm trying to create a more advanced system. All thoughts are just brainstorming for later use once I get the template down. If it was easy to create a more advanced system I would of been able to just use the ones already created as a reference.
> 
> I'm saying ABC, but there's 23 other letters in the alphabet. I'm hoping to finish the rest of it. I'm not seeing much hope coming out of this. I'll either figure something unique out or I'll have to revert to something simple.


Do you want a system that is more advanced or just one that's more complicated?
Also, what kind of writing project are you using this in? Just interested.


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## popsprocket (Jul 18, 2013)

I don't see the point in changing the way trade works. Trade is trade. You can pay for products in money or goods/services, but it's still trade no matter how you spin it. Is there an actual reason you want this "advanced" system in place? Is it an important part of the plot? Or are you just doing it for the sake of trying to make your setting stand out?



FleshEater said:


> A gold standard currency is the best there is. The problem is that no one understands how it works, so governments have dismissed it, they've printed too many pieces of paper, and destroyed the whole system.



Governments understand how it works, but it's too risky to keep the value of currency floated against any single commodity. 

It's far too easy to devalue or manipulate a currency when you have access to what it has been valued against. That's why Fiat money works. It can't be hoarded to create artificial scarcity, and it can only be supplied by the government who carefully regulate its printing and distribution so as to not affect inflation rates.


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## Nickleby (Jul 18, 2013)

It would help to have some idea of the goals you see for this system. Any economic system will favor some people over others. Who benefits from this system, those with the most specialized skills or those with a wider array of skills? How do you measure the development and maintenance of skills? Who tracks the quality (rather than quantity) of an individual's skills? How do transactions work? Answer those questions and you'll have a clearer picture.


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## patskywriter (Jul 18, 2013)

I think I might have an idea, but I might be off base. I'd like to see your questions to Nickleby's questions first.


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## movieman (Jul 18, 2013)

popsprocket said:


> It's far too easy to devalue or manipulate a currency when you have access to what it has been valued against. That's why Fiat money works. It can't be hoarded to create artificial scarcity, and it can only be supplied by the government who carefully regulate its printing and distribution so as to not affect inflation rates.



That'll be why the dollar lost about 99% of its value over the last century.


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## tabasco5 (Jul 18, 2013)

I would recommend researching the gold standard that was used in this country up to 1933 and/or 1970 depending on how you look at it.  To start with, do a google search for the "characteristics of money."  Learning what money is and is not will help if you do not already know and understand these concepts.  Also, if you have an hour or so, there is a good documentary on youtube that spells it out quickly and easily.  It is called "Money as Debt" and is a three-part series, though you only need to watch the first to get the concepts.


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## FleshEater (Jul 18, 2013)

popsprocket said:


> Governments understand how it works, but it's too risky to keep the value of currency floated against any single commodity.
> 
> It's far too easy to devalue or manipulate a currency when you have access to what it has been valued against. That's why Fiat money works. It can't be hoarded to create artificial scarcity, and it can only be supplied by the government who carefully regulate its printing and distribution so as to not affect inflation rates.



It's actually supplied by a third-party, not the government. The Federal Reserve Bank isn't part of the federal government . Sometimes I question if our treasury even understands money. Going away from the gold standard was the biggest mistake ever made.


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## ppsage (Jul 18, 2013)

The monetary systems which we have exist to represent only one sort of value. We might call it exchange value or commodity value or market value. There is some difference in these but they're close. They are (very efficient and useful) intermediaries for buying and selling. To make a more advanced 'monetary' system (I'm not sure it's really still monetary though, or what the OP is proposing), one would need to evaluate other sorts of value. These exist, of course, it's the evaluation we're making whenever we say "Money can't buy ..." To make a very simplistic example, consider nutritionally equivalent amounts of soy paste and beluga caviar. On the, let's say A scale, the commodity value scale, they are highly divergent, one costs a lot more. On the, let's say B scale, the metabolic use scale, they are the same. It's possible to imagine a society where both scales must enter into the exchange equation. To be more controversial, let us say the second scale measures how green a good or service (a worth, as they say) is. It's possible to imagine a society mandating this measure as a multiplier of the first, to achieve certain ends. A slight consideration of other sorts of value, emotional say, reveals a pretty complicated situation. Calculation across scales could require complex methodology.


