An intellectual's review

[Unimatrix11]

[SIZE=1]
Lets say there's a local builder called Bob, who is now retired/unemployed. He's getting a bit on in the years and chronic back problems have stopped him doing any real work.

I had to make a post right away: Hey, Blake, lets keep the shattering of view on the world to adults - my nephew wont like what you just said here: Bob the builder has a bad back and gone into retirement ? Now, thats gonna make HIM (my nephew) cry.

[Unimatrix11]

Originally posted by Blake

Take for example "Killing is wrong". Sounds good.
What if a person is in an awful lot of pain and are never going to get better and are pleading to be put out of their misery? Isn't killing them okay?
Any right-minded non-ideological person is going to say "...yes. Killing them is okay. It's merciful".

The "correct" stance is that "Killing should be only done for the most compassionate of reasons", it's an awful lot harder to find a counter to that then an absolute like "Killing is wrong".

This reminds me of a strange encounter i had with a gypsy in a wagon right behind my house... Its a question to choose between the virtues of spirtiuallity and compassion...

[Unimatrix11]

Time = money - heck isnt that even a proverb ? If you look at the bills of the board-game "Axis&Allies" they actually say "X million man hours of industrialized work" or something like that. In fact this is how i look at any price - i translate it to the amount of time, i´d have to work for it. Of course, by this perspective, the value of money is quite a different one for someone who earns 100$ on hour than that of someone who works for 10$ on hour - everything comes at 1/10 of the price for the former when compared to the later.

Adam. i think with your example of the oil-industry you hit the nail on its head precicely. "Competetion + limited ressources = innovation" - riiiight... If ressource-effieceny is meant here, i´d like to point out, that by the need of the profit-driven economy based on the credit-system for perputual growth, any preservation of ressources by higher standards of ressource-efficiency (less use of ressource per piece) will be very quickly nullified by expansion of production. Recycling is only done, if and because it creates profitable work. You cannot expect this economy to stimualte prolonged product-life-cycles for example, because there is no profitable work in that. In the same manner, recycling will take place at the lowest level feasible - re-use of a highly sophisticated product can only be the exception in this system. Likewise technological advance will be introduced into the market at the smallest steps possible, for in each step is a lot of profitable work (and a lot of waste of ressources). CD -> DVD -> Blu-Ray... I dont know about you, but when the CDs came out, i immedietly had the idea of having multiple data-layers (and i was like 12 at the time). It´s save to say, that i wasnt the only one and that CDs were just brought to the market to realize profits ("of course - why else ?" one asks in our world, such is the magnitude of its wickedness), when people who produced them knew very well that they are actually an immature product and just around the corner is a product, which has a tenfold usefullness and about the same ressource-investment per piece. I mean: Come´on ! That using a blue laser with a shorter wavelength will enhance data-density is something we figured in physics class like 12 years ago. But think about how much profit would have not happened, had they not brought out CD, DVD and DL-DVD first. Ressources are the medium that suck up the work and spit out the profit - this is their primary role in this system, not to actually be transformed into something of use and value. The shorter the life-cycle of a product is, the more can be produced, the more ressources will suck up work and spit out profit. Look at "packaging". Recently i was on a work-trip in a hotel with like 20 guys. One of us used an actual bar of soap in a conventional case - the rest (including me - shame on me) used shower-gels with its convenient one-way packaging. Competetion and limited ressources bring about innovation all right - Innovation that is geared towards profit and nothing else. For innovation to be positive tho, it should be geared to, say, common welfare, or a sustainable environment, fighting deseases and such things. Innovation for profite does not only not consider these things, often it even works against them.


On the Star Trek thing: Replicators alone would not suffice for the Star-Trek would come into being. They would, as any recycling process, need energy to work (that is actually the most important thing of ecology: The material cycle is only feasable by a constant enery throughput). Thats why recycling is not the be-all and end-all of a sustainable economy - it can only do so much. Best is not to create too many procucts in the first place - something that capitalism is 100% at odds with and the reason why it continues to be a threat to anything that has not been "put to value" (=profitable work) yet.

