Currency

@andrewmcpherson the list of assumptions lay out the values and goals that the policy is intended to achieve. If you don't share these values and goals, that's fine, but it would be nice if you could say so explicitly, and explain why.

In order to evaluate how economically realistic the proposal is, you'd need to read the entire policy, and see whether or not you think it could successfully modify the existing economy to achieve the goals laid out in the list of assumptions. That's a technical exercise which doesn't depend on whether or not you share those goals.

@strypey the reason I don't share those assumptions is because I have learnt from the experiences of my German lecturer who came from East Germany, my secondary schoolmate who had left Russia soon after the Soviet Union collapsed, a couple of workmates from Georgia, and a younger friend from Russia.

I think that if even the notoriously well-organised Germans can't make their own communist system work as an economy, then nobody can. And that sentiment has been shared by everyone I know who has actually lived in a communist economy.

For those reasons, the land tax system just won't work, as the basic assumptions used are illogical and irrational, and have been proven to not be desirable functions of an economy by historical evidence from 25 years ago.

@andrewmcpherson This is just one big strawman. Land Dollar = Soviet-Style Socialism (SSS), ergo, can be dismissed. A similarly hollow argument has been made against free code for years (“if you program open source, you program COMMUNISM”). If I claimed that your social network/ cryto-currency proposal is just communism, ergo not worth even discussing, would that be a fair argument?

The proposal for the Land Dollar shares almost nothing with this strawman of your creation. The assumptions in the Land Dollar paper were never the actual values or goals of the regimes which operated SSS, just rhetoric used to justify them, The actual economic mechanisms proposed in the Land Dollar paper have nothing in common with the way SSS operated.

BTW This is not just about “philisophical convention”, it’s about arguments that actually address the point versus arguments that just make shit up. I’d love to learn from knowledge and ideas about economics, but for that to happen, you need to give me detail, not weak rhetoric.

@strypey I am unsure why your argument has now gone over to why I have to teach you basic economics in order for the debate to progress.
I'd simply refer you to 4th & 5th form economics and 6th form business studies, which I did over 20 years ago. For the purposes of your education, you should be able to pick up any ncea studyguide cheaply.

As for the question of the land dollar, it goes against the basics of keynesian economics, which has been accepted as the standard model for the last 80 years.

Now you are you just being patronizing @andrewmcpherson . This contributes nothing to the policy discussion.

As for the question of the land dollar, it goes against the basics of keynesian economics, which has been accepted as the standard model for the last 80 years.

Even if this is true, and you haven't told us why you think it is, that doesn't mean it wouldn't work. Keynesian economics could be wrong. In order for us to establish this either way, we need to go into details and evidence. In policy discussion, you need to put forward reasoned arguments, not just contradiction:
http://www.youtube.com/watch?v=kQFKtI6gn9Y

Does anyone else have anything to add to the discussion of what monetary policy the Pirates could/ should have, and whether we support the crypto-currency proposal by the IP?
@andrewreitemeyer @mako @adambullen @robueberfeldt @hubatmcjuhes

I for one would love for the NZX to pick up the slack where MtGox left off and provide a secure trading platform for BitCoin.

MtGox had a good idea, they just didn't have the security expertise to back up their rapid growth. Once they got to a certain size they became a massive target and their downfall was inevitable.

Security is a major concern with digital currencies, thus organisations that already have extensive experience with security could provide the kind of confidence that people are looking for.

If the NZX were to pick up BitCoin, it could sidestep the whole debate about weather or not it is a "real" currency by trading it like any other stock.

@adambullen it is not that MtGoX was a decent company and only overwhelmed by being massively targeted. Actually they where a trading card trading platform and treated bitcoin transactions with the very same sensibility. They acted recklessly. Not a good idea, actually.

Sure enough, if some serious service provider would take responsibility for seriously trading bitcoins (or any other crypto currency), that would make a difference.

