THE MAGIC TRIANGLE AND ITS IMPLICATIONS FOR BARTER INDUSTRY

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THE MAGIC TRIANGLE AND ITS IMPLICATIONS FOR
BARTER INDUSTRY

• Szczesny Zygmunt Górski szczesnyg_at_tlen.pl
• The IRTA EU Conference Gliwice, Poland, 12-13
  April 2008

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THE MAGIC TRIANGLE AND ITS IMPLICATIONS FOR
BARTER INDUSTRY
Contents THE MAGIC TRIANGLE OF MONEY THE
FUNCTIONS OF MONEY CAN THE SAME TOOL SERVE AS A
TRANSACTIONAL, MEASURING AND ACCUMULATING DEVICE?
RANKING OF THE FUNCTIONS OF TRANSACTIONAL MEANS
IN THE ECONOMY SOME IMPLICATIONS FOR THE
BARTER INDUSTRY BIBLIOGRAPHY
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We can conceive the best monetary system
possible but if we based it essentially on
rivalry rather than on co-operation it would be
like building a house on sand
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THE MAGIC TRIANGLE OF MONEY
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THE FUNCTIONS OF MONEY
Money as a transactional instrument Money as
an universal yardstick for measuring value Money
as an accumulator of value
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Money as a transactional instrument
Money is a catalyst for transactions because it
reduces their costs The acquisition of
transactional means must be accompanied by their
expenditure A fluid satisfaction of needs occurs
when there is a balance between total supply and
total demand Fluid supply needs the presence of
fluid demand
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Money as a transactional instrument continued
A fluid influx of transactional means ensures a
proper connection between the supply and the
demand of commodities A fluid influx of
transactional means is the fundamental condition
for economic development based on the division of
labour The Polish term for a prosperous economy,
koniunktura, is derived from the Latin
coniunctio connection To ensure a fluid influx
of transactional means its emission must cope
with transactional needs
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Money as a transactional instrument
continuedThe rate of the influx of transactional
means is optimal if
It comes into existence at the start of the
transactional cycle commodity ? transactional
means It is recycled as quickly as possible As
a result, it raises the frequency of completed
transactional cycles commodity ? transactional
means ? commodity The accumulation of
transactional means by withholding them from
circulation prevents other possible transactions
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Money as a transactional instrument
continuedThe rate of the influx of
transactional means is optimal if
A moderate inflation of about 5 slightly exceeds
the liquidity incentive. It can therefore
accelerate the circulation of transactional
means. Another tool for accelerating the
circulation of transactional means can be a
demurrage on keeping a credit as well as debit
balance. The demurrage on credit balance
encourages one to quickly spend transactional
means by buying commodities while the demurrage
on debit balance encourages one to quickly buy
them by selling commodities
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Money as a transactional instrument
continuedThe rate of the influx of
transactional means is optimal if
A moderate inflation encourages one to spend
transactional means rather than buying them by
selling commodities Actual giro money is fit for
short-term transactions
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Money as a transactional instrument
continuedThe rate of the influx of
transactional means is optimal if
The barter transactional units (with demurrage
accelerator on credit and debit balance) are a
preferable transactional tool to actual money,
with its inflational acceleration. The
interest-free bartering of transactional units
greatly reduces transactional costs in comparison
with bank credit money charged with interest.
Bibliography recommended for this
section Fritz Anders Das Geld im Kerislauf der
Volkswirtschaft Revolution Nr 7 April 2002INWO
International Sektion Deutschland INWO e.v. Max
Bock Str.55 60320 Frankfurt /M Dieter Suhr The
Neutral Money Network www.geldreform.de lub
System pieniadza neutralnego www.barter.org.pl/ind
ex.php
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Money as a universal yardstick for measuring
value
Money should enable one to express and to compare
the value of all commodities It can function
as a yardstick only if the unit of measure does
not change over time Thus actual money, treated
as a commodity, is not suitable for long-term
transactions Bibliography recommended for this
section Th. H.Jr. Greco Money and Debt,
geldreform.de Pieniadz i dlug
www.barter.org.pl/index.php
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Money as a universal accumulator of value
Money should be suitable for comfortable
safekeeping Actual money, considered as a
commodity, is not suitable for the storage of
value in long-term transactions, because of the
possibility of its speculative distortions Biblio
graphy recommended for this section Silvio
Gesell A Story of Robinson Crusoe
www.ccdev.lets.net/crusoe Historia Robinsona