[Unimatrix11]

I wanna bring another example of governments getting a brown nose on big business on the expense of the common good:
You might have heard that europe is switching to the system of emission-trade. Every company gets entitled to emit a certain amount of CO2, which it could sell, or add to via buying the rights to do that from another company. Now this sounds reasonable at first. But by international agreement, the german government said it would only pass out rights to about 75% of the current CO2-emmissions in order to keep their promises given in the kyoto-protocol as well as to take a leading role in global climate protection. It now seeped out (they were not going to announce that big time, of course), that they will pass out 100% of the current emmissions as a right to do so instead, practically giving too much pollution a positive legal basis. Instead of reducing emmission they enable companies to say "it´s our right to pollute". But thats not the whole trick yet - to cut down pollution (=official reason) they will in the coming years BUY back those rights from the "pollution-market". So, to make it absolutely clear: First they give pollution a legal basis, entitling companies to do harm for profit, and then they buy back what they had passed out for free before...

Another one ? We had one of the best social systems in the world. Then we had some economic crises. The cost for the system, that allowed for someone who lost his job to get paid 68% of his last salery by the state for two full years, had made work too costly in germany to be competetive on an international scale. The moneymakers would simply produce somewhere else, were such a system would not be in place and adds like 10% of cost on each hour worked. So we had a reform, called after it´s drafter and version Hartz IV - Mr. Hartz is by now in jail for deeds of corruption he did in his role at VW (of course you have an active business man drafting social reforms - great idea in the first place) - but his reform is still in place and clung to by all major parties, even tho it resulted in children-poverty doubling since 2005 for example. A jobless person in Germany nowadays is FORCED to work for 1 (one!) additional Euro per hour at whatever is offered to him, or else his social services get cut severly (that this is against our constitution that gurantees the free choice of work doesnt seem to worry anybody unduly - who reads the constitution anyways ?). Note that the state is by this directly paying the saleries of private companies - it pays the social service to the worker, who is thereby enabled to work for close to no cost to the company (stop and consider the effects on competition for a sec here). Combined with the fact that you have to take what ever they "offer" you, this comes damn close to slavery in my book. Now this whole reform had cost quite a bit of public support for the government. They wanna make up for it, by reducing the amount of money the worker has to pay for the obligational "joblessness-insurance" (which as you have seen is merely a system of forced-work at sustanance and state-cost) - i know that this song will end with the line "and there was no joblessness-insurance anymore because people asked to get rid off it"- Hail the return of pauperism ! For approximately 270 Euro a year the employed worker will give up any solidarity with his "less-lucky" fellow man, just because he can hardly afford not to these days. For the majority of people, those who do not work, are just lazy asses anyways... we got 4 million of those germany... let´s force them to work ! You know thinking about this kind of stupidity makes me really mad sometimes, because it should be obvious to anybody, that if you force some to work at any condition, that the conditions of all other work will change, too.

EDIT: This last point also supports the idea of national wealth being in direct correlation to the poverty of it´s people. Nobody would argue that while our export-orientated economy thrived by that reform, at the same poverty was sky-rocketing.

One more: Right now an energy-company wants to build two coal-powerplants in the state of lower-saxony. It announced that it has three communites in their closer choice and named them. By virtue of competition and need for jobs, you can figure out on your own, how much those plants will cost them in the end: Close to nothing - the communities will up each others bonuses granted to the company to a point were they will pay for the jobs created. And this is about coal-plants - something that you do not really want in your neighborhood... (not to speak about all the innovation created by competetion here).

And just another one: In 1970 three german states subsidized the building of an aluminium-factory in Hamburg, covering 640 million (marks) of 654 million total expenses for the Reynolds company. The laws in place that regulate the permission to build such a factory with environmental impact were all ignored. When the according state-institution objected to this, Reynolds immediately threted that if it would take too long or would be too inconvinient, 1000 jobs wont be created. A member of the Hamburg senate said, that interests of protection for the people and environmental consideration have to stand back and are second to economic needs, which have to be decided on by those running it alone (why this guy even sat in the senate, is a riddle to me: obviously in his view, the senate had no real power anyways). In 1974, four years later, a court stated that the aluminium works operate illegally and without permission by the proper bureucracy. Now the senate as well as the people (!) were getting mad at the court - a situtation that Reynolds exploited and have another court say that they may continue production at 2/3 of its capacity. Not enough that, Reynolds announced it was going to sell the factory. The potential buyer - the "Vereinigten Aluminium Werke" (united alu-works) said it would preserve the jobs if another 120 million would be paid by the state. In the end, the state of Hamburg BOUGHT the factory itself, but Reynolds still kept operating in it. Since constant capital (the factory) alone makes no profit, but only the variable (profitable work) does, Hamburg had taken the risk, while leaving the profit to Reynolds. The profits were privatazied, the costs and risks socialized... Hamburg had the name, Reynolds kept the game (just like with colonialism)... Now at least jobs had been created:
But the 1200 that were origianlly planned got reduced to not even half that number in the course of a mere 5 years. Then the works started to make alu for the reynolds group exclusively, which means exporting it, which means its not used by any german company, creating subsequent jobs here. By that time over a billion marks (1/2 b dollars roughly) had been invested by the state. How could it afford such a tremendous expenditure ? Well, cut back on social services, like hospitals and schools. And i am not even talking about the effects on the environment of all this here. (Later example taken from: "Poltische Ökonomie", Holger Strohm, 1979)

