Compound Disinterest

Compound Disinterest

Money acts as the life’s blood of the economy.  It flows, surrounds, and defines the market.  When Money is working well it does the one thing that it does better than anything else, reward quality and a job well done.  But rewarding the talented and diligent only increases their advantage.  If left to its own devices money concentrates.  Money feeds back on itself.  Money makes money more powerful.  The process becomes most pronounced when the monetary system is completely dominated by those with an abundance of money.  Money becomes the tail that wags the dog.  The rich get richer and the poor get poorer, until the process finishes with a very few having all the money.  It has been the same in all money economies for thousands of years.

Concentrated money stops being a neutral medium of exchange.  The Free Market stops working.  For the Free Market to work money must be neutral.  Neutral money is disinterested and Indifferent.  Disinterested money does not have a stake in the outcome of any transaction.  Disinterested money does not seek an outcome that is best for money.  Indifferent money is no respecter of persons, it treats every one exactly the same.  Indifferent money has the same set of rules for rich and poor.

The combination of money and talent alone are enough to drive money into the hands of the few but once money gets started there is another power which doesn’t even need talent.  Money has interest.  Interest is a type of rent that one person pays another for the use of their money.  The person renting out their money for interest does not need any talent or skill and it doesn’t matter how they got the money, they can loan their money and collect interest.  Interest allows people who have money to maintain a powerful position in the economy by renting out their money.

There is simple interest and there is compound interest.  Simple interest involves a flat payment on an amount of money for a period of time.  Compound interest involves collecting the interest at certain points in the life of the loan and then collecting interest on that collected interest as well.  Money grows and grows and eventually the renting out of money overcomes all other activities.  Money becomes concentrated and most of the people of the world become servants.

Concentrated money raises social and political opposition.  These reactions to the concentration of money quite often turn into violent and bloody revolutions.  Sometimes the revolutionaries are pushed back and an official oligarchy, a rule by money is imposed.  Some revolutions sweep money away.  Oft times dictatorships based on race or ethnic identity follow.  Some try to establish and maintain money equality.

The problem with money equality is that money loses its ability to reward diligence, creativity, perseverance, and attention to detail.  Without this capacity to reward, money becomes meaningless.  Equal money can divide up a pie fairly, but it can do nothing to make sure that that pie is delicious or big enough for everyone.  When equality is enforced bureaucrats take on more and more power.  Political opposition develops.  People want the freedom to trade with whomever they want and they eventually get it.  This opens the road back to concentration and once entered it is relentless and seemingly inevitable.

The tool of money is volatile.  It keeps smashing us on the rocks.  The human drive for freedom meets the human drive for equality in what seems like a fight to the death with no end in sight.  There must be a way to make money neutral without making it equal.  There must be a way to allow money to reward a good job without it ending up in the hands of a few.

Casino Fortunatus

The 1% Solution

The 1% Solution is a self-organizing system of Gambling Chips.  The goal of The 1% Solution is to keep the chips a Neutral Part of the Game and to keep everybody in the game Forever.   The 1% Solution will be Casino Fortunatus’s method of making sure the House always wins.  The difference at Casino Fortunatus is that you are the House.

The 1% Solution Chips will be a type of money.  Money occupies a rare space somewhere between the forces of growth and decay.  Each of these forces generates tremendous energy, enough energy to power money.  Existing or proposed moneys choose one or the other.  The 1% Solution chooses both.  Completely.  Separately.  Simultaneously.

The scientific and mathematical worlds owe a great debt for the knowledge of how things build up and how things break down to the process of compound interest.  Swiss Mathematician Jacob Bernoulli gladly borrowed this knowledge 300 years ago and it has paid great dividends ever since.  Sea shells, hurricanes, molecules, galaxies all follow the same pattern Bernoulli found in compound interest.  The debt is now come due and this special knowledge of growth and decay will create a whole new power in money, Compound Disinterest.

  Nautilus: Chips That Grow

Nautilus Chips are named for the Nautilus Shell.  The Nautilus Shell has the property of being able to grow larger and still keep its shape.  The Nautilus Chip system has two parts, an Equal Stake and a daily dividend called the Daily Bread (DB).   For those players starting on the first day Casino Fortunatus will create and distribute 100 chips per player.

Once received these chips are the property of the players to use as they see fit.  They can spend them or gamble with them or give them away.  After the first day the Stake will no longer be equal.  Some people will have more chips than others due to their activities of selling things or working for chips.  Some people will spend some of their chips and others all of their chips and have none left.  This is no different than the way things are now.

On the second day Casino Fortunatus will create a number of chips equal to 1% of the existing chips and divide them equally between the players.  This is the Daily Bread, an equal share of 1% of the existing chips paid to each player each day.  Receiving an unconditional daily dividend is different than the way things are now.  Everyone will have at least some chips every day.

