What if we all got $100k?

This is a thought experiment to help conceptualize the value of money, material, labor, goods, and services. It may serve as starting idea for a different way to structure economies, but it is by no means complete or robust. This is loose theory, not a fact-based article.

I wrote this in my journal at like 1 in the morning.

What is Money?

Essentially a contract that can be exchanged for the material that is being monetized. The contract stipulates that it (the contract itself) can be exchanged with others for material goods, labor, and services. If that contract fails (one is unable to procure goods / services from reasonably accessible markets), then the contract is void, and the original material backing the contract must be given to the contract holder.

In Essence: I get $200 from the Mint. If no-one will take my $200, I go back to the Mint and get some gold ... or whatever.

So how is money created now?

The contract is to be able to buy goods/servies. Most can be bought with money. But if markets decline that money, what collateral is provided? What does America provide of value if money stops working? Food? Water? Shelter? Military. Military is of value so far as it procures food. Labor? Industry?

If people are unwilling to work (farm, transport, etc) due to money's loss of value, the military can ensure that labor continues. Without some amount of shared labor, we surely would all starve. Or die much sooner of a lack of water.

Inventing Currency | A hypothetical

  • America produces 30 pounds apples.
  • China produces 10 pounds tofu.
  • America buys 10 pounds tofu and gives china $25
  • America printed those $25 and that can buy 30 apples
  • China buys 10 apples for 12 yen (not yen? And probably more than 12)
  • 12 yen affords 3.3 pounds of tofu.
  • China printed that 12 yen.

Yen and USD both serve as contracts that stipulate: Currency will afford X amount of tofu (or apples)

But product prices are not guaranteed, in reality.

Devaluation of USD

  1. $25 more dollars are printed to purchase another 3.3 pounds tofu. Transaction complete.
  2. No additional apples are produced.
  3. China wishes to redeem their $50 for 60 apples.

Only 30 apples are available. So are $25 held onto as a promise of 30 future apples? Or are the additional $25 worth nothing? If one shall die now without apples, then the promise is worth nothing. If the promise is worth nothing, then USD has been devalued.

If the contract cannot be fulfilled, then the currency (contract) is void. And what are the terms when voiding that contract?


A New Economic System | Thought Experiment

  • Everyone has $100,000.
  • No more than $100,000 can be accrued to savings annually per person

More money can flow in as long as it flows back out. Non-labor can still build wealth, but not quickly. The maximum someone could die with, if they die at 100, is (100 years X $100,000 = ) $100,000,000 (100 million). That's 100 people worth of money. None extra was printed.

How can that happen?

  • 100 people lose $100k
  • 200 people lose $50k, leaving them with $50k
  • 500 people lose $20k, leaving them with $80k
  • 10,000 people lose $1k, leaving them with $99k each

The $1mil at age 100 provides security, but that has a cost. The goal here is to effectively distribute resources. I don't want anyone to starve or be unable to get shelter / medical care. We'll set aside welfare for now and talk labor.

Example 1: 11 people with $100k each to start

Let's talk 1 year, 11 people, $100k each to start.
One person ends the year with $200k.
Ten people end the year with $90k.
Why?

Everyone earned $100k. The Ten effectively each spent $110k. The One effectively spent no money.

How did The One spend no money, yet survive?

  • Performed additional labor & used the extra income to pay The Ten for food and other needs.
  • Owns land, produces all their own food, and directly trades product for all needs
  • Stole all they need to live
  • Provides higher quality product. Sells for more. Extra income is spent for needs.
  • Is the only source for water & prices water (product) higher than their labor costs

Example 2: 10,000 people want to be millionaires

If 10,000 people are millionares (1.1 mil) at age 100, then 10,000 people X 100 years = 10,000,000 people with zero wealth (savings). If Ten Thousand people want to be millionaires, then Ten million people will have zero wealth.

Scaling up | $100k per person globally

If 1 million people want $1.1 mil, then 1 billion people have no wealth. Will they starve? Without welfare or income from labor (or products/services), they'll be unable to purchase food.

If they are unable to sell SOMETHING to the market, and they are not provided money, they will be unable to acquire from the market.

Then they must die, be given product, or acquire product outside the market.