[Unimatrix11]

These four examples have one thing in common (and their number shows that this is not some random oddity, but rather the common thing): Competetion has expanded to social communities who compete for a company to bring some jobs to their region, because they themselves are not able to do it anymore - hooray the credit system. The dependancy of the individual, on which capitalism relies in its beginning, extended to encompass whole nations. Thats why you see nations competing with each other in things like tax-breakes for the upper classes and companies. Thats why you see social systems dismantled in all those countries who once were proud and glad to have them. Thats why you see constitutional rights dísbanded by democratic governments. Thats why we have been talking about protecting the environment since the 80´s (at least !)and not seen much action. Thats why, in short, whatever social unities render desirable has no chance to come into being when it is against the interest of big business and very little chance, if it is not part of it. Weather it is the global society (mankind, for god´s sake, the whole of it !) trying to preserve the global climate at the current state, or a small muncipality trying to get some jobs - it wont happen if it doesnt suit profit.

Just another thought about the credit system: Interest is, as someone else stated correctly, the price for having something now rather than later. So what you do when you pick up a loan, is -- selling your future. Why would you do that ? As also stated by someone else, to buy the future of someone else at a better price... hmm, yeah thats morally correct, i suppose.

[MJW]

Originally posted by Blake

Sorry? What is that in reference to?

Regardless I can state with absolute confidence that there is no infinite life after death.

Oh, that part was just inane flamebait to see if you where picking and chosing posts. It was a reference to an crazy ot post you made a looong time ago.

--MJW the loser

[MJW]

My first double post.

I just say here that my diplomacy rant outlines why this thread is pointless. Unless it is made into a duel game civ WILL be broken (as in diplomacy is 90% of playskill in MP). That won't happen. So this thread should be about gaming in genreal at the least...

[nbarclay]

Originally posted by Blake

A restrictive textbook understanding of traditional fiat and precious-metal backed currencies maybe. But is your mind open to other kinds of money?

Either money is backed up by the ability to exchange it for something concrete, or it isn't. The "something concrete" wouldn't necessarily have to be precious metals. But unless people can count on being able to exchange their currency for something that is valued for practical reasons, not just as a medium of exchange, the currency is only as good as people's trust that others will be willing to accept it.

Consider what would happen to a local currency if people start losing interest in it, and become less willing to accept it at face value. People who have credit balances could find themselves in a situation where they can't find anything to spend their balances on that provides as much value as they expected when they accumulated their balances. Right?

[Unimatrix11]

Apart from the fact that no (major) currency in the world is backed by anything anymore, i´d like to ask the practical value of gold or silver, which used to back currencies. It is only in times of emergency that something of practical value replaces money as a currency for a while, like cigarettes in germany after WW2.

What you described can and did happen to conventional currency, too. At the end of 1929, you´d have to carry a cart full of money to the bakery in order to buy a bread - and you´d better hurry your way from the bank to the bakery, or you´d need to bring two carts. I THINK (i am not sure about this), that it was only then, that the Reichsmark got replaced by the Goldmark - the name of the latter suggests that it was backed by gold - but again: I am not sure about this. If this is true, it might be worth noting, that at the same time, the dollar stopped being backed by gold...

[nbarclay]

If gold and silver don't have any practical value, why are they so expensive? Granted, they aren't something that people genuinely need. But they are something that large numbers of people value for purposes other than just as a medium of exchange.