But the real difference is in the relation, really : If the crypto currency relates to standard fiat-currency, then the difference is really only in the international transaction costs. This would be reason enough to support its existence. But how boring would that be.

If the crypto currency relates to something else to back up for the trust needed to run a currency, then it becomes an alternative system. E.g. if a crypto currency would be used to implement the Land Dollar as proposed by the New Economics Party, then it would implement a completely new economic system. This would not bre revolutionary, as it only would exist as a niche aspect of the national economy. But it could become more important to exactly that degree as people would literally buy into it. It could open up a door for us all to step into a system that would stand tall, even when the fiat system may collapse.
I am convinced that we need such a system. It's just that a crypto currency is not the saviour. It is the backing of the currency that might be.

@andrewmcpherson like the western philosophy of the last 2500 years can be divided between Aristotelian and Platonism, the economic theories of the last 80 years can be divided between Keynes and Adam Smith. In this duo-pole Keynes has always been the minority position.
Like Immanuel Kant has changed the playground of philosophy by igniting the era of enlightenment (te reo: Mārama?), degrading both, Aristotle and Plato to 'the classics' as opposed to the 'modern philosophy', we might need to do the same with Keynes and Smith. What about that?

@strypey A fiat currency is inflationary by design, because the fiat system only works as long as there is growth. This growth is not about the growth of the underlying economy, though, but simply the growth of money supply! With the de-regulation of the financial system that we have seen throughout the last 2 decades, the financial system can provide growth of money supply without the need of actual growth of the economy. This is known as bubble, but works to some extend (enough to get fed by boni before leaving the ship like rats) before everything collapses because of money supply being out of sync with real economic growth.

Bitcoin is deflationary by design because the money supply is finite. But transactions do cost a little bit. So having bitcoin is cheaper than spending bitcoin. This is intrinsically deflationary. End of story.
T
he fact that the bitcoin is traded against classic fiat currencies and that therefore the actual price goes up and down doesn't change anything of that nature. These price changes are injected from the external system, where bitcoin can be seen as an alternative to gold, the traditional currency you turn to if you loose the faith in your local fiat currency.

@hubatmcjuhes how can BitCoin have a limited supply when it is infinitely divisible?

Micro-BTC are already being traded, divide by 10⁶ start trading pico-BTC.

In 10 years one coin could have the value of the entire current supply, but still it wouldn't be in any way inherently limited.

@adambullen There are about 21 million bitcoins (already mined or not mined yet) and there will never be any more. Dividing them into tinier pieces doesn't change that at all.

That the exchange value of a deflationary currency rises over time compared to an inflationary currency would exactly be as expected. And - if you are right with your prognosis regarding bitcoin - this would only prove my point.

The question that I would like you to answer is: If you believe what you propose about the development of the value of bitcoin: why would you ever want to spend one (or any part of one) unless you must?

@adambullen the trouble with Bitcoin is that it is not well designed for security, or economics.
1 a. I believe the main problem with the economics of Bitcoin is that it is designed to be a libertarian wet dream where only the first 0.1 % have any chance of amassing a collection of coins.
Naturally, the entire process of mining is also rather energy inefficient now, and provides further barriers to the currency.
1 b. The security is clearly not made by anyone with half a clue how encryption systems work in real life, which is why Bitcoin wallets are so vulnerable to tampering.
For those reasons, and others which the GCSB is also well aware of, a responsible stock exchange would not deal in Bitcoins as it fails to meet security standards necessary for finance.

@HubatMcJuhes 2 a. there is nothing to stop a crypto-currency from being used to trade in Land Dollars, however I do not think that system should be the only use for a crypto-currency.
2 b. The main problem I have with Land Dollars is that I think that it will be used unscrupulously by local authorities to raise additional taxes without being held to account for it. I do not think we need councils to be given a new large source of funds which they control alone.
3 a. Keynes is relevant today as the economic remedy to the austerity of both the great depression and the global financial crisis.
3 b. There is bound to be room for development in economics, so long as it is not the idiocy of austerity and tax cuts for the rich funded by a firesale of state assets, then I am enthusiastic.

