================================================== Money reference

Ontologie : "Démocritique"

élément : Sequence_Unit_Class

rdf:ID : N14_Reference_Monetaire

rdfs:label : Money reference

December 2010

drapeau tricolore

Advocacy for the identification of all currencies

The Raft of the Medusa

In the ocean where currencies fluctuate,
alas, there is no land in sight !

We live in a world of floating exchange rates since 1971, when gold reserves stored at Fort Knox proved to be insufficient to cover the cash required in order to finance the Vietnam War.

Richard Nixon then decided to abandon the dollar parity to gold, fixed at $ 35 per ounce by the Bretton Woods agreements. At that time the situation did not change much, because the inertia of the economy was still high.
Of that, who have been affected ?


In calm weather in a sheltered harbor, to only cast off the moorings of a large ship not enough to make him leave the harbor. But with time it will start to deviate itself, then imperceptibly its moorings will be too short to be used, and it would then be necessary to use other means to bring it back to dock.

So, global currency supplies are parties to drift, each currency more or less related to an other, itself attached to nothing !

Some economists would want the organization of a new "Bretton Woods".


Some say that without a reliable reference for currencies, control of the world economy will always be problematic.
they think that the experience shows there exist no reliable natural asset which may be used as a currency reference as currencies are now too dematerialized. The former "Gold Standard" promoted by Jacques Rueff could it work again today ?

So ?

When in a domain a problem remains unsolved, does not it necessary to seek its solution in another area ?
But so lot of new ideas are born of such approach, to report them is often harder than finding them.
As long as we did not find the way to solve it, or simply wanted to build a way to achieve this, is it not doomed to remain utopian ? However being aware of that should not stop to describe any solution you think suitable . Should we not try innovation with one way or another, and begin at the modest imitation of the improbable flying machines of Leonardo da Vinci ? Is not the only way to give someone a chance to realize it ?

So we must dare ...

there is a domain that is both human and intangible that can inspire a reliable reference currency, provided it is agreed to establish it.

Is it a just reward ? We may get its feasibility from these new information technologies that have widely contributed to the current disorders. For this we must, of these, remind a few aspects : When, in the seventies, the Arpanet project has developed what would become the Internet Protocol, it had to assign each machine an identifier, that is necessary for it to be recognized as a network node. This required a shared management by these machines of tables containing lists of addresses that identify each computer connected.

All this worked so much so that a specific organization was required to register the address requests to the network of Internet networks in order to allow its worldwide development. For this an independent, ICANN was created in the late nineties, which manages the assignment of domain names and addresses "IP" , that are unique identifiers at every time of every machine connected.


So this trade issue of a totally immaterial object, that is just a composition of integers, is essential to the functioning of the "economy" of the network of networks, in the etymological meaning of the term.

What was technically realized for the organization of the Internet, could it be transposed to the currency issue ?

Today the money is not actually identified, exept in the form of banknotes. The coins are not. And when money is affected to an account, it appears only as a sum ; it is only the allocation of an amount to an account number : nothing allows to distinguish money in scriptural form 1 .

Is it not philosophically problematic to give any value to something that is both replicable and indiscernible, so that you can sometimes challenge its very existence ?

If it is vital for the economy to use dematerialized currencies , However, would it not useful to make discernible the scriptural money ? If it is no longer possible to rely on a physical property, to get a monetary reference base on mathematical objects, is it not the best way to remove all physical contingencies for the monetary reference ?

Imagine that on an account, instead of recording the amount, one records a closed list of numbers, duly issued and managed by a network of central banks, as they currently do for banknotes.

Imagine the old unstable references of currencies that were gold and silver, or cowries in Africa, replaced by a mathematical unalterable standard, issued by a consortium of central banks : sets of unique identifiers 2 . Imagine that central banks issue these numbers, the same way they issue banknotes.

