R. A. Hettinga on 14 Mar 2001 02:39:29 -0000

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[Nettime-bold] Postscript: A Synthetic Numeraire (was Re: Geoecon: Who needsmoney anyway? )

At 4:51 PM -0500 on 3/13/01, R. A. Hettinga wrote:

> Bruce isn't the only one...

And neither was I, in the long run.

One of the things I finally realized, about three months after I wrote that
rant, and after his incessant hammering on me for a couple of years about
it before then, was why Paul Harrison, now IBUC's President/COO, kept
pounding on me to pay attention to the possibility of creating digital
bearer bills of lading and, more important, digital warehouse receipts --
which are what e-gold book-entries pretty fairly represent at the moment.

Paul's point was this: if you can issue bearer-form title to recently
finished manufactured goods, and create an index out of them, you end up
with a fairly decent proxy for an inflation index.

The US Consumer Price Index, for instance, is an example of exactly this
idea, only in book-entry form.

And, if you notice, a central bank, like the US Federal Reserve, uses
indices like the CPI to "price" their currency against inflation.

The next step, of course, is to just publish the index of *all* the assets
you're cuing off of, well, sell it, actually, just like Standard and Poor's
does with the S&P 500, a safer proposition than actually holding the
capital for an entire currency, which is why nation-states issue currencies
by fiat these days anyway.

With a public index like that, *anyone* can issue an inflation-free
currency just by buying the underlying assets of the index and selling
internet bearer certificates representing those assets in the aggregate.

Or as close to inflation-free a currency as the market will allow, the
march of material progress (more stuff for less money) being what it is.

Once again, look, ma, no nation state.

Or, as Richard Rahn, Regan-era supply-side economist turned financial
privacy advocate pointed out to me at a conference on non-state governance
in Nevis, where I presented this idea about 6 months after that article was
written, you create a "synthetic numeraire".

Now, that, folks, is *progress*.

Or we've just gone full circle, creating a currency when we might not need
one anymore?

The ganglia, to quote a famous science fiction villain, twitch...


R. A. Hettinga <mailto: rah@ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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