I don't view the idea of having money backed by something tangible as the kind of panacea that some people do. If money is backed by a particular commodity, there is serious potential for the value of the money to fluctuate based on the supply of and demand for that particular commodity. Also note that one of the functions of the Federal Reserve in the United States, and I would assume of similar mechanisms elsewhere in the world, is to tighten or loosen the money supply in response to changes in the velocity of money - in how often on average money changes hands in a given amount of time. I would guess that such a mechanism would be more difficult to manage with money backed by a commodity than it is with fiat money. So while fiat money is more vulnerable to losing its value in a major economic collapse, I'm inclined to believe that it has some advantages in a healthy economy.

By the way, a lot of talk about the money supply is extremely simplistic because it ignores the velocity of money. For purposes of issues such as inflation, what matters is not just the total amount of money in existence, but also how often the money changes hands. If the money changes hands twice as often even though the quantity of goods and services exchanged remains the same, and assuming the total amount of money remains the same, the result would be inflation in which the money loses half its value. Conversely, when money changes hands less often and the total amount of money in existence remains the same, the result is either deflation, with people making the same transactions but at lower prices, or a recession or depression, with fewer transactions taking place. A mechanism such as the Federal Reserve can provide a buffer against inflation and deflation (or recession) by adjusting the money supply in response to changes in the velocity of money - tightening the supply if the velocity goes up faster than the amount of goods and services being exchanged goes up, and loosening the supply if the velocity goes down.

[couerdelion]

First in response to “perfect knowledge” on the Value(C) > Value (B) argument, I would say that 100% knowledge is not a pre-requisite for there to be a demand for money. All it needs is a “utility function” for the individual which places a value on their given state and can then determine that they are in a better state in case C than they would be in case B.

Utility functions differ quite dramatically from one individual to the next. A 25-yr old guys will see a greater utility in owning a sports car than would a 25-yr old girl or 70-yr old man. Someone who expects property prices to rise may see more value in borrowing money to invest in property.

All we need to a price on money is for an individual to believe that they are better off borrowing now in order to spend than waiting to earn the money needed to spend later.


I find Blake’s micro-currency idea very interesting and can see certain merits in refining these sorts of things. Many of the real problems that emerge within a single large economic and currency area can be caused by the failure of such a wide area to take account of shorter term economic difficulties in individual communities. A local economy might then serve to smooth out hardships if the local economy can continue to operate up to a point.

But there are still problems that would need to be addressed.

1) Most people live in urban communities so local resources are not diverse enough to supply all their needs.

If the system is there to provide a fall-back in the event of widespread economic crisis, then it is all well and good that Bob can get his back looked at, Craig gets his paintings, and Allison, her kennel. But they are going to be quite hungry if Bill the Baker cannot get his corn from Fred the Farmer, who lives 1000 miles away in Iowa.

In this situation, there is no alternative but to use the uber-currency which will drain the net reserves of this local economy.

2) Why would people accept a micro-currency if they can get the same (or better) benefit from the uber-currency

This is really a barrier to entry into the system. One can presume that the Craig, Bob and Allison could always pay for these goods/services with standard currency so you have to ask why they would arrange a deal with a weaker currency. Unless there is a significant cost-saving from acquiring a local service there seems to be no benefit from using the credit system.

3) What happens when certain individuals or companies are net importers/exporters in this system of credit.

There are clearly situations where some individuals will have a business which is more local than others. So they will be acquiring credits while others will move into debt. Those with excess credit, and probably needing to acquire some supplies from outside the system, will need to exchange their credits for a real currency.

4) How do people gain confidence in the system

This has already been raised but is a fair criticism because the system relies heavily on trust AND on a certain critical masses, the two goals being conflicting unless a single entity stands in the middle of all transactions as some sort of adjudicator/guarantor. In this way, the creditworthiness of unknown individuals will be assured (up to a point) and unscrupulous individuals can’t simply come along and use it for what they can get before moving on to the next scheme.

Don’t forget that the charming little village where everyone knows everyone else is the exception in the modern economy.


Now with these criticisms it looks just like a real currency, if it is going to work. But since this currency will bring nothing new that the main currency, where is the incentive to use it?

[Unimatrix11]

Originally posted by nbarclay
If gold and silver don't have any practical value, why are they so expensive? Granted, they aren't something that people genuinely need. But they are something that large numbers of people value for purposes other than just as a medium of exchange.

