Is a multi-currency model possible?
The fundamental theorem of plane suggests you need only 2 non-collinear vectors to define a plane. 3 non-coplanar vectors can define a space. Thus to increase the spanned subspace of any entity, we need equivalent independent entities which serve a similar purpose in a similar context. Id est, to vectorise money, we need more and different money.
If you can’t follow anything — you’ve missed the preceding lecture.
TL;DR: The current capitalist system is antedated. A very desirable
evolution would be if we upgrade our fiat currencies to vectors rather
than scalars.
So the question I want to discuss here is:
Can a multi-currency model work?
Of
course. The world is a multi-currency model.But who is going to be the
overlord of these new currencies here? I wish to dedicate an entire post
to that discussion later but it is difficult to proceed without
discussing it briefly here.
Since
the key idea was to preserve individuality, how about every individual
mints their own money? Bit much? How about governments independent of
central banks? It seems like a really catchy and rather ‘current’ idea
so I’ll let you ponder over it. How about we invite the Church to the
party? Let them roll out their currency. It adds a lot of sense to the
‘independent vectors’ vision. What if different big enterprises roll out
their own currencies? This sounds more vogue. We’ll discuss this in
this post as it appears to be the most generic template which can be
scaled from an individual to the globe.
If
you’ve been wondering all this while how the heck are they supposed to
print money — I’ll suggest you google a rarely heard term called ‘Cryptocurrency’. There
are just too many blogs blabbering about it and they’ll convince you
well enough that you yourself can start minting your own currency
whenever you want.
To
analyze the practicability of a multi-currency model, let’s start by
asking ourselves, why don’t we have a universal currency? Why does each
country get to have their own currency? Why can’t we agree upon a
universal currency? There have been attempts towards it but among other
reasons, Uncle Sam wasn’t much fond of it.
The first and perhaps the biggest reason is that every fiat currency has an overlord, a central bank, and a global currency with a single overlord would mean just too much centralization. Like
it or not, money is the biggest thing that drives the world and it is
crazy how we make and manage money. Everything in the world would be
subjugated to the all mighty Central world bank.
Beyond the demerits of a global currency, are the many merits to each ‘economy’ having its own currency.
“I promise to pay the bearer a sum of two thousand rupees” — Governor,Central Bank
When
trading your G&S for a given currency, you qualify your trust in
its issuer. It is essentially buying stocks of a country’s economy. You
believe that any time in the future you can barter the money for an
equivalent amount of G&S. There is a belief imbued in possessing
currency of a certain economy — a belief that it’ll be worth its
denominated price in the future too. There’s patriotism in avowing this
trust in a nation, and in practicing its trade via its entrusted
currencies. It’s its liquidity that makes us forget how every time we
buy (sell) something, we evaluate and compare the worth of the 2
commodities — what we bought (sold) and the money we spent (got).
The same trust can
be transferred ‘as it is’ to a currency issued by any other authority
as long as you are assured of its production transparency (Forget
crypto, we do buy and sell stocks, don’t we?). So we can all agree that
simultaneous circulation of multiple currency is not only acceptable,
but is very much in practice, albeit in a less liquid form. The real
question is : Will the common folk ever be ready to calculate the risk vs capital gain of a portfolio (of multiple currencies) trade on trivial commercial exchanges?
No.
Not even when there are only a couple of fiat currencies accepted in
the market (and I plan on painting a world where there is a possibility
of infinite currencies). That is because, the currencies still
represent a common capital. The additional vectors are simply a
computational overload. If we consider that different currencies have
different nature of volatility, then it is not simply a
computational overload, but a genuine menace in profit evaluation. No
bloke would want to sketch a risk vs gain manifold in an N-dimensional
hyperspace and then compute the optimal price. More intricately, the optimum result would be a pareto-optimal curve
wherein the evaluator will have to pick a point of his immediate
preference in every trade. This is the real headache (bottleneck) of
such a system.
But, what if this “capital gain” equation was irrelevant or barely relevant? What if these currencies do not represent a common capital? What if there was more meaning to each of them than mere monetary merit? Say one of them is a token of your belief in love; another represents your conviction in spirituality; how much you prefer apples over strawberries; a bet on Johnny Depp’s capacity in underwater basket-weaving; your love for Angel Priya’s right earlobe AND her pottery skills. Each currency is a token of your patriotism towards its own economy — to
what it represents. You can’t compare a man’s bet on Katy Perry
squirting COVID-19 vaccines out of her elbows when her cheeks are
pinched to Monero’s worth in Costa Rican colones. They both have
different meanings to them. Apples and Oranges baby!
What these meanings could be, for the different currencies I dream will be discussed in a later post. Stay tuned.
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