Is “Free Money” Coming Your Way?

Doug TjadenEconomics, FinTech, Money, Principles2 Comments

Who couldn’t use a little extra money? (well, cough, cough – maybe some of those billionaires in Silicon Valley) That aside, you need to know that the idea of giving out free money is gaining in popularity. In fact, it is a subject we are going to have to seriously wrestle with in the years to come. Why?

Technology and the “Robolution”

There is a real and growing concern that technology is going to automate millions more jobs that it creates. In his 2013 book, Too Different for Comfort, Louis-Vincent Gave highlighted the jobs and industries that are at the greatest risk of having a large portion of their workforce displaced by technology. He dubbed the trend “robolution.” His work isn’t some sci-fi work of fiction. It is a straight forward reality based analysis of the trends in place.

This is why CEOs in Silicon Valley are among the most vocal about creating a universal basic income. They know what is in their research and development labs. They know what is coming to market in the next five to ten years. They know the impact that it will have. So we’d better not just poo poo their voice and cry “No way! Welfare state!”

Instead, we have to recognize that the idea of giving free money to people causes a collision of major proportions. Economic theory collides with monetary theory. And both collide with social principles such as personal responsibility and contributing to society.

If Free Money is Coming, What Kind?

I want to start by noting the “if” in the statement above. I am not 100% sold on the idea that universal basic income is coming, nor is it the right thing. However, it is something that we need to wrestle with so I am approaching it with an open mind.

Without getting into the weeds of economic and monetary theory (that’s best left for another, much longer discussion), it is pretty self-evident that state issued money cannot just be created and handed out without disastrous consequences, because money is not “values neutral.” Printing money in a debt based monetary system would force the perpetuation of the value system associated with that money – debt. The “free money” would be someone else’s liability – yours, mine, our children, and our grandchildren. We’ve had enough of that already thank you. Then there is inflation, which is another subject entirely.

So, what is the alternative?

Smart Money

With today’s technology, it is possible to create money at the community level. In fact, this is happening around the world at an astonishing rate today. Hundreds of new “tokens” are being created on distributed ledger technology (DLT) platforms every month. Right now, this has created a bit of a “wild west” in money creation. It has also created a new monetary eco-system that is challenging the very idea of what money is and should be. So, let’s join in.

Imagine a system of money where:

  • A community comes together and decides the value system they want their money to promote.
    • Prioritize care for poor, widows, orphans, healthy infrastructure, basic income, etc..
  • Using smart contracts (agreements that must be performed when money is spent), they literally code those values into the money they use.
    • When money is circulated in the community, a portion of it goes to fund those community initiatives instead of going to banks as profit.
  • Money received as basic income is only able to be spent for basic needs – food and shelter.
  • A portion of the basic income must be given away to fund other community initiatives.
    • Promotes a mindset of giving and not just receiving.
    • Promotes being active in the community.

This type of money can be constructed today. Literally. I personally have access to the system where it could be built. While it is tempting to just jump in and go, we must take a reasoned and steady approach. We need to deal with some very important issues:

  • Just because we can build it, is it the right thing to do at this time?
  • How do we best implement such a system and gain community acceptance?
  • How does it interface with the national currency system?
  • What backs the money? US dollars? Gold? Cryptocurrencies? Labor? A combination of these?

These are all valid questions and they are questions that are being wrestled with around the world as well as on a team of people I’m working with.¬†We are not sitting around while Silicon Valley and the government decide what “basic income” looks like and even if it’s the right thing to do. I doubt what they are likely to come up will promote Judeo/Christian values and empower local communities.

No, you and I have to face the robolution and the economy of the future. We have to wrestle with how to best design the monetary system of the future. The questions are not easy to answer. But the answers are there if we stick to our principles and have the courage to give voice to those principles in the marketplace of ideas. What are those principles:

  • Honest weights and measures – it can’t be stolen through the system or through debasement.
  • Localism – decisions on how to manage community priorities are best left at the local level.
  • Jurisdiction – who has access to, and thus decides how your money is spent.

Promoting these principles and others is our challenge. And that is my challenge to you. Opportunity knocks. Are we ready to engage?

I’d love to hear your thoughts. Leave them below in the comment section, or send them to me directly via the “contact me” page.

(photo credit CafeCredit.com under ccl)

  • Robert High

    This topic keeps coming up at our dinner table. My wife talked me into selling a portion of my bitcoin today as the price hit $3800. I bought in around $100. My kids tell me hold, hold. But sitting on that kind of gain, I had to side with my wife’s advice. She kept saying it’s free money and if bitcoin is real, prove it by selling it. Cryptocurrency still has a way to go, because if it was mainstream I wouldn’t have had to pay Coinbase $150 in FEES!

    • Hi Robert! To be sure the crypto “industry” is still immature. You are wise to take some profits. Volatility will rule this market for some time to come. It will be interesting to see where Bitcoin lands in the emerging monetary eco-system. It will have its place to be sure. That’s why we will keep a sharp eye on it as DLT platforms continue to emerge. There is still a lot of innovation coming in money. We’re early in the game and my prayer is that we get into it and help determine what the final eco-system looks like.