4 a. Strictly speaking inflationary economies are preferred to deflationary economies, as the difference is that in an inflationary economy spending is encouraged, which leads to growth.
In a deflationary economy like Bitcoin, the incentive is to save your Bitcoins rather than spend, so the economy slows down into recession as trade is less profitable than saving your Bitcoins for later.
4 b. Bubble economics would be best left to John Key and the farmer MPs in the current regime, they have all the experience of it. ;-P

@adambullen 5 a. Bitcoin is divisible to 8 decimals, but the entire mining process shuts down in 2140 when Bitcoin 21000000 is mined and no further Bitcoins are created.
5 b. The main problem is that the entire economy of Bitcoin is designed to enrichen only the first 0.1% of Bitcoin miners significantly, it is not in any means fair to all comers, or even meritocratic.

Do we need anti money?
http://iopscience.iop.org/1367-2630/16/3/033024/

So I finally read the full land dollar description from the new economics party.

It puts up some interesting ideas, but it seems that the example they give of this being a working system from 1040 - 1280 is a poor parallel with the world of today, mainly due to physical mobility.

Basically as a contract engineer, I work in various regions, if I work for company X in Auckland and get paid some portion of Auckland Currency I can't then spend that currency at home in Taranaki.

Equally this works in the reverse situation, I have some Tananaki Currency that I earned whilst at home, but I have a 2 month contract in Auckland, I have to spend all my NZD as Auckland doesn't accept Taranaki Currency, this impacts on my ability to pay business tax which is a NZD only transaction.

I think some of the ideas raised are really good, such as holding land and improvements as effectively separate entities and thus separate transactions. I also like the idea that the interest portion of the land loan goes back into the local community, but this would massively increase the debt held by the local councils which don't have a great record in this regard.

But I also think that adding a bunch of local currencies just adds to the inefficiency of the overall monetary system. It would lead directly to a kind of internal FOREX market, where Auckland Dollars are traded for Wellington Dollars and NZD are traded with Christchurch Dollars. Suddenly speculators having a new market to play in.

The other problem is the local currencies would inevitably be small (a few hundred million in value), and thus subject to large swings in value as individuals or corporations could theoretically purchase significant portions of the active currency at any one time.

@adambullen
My understanding is that you would pay taxes in Land Dollar, not NZD (but you could if you had reasons to prefer NZD).
Certainly would the exchange between currencies need to be easy and cheap. This can be easily implemented nowerdays, e.g. via a cryptocurrency.
As the Land Dollar is fully backed (or am I wrong here?), there is little to no space for speculation, swings and the like.
Not sure what you mean with the massive increase in debt held by local councils. Where does that come from?

The model used dates from serfdom to your feudal lord, which is why the scheme doesn't account for modern mobility as @adambullen has already stated.
It is not uncommon for people to move around the country just for a holiday weekend, let alone for a work contract.
As this would result in people discriminating economically against Land Dollars from areas they have no plans to go to, this would result eventually in a greater degree of economic centralisation in the main cities. It would not work at all well for those Land Dollars which aren't holiday destinations, or the like.

Imagine if you will, that you are at the Tui brewery and try buy some Tui beer with Land Dollars from Fielding.
Do you really think anyone in their right mind would want to find something worth buying in Fielding ? It's not like there is a variety of shops there.
So obviously, there would be little incentive for people in Fielding to be paid in Land Dollars, as they would at least want to be able to shop in Palmy North.

@hubatmcjuhes the antimoney idea could work in my cryptocurrency, so long as a small debt threshold applies, and that a tweak for money mining is made.

@andrewmcpherson the Land Dollar is designed as a parallel currency, not a replacement of the NZD. You wouldn't deal commodities in Land Dollar, but land, taxes and the right to use resources (CO2, water, hydrothermal energy,..)

