Rene Churchill wrote: > Money is just a medium of exchange backed by the government.
> It eases the difficulties of the barter system by removing the > requirement that both parties have something that the other > desires. > Money also solves problems of sliding scales. > There is also the problem of liquidity. > If my aging memory is working right, there was a time in the > 1840's where the US government allowed businesses to print > their own currency. Frequent flyer miles and gift cards are modern examples. Also, North American banks did print their own currencies (before competition was eliminated). The banking system is technically insolvent. The players increased leverage beyond stability and broke the system. As this continues to unfold, society may be more receptive to a different system at some point, and our tech makes a substantially different system possible. In particular, we could move to peer-to-peer or friend-of-a-friend banking in which every individual and organization plays the role of a bank. Here "friends" are peers that set up a credit relationship, so this includes actual friends, but also stores and customers, manufactures and distributers, employers and employees, etc. throughout the economy. bank accounts -> distributed ledger on the network bank client credit -> friend to friend credit inter and intra bank clearing -> small-world-network clearing through peers This model can deal with denomination changes to the extent that the network has credit links that span currencies (or even commodities). Extension of credit and default risks are distributed throughout the system. Do peers know each other better than banks know their customers? Bringing this thread back on topic, check out this (dormant) project: http://en.wikipedia.org/wiki/Ripple_monetary_system -- Anthony Carrico
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