(Download a PDF version of Money: Executive Summary)

True learning takes place only when the mind has discerned the Glue of a subject. The Glue is the essential components and their juxtapositioning into a new system with properties and functions not predictable from an examination of the individual components by themselves. The key to solid, permanent knowledge is to find the Glue of the target subject. Once the Glue is captured (Bounded) by the mind, the rest of the subject is just details and nuances that can be readily hung on the superstructure of the Glue, with total recall.

Unfortunately very few writers, teachers, and publishers understand this. Consequently they do not produce Glue books and videos. Instead, they produce works that obscure the Glue or miss entirely some essential component of the Glue thus making learning more difficult or even impossible.

We at Glue Publications, LLC, hope to reverse that practice and our goal is to publish only Glue publications: works that are short, dense and completely bounding the Glue. Our purpose is to facilitate a new era in learning.

All words capitalized and in Bold are found in the Civilization Engineering Glossary at the end of this paper.

Introduction

There are four generically different modes of exchange. They are: 1) barter, 2) quasi-money, 3) money and 4) credit. Each modality is derived from how humans interact in the marketplace, voluntarily exchanging. Barter— the first mode of exchange— is the exchange of a commodity or service for another commodity or service. Quasi-money— the second mode of exchange— occurs when a particular commodity has reached desirability as a medium-of-exchange rather than as a commodity per se by a wide number of people. A commodity in this status is still a commodity but its valuation is increasingly based on its desirability as a trading/exchange medium, rather than as a commodity. This mode of exchange involves movement of a commodity or service from A to B and a simultaneous movement of the commodity-money (quasi-money) from B to A. In this second mode of exchange, people are valuing the quasi-money such as gold or silver, not for its metallic content, but for its exchange value in the marketplace. The third mode of exchange is true money and it is pure number, whether the number is stored on a piece of paper or in a computer file and always without a commodity backing. In this modality the members of the marketplace are exchanging for the number value on the paper or in the computer file, not on any expectation of receiving a certain amount of gold or silver. The third mode of exchange is true money. The fourth mode of exchange is credit and this occurs when an exchange takes place over time and one side of the exchange happens now with the movement of money, services or goods from A to B and then time passes and repayment occurs when a commodity or money or services moves from B to A completing the exchange.

All four modes of exchange occur more or less spontaneously in the marketplace but all are defective in providing a monetary system that provides a true compass to the economy. The four, natural, undeveloped modes of exchange are to a true monetary system what the naturally occurring plants are to developed agriculture. Nature has given us the plants to eat but it is the entrepreneurial effort and planning— agriculture— that turns those plants into the sufficient foodstuffs we need to survive. If we did not have farmers and we were all just hunter-gatherers, our numbers would be very few and we would be hungry most of the time with a life-expectancy of 30 years. That same type of entrepreneurial effort and engineering that creates agriculture out of raw plant life is needed to create a true monetary system that will provide a reliable compass to the marketplace to direct and optimize production and consumption. In the realm of money, we are still in the hunter-gatherer condition awaiting a true monetary system to liberate us from the miseries of having no true compass for the economy. All prior attempts to engineer a monetary system have degenerated into making the monetary system into an instrument of plunder as all of history has amply shown.

The elements of a true monetary system are summarized below. The full development of the ideas expressed here will be delivered in the coming series on Money on the civilizationengineering.com website.

Money: Executive Summary

Components of a private enterprise money system.

The Money Company or Game Maker

A. The Money Company is a profit-seeking enterprise with stockholders that could include a very large number of stockholders or just a handful of entrepreneurs. The Money Company is a Community in CE (Civilization Engineering) terms. There can be competing Money Companies under Freedom, but as a practical matter, one or two will, most likely, prevail in the end. This is the one that can deliver the most reliable monetary system defined below as the Money-Neutral Economy.

B. The Money Company is a Community whose purpose is to provide a reliable medium of exchange to the marketplace on a voluntary basis for all who wish to participate.

C. Done properly, a monetary system will provide a Money-Neutral Economy. This means all market price-changes signal a shift in supply and demand in the marketplace rather than a distorted signal created by the improper manipulation of the money supply— creating or destroying monetary units— and/or a Mal-Distribution of Money.