@hubatmcjuhes Land is a commodity that should not be locked up to the whims of local councils and I am highly doubtful that most councils can be trusted to manage resources effectively.
There are some arguments that councillors can't be trusted to make decisions about water given how easily some fools listen to fluoride conspiracy crackpot theories by quack propagandists.
Personally I would prefer that those decisions are made by central government bureaucrats and not subject to political interference.

Back to the topic of economics, it is generally accepted that the serf economy model, as used by the land dollar will only benefit the extremely wealthy and those who would prefer the medieval western Europe definition of freedom: ie: freedom comes to those fortunate enough to be wealthy.

@andrewmcpherson If I recall right, you have mentioned that you have read the Land Dollar proposal of the New Economics Party. Yet you refer to the name Land Dollar and state things that I cannot relate to their policy.

The land distributed through the Land Dollar system is given to the people who utilise the land for long terms. E.g. land used for housing would be given to the people living there for either until it is returned (because of leaving the residence) or because of death. Whatever comes later. For that time a fee is charged not higher than the perpetual costs for a mortgage on the land value. The formal ownership remains within the almende. So the council is not managing the resources at all.

@hubatmcjuhes so you would be indebted to the council for life as compared to a twenty year mortgage ?
That is why I say it is economic servitude, as the typical mortgage will be paid off before retirement, and in the cases like my in-laws where the mortgage is not paid by retirement... The children have left home and the house can be downsized, leaving a significant amount of spare money to enjoy in retirement.

In short I have severe problems with a system which is less fair than capitalism.
I will outline why later today.

@hubatmcjuhes the reason I said that company tax is only payable in NZD is because I am assuming that all but my rates will still be taxed by the national government. Thus they will not accept local currency to settle tax debit.

The other point that you raise about land dollars being stable, and having no room for speculation would only hold if there was no trade between land dollars. If trade is allowed, one land dollar is going to be worth more then other land dollars. As soon as there is a difference in value, someone is going to try to exploit this difference, as soon as that happens then you get a demand difference.

My other point about massive debit held by councils, currently land is owned by someone. Lets say a town/city wants to expand into new areas. The land they want to use is owned by a farmer, for the council to be able to give away the use of this land they will need to compensate the farmer, they could either borrow the money (in NZD) from a bank and buy it that way or print some value of land dollars. Assume the land dollar purchase, the farmer now has a very large sum of capital in a time sensitive currency, what he is most likely to do with it is purchase a smaller property in town, leaving him with some large but diminished sum of capital. The most continent way to get his time sensitive currency into non-time sensitive currency is to exchange it for NZD, thus increasing the volatility of the local currency market.

Further to the post above, assume the farmer tries to exchange his large portion of land dollars, thus increasing liquidity of the market. This increase in available land dollars will push the price down, thus decreasing the value of every ones land dollars.

The only way to control this is for the council (controlling body) to remove some of the land dollars from circulation. People are not just going to give up something of value for no reward, so the council will have to buy them back. The only way to do this is to borrow NZD to buy the excess land dollars in circulation.

I lost my original reply while picking up my partner from hospital.
In every case that I look at the Land Dollar scheme, it is manifestly more unfair than capitalism and thereby I can not in all honesty support it as an idea worth entertaining.
It seems designed to increase council holdings at the sole expense of the poor ratepayers who will do worse depending on how unpopular their local area is to live in.
This basically centralises the demand for housing in the main centres and stuffs up the rural economy.
Considering that Jamie Whyte's "Aotearoa Legalise Bestiality party" (ACT) & National will mobilise every one of their potential voters on this issue, if we got this into a coalition policy it would be a serious vote loser.

So, I'm going to say that given that it will enrage the sheep sheering / sheep shagging sector, it shouldn't be adopted as a policy that will muck up the economy.

Mr. Rosenblith has gifted his great documentary 'The Money Fix' to the public domain. You may want to consider watching this very instructive documentary movie:
http://themoneyfix.org/