Generalizing the identification of any bank money means that any transaction no longer allows to be unmarked the traded amounts, but involves a transfer of lists of identifiers payer account to an account credited. An essential role of banks of issue is then to exchange on request lists of identifiers of equivalent nominal values, in order to as appropriate, "make change" or, conversely, reduce the length of lists of scriptural values to manage in each account.

Technically the complexity of recording such transactions is hardly greater than the credit card payment. Only the standard transaction management software needs to be adapted and extended the storage space of smart cards .

Is this different from what we know today ? The transaction management systems that perform money transfers between legal entities or individuals accounts, while dealing with assignments of identified objects. The only change is that the story of transactions is stored. As for Banknotes and coins only a central bank can emit and reabsorb the new scriptural currency.

The question of the value of such currency is recursive: that was worth a Cauri in Africa if it is not the result of its scarcity or of its abundance ? Was it not the same we do in Europe with gold and silver coins ? Making discernible a bank money, the outstanding volume is known reliably, so its actual value is manageable.

The political aspect of the rules assigned to central banks for the issue of this currency based on economic conditions is not different as what exists today. But would it not be technically manageable as currently it is ?

The identification of bank money does not only monitor in issuance of bank money, it also allows the resorption of bank money, and to control it 4 . This is like blood in a human body, of which it is the main currency of vital exchanges. As for us, the balance of our lives that requires constant replacement, without inflation or growth.What argument does one have to justify that it should be different for our economies ?

Bank secrecy for tax evasion, money "dirty" and "whitening" can they survive in such a monetary system ?

All this was technically unthinkable a few years ago. The extension and development of Internet communication capabilities, the strong cost reduction and miniaturization of digital memories, all this has made this possible. It's only a matter of programs and of implementation of IT procedures.

As we begin to experience the devastating effects of deregulation, everyone seems to demand new "regulations" or "controls". But how many of those there know what formally is a "regulation" and a "control" ? Who knows the laws of the scientific discipline which relates to cybernetics ?

At least, those not there should be taught that it is neither theoretically nor practically possible to control a phenomenon without relying on an invariable measurement reference ?


Making discernible the bank money by its identification would give the central banks a way to assign a measurement reference undeniable to any value.

Although paradoxically this reference is devoid of intrinsic value other than the names attached to it, the guarantee of their uniqueness verifiable at any time, is a guarantee of the confidence that will be granted.

The adoption of a currency is based on the confidence that one can lend to it. This is done by imitation, each preferring to recognize the most shared currency. This is done by obligation when an institution requires it for the financing -by taxes - of common charges. However if the institution may charge a price in return for what it brings, this assessment is limited to this and other exchanges are free to estimate their own credit or their own belief in the value of the imposed account unit.

In fact this is based on rules of currency issuing : on what basis are they founded ? The takeover of States on the central banks create the temptation to offset the deficits by issuing money, even if inflation monetary generates distrust and consequently the destruction of the economic balance. But if the separation of central banks allows to control inflation, it is unable to control imbalances in wealth accumulation and competitive devaluation of the value of goods essential to the life of human communities.

For the credit do not drift, and investors expectations remain valid, it is necessary that the units of account are formally attached to objects indispensable to life on Earth, the amount of which is inherently inexpansible

In a way this ensures that the emitted money supply always matches what is necessary to solve effectively achievable short-term transactions. And it prevent the development of expansionist false hopes, on which ordinarily the financial traders make their profits, and , from crisis to crisis, who despair to obtain them.

again , it is in a way about giving to the money the role of a mere intermediary between transactions, allowing their spacing in time, splitting their exchanges and plurality of actors that barter can not. And restrict the money rigidly to this simple role 5 .

This assumes that the identification of any amount issued is formally attached to a share of an registered mortgage. These mortgages should be based on tangible as well as vital wealths, also formally registered, at central banks.

Such practice is not new : the ancient Egyptian people were storing a part of their crops within the stores of the Pharaonic administration, in order to get identified countermarks made up of ceramics for their routine exchanges.