D. Being a Community, the Money Company needs to be Triangulated by another, separate proprietary-interest, profit-seeking enterprise— reluctantly— called a Government— this is not the political state in any current form— for the protection of all: the Money Company, its Member Banks and the Banks’ Money-Worthy and Non-Money-Worthy Customers.

E. The Money Company determines what the total money supply shall be by contractual agreement between itself and the member Banks and Customers; and allocates portions of the total money supply to each of its participating Banks on a per Customer basis.

The Banks or Game Players of the First Type

A. Banks are licensed and regulated by the Money Company to participate in the distribution and management of the money-creating power to their Money-Worthy Customers. The present-day banks and credit card companies are performing a similar role by knowing their customers and managing the amount of credit they allow their customers to have. Under this proposed system the Banks are allocating the money-creating power— not credit, which is something else— to their Money-Worthy Customers.

B. The wider the money-creating power is distributed throughout the population, the better. Ideally everyone is reliable and is allotted a certain amount of money-creating power. Practically some will not be worthy of the money-creating power and will be limited to checking accounts that cannot go negative-balance. Having the ability to go negative-balance with one’s account with the promise to sometime return one’s account to positive-balance by selling a product or service into the marketplace is to possess the money-creating power. The Money-Worthy Customers are the only ones with the money-creating power and are the proven producers in the system/economy and they are determined and underwritten by the Banks.

C. Mal-Distribution occurs when the money-creating power is not widely— and as evenly as possible— distributed among the Money-Worthy Customers. Mal-Distribution is to be avoided as much as possible.

D. Banks also receive savings deposits from their Customers and loan this money to others. This is the credit management function of Banks and is different from the money-creation-management function being outlined here.

The Government or Game Keeper

A. The Government is the agency— institution— that keeps the Community of money in working order by protecting against: counterfeit; identity theft; fraud and embezzlement; and most importantly against expanding or contracting the money supply beyond the amount agreed upon by the Money Company i.e. the Game Maker, and the Money-Worthy Customers i.e. the Game Players— the participants in the Money Community.

B. The Government provides a service, done on a voluntary, subscriptive basis and is itself a profit-seeking enterprise with ownership different from the Money Company to avoid conflict of interest. The participants in the money community pay a fee for the protection provided.

C. The Government protects by administering whatever level of physical force proves necessary to maintain the agreements between all participants and fend off criminals such as counterfeiters (freelance coercers) and the political state (institutionalized coercers).

The Money-Worthy Customers or Game Players of the Second Type

A. The Money-Worthy Customers are the true source of money-creation in the system. They create money by going negative-balance in their checking accounts to the limit agreed to by them and their Bank. This is the creation of money by entry into a computer. There is no commodity backing such as gold in the creation of true money. True money comes into existence when a Money-Worthy Customer goes negative-balance in his checking account and goes out of existence when that Customer goes positive-balance in his account by delivering products or services into the marketplace and receiving money for them.

B. The Banks allocate their portion of the money supply between their Money-Worthy Customers.

C. The Banks underwrite any failures of their Money-Worthy Customers to eventually bring their account back to zero-balance.

D. The Money-Worthy Customers are all producers who create values— goods or services— that are exchanged in the marketplace for money. As they earn money, the Money-Worthy Customers bring their checking accounts to a positive-balance condition.

The Non-Money-Worthy Customers or Game Players of the Third Type

A. These are Bank customers who have not yet proved their ability to reliably earn money.

B. These customers must have a positive-balance in their accounts. They are not allowed to create money by going negative-balance. When they show a consistent earning ability, the Bank can make them part of the Money-Worthy Customer base to the advancement of all. Ideally, everyone eventually becomes a Money-Worthy Customer.

The Quantity of Money

A. The single most important parameter to maintain in the system is the quantity of money per Customer participating in the system. Once fixed by contractual agreement, it is never changed. This is a refinement of Alexander del Mar’s idea of maintaining the entire quantity of money in the system fixed on one amount regardless of the number of participants in the system.

B. Fixing the quantity of money per Customer— Money-Worthy and Non-Money-Worthy customers added together— will render a system wherein all price fluctuations will reflect a true shift in supply and demand rather than some arbitrary change in the quantity of the money supply. This condition is called a Money-Neutral Economy.

C. Fixing the quantity of money per Customer will render a system that is flexible as to the number of participants in the system while maintaining a Money-Neutral Economy to those participating in the system.

