Money Creation

A lot of parts of Macro economy become irrelevant in colourcash. The whole phenomenon should be rewritten. If you have a background in economy, I must congratulate you with your persistence reading this book as far as you have. From here on it gets worse, we're going to talk about money creation and money destruction.

A lot of people think money begins its life when they take it out of the ATM. Taking money from your bank account does not mean you "create" money in that instant. That money was already sitting on your account, so it originated earlier. But the money on your account has to come from somewhere? "My employer!" I can hear you think. And he gets it from his customers. Right. But where did money start its voyage? When did it appear on someone's account for the first time?

According to the Belgian-American professor Bernard Lietaer [liet2001] there are two possibilities. The first is the case of mutual credit.

Mutual Credit

When using mutual credit one person sells something to another, both bank account balances change. The total of all bank balances should be zero, in principle. There is no money in circulation; all the money is virtual, on paper or electronic. This system can easily be introduced on the Internet, and no doubt it will be.

We used the same system in the student flat where I lived for years. Everybody had their own account at the kitty. When you paid for bread or dinner, you wrote it down. You could also settle internal payments. Say that you borrowed 10Euros, you add it to the lender and subtract it from the borrower. This way the total end balance is not influenced by an internal settlement.

Printed money

The other way starts with printing paper money and minting coins. An old problem in the Capitalist (black and white) economy is that when there is too much money on the market, it loses its value. This problem is non-existent in colourcash. You plan ahead based on the expected harvest and use that base to create money.

We use the traditional Mayan "Day outside of time": July 25 for money creation and destruction. This day our Sun is aligned with Sirius in Orion, our nearest point of calibration in the time-space dimension. Our stellar clock heralds the new year then. You've already understood... Together with the money system we also reform the calendar, but that choice is up to you. If you use the Gregorian Calendar, I think December 31 or June 30 are good dates.

July 25 the sunflowers are nearly ripe to be harvested and the farmer says: I think I can harvest 1400 kilos of seed this year. He agrees with the oilman and they set the price for 60 kilograms of oil at R6000 G6000 B0. In the same way baker miller or other farmers make price agreements about the cycles of grain and bread. Also the hop farmer and brewer make their planning. The evening of 25/7 all representatives of all (production)cycles gather and count their blessings. That moment, form the bottom up, the planning of our village tor the following year is born.

The total turnover of the village is R24000 G3000 B0.

The village knows, approximately, what the total profit will be. The incomes of all villagers will be precisely R 24000 Organic waste, water and other recyclers will have to process G 30000. In this case a community of ten villagers can generate annual income of R 2400 per person or 6 per day. Not a lot, but the available space is limited!

All other products are procured in neighbouring villages that each have their own speciality, apart from bread. E.g. horses, cheese, wine, whatever...

The villagers will obviously spend money. They assume that all the money will circulate 1 x month, so they need to create R2000 G2250 B0. They can either print the money using a basic printer or keep a simple bookkeeping that regulates the mutual credit. This administration can be kept on-line, using the internet, or on paper in a ledger.

All this trouble to make a plan for the whole village, is something they'd probably have to do anyway. In an Every man for himself economy, you don't have to reckon with your neighbour, but if you have to survive with what you can produce...

Limitations

The given example is rather limited, so let's examine them closer.

You will have noticed that the earnings are rather slim for farmer and oilman, but that is what you get when you only have 0.5 hectare per person. A fair earth-share according to the Ecological Footprint is around 1.8 hectares per person. In Holland the space used amounts to 3. We are used to too much luxury, we use up more than we should. The inventors of the Footprint try to make you feel guilty in order to get you to take some positive action. Ask yourself... What happens if all those football fields (out there in Elsewhereia) I need to keep up my lifestyle, all of a sudden no longer are available to

The given examples was deliberately disfigured, because the Blue-part is zero, and that is an unrealistic situation. The goal of the example was to show how to determine the cost price of products in Red. There are no typical Blue products, like natural gas, plastics and imported goods, in the example.

So this example is far from ideal. No problem. I gladly leave other examples to reality when they come up. The examples I can think up behind my desk, with a bit of help of tables and publications, can't attain the same level of accuracy of real specialists in the field. Probably my figures using sunflower oil are so inaccurate that a specialist isn't convinced. That's why I invite the experts to determine the value.

In a nutshell

To determine a "right" price, you're dealing with:

• your partners with whom you make up your production cycle. The aim is to search for the true value, not to fill your pockets with money.
• The energy (kJ) in the product , or the energy released at the end of the product life. Food, composting, incineration).
• The amount of material (kg) that is to be recycled, according to agreements with your partners..
• the amount of material that can't be recycled because no partners could be found.

I took tables for the nutritional value of food, because in principle the amount of energy released by the food in the body is the same as the amount of energy stored by the plant and the sun. There is also a big part of the plant that isn't eaten, e.g. leaves and stems of the potatoes plant. These parts are not counted in the values, this energy will be released on the compost heap as heat. If you can use that energy, you can include it in your "wealth". If you don't do anything with it, this energy is lost. Not really lost, because this heat is needed for composting!

Cultivating plants and transport also take energy. This wasn't incorporated. Depending on the agricultural techniques used and the way of life, the production costs can vary between 1/10 of the yield to 10x the yield. This is the difference between our way of life and permaculture. Before we can understand this balanced way of life, we have to investigate our own way of life.