Think Bigger. Aim Higher. Go Further.

Tag: social agreement

We Got It Backwards

The History of Financial Innovation

The invention of the wheel, wedge, and pulley came long before the invention of credit scores, CDO’s, and International Trade Agreements.

Technological Change must always precede economic growth – economic growth cannot sustainably precede technological change. If you throw money at a problem, you are not guaranteed technological change.  If you throw technological change at a problem, you are guaranteed money.

The Tiny Flaw of Market Capitalism

We are going about the process of globalization as if economic growth can precede technological change.  This is the tiny flaw of market capitalism and it is unsustainable.  In short, we’ve gotten it backwards and continuing on this course prevents us from seeing the future.

The flaw is easy to correct. The Ingenesist Project has specified two for-profit business methods, “The Value Game” and “Zertify.com” which if deployed today in Social Media could accomplish this.  These business methods are committed to the public domain.  The only thing standing in the way is a social agreement.

Let me know if you agree

War Is A Social Agreement

I often make the point that a currency is simply a social agreement. People need to agree that a monetary unit represents their productivity so that they will use it to trade their productivity with the productivity of another person. The test question for any so-called currency (coined by Jay Deragon) is: “Yeah, but can you buy groceries with it?”

I am now seeing a SHARP increase in the social interest for an alternate currency to the dollar. The dollar does represent productivity – albeit future productivity in the form of debt – that’s why it is still exchanged for the work that we do. My suspicion however is that the social agreement regarding the dollar is, in fact, increasingly becoming a social disagreement.

People have a deep seated unease with what the dollar is and what the dollar represents. To escape the dollar is to escape a tangle of influence that impacts everything we say, do, and think about ourselves and about each other. It almost seems that to escape the dollar is to escape ourselves.

That’s just the idea that came to me after watching this video about a soldier questioning the occupations. He is saying something very interesting:

War is simply the soldier’s willingness to fight it. It is a social agreement.

Video; Will Social Capitalism Replace the Corporation?

mysocialnetwork Meet the new Org Chart

A corporation is simply a legal entity – otherwise, it is fictitious. A corporation is made up of people who have a social agreement among themselves to do what is in the best interest of the legal entity.

There is very little about a corporation that cannot be duplicated in social media. This calls into question the nature of social media vs. the nature of corporations.  Here we uncover a third pillar to the US economic recovery; Social Capitalism.

Is Virtual Currency a Problem?

Editor’s note; The following analysis by Daniel Indiviglio from The Atlantic regarding a NYT article is foreboding of an unknown future.  Half insightful synthesis and half tongue-in-cheek, this article suggests that virtual currency may impact the current monetary system.  The conclusion is brilliant suggesting that the national debt could be paid in virtual currency.  It seems quaint now, but what would happen if the dollar fails?  During the Mexican Crisis, citizens emptied WalMart because today’s peso would be buy fewer Levies tomorrow – and it happened very fast. Get this and get it well: currency is a social agreement. People will trade what ever people agree to trade.

by Daniel Indiviglio

Is Virtual Currency A Real Problem?

All that time spent playing video games may finally be paying off. Literally. According to a fascinating New York Times article today, virtual currency — credits to buy stuff in video games — is being taken very seriously. China worries that make-believe video game money could affect its ability to control its money supply. As a result, it’s slapping limits on virtual currency. I’m not kidding.

From the NY Times:

Some people have even traded virtual currencies in China, and exchanged them for clothes, cosmetics and other goods. Last year, nearly $2 billion in virtual currency was traded in China, according to the China Internet Network Information Center. Some experts say they believe there is a much larger underground economy in the virtual world.

And it gets wackier:

Can Twitter Fuel a Run On Banks?

The Ingenesist Project is retained by corporate clients because we look at the world through a different set of filters. We are looking for possible disruptions on the horizon as far in advance as possible so that our clients can be aware of potential perils and modify their business plans accordingly.

One of our signature assertions is that Money is merely a social agreement – not a federal mandate of a democratic government. People will trade whatever currency they agree to trade. Increasingly, people, empowered by social media can impact the financial system far more that a bunch of Quants peddling CDOs.

People simply do not know how powerful they are.

Suppose someone puts together a Twitter/Facebook campaign for everyone the withdraw their money from a single financial institution who just handed out big bonuses? At best, those bonuses will have to be recalled to keep the doors open. At worst, people will find an alternate currency to store the “value” that is destroyed by a bank run. Virtual Currency? Admittedly, it’s far-out, but we need to keep our eyes on these trends because once started, they move very very fast. That’s why they call it a “Run”

Is this scenario really possible? Read on…..

To Awaken a Giant

“Our workers are no less productive than when this crisis began. Our minds are no less inventive, our goods and services no less needed than they were last week or last month or last year. Our capacity remains undiminished”.

– Barak Obama

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The gloves are off:

Mr. Obama’s statement is profound; in a single stroke, he liberated social capital, creative capital, and intellectual capital from the oppressive arm of the financial markets.  This sends a strong message to entrenched and corrupted financial operatives that they no longer hold a monopoly on American productivity.

The factors of production carried over from the last century; land, labor, and capital, can be now be challenged by social capital, creative capital, and intellectual capital as factors of production for an Innovation Economy.

The third option:

Q. So how exactly does a country meet a 50+ Trillion dollar obligation?
A. It depends on the social agreement.

First, we could default and let the system crash. Second, we could endeavor to pay it back by committing the next several generations to servitude of the debt.  Or, there is the third option that nobody talks about.

Create a new currency.

Almost every country has done it.  Mexico replaced the old “Peso” with a “New Peso” (worth 1000 old Pesos).  Europe created a new common currency.  Chinese Yuan is a “bridge currency” that gets them from point A to point B. Each of these examples is different, but they have one very important element in common; they are utterly dependent on a social agreement.

People must agree to exchange the new currency on the streets.  Social agreement, creative agreement, and intellectual agreement drives entrepreneurship and all must be achieved completely or “black markets” will form undermining the entire system.

The Tipping Point

We know a few things about currency outcomes.  If inflation occurs, people with “cash” will lose it, while people with “debt” will see it deflate.  The US can erase the deficit by inducing inflation and deflating the debt if production capacity remains undiminished. People, organizations, and governments that have exactly as much cash as they have debt will see no net loss or gain.  In fact, the entire world’s financial system is worth exactly as much as it owes to itself – minus the value of social capital, creative capital, intellectual capital and natural resources – now, set free. 

Social Agreement

As inflation progresses, there will be a point where a critical mass of the “social agreement” will hold the same amount of cash as they hold debt – their net loss will be zero.  That’s when the system can reboot.  obviously there will be serious consequences to any of the options, but this time, unlike any other time in history, social media will be the vehicle upon which the social agreement is catalyzed and not necessarily mandated by policy makers.

The Obama Factor

“Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America”

Mr. Obama is right – the outcome depends on us. We cannot expect government or corperations to attend to all of our needs because we are the ones who individually and collectively own and control the factors of production that will support the next currency. The road to opportunity has been cleared and the invitation has been cast.  We must now reach deep into our imagination and define the new business system where social capital, creative capital, and intellectual capital are directly tangible in a new global economic imperative; the Innovation Economy.

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