D. With a Money-Neutral Economy, prices will reflect the increases in productivity that occur over time and there will be a long-term drift down in nominal prices while short-term price fluctuations will reflect changes in supply and demand and thus be a true and reliable compass directing production and consumption. This will permit long term financial contracts to exist such as 100-year leases and whole-life insurance and many other money-based exchanges that persist over long periods of time.

E. Fixing the quantity of money per Customer is the most important parameter to rendering a Money-Neutral Economy. This is still true in a system based on gold backing of the money unit— quasi-money— but the desirability of this parameter is totally missed by all gold advocates. Advocates of free-banking and free-coinage do not understand that for best performance— a Money-Neutral Economy— the quasi-money currency needs also to be fixed on a set amount of money per Customer in the system the same as the paper system discussed here— so why use gold?

F. A monetary system that delivers a Money-Neutral Economy will attain in time a confidence and trust from the marketplace that will insure its durability over an indefinite time. It will become the true monetary standard.

The Phenomenon of Interest

A. The phenomenon of interest arises spontaneously from human nature as encompassed in the First Postulate of Intentional Science. Interest is the manifestation of voluntary interaction of humans all acting on their respective Value Hierarchies with each participant deciding their subjective valuation of present versus future satisfaction.

B. Interest is the “price” of the time-value of money; also known as originary interest.

C. Interest rates should be set only by market action in an auction market.

D. Savings arise when a Customer does not need to spend all the money in his account and he can function without the use of some of his money for a while and thus sets aside some of his money for future use.

E. Only savings can be loaned, not money created as discussed here.

F. Only the supply and demand for savings/loans, balanced through a market auction process, can determine the true market rate of interest.

G. All Banks and the Money Company agree to interest rates being set by auction in the marketplace. The mechanics of this auction process will be disclosed in the full course on Money. Interest rates are never set by fiat of the Money Company or the Banks.

H. Interest rates set by this process complete the “true compass” function of the Money-Neutral Economy. Interest rates set by this process direct the rate of savings and borrowing as determined by the value hierarchies of the market participants. This auction process is the clearing mechanism matching savings to borrowings.

Everyone at Risk

A. The maintenance of the integrity of this system does not depend in any way on virtue, good moral character, brand name, family pedigree or track record of any individual involved with the managing of the creation of money. All principals of the Money Company and the participating Banks are under a signed agreement they will not violate the rules of the creation of money under any circumstances upon pain of death. This contract is enforced by the Government (Game Keeper). No option of restitution will be offered in case of a violation of this parameter. Any violation of the agreement means automatic death. Signing such an agreement as a condition of participation in the creation of money is called in CE “taking a Darwin.” This game is not for amateurs— only professionals with great integrity need apply. You will hold the amount of monetary units in the system to a fixed number per customer or you will die.

B. The harshness of this policy is due to the extreme ease of creating money when it is based on computer entries. History has shown the temptation to abuse the system to be irresistible when no such safeguard is in place. In addition to the risk of the death penalty for any violation, a large bounty is placed on any principal/violator so that all his colleagues would be his most likely detectives. (See the CE overview presentation for a greater example of this concept.)

C. The advocates of a gold-backed monetary system— quasi-money— are lacking the CE principle of “taking a Darwin” which means agreeing to the death penalty for contract violation: in this case changing the quantity of money per Customer. They thus rely on what they perceive as the limited availability of the commodity of gold to provide a brake on the creation of money— and this only among those rare individuals who recognize that the money supply needs to be limited in some way. Relying on the difficulty of gold production as a brake on the system of money-creation is seventeenth century technology at best and has many other limitations and loose-ends and is not suitable for the energy/information age we find ourselves in. The reason a quasi-money system is not in full operation today at this point in history is that the free-banking, free-coinage system as practiced, on and off, throughout history is an unbounded system, meaning it is lacking one or more essential components. Galambos’ positive history principle and the Third Postulate of Intentional Science are proof of this claim that the gold-backed, free-banking, free-coinage system is not a “natural”, spontaneous, stand-alone, bounded system. The “natural” quasi-money system is akin to plant life as opposed to agriculture. If a true monetary system could run spontaneously on automatic, natural principles without entrepreneurial intervention, as the Austrian school argues, it would have arrived long ago and be firmly in place today.