Why can't they sell ANYTHING to the market?

  • Disability
  • The market has no needs / No scarcity
  • They choose not to participate in the market

How is each of these scenarios handled?

  • Disability: Welfare, go outside the market, or let them die.
  • The market has no needs: create needs in the market, go outside the market, or let them die
  • Choose not to participate: Welfare, go outside the market, or let them die

In my current thinking "welfare" may include non-government assistance, like support from friends/family or community groups. It also may include government assistance.

So the four answers are:

  • Welfare
  • Go outside the market
  • Let them die
  • Create new needs in the market

Going outside the market

"The Market" would be ... official trade networks that use currency as their means of trade. Their could be other markets outside of these that allow trade, such as illegal goods markets or products traded directly for products.

Theft is outside the market & is a means to acquire food and other goods.

Let them die (no, please don't)

No. I don't like it.

Welfare

This is a whole complicated thing that involves taxes and non-market means for distributing resources. I would love to think about that, but not right now.

Create new needs in the market

Umm. I think this is what we do. This is how people keep working. I have a technology based example.

We need smartphones. This is a practical need at this point.
How often do we need to replace smartphones? It depends.

Ideally

  • Software efficiency is a priority (as it was with like, the GameBoy)
  • Phones are highly repairable (from initial design to availability of replacement parts to instructions & schematics)

Phones very rarely need to be replaced. Hardware does degrade or get damaged & need fixed / replaced, so some replacement will still be necessary sometimes.

In Reality

  • Software efficiency is not much of a priority, so it keeps getting more complex, memory intensive, power intensive, and slower.
  • Hardware keeps getting faster, better, and more efficient.
  • Phones are NOT very repairable (from design to availability of parts & support)

Phones must be replaced frequently.

In conclusion (about phones)

In both cases, some people will need to replace their phones, or at least certain parts. Camera hardware will improve. Other hardware will improve. Some people will have a real need for this, which is inherent to the work THEY are doing. There is some inherent need to replace hardware. However, the bulk of hardware replacement is an artificial need created by inefficient software development and systems that make it difficult to do repairs or to do modular upgrades (like replacing JUST the camera)

In conclusion (about it all)

Our current system creates a need for replacement phones. This need creates jobs. Those jobs allow resources to be distributed. This need is CREATED, rather than being inherent. But there is an inherent need for the distribution of resources and the sharing of labor.

I would like an economic system that stops this cycle of:

  1. create new need in market
  2. Satisfy the need
  3. Loss of jobs / reduction in distribution of resources
  4. repeat

Umm. There's also a lot of back and forth in my head about some needs that are created by culture, rather than by large producers. Culture seems to demand higher quality graphics in games, easier software development (which often means MUCH less efficient), better graphics in movies ... But I'm also not convinced these are all real needs for human wellness and growth.

I'm interested in laying out what the actual human needs are & therefore the BASE needs of The Market. Then establishing different levels of needs & considering where we can eliminate needs. Levels of needs may include: Human Survival, Human Happiness/Entertainment, Self actualization/Personal Fulfillment ... I don't know.

I'm done. Hope you liked my thoughts.

Mayhaps (footnotes while re-reading)

  • People using guns to force others to do labor might be less effective than having a "military" that just DOES LABOR when the regular laborers in the market refuse to
  • Much of the value that currency holds is actually in the promise of labor and future product, not in its inherent value.
  • if we only allow a person to increase their wealth by $100,000 in a year, then there must be a system to track this wealth and a system to re-distribute anything over their allowed increase in wealth.
  • I made some estimates on math ... like maybe the age 100 should actually be age 101? It doesn't really matter.
  • Maybe new money is created only when a new person is created (born), and maybe their $100k of new money is destroyed when they die. Or put into a reserve? I don't know
  • With Example 1, there are so many different ways i could describe it. So many different hypotheticals.
  • in Scaling Up, it could alternatively be 2 billion people each have $50k wealth or whatever. They also could continue to provide labor, get income, and afford their needs. It's if they are unable to provide labor (or otherwise acquire income), then they would starve.
  • if phones are highly repairable, this creates a new need in the market for people who can do repairs ... and/or for educational materials that allow regular people to do their own repairs.