Unlike the old standard based on gold reserves or in France the revolutionary assignats that were based on the confiscated property of the Church, currencies should be referenced on mortgages on the sets of vital goods on markets, and not on closed quantity resources inadaptable to the daily changing needs of trade . History shows that monetary references based on a limited wealth has always been compromised, then abandoned.

Rather, it is necessary that every citizen can claim to save or reduce a mortgage with a money issuer on the basis of vital though it puts trade. The money supply can be based on all these mortgages.

As the identification of any currency unit is exactly that of a share of an identified mortgage, it inherits its lifecycle. As it is created when anything is put on market, it is destroyed when that thing is consumed, by obsolescence or by destruction.

By their conservation role mortgages, of which most is by definition local, central banks need to form a federation of delocalized emissions of common currency.
Each one retain the prerogative to assign its share identifier to the currency units corresponding to the mortgages that each have registered. This allows to separate each monetary mass issued on a local market, that needs to be taxed for the corresponding financing duties of the local market.

The Mortgage rights create a negative interest on the real economy. This is paid by the sets of financial actors, primarily banks, for the payment of bank care expenses. This negative interest is essential to the balance of the economy, in that it must fully compensate the positive interest rate they demand as compensation for their monetary cash advances.

Such a reference system is it useful, if not sufficient, to found the stability of economies ?

If indeed that is not enough to achieve satisfactory balance on the relative value of capital and of work, the role and power of a tax system adapted to the control of trade dynamics can achieve this, in addition of a principle of monetary subsidiarity, with partitioning of non-speculative local currencies.

But without money and traceability of its value, which can claim to control maintain any such balance ?

to follow,


In order to verify that these identification principles of scriptural money were feasible, it was necessary to demonstrate the technical feasibility of evolution of payment systems that implies.
This was achieved by Tine Seck under its report graduation of Miage Master 2 (Master of Information technologies applied to company management) at the University of Evry Val d'Essonne.
Her report is available here .

1 "A hundred real thalers do not contain the least coin more than a hundred possible thalers. For as the latter signify the concept and the former the object and positing of the object, should the former contain more than the latter, my concept would not, in this case, express the whole object, and would not therefore be an adequate concept of it. My financial position is, however, affected very differently by a hundred real thalers than it is by the mere concept of them (that is, of their possibility.)" (Immanuel Kant)

2 Technically this could be XML identifiers ; XML (eXtensible Markup Language) is the meta-language for any computer expressions, recommended by the World Wide Web Consortium, universally adopted by all players in the field of computing. XML is a kind of Esperanto that succeeded.

3 One can imagine the scene of a rendez-vous of a "Holder" with the representative of the governor of the bank, who signed the banknote, asking him to execute his promise ... ... and this one, probably with a very British phlegm and with the serious attitude that is required, takes the given banknote , where he acknowledges his debt to him and replaces it with a new banknote !

4 The resorption of the currency is a key of economic balances, that the institutions currently deal only with the devaluation of money that inflation creates. Transposed to a human body, it would be as if the blood becoming less and less effective to bring oxygen and nutrients the body would need more and more blood volume, with the multiple disadvantages of hypertension, thrombosis, edema, which are desirable for nobody .
The identification of the currency allows to control its lifecycle, and define when and why, at the end of life of each currency unit it must be resorbed, according to the principles of balance. If we accept that money is only a intermediate value support between two transactions, it is justifiable to associate a lifecycle between two transactions, avoiding the imbalances engendered by monetary accumulations. It is also suitable to apply the principle that no one can claim to be entitled to benefit from the turpitude of others : so, for any financial penalty required by law, should it not result in the resorption of the amounts paid, so for nobody's profit ?

5 To take a physical analogy borrowed from quantum mechanics, the money is then a kind of intermediate boson that have just a short life between two strong physical interactions, as this would be represented by a Feynman diagram ...

Feynman diagram

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