Crusoe www.barter.org.pl/index.php F.E. Ricardo
Die Giralkartoffeln www.geldreform.de Opowiesc o
pyrach zyrowych www.barter.org.pl/index.php
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CAN THE SAME TOOL ACT AS A TRANSACTIONAL,
MEASURING AND ACCUMULATING DEVICE?
Transactional function versus market value
measuring function Transactional function versus
accumulation of value function Universal
yardstick for measuring value function versus
universal accumulator of value function
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Transactional function versus market value
measuring function
Measuring market value has no meaning in the
absence of exchange Without measuring value,
market exchange cannot take place The stability
of the measuring unit of value is all the more
important the longer the time interval between
the exchange phases commodity ? transactional
means ? commodity This is especially important
in the case of long-term savings ex. disability
allowances and old-age pensions.
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Transactional function versus accumulation of
value function continued
In the case of the rapid circulation of
transactional means, the stability of the unit of
value is not that important On the other hand,
the more stable the unit of value the slower the
circulation rate of transactional means However,
treating the transactional means as a commodity
causes instability of the measuring unit of
value. This is especially the case with massive
stock exchange speculation This applies to the
uncertainty of any economic calculations
Bibliography recommended for this section Th.
H.Jr. Greco Money and Debt, geldreform.de
Pieniadz i dlug www.barter.org.pl/index.php
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Transactional function versus accumulation of
value function
In the case of short-term transactions, the
function of value accumulation is not that
important The function of value accumulation is
all the more important the longer the time
interval between exchange phases commodity ?
transactional means ? commodity The better the
function of transactional means as an accumulator
of value (such as gold and silver coins), the
worse is its function as a transactional
meansThe tendency to withdraw it from
circulation increases Kopernik Gresham
principleEspecially when economic expectations
are poor economic and political crisis, war
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Universal yardstick for measuring value function
versus universal accumulator of value function
Both functions essentially support one
another Bibliography recommended for this
section Th. H.Jr. Greco Money and Debt,
geldreform.de Pieniadz i dlug
www.barter.org.pl/index.php
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RANKING OF THE FUNCTIONS OF TRANSACTIONAL MEANS
IN THE ECONOMY
The transactional function the most important,
as it regulates the division of labour The
function of short-term yardstick for measuring
value to enable short-term transactions The
function of accumulating value for short-term
transactions These three functions are served
for local purposes by the cashless barter
transactional units better than by actual
money Barter cashless accounting is not suitable
for long-term transactions, the long-term
accumulation of value, or as a long-term
universal yardstick for measuring value. Nor is
the commonly-used money. These tasks would be
better served by other tools Relevant
propositions have been given for instance by
Dieter Suhr, Silvio Gesell and T. H. Jr. Greco,
F. E. Ricardo, to mention a few from a long list
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SOME IMPLICATIONS FOR BARTER INDUSTRY
The transactional, accumulation and measuring
value functions can be served satisfactorily by
one instrument only in the case of short-term
transactions These can be served by ordinary
money or bank giro or by cashless barter clearing
units. Ordinary money and bank credited giro
payments are sub-optimal in comparison with
barter credit giro The demurrage on both credit
and debit balance accelerates circulation better
than an inflationary accelerator In the case of
long-term transactions, the barter credit giro is
unsuitable for transactions, as a yardstick for
measuring value, or as a tool for accumulating
value One monetary instrument cannot serve three
functions of money for long-term transactions at
the same time.
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The current international money system, based on
its emission with interest, builds rivalry and
egocentricity, on both a global and local level.
It benefits mainly the wealthy, who possess
superfluous money. That money is made available
with interest to others in dire need of it for
their existential transactions. Ultimately it
brings about the present global state of
economical, political and social crisis, wars and
ecological devastation. It is the merciless
robbery of our planet's resources freely made
available to all of us.Perhaps we cannot change
this enormous powerful structure on a global
level. However, we can prove the feasibility of
the barter industry on a larger scale. After
all, we can use our rationality much better than
for irrational ventures.