Tally Sticks in your future?
There has been much
talk about the need to end the Federal Reserve Bank. However, there are many
people who think the way I do and have lost faith in the electoral process. The
idea of ending the Fed seems like an insurmountable path through government
bureaucracy and endless regulation. When I think of ending the Fed through
operating the levers of government, a visual comes to mind of government trying
to save New Orleans from Hurricane Katrina. Maybe they could end the Fed, but
what would they replace it with? If history proves anything, they will replace
it with something worse than what we currently have. Beware of government
solutions, they are usually worse than the initial problem.
What I have been
wondering is, wouldn’t making the Federal Reserve irrelevant essentially
achieve the same goal? Then they could destroy themselves by going out of
business. This seems like an interesting concept, but how would one go about
Is a Tally
One approach might be
to go back to an ancient idea involving Tally Sticks which dates back as early
as 35,000 BC. Is a Tally Stick money? Well, actually according to wikipedia.org, a Tally
Stick “was an ancient memory aid device to record and document numbers”.
We use memory devices today, but instead of using sticks we use a little more
modern device called a computer. So a Tally Stick actually is not money but
just a method of keeping ‘tally’ of who has paid or owes what to whom. In other
words, the stick itself has no value and its primary job is to keep ‘tally’.
It’s equivalent today is just a simple computer book keeping system.
paper money used in history:
When you think about
it, it’s not much different than how banks operate today. When you go to the
bank to get a loan they don’t even bother to print the money anymore. They just
give you a computer entry in their database. Only you pay interest on this computer
entry, which only costs them the electricity to run the memory device.
Who owns the computer?
So the real question we
should ask is: who owns the computer? If the bank owns the computer, then I
guess we pay what ever they demand for interest on a certain pattern of
electrical signals. What if we take back ownership of the computers and set up
our own data-warehousing network? What then would we charge ourselves interest
on computer entries in our own computers? I’ll probably charge myself nothing :).
You can charge yourself what every you want.
gold was the answer?
What I’ve been
describing is a form of fiat currency, i.e. there is no value in the currency
itself. “But I thought gold was the answer?” Gold can be used as a currency but
most importantly it’s a store of wealth. Gold will always be accepted in a
barter system, because it has value. The success of gold as a currency,
however, is dependent on the availability of gold. For example, because much of
the world’s gold has been amassed into a few hands it will always be difficult
to get away from manipulation of the gold market (some say that the IMF holds
75% of the worlds gold). The second point is this: If things get bad and I need
to feed my family and I have two goats and am tired of goat’s milk and would
sure like to have a pig, if gold is the currency and I have no gold, most
likely, I’m not going to be having bacon for breakfast anytime soon.
benefits of trade?
In economics 101 I
learned the benefits of trade from the simple illustration of Robinson Crusoe
and Friday being trapped on an island and their ability to produce coconuts and
palm leaves (a
quick overview of basic economics). Without going in too much detail, and
in a nutshell, it was shown that both benefited by developing skills,
specializing, and trading with each other. If trade is mutually beneficial for
all, why then put limits on ones ability to produce and trade with his neighbor
due to the availability of a physical commodity?
A little competition
The fed’s decades long
old easy money policy creates a difficult environment for the competition of
gold as a currency. The reason is that human nature wants now what it can pay
for tomorrow and easy money always looks good compared to working for gold and
silver payment. The average person may not always think about the future
ramifications of the use of such a currency and its pitfalls e.g. exponentially
compounding interest and debilitating inflation. As long as there are enough
people around to fall prey to this easy money endless debt scheme, then there
will remain powerful bankers to contend with.