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## WechtleinUns (Jul 18, 2013)

I think I may be able to help. First, I'd like to point out that your definitions are very vague. Also, you're right to say that you're not well versed in math, because the math you've put forward is gibberish. However, you do have a good concept, and it's enough to build upon. So then. Let's work it out one step at a time.

Our current monetary system uses paper dollars to represent value. This simplifies economic activity because any value that you create can be translated to a paper medium, which can then be exchanged for any value that someone else has created.

A barter system works along a similiar fashion, but without any tokens to represent or quantify value. As a result, a mathematical description of a barter system would be like a book without words, so to speak. The very idea of monetary policy requires that there be some kind of unit to manipulate. Without that unit, there is nothing to discuss except vague and fuzzy feelings.

Let me put it another way. Distance can be measured in miles, kilometres, or any other units of distance, such as inches/centimeters. The important thing, however, is to realize that the distance is not embodied by the units. It is only represented by them. You can say that 1 mile is equal to 20 light-years, but that doesn't mean you can travel to the sun on half a tank of gas.

It is the same with financial policy. And because it is this way, I have good news for you. The first is that your monetary system is already in effect. We, as human beings, *do* operate on a value-based system that *is* independent of actual monetary units. The fact that we use money to quantify this system and speak about it more precisely does nothing to alter that fact.

What does this mean in practice? Well, let me give an example: Would you rather have 100 dollars or 100 pesos? Most would choose the 100 dollars, because that amount would let them *purchase more value*. This is called a floating exchange rate, because it depends upon how much value the dollar is percieved to have in the international community.

And how is this value calculated? Well, by the very feelings and fuzzy descriptions that I mentioned earlier. A country's money is only as good as a country's word. This is why the United States Dollar is so valuable in the international community. Even though the United States is deep in debt, we still have the largest and most reliable infrastructure in the world. If someone in florida makes a call to someone in Santa Fe, the line will get through.

The United States provides aid to many countries around the world. The aid is often talked about in terms of billions of dollars, but most of the time we're not delivering boxes of money. Vaccines, food, clothing, and many, many products of an essential nature come from the united states to the rest of the world. This value is worth something in the international community, and it is why America is *still* considered the world's super power, even as most foreigners look upon its citizens as dumber than a sack of bricks.

So, technically speaking, your monetary system is already in place. I wouldn't expect any letters from the Nobel Prize comittee, but you win some you lose some. 

But there's something else, and this is the real root of what you were getting at: Inflation. Inflation is an indicator. It indicates that the actual value of a currency is slipping. This is why the Federal Reserve doesn't slash interest rates, though most corporations would love for them to do so.

If the Federal Reserve were to slash its interest rates, then everyone would rush to borrow money from them. This, in turn, would flood the markets with cash and ignite a huge spending spree. The problem, however, is that the production of value and products in stores would not necessarily increase.

So you'd have 50 brands of toothpaste, and 20 brands of bikinis, and a million dollars to spend on maybe two types. See the problem? After the initial rush of spending, companies would realize that they are selling less, but making more. When a store sees that, they get dollar signs in the eyes. They realize that they can extract even more money out of the system by restricting inventory(i.e. producing less value) and raising prices(i.e. demanding more value).

So what happens? You get a 50 million dollar loaf of bread. That's what happens.

The united states, however, is not in such a precarious position, and that is one of the reasons why our financial system is so robust. We are the only country in the world that operates a Federal Reserve System. Because of this, our government can't just say to the banks, "print more money."

In fact, fiscal policy revolves around this point. You're not going to get a president who can just say, "Give everyone a million dollars!" The president doesn't even have the power to do so. Who does? Ben Bernanke, the directory of the Federal Reserve.

This is actually a very good thing. When the government of a nation is under hard times, there is a large temptation to cheat things in order to make them better. Case in point: Germany, after losing World War I, was saddled with debt. The government's response was to pay off the Allies by just printing a huge load of money. The debts were "paid", of course, but the "money" was worthless.

The environment of post WWI germany allowed Hitler to come into the picture and start telling everyone how he'd make things better, actually. But then, when you need a wheelbarrow to buy an egg, you'd probably be desperate enough to listen to someone like that, too.