Here You see what makes the price of things: the average effort to obtain them. We have already asserted that things get their value by the work lavished on them - gold and silver are no exception to this. If Gold would be lying around like once in Lydia everywhere, it´s king, Croesus, would have never obtained legendary wealth, just because the average effort to get it, would be much less, which would have been reflected in the price of it. Historically this can be observed when you look at the exploitation of the gold-mines and remains of indian cultures of todays latin-america by the spanish in the 17th century - it was so easy to obtain, that the price for it plummeted in europe and made Spain rather poor then wealthy. When looking at the mechanism of "demand and supply make the price", it is important to note on what demand and supply depend.

Also the "large numbers of people" you talk about, is, well, relative. Take a medevil society in europe - the common farmer would have little use for gold and he would traded it very quickly. It is, in fact a small number of people who appreciated it as a luxury and who could afford to collect it, who created any demand for it other than as a medium of exchange. In fact this is exactly what makes it such a good medium of exchange - most people dont have a real use for it - just as a fiat currency would not work, if the bank-notes were actually worth more (or the same - in a practical meaning) than the numbers printed on it. If it was different, if everybody would have a practical use for the medium of exchange, it would go "into shock" immediately, as it would not be exchanged for other things.

... A mechanism such as the Federal Reserve can provide a buffer against inflation and deflation (or recession) by adjusting the money supply in response to changes in the velocity of money - tightening the supply if the velocity goes up faster than the amount of goods and services being exchanged goes up, and loosening the supply if the velocity goes down.

That would be, what it is supposed to do. And if it was a state-institution that runs at no profit and supplies the money according to the state´s and economy´s need at no interest i would be all fine with it. Though i still would have a feeling that it wouldnt be neccessary - money is the blood of the economy - but i dont see a blood reserve in humans. What you do with a human when he goes into shock, and his blood-circulation colapsed and the blood is all in the legs: you turn him upside down pretty much. You force the blood out of the places were it accumulated. A hefty property tax could do that for example. But then again, in this analogy, our economies would all be red-headed corpulent (to be nice) guys with high blood-pressure anyways - a little drop in the blood-pressure and a good diet might be healthy after all...

[wodan11]

Gold and silver do have a practical value. e.g., gold is an excellent conductor.

Wodan

[nbarclay]

The fact that people sometimes say that money is the blood of our economy does not mean that we can use concepts regarding how blood flows to gain a better understanding of how money flows. Consider, for example, the fact that blood is moved by a centralized pump - the heart - whereas the mechanism that moves money through an economy is the spending of tens or hundreds of millions of individual people. So trying to use medical ideas regarding blood flow as analogies for the best way to control the flow of money through an economy is not generally useful.

It would be difficult to find a workable way to add temporarily to the money supply without charging interest because whoever receives the new money - even just as a loan - would be getting something for nothing. With the Federal Reserve charging interest, the organizations that borrow money from the Federal Reserve have to consider whether they have a use for the money that is valuable enough to be worth paying the interest. The amount borrowed from the Federal Reserve is thus governed by the laws of supply and demand, and the Federal Reserve can manipulate the amount borrowed (and hence the money supply) by increasing or decreasing the cost of borrowing. If interest were not charged, it would be necessary to develop an entirely different mechanism, and the alternative would need to be both fair in determining who receives the zero-interest loans and effective in putting money to productive uses. (And the zero-interest loans had better not go to people or organizations that might not be able to pay the loans back.)

As I see it, there are three critical points to keeping a Federal Reserve type system fair. (1) If the system increases the money supply by creating money out of thin air and loaning it out, any profit from interest on the loans must go to government, not to private individuals or business entities. (This does not preclude borrowers from making a profit from how they use the money they borrow.) (2) The decision of who receives the loans, and at what cost, must be based on supply and demand rather than on arbitrary favoritism. (Restricting eligibility to banking institutions is not arbitrary because it is based on the special rules governments impose on banking institutions in an effort to ensure their stability.) And (3) the goal of the system must be to maintain stability, not to manipulate the economy in order to gain advantages for some groups at the expense of others.

If anyone wants to persuade me that the Federal Reserve system is bad, they need either to find a problem in one of these categories or to persuade me that some other type of danger exists.

[Blake]

Originally posted by nbarclay
Either money is backed up by the ability to exchange it for something concrete, or it isn't. The "something concrete" wouldn't necessarily have to be precious metals. But unless people can count on being able to exchange their currency for something that is valued for practical reasons, not just as a medium of exchange, the currency is only as good as people's trust that others will be willing to accept it.

Do you remember my earlier post in this thread on backed currencies?

It's entirely possible to back a currency with a "basket" of good. For example, a currency could be backed by Gold, maybe there's a shortage of Gold so they start backing it with silver too. Now the currency is backed by the "basket" of gold and silver. Someone who has some money can exchange it for Gold, Silver or Both.

Now expand this basket concept - in fact expand it to as many relatively non-perishable goods as possible/practical. Include things like Lumber, Grain, Iron, Oil.
Okay, like gold, each of these things has a price in the market - the price people are willing to pay for it.

Now imagine a warehouse which stores this kind of stuff. Someone can bring in a stack of money and exchange that money for some grain, wood, iron or oil.

Now here's the marvelous concept:
REVERSE that also!

Someone can bring in a truckload of wood and exchange that for a stack of money! Issued BY the warehouse at the current market rate for wood (in other words the warehouse doesn't need to earn the money - they just "print" it).

SOMEONE has to issue money ("print" it), usually whoever gets to issue it is whoever has the most guns and lawyers behind them, or politicians in their pockets, however it goes.

Why use the credit system?!

It's smarter to increase the money supply, when the supply of goods increases, directly proportionally. All that is required is that the warehouses have the guns, lawyers and pocket-politicians instead of the banks (so they can be "trusted" to issue currency fairly - cynical definition of trust I have, eh?). And note that THIS STUFF HAS TO BE STORED ANYWAY.

You basically merge the banking system with the commodity storage system.

Note that someone living in such a commodity-basket backed currency society doesn't have to interact with the warehouse system. Once Jack has exchanged his lumber for cash, he can spend that cash to buy other things from other people, who may produce products which aren't "warehousable", or which don't have a well enough defined value.
Perishables and art are good examples. Perishables need a quick turnaround, the value of art is highly subjective.

If the money supply isn't sufficient, the idea is to use a larger basket - add more commodities (which have pre-existing storage facilities which just need to be "empowered" to issue money). The other way is to increase the value of some of the commodity types, so that people bring more in rather than selling on the open market. But it's probably more ideal to use a more inclusive basket.

Noting the "People don't have to directly interact", this can be expanded even further. You could have "end user currency" which is BACKED by the basket backed currency - which may only be used in large-scale trade and transport sectors. More generally if someone produces lumber on a very small scale, they might rather sell it directly to other users and that's fine too.

There's absolutely no need to abandon free markets or the general "the market sets the value" concept - the idea is that by using a BASKET, the value of the currency is relatively resilient to a change in price of any one commodity. In fact it would be required that the market continues to set the price, if you say that "Grain is worth X, end of story", then either the warehouses would start overflowing with grain (because it's too profitable to grow), or people take out ALL the grain - and now the currency has lost utility because it can no longer be exchanged for grain - people would buy the grain from the warehouses then sell it at a HIGHER price on the "black market" - grain has become available only on the open/black market. So the market setting the price is still very much required.

The technical merits of such a system are high, for example it's immune to inflation. In fact the money (in circulation) NEEDS to naturally demmurage (lose value) because it's solidly backed by something solid, and that stuff decays when it's left in a warehouse. So it's necessary - both to properly reflect what ACTUALLY happens when people hold onto cash, and to encourage people to SPEND/INVEST their cash. The negative interest rate would be probably about 2-4% a year, so it's not particularly high (although it'd go higher if it was necessary to add perishables to the basket). It's like if you leave $1000 in an account for a year, at the end you only have $960...

Note this system is completely compatible with Investment - this is taking money, and giving it to someone else, who then uses that money to (ultimately) take stuff OUT of the warehouses where it's then integrated into real value-building stuff. That's why investment is good - in real terms it prevents demmurage - loss of value by stuff decaying in warehouses.
Investment is obviously firmly encouraged by money which loses value. If people can't spend their money, they invest it so it's doing something useful for them. The necessity of investment is made even more obvious by the fact that money loses value, this is no longer being disguised by the inflation rate.

THAT is the system would should replace central banks.

The ultimate merit of it, is a "Will buy guarantee" for raw materials, there is NO possibility that there wont be enough money to buy the "commodity basket goods", the price might fluctuate a bit but there's no chance of the economy collapsing or something. It's a system which results in very high confidence for producers which makes for an economy with a very strong foundation.
(You obviously want to keep more trivial crap out of the basket, it's for the building blocks of civilization type stuff).