D. The system must be run with full transparency to all concerned including and especially the Customers. They must be knowledgeable enough to know that what they want in a monetary system is a fixed amount of money per Customer in the system and that when this is maintained their economic calculations and contracting will be safe from money manipulations as has otherwise been the case throughout history.

E. The open transparency and steady reliability of the monetary system that delivers a Money-Neutral Economy will insure its longevity and durability. This is what the world has never seen before.

End of Money: Executive Summary.

Administration of Physical Force: applying or threatening to apply physical force (violence) to a person who has coerced; a retaliatory action only; distinct from Coercion which is the initiation of physical force or fraud.

American Revolution: the idea that the individual is Sovereign and does not need to be governed (controlled/compelled/ruled) but rather protected-only from Coercion by an agency known as Government. This idea can be read into the Declaration of Independence (1776) but is not the only possible reading of that document and is contradicted by the institutionalized slavery initially built into the US Constitution and the compulsion still obtaining under it. The Sovereignty of the Individual idea is in contradistinction to the Judeo-Christian concept that the individual does need to be governed in order to have a civilization that works. The American Revolution Party will bring about the completion of the American Revolution and build a civilization based on the Sovereignty of the Individual.

Ancien Regime: the parasitic class in France at the time of the French Revolution (1789–1799), living strictly off the plunder extracted from the rest of society. It was comprised of Clergy and Aristocrats which together represented about 2% of the population and owned 50% of the land. Individuals of this class suffered deeply from the Thomas Jefferson Syndrome and could only be removed by death. The modern version of this class is embodied in the politicians, bureaucrats, university professors, teachers, firemen, policemen, welfare recipients, subsidized farmers, subsidized bankers, government contractors, protected industries, protected unions, subsidized Non-Government Organizations, Social Security recipients and many others. All of these groups are presently living on plunder, suffer from the Thomas Jefferson Syndrome and will not readily give up their parasitic position. It is going to get very ugly. Be prepared.

Axiom: a statement of truth that defeats any attempt to show it is not so by implicitly assuming the truth of the axiom in the attempt; stronger than a Postulate and hence the ultimate goal of Philosophy. No axiom has yet been announced in any of the three Domains of Knowledge.

Bounded System: a system that possesses all elements of its Glue in “proper working order” and hence capable of performing all its characteristic functions. A system becomes unbounded, and will not perform at least one of its characteristic functions, when just even one of its Glue components is missing.

Civilization Engineering: the application of the postulates of Intentional Science on a societal (civilization) level.

Civilization: the Emergent Property of the correct juxtaposition of Community and Government which remains stable and durable when Freedom and Justice obtain.

Clearinghouse: an agency that records and protects ideas as property (primary property by Galambos’ system of classification); an idea and wisdom factory; a profit-seeking agency that passes knowledge to the next generation and hence replaces the functions currently performed in part by tax-supported universities; a Glue component of a stable, durable Civilization; the brainchild of Andrew Galambos with substantial modifications by Dennis Riness.

Coercion: an interaction where one of the parties to the interaction initiates physical force or fraud to the other person such that the other person experiences a downward move on his/her Value Hierarchy; parasitism; opposed to Voluntary Interaction; a plus-minus transaction; there are seven ways one can be coerced: murder, kidnap, rape/battery, theft, fraud, defamation and extortion; one is not coerced when other people engage in activities one finds offensive if none of the seven ways of being coerced is involved, in these cases the offensiveness entails an Externality but it is not coercion; all civilizations to date have been built on coercion and this has been their undoing.

Community: any two or more individuals interacting; a Game; one of the Glue components of a stable, durable Civilization; almost all communities need to be Triangulated.

Corporate Bodies: fictional, legal entities treated, for legal and/or communication purposes, as if they were individual persons when they are actually a collection of persons; use with caution as Corporate Bodies are not sovereign individuals even though in many contexts they are treated as such to the confusion of all.

Deus ex Machina: originally a piece of stagecraft used by the Greeks to represent the supernatural, particularly as an active agent in human affairs; the mistaken concept that there is some agency beyond the Double Zero Line Diagram that will assist humans in building a civilization.

Domains of Knowledge: there are three, main Domains of Knowledge or science. They are the Physical Sciences; the Biological Sciences and the Intentional Sciences.