The federal reserve system prevents over eager politicians from trying to make a good name for themselves by meddling with stuff they don't understand. The entire U.S. Government is highly modular, after this fashion. And that's a very good thing, because it means that our government is extremely stable.

To put it another way: We as Americans have the *luxury* of arguing over stuff like abortion and who would win in a fight between gandalf the gray, and dumbledore's army. The rest of the world is not nearly so lucky. They have to argue about stuff like "who gets to eat?" and "when does the power come back on?"

I hope I have been able to shed some light on the issue. Thanks very much for listening. (^.^)


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## popsprocket (Jul 18, 2013)

FleshEater said:


> It's actually supplied by a third-party, not the government. The Federal Reserve Bank isn't part of the federal government .



'Tis government owned in Australia


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## Lewdog (Jul 18, 2013)

FleshEater said:


> It's actually supplied by a third-party, not the government. The Federal Reserve Bank isn't part of the federal government . Sometimes I question if our treasury even understands money. Going away from the gold standard was the biggest mistake ever made.



The problem is, most people believe that the U.S. has been telling lies about how much gold it actually has stockpiled.  Many believe that Russia and other countries the U.S. currently owes money to has been asking for gold as payments instead of U.S. currency because they believe the value of the American dollar is over inflated and doesn't have proper backing.  If this is true, and places like Fort Knox is indeed a lot less full of gold than what the government wants us to believe, if it was ever to get out, it could cause a serious civil upheaval.  Originally the U.S. was on the 'Silver Standard,' and I still carry around a one dollar silver note that was given to me as a good luck gift.


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## FleshEater (Jul 19, 2013)

popsprocket said:


> 'Tis government owned in Australia



This is such a worldly site, it's hard to keep tabs on everyone.  



Lewdog said:


> The problem is, most people believe that the U.S. has been telling lies about how much gold it actually has stockpiled.  Many believe that Russia and other countries the U.S. currently owes money to has been asking for gold as payments instead of U.S. currency because they believe the value of the American dollar is over inflated and doesn't have proper backing.  If this is true, and places like Fort Knox is indeed a lot less full of gold than what the government wants us to believe, if it was ever to get out, it could cause a serious civil upheaval.  Originally the U.S. was on the 'Silver Standard,' and I still carry around a one dollar silver note that was given to me as a good luck gift.




Fort Knox has its balance posted online. The dollar ISN'T worth anything because the Federal Reserve Bank has been printing billions of dollars since the end of the Bush administration. When we stuck to a gold standard it was 1 to 1. Today, I'd say it's 85 to 1. They can keep propping this economy up, but it's going to sink sooner or later.


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## Kehawin (Jul 19, 2013)

This is slightly off from the OP, but it is also slightly significant - 
I, too, had some silver certificates.  I was working at a gas station as a teen, and this guy who was without a job came in every day to put a little gas in his car to look for a job.  It got to the point where he was using his coin collection to do so.  Every time he came in, I checked out what he was using, and exchanged my dollar bills for the coins if I could.  One day, he brought in 20 silver dimes (this was back when gas was less than a dollar a gallon).  Two days later, he five one dollar bills.  I almost didn't look at them, but they were extremely crisp and at the last moment I did.  I only exchanged them because they were dated the year my mother was born and in extremely good condition.  I took them home to my mother, she took one look at them and thunked down onto her rear, and told me I needed to seal them up and keep them.  They were 1938 silver certificates, and I got them for $5.  Over the course of my lifetime, I gave that man's coin collection to various people as gifts.

So, regardless of what the "exchange rate" is for different types of currency, its value is really only that which the receiver gives it.  Since we were just a gas station, his collection of "valuable" money was only worth its face value.  Current value of those 5 silver certificates is estimated at $300 if sold to a collector - but less now at a gas station if one considers it would buy less amount of gas.


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## Nickleby (Jul 19, 2013)

Don't get discouraged by all the advice on this thread. We don't really know how to set up a successful economy, any more than we know how to write a best-seller. The professional economists don't do any better at predicting the future than people who guess wildly. Create your system. Take the advice you like. Ignore the rest.


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