The first Daily Bread will be 1% of the 100 Chip Equal Stake, so it will be 1 chip.  The number of chips per player has now grown to 101 chips. The Daily Bread (DB) on the next day will be 1% of 101 chips.  The DB is 1.01 Chips.  This brings the number of chips per player up to 102.01 chips.  The 1% increase is taken on the new total number of chips.  The total number of chips grows at 1% per day which makes the Daily Bread grow at the rate of 1% per day.  This is called Compounding.  This keeps the Daily Bread and the Total number of Nautilus Chips in a constant ratio of 1/100.  The total amount of Nautilus Chips is always 100 x Daily Bread.  Daily Bread is always 1/100 of the total number of Nautilus Chips.

At the end of a week the Average Stake has grown to a little over 107.2 chips and the DB to 1.07.  At the end of a month the Average Stake is almost 135 and the DB is 1.35.  Around the 70th day the Average Stake is up to 200 and the DB is 2 chips, 1% of the average stake.  This is the Doubling period.  Everything doubles about every 70 days.

The 1% Solution is Compound Disinterest because the Daily Bread dividend is completely disinterested in who gets it.  Everyone gets the Daily Bread with only one condition, you only get one.

Players who enter after the game has already begun will be given the Average Stake.  The Average Stake is always 100 x Daily Bread on that day.  If they come in on the 70th day their stake will be 200 chips.  Everybody starts in the middle.  The number of Nautilus Chips will have grown to 400 chips per player on the 140th day and the dividend will have grown to 4 chips per day.  Players entering on the 140th day will receive a stake of 400 chips.

The Daily Bread process dilutes the existing Nautilus Chips.  That dilution is compensated for by receiving the new chips.  The dilution falls heaviest on those people with the most chips.  It is exactly compensates those in the average position.  The new chips are the most benefit to those with less than average numbers of chips.

If you have spent chips and stop spending them you be nudged back toward average.  If you have earned chips and stop earning you will be nudged back toward average.  If you spend half your Daily Bread every day your account will stay at half of average.

Nautilus is a beautiful system.  Whether this is sufficient to counter the weight of money’s power to feed-back upon itself can only be answered by trying it.

Ouroboros: Giving Money a Half Life

Ouroboros, the Snake that eats its own tail, will harness Decay.  Each player will receive an equal stake of 100 chips when they enter the game, whether they enter early or later on.  There are always 100 chips times the number of players in the Ouroboros system.

Once received these chips are the property of the players to use as they see fit.  They can spend them or gamble with them or give them away.  After the first day the Stake will no longer be equal.  Some people will have more chips than others due to their activities of selling things or working for chips.  Some people will spend some of their chips and others all of their chips and have none left.  This is no different than the way things are now.

All of the chips in the Ouroboros System will be skimmed at the rate of 1% per day.  This causes each account to shrink at the rate of 1% per day.  The proceeds from the skim are returned to the players as an equal dividend each day.  This dividend, the Daily Bread (DB), will always be exactly 1 chip (1% of 100).  Receiving a steady dividend every day is very different from the way things are now.

If one spends their Daily Bread dividend every day then that person’s account will begin to shrink.  The first day this will be 1 Ouroboros Chip, 1% of 100.  This will leave only 99 Ouroboros Chips on the next day.  Taking 1% of 99 is only 0.99 Ouroboros Chips which leaves 98.01 chips.  The next day the account will only shrink by 0.98 Ouroboros Chips leaving 97.03.  It will take a little less because each day you are taking 1% of a shrinking amount.  It will continue to diminish each day thereafter.  On the 70th day there will be 50 chips of the original stake left.  70 days is the Half-Life of Ouroboros Chips.  This is inverse compounding.  .

In addition to the 50 chips you have left from the Original Stake at the end of 70 days you will have received 70 chips worth of Daily Breads.  But you will not have 120 chips; you will have exactly 100 chips.  Each of the chips you have received in those 70 days has also been skimmed at the rate of 1% per day.  Those received early on will have lost almost half and those later on will have lost very little. These constantly sinking 70 chips and the 50 left from the original stake will add up to exactly 100.

Idle accounts will be skimmed one chip a day and will receive one chip a day.

The 1% skim is a flat proportional tax on all chips.  Those with fewer chips in their accounts will pay less.  Those with more chips in their accounts will pay more.  Ouroboros is indifferent.  The Daily Bread will remain equal no matter how many chips you have.  Ouroboros has no interest in who receives the Daily Bread.  The rich will get an equal share.  The lazy will get an equal share.  Children will get an equal share.  Plumbers will get an equal share.  Bums will get an equal share.  The infirm will get an equal share.

Ouroboros is Compound Disinterest.

Peer to Peer

Voluntarily associate with others who wish to do this and share your experiences with other groups.  Those are the Rules.  Laissez les bons temps Roullez.

 

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