viernes, 9 de junio de 2017

“COMMODITY – MONEY – COMMODITY”, a monetary system implemented as an ecosystem of Ricardian Contract vouchers.


This paper is inspired by the works of Samo Kavčič around the marxian concept of C-M-C money. 1 2 It broadly shares all the goals and principles. However, it proposes a different mechanism, or rather, different mechanics to achieve a similar monetary circulation.
The purpose is to bring it closer to the concept that “Anyone who offers goods and services for sale in the market is qualified to issue currency”, THE END OF MONEY AND THE FUTURE OF CIVILIZATION, by Thomas H. Greco, Jr., 2009, trying to minimize the role any government or monetary authority, or law enforcement, has to play in the system. After all, the final marxian utopia is the overcoming of the state by the free association of the workers and producers.
To do so, we recover some of the ideas of Paul Grignon by which “Credit Coin is a contract backed by promises of future productivity” 3 4. We take strictly the principle that the promise of the producer has to be a legally binding contract to deliver the goods. The role of the state should be no other than enforce the fulfillment of these freely issued contracts by the producers with the holders. The system should work and stabilize without any further monetary intervention.
To standardize and make the contract legally binding, we propose to use the Ricardian Contract format for the C-M-C currencies. A Ricardian contract is a document which is legible to both a court of law and to a software application. Its purpose is to provide digital trading systems of various kinds the solidity of legally binding claims on goods or property.5 6
We describe how small producers can associate in cooperatives or associations and the Ricardian Contract collectively signed and used as framework for the promises. Something like the widespread Marketing Agreements used, for example, by farmers. However, the model also works for a big company.
Finally, we highlight how block-chain technologies with smart contract functions is the technology of choice.

Summary of changes to the KMK

This is a summary of the main changes to the original KMK proposal:
  • The small community closed loop economy used just for the purpose to illustrate the functioning of mutual credit currency systems,
    • for us it is an essential precondition for the model that the local CMC currencies cannot be freely traded with general purpose currencies or larger scale currencies. We propose as well a scenario of a closed loop economy covering from district to region, covering the economy areas for which this size is the optimal and adequate economies of scale 7, but, for now, its closed. We leave a model for the interrelation of different scale CMC currencies in a “Great Localization and Engagement scenario” pending for a future elaboration. A model on transitory conditions in which these CMC islands emerge under the dominance (and possible hostile actions) of large scale, world trade, or national fiat, currencies will not be elaborated for now. Table 1 provides a list of industries that could be included in such a closed loop economy. The reason is that a C-M-C system becomes vulnerable to speculation if world trade currencies are let in.
  • Instead of a general purpose currency like KMK,
    • we propose an ecosystem of CMC currencies, vouchers, issued by the main production sectors as promises of their future production, expressed in production units. These currencies can be freely traded with each other at the local monetary market.
      • the goal is to obtain a better transparency of the monetary cycle from issuance to redemption, where the identity is not diluted into a general purpose currency.
      • the goal is a better self-governance of the monetary circuits associated to an industry production.
    • there is no assumption of a monopoly of any entity (business or association) over any currency of a productive sector at this local community. Milk producers could associate into one or several cooperatives, each of them with their own currency or vouchers, competing each other. In that sense, CMC currencies resemble trade mark bonds, competing with each other.
  • Instead of a mandatory forecasts submitted and approved by whatever authority followed by the approval of overdraft credits,
    • we propose a self-credit with no other authorization than the producers themselves, consisting in the the issuance of signed vouchers on their future production, legally valid. The vouchers are denominated in units of production of that special product. The vouchers can be issued at any time before product in the market, and must have a validity start date and end date, corresponding to their product at the market and expiration dates. Start means the moment when the product is ready for sale. End means the moment when the product perishes.
  • Instead of a Monetary Separation of the so called “Real and the Financial Exchange Circles”