I have been hearing a great deal about an inevitable collapse of the dollar. Not today or tomorrow, but more likely over the course of the next 10 years. The failure will probably not be a stupendous crash since politicians would avoid this as a means of self-preservation. Rather, it would simply be a slow and grinding inability to “afford” many important things using cash. Note that this has little or nothing to do with your human ability to produce important things.
Few people disagree that a 50 Trillion dollar debt obligation cannot be paid back without at least 50 Trillion dollars in increased human productivity. Traditional productivity usually means taking stuff out of the ground, air, ocean, or the forest and making things that eventually wind up back in the ground, air, ocean, or the forest. Today, we are encountering constraints on the planet’s resources. Something has got to give.
The ONLY technological change that is happening at anywhere near the rate that can conceivably deliver a substantial amount of “increased productivity” is Social Media. But how do we turn it into dollars? Maybe we shouldn’t.
Here is the problem; the trends for monetizing social media actually slow it down. People use social media only because of the prospect for increasing their long term productivity as relationships prosper. Entrepreneurs trying to get paid for their innovations invariably need to introduce “friction” by attempting to convert “short term” user productivity into cash. There is no business case on short term productivity making their innovation nonviable. Therefore, the monetization problem introduces a threshold over which most great innovations simply cannot reach.
The purpose of this article is to consider what people will use for trade if the currency becomes ineffective AND their productivity does not. If the dollar does fail, people will attempt to meet their daily needs until a financial system is corrected. Many countries that have experienced currency problems and the most common result are the emergence of a black market where Levi’s, Cigarettes, or other commodities serve as a de facto tax-free currency.
While on-line gaming industry is pioneering virtual tax-free currencies with extraordinary results, back in reality, people will begin trading services. Plumbers will find dentists, farmers will find laborers, and teachers will find landscapers. Matchmaking will become a financial instrument. People will use Facebook and Twitter, Linkedin and many others in new ways in order to keep the game in play.
In fact, perhaps they already are.