Double Zero Line Diagram: a mnemonic developed by Gordon Smith to remind us to keep our focus on what is real in our systems-building and not drag in things which are hypothesized to exist outside of human interactions between each other and/or the physical universe; the symbol to remind us that all human interactions can be reduced to either a one-on-one interaction or a one-on-the-universe. See Deus ex Machina as an example of creating something in our thinking that purports to exist outside of the Double Zero Line Diagram.

Emergent Property: the property of a system that is not predictable by an examination of its Glue components in isolation; what Buckminster Fuller called Synergetics; the nemesis of all reductionists since Emergent Properties are not logically predictable from an examination of the Glue components in isolation.

Ergonomics of the Mind®: the body of thought describing the learning process and how to facilitate it. It reduces to three principles that must be present for learning to occur: the subject must be Bounded, Grounded and taken to Fluency.

Externalities: unintentional interferences caused by humans living in close proximity; to the recipient they may feel like Coercion but they lack the intent to coerce by the perpetrator; the domain of concern for a Community manager when the manager is doing his job properly i.e. creating the ambience of the Community.

Federalism: the practice of agreeing to some restrictions on one’s freedoms/options in any Community setting; a partial surrendering of one’s options to mitigate Externalities, without surrendering one’s Sovereignty; historically the concept has been misapplied to Corporate Bodies trading off which body (state or federal) will govern (control) the citizen. Traditionally the concept of Federalism is based on The Worst Idea in History.

Freedom: the societal (Game) condition when all interactions are voluntary; one of the Glue components of a stable, durable Civilization; a product brought into existence through entrepreneurial action and thus unnatural and not found in Nature; indestructible once locked in.

Game: a Community; any activity between two or more individuals involving a purpose, barriers and freedoms; a highly integrative concept bringing together every component and dynamic of human interaction and thus one of L. Ron Hubbard’s massive contributions to enlightened thought; a Game is generally in need of Triangulation with a Government for the protection of all concerned.

Glue: the essential components of a system and their proper juxtaposition. The test of a Glue component is that its removal from the system causes the system to lose at least one of its defining characteristics and/or functions. See also Bounded System.

Government: an agency that provides protective services including but not limited to the Administration of Physical Force when done on a voluntary, subscriptive, fee-for-service basis; a Government does not govern (compel/coerce/rule) its customers, only protects them; one of the Glue components of a stable, durable Civilization; most efficiently and effectively deployed using a novel application of the insurance mechanism, the brainchild of Gordon W. Smith, Jr.; a profit-seeking enterprise whose products are Freedom and Justice.

Intention: a defining characteristic of living matter which is not found in inanimate matter; a primordial phenomenon that is the final source of all human action; most importantly Intention is the phenomenon that lies at the base of the ability to overcome the Second Law of Thermodynamics (entropy) which is what all living systems do. Unresolved is the question of whether Intention is a phenomenon independent of matter (Idealism) or an Emergent Property of matter (Reductionism).

Intentional Science, First Postulate: all men/women live to Pursue Happiness; this always manifests as an attempt to move upward on one’s Value Hierarchy. Simplified one could better say: all men/women live to move up on their Value Hierarchy with every Intentional Act they perform.

Intentional Science, Second Postulate: all men/women live to pursue Justice.

Intentional Science, Third Postulate: Voluntary Interaction is unstoppable.

Intentional Science: the Domain of Knowledge concerned with human action and interaction based on those properties of human nature that are reducible to the sole phenomenon of Intention. All of Civilization Engineering is based on the Intentional Sciences.

Invisible Hand: the idea developed by Adam Smith that when people are allowed to pursue their own interests in the open marketplace, things just get better all around for everyone, as if an invisible hand were working to guide every member of the marketplace to a synergetic whole not envisioned by any of the participants. What Adam Smith was on to is the phenomenon that Voluntary Interaction not only satisfies the two people engaged in the interaction (a plus-plus transaction), but that it creates an Emergent Property or, in this case, a benevolent condition in the economy as a whole that no one anticipated. A deeper look at this phenomenon takes one into the spiritual side of Money. This will be dealt with at a later date. In the meanwhile, read Ayn Rand’s thoughts on the deeper meaning of money in the speech by Francisco d’Anconia in her novel Atlas Shrugged. The Back of the Invisible Hand is this same process in reverse— everything goes to hell under a system based on Coercion. A message from the dawn of creation (God if you like) for us to get to symbiosis in all things.

Justice: the condition when the rules are the same for all players of a Game; a value held very high in everyone’s Value Hierarchy; one of the Glue components of a stable, durable civilization, encompassed in the Second Postulate of Intentional Science, thus recognizing the existence of a natural phenomenon or primordial force in Nature which strives to achieve this condition of equality at all times; the desire for Justice is natural and occurs automatically in Nature, the fulfillment of Justice is done through entrepreneurial action; the temporary absence of Justice in any given Game/Community creates a dynamic between old Game and new Game that eventually plays out to either a new Game being established or the old Game being reestablished with the rules the same for all players in either case; shades of Hegel, possibly what he was looking at when he formulated his philosophy.

Measured Exchange©: an application of the First Postulate of Intentional Science in the workplace. Employees working on Measured Exchange get paid according to production, not the time spent on the job. See Appendix A for expanded discussion.

Money: the third mode of exchange in the Riness System of Classification of Exchange modes; electronic exchange with no commodity backing— such as gold— of the monetary unit, thus a technical, highly evolved and specialized form of Community when done correctly; a Glue component of a stable, durable civilization.

Money-Neutral Economy: an economy that has a proper monetary system in place that renders all price changes an accurate indication of a change in supply and demand as opposed to price changes brought on by a manipulation of the money supply.

Philosophy: the attempt to find the Glue of everything; those principles, Postulates and Axioms which extend over all three Domains of Knowledge; philosophy may always remain an unbounded subject— the ultimate Glue of everything not being found— thus remaining the arena wherein the big questions are asked and once answered a particular subject moves out of philosophy and becomes a stand-alone subject.

Postulate: a statement of truth that is always found to be true experientially, but is of such a character that the possibility persists that an exception may one day turn up and thus invalidate the postulate; not as strong a statement of truth as an Axiom.

Pursuit of Happiness: the primordial thrust toward one’s idea of a better condition, manifesting as the pursuit of one’s subjective values, the higher in one’s Value Hierarchy the better.

Self-Governing: a contradiction-in-terms when governing is understood to mean control or compulsion and not protection of the individual; a derivative of The Worst Idea in History.

Sovereignty of the Individual: the condition wherein every individual is in control of his/her life and all aspects of it, and not subject to unwanted external control or compulsion by others.

Sovereignty: the final say in human affairs; when the sovereign says “No” it stays “No.” Anyone can propose an interaction with any one else but if the party proposed to says “No” and it stays “No” then the party possesses Sovereignty.

The Golden Rule: the Golden Rule is correct in principle but grossly understates the brutality and intransigence of the phenomenon of Justice and should be reworded to read: Do carefully unto others because they will— eventually— do likewise unto you.

The One Commandment: Stop Coercing!; this commandment replaces all prior morality systems and is the only moral precept one needs to build a civilization that will not self-destruct; run, do not walk, from anyone who advocates coercion as you would from a medical doctor who does not wash his hands.

The Worst Idea In History: the idea that a stable, durable Civilization can be built only by institutionalizing Coercion (governing/compelling/ruling people); the core premise of the Judeo-Christian world view and Communism in all their guises.

Theorem: a stable, durable Civilization can be built only upon the Sovereignty of the Individual; the proper connection between the condition of the individual and the condition of the Civilization, showing that they survive or fall together.

Thomas Jefferson Syndrome: the vulnerability of even the finest, most well-intended and otherwise respectable people to rationalize and maintain the gain in their affairs at the expense of others when the gain is based on Coercion; the acceptance of plunder as one’s right; an insidious condition that eventually destroys its possessor.

Triangulation: the Civilization Engineering practice of juxtapositioning a Community (game maker), a Government (game keeper) and a player such that all are protected from Coercion and Justice prevails; the separation of the Community (game maker) and Government (game keeper) functions.

Value Hierarchy: the hierarchical arrangement of one’s internal, subjective values with the highest value at the top progressing downward to the lowest; the framework for understanding the First Postulate of Intentional Science.

Voluntary Interaction: an interaction when both parties to the interaction experience an upward move in their respective Value Hierarchies; a plus-plus transaction; symbiosis; opposed to Coercion.