A community controlled
fiat currency with the capability of credit creation has three major advantages
and would give the centrally controlled interest bearing Federal Reserve Note a
run for its money (pun intended). First, there would be no interest on the
creation of credit hence no exponential run away credit bubble looming. Second,
it would be controlled at the local level instead of centrally controlled by a
powerful international banker. It’s much easier to run down to your local
treasurer and drag him out to be brought to a public lynching if things go
south! (a metaphor of course...I’m not advocating violence). Third, there would
be many currencies competing with each other for viability. If you don’t like
the direction that your currency is heading, then abandon it and join another,
or better yet start you own. Most likely an individual will be involved with
several currencies simultaneously and most frequent the one that seems most
How would a community
First, one must change
their basic mind set about the role of money. Many equate money to wealth. This
I believe is a mistake, because this means that the destruction of money is the
destruction of wealth. Money is merely a tool that enables trade. Wealth is
still measured in oz. and stored in a vault, or acres, or square feet, or
bullets, or however you choose to define it. We have been forced to think like
this recently due to the current destruction of the U.S. dollar, however, it is
wise to continue this mindset even when talking about the role of a community currency.
A currency begins with
someone saying, “hey, I’m going to start a currency” and calling it something
like “tallysticks” and then getting people in his/her community to join this
currency. Most likely it would be someone who owns a computer and has
web-hosting access. Everyone in the community starts with a zero balance in the
bookkeeping system. Some type of rules are set and agreed upon by the community
to limit the amount of credit individuals can create for themselves. Credit is
only created when there is a transaction. For example, if Joe wants to buy some
carrots from Fred for the amount of one ‘tallystick’ then Joe’s balance becomes
–1 and Fred’s balance becomes +1. Joe can continue ‘buying’ stuff from the
community until he has reached his credit limit agreed to by the community.
Over time, an individual can increase his credit limit based on community rules
and his ability to repay the ‘debt’ to the community i.e. deliver goods and or
services back to the community in exchange for that which he has received.
balance of the community will always equal zero. There literally is no value in
the currency itself. In other words, it's not a debt based currency (like the
FRN), nor is it a value based currency (like gold), but it is a zero based
currency. The accumulative ‘value’ of the currency is nothing. It is merely a
bookkeeping system for keeping ‘tally’ of economic activity. The advantage of
this is of course, that there is no lag time to stimulate economic activity as
in a commodity-based currency, which requires the accumulation of wealth
buildup in the circulated currency itself. Economic activity would, therefore,
be generated almost spontaneously with the limits being only the community’s
ability to produce and trade. Community members would spend time raising goats,
farming crops, or what ever instead of mining for a mineral that is required
What is open money?
In order for the
community to have their own computer networked tally system, there first has to
be a standard, which is open to everyone from which to build the system on.
This will allow computers distributed across the Internet to interact with each
other and perform currency-based transactions. ‘Open money’ is the standard
that is currently in development in the open source community of software
developers (here is the
manifesto). Below is the basic flow diagram of what the architecture would
look like. For more info on open money go to http://openmoney.org/
…or simply google “open money”.
The tallysticks.org project
The tallysticks.org project is an implementation of the
open money core with an interface that allows for posting items, viewing items,
and bidding on items for trade using various currencies. Through this
interface, accounts will be created in the open money core, and flows will be
generated when item bidding is completed. It is currently at an early
development stage and allows for posting, and viewing of items for trade. The
bidding capability will be completed shortly, and then following that will be
the creation of flows. The final task will be to create an interface to the
member account to view balances and transactions.
The immediate goal is to get people familiar with the
concept of community currencies and the open money idea. It is also to create
exposure to the tallysicks software and seek feedback on the usage model. I
hope to see a reasonable amount of interest and if there are any software gurus
out there who would be interesting in collaborating, I will eventually have the
source code checked in to a software warehousing sight—contact me if
interested. I will also eventually have the ability to submit bugs and feature enhancements
to improve the overall experience. Feel free to browse the sight and post and
view listings at: Tallysticks.org When there is
enough people that feel the software is of good enough quality we can reset the
account database (zero out all balances) and then begin submitting real
postings, small ticket items at first, like maybe things that might normally go
to goodwill, t-shirts, or whatever. Thanks and enjoy.
Listings page sample: