Pacific Reserve Digital Currency
Colin Davies
Public
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I believe that New Zealand is in a unique position to create its own Digital Reserve Currency. This currency would be scalable to adopt the concepts of the Bancor as proposed by JM Keynes.
Throughout history various currencies have existed as the major reserve currency from Portuguese real, Spanish pieces of eight,Dutch gilder ,French franc,British pound sterling. And now the US dollar.
All these past currencies have failed due to what has been named the Triffin dilemma, where balancing the external needs of a reserve currency and the internal requirements of their own economy become contradictory.
This can be seen in the USA today whereby the US is effectively issuing close to a trillion dollars per annum to solve their domestic economy's woes.
Interestingly the next country that would be expected to have a global reserve currency being China, has expressed reluctance at their role in such a position, however has recently began currency exchange agreements with Russia, to alleviate their position. The other nations in the BRICS group appear to be doing similar.
Generally reserve currency attributes needed for a reserve currency are. 1.)
Liquidity (easily traded)
Size (enough of the currency exists)
Safe Haven (swiss franc is a good example).
I am suggesting that New Zealand create a second currency based on these principles.
1.) Utilising the Bitcoin protocols however more scalable. (No mathematical limit).
2.) Wallets available in various forms eg; primary wallets: nationally physically verified and authenticated. secondary wallets: globally pseudonymous.
3.) The price fixed by national calculation. Eg NZ$ factor + "price of energy gram" factor. [37.18% powerunit is a reasonable initial factor]
4.) To gain legitimacy the energy factor would be via physically holding said energy, although this will decrease the seigniorage of the mints production.
5.) Decentralized in that other nations may have digital mints, if they so wish after entering an exchange agreement.
6.) Currency issued may be redeemed by way of a 90 day Bill from the country of issue in its own currency.
An international agency similar to the IMF's functions would need to be formed to control agreements, and digital checkpointing.
Also the poW(proof of work concept of bitcoin is not used for issuing currency).
Note: a single node somewhere on the planet is still doing the bitcoin checkpointing.
This concept is not to, replace fiat currency, legal tender, or other digital currencies.
If we do not act at some stage on changing our reserve currency we face the prospect of holding a mountain of useless reserve currency in the future as the US economy erodes. Luckily I expect most other nations will be joining us on this ride. However the future transition to the next reserve currency will be very expensive.
If New Zealand was to be the first mover on such a new currency there will also be many advantages and opportunities for New Zealand businesses. How ever time is precious and the longer New Zealand holds the US dollar the more time we are giving the US an effective interest free loan.
A starting point for New Zealand to commence circulating the currency could easily be in the 680 million foreign aid we give annually.
Kenneth Kopelson Wed 4 Jun 2014 11:37PM
That's not to say this is not a good idea. I'm just thinking we should see how far we can go in making a truly better world, one where all people can more easily become the best they can be at whatever they are wanting to do.
Colin Davies Thu 5 Jun 2014 1:15AM
Different to your suggestions I am only suggesting we create an alternative reserve currency. Not a national currency which your two posts refer to.
The US dollar is the major world currency at present for solely one reason; there is no alternative.
For example the Euro is plagued with politics, the Swiss actually don't want there currency to be a major reserve. China wants to only slowly decentralize there currency.
However in New Zealand we are almost locked into the US system of purchasing their currency to protect our currency. As the US issues more and more dollars, small countries such as New Zealand are almost obligated to purchase those new dollars. Thus the cost of the US bank bailouts etc are being increasingly passed onto us.
Its almost like a recursive loop with the only exit being a motherboard failure.
We need to invent our own exit from that loop and stop propping up the US economy before our reserves become worthless and our trading ability is ruined.
There are only a handful of nations in the world, that would be considered a "Safe Haven" and have the reputation to achieve this. Combined with the timing of the Internet Party, we are most likely in a unique position.
Also this idea has a relatively easy transition which is important for any currency change, which would allow true strategizing to be easy.
Kenneth Kopelson Thu 5 Jun 2014 1:26AM
Ah, okay Colin, I see that now. I suppose it would not be a bad thing on the way to a more enlightened total currency overhaul. Regarding the U.S. reserve currency, I agree that any connection to the U.S. is bound to drag down New Zealand in the long run. Sadly, what I see is the U.S. becoming even more entwined with NZ, not less.
Kenneth Kopelson Thu 5 Jun 2014 1:29AM
I think my proposals for a traceable stateful currency is more realistic than BitCoin style of currency, mainly because of the way BitCoin can be misused for corruption. The main feature of the stateful money system is safety from abuse, which I think is a good feature for the society as a whole. So, if you could consider changing your idea to not use a BitCoin type currency, but a Stateful currency instead, that would be more workable in my view.
David Noblet Thu 5 Jun 2014 1:41AM
I like the basic idea Colin, as you may be aware.
I suppose I differ from you in a few things. I support a finite amount of "currency units" (or what I call "KiwiCoins"); abolishing the Kiwi Dollar; using BitCoin as the global reserve currency; and a floating price rather than fixed.
I'm open to information, but remain (at the moment) unconvinced that I could agree with things as you have concieved them.
Kenneth Kopelson Thu 5 Jun 2014 1:50AM
@davidnoblet I appreciate your comments on this, but ask that you please reconsider your use of bitcoin as a model for crypto currency. From a governmental perspective, it has serious problems, not the mention the problem with a limited amount of possible "coins". I have given great thought about all this, and found a way to "have our cake and eat it too" by using what is called "stateful" money. This would work in conjunction with a Value-based Economy, and together would revolutionize how money works and how it supports a truly vibrant society.
Kenneth Kopelson Thu 5 Jun 2014 1:52AM
@davidnoblet If you want to know more about this currency plan, please look at:
https://internet-party.loomio.org/d/5BZsehS4/supporting-a-traceable-stateful-electronic-currency
Colin Davies Thu 5 Jun 2014 3:45AM
@davidnoblet I do not oppose the great Bitcoin experiment. After all; All currencies are experimental.
However I do not believe bitcoins were designed to be a reserve currency, rather to be a global currency.
While this may appear pedantic. A reserve currency unit, utilizing the principles of the bancor, would be capable of resolving trade imbalances.
Colin Davies Thu 5 Jun 2014 3:53AM
@kennethkopelson the stateful electronic currency does indeed have similarities. Note: I am suggesting that we use the bitcoin protocols not actual bitcoin. But I suggest that all currencies are open equally to corruption. Cash is used regularly for all manner of nefarious dealings but nobody suggests prohibiting it. Bitcoins have got bad press in this respect, but they are no more capable of illicit use than cash.
Kenneth Kopelson · Wed 4 Jun 2014 11:20PM
What I am proposing dispenses completely with Keynesian economics, which at it's very core is designed to hold the general population back, and act as a governor to innovation. If we use a Value-based Economy, with a Stateful Currency system, there is no more need for taxes, and there is no danger to creating as much money as is needed to pay the people who are willing to work on society's behalf. What is possible with this kind of system is mind-blowing. No project would be too big...as long as the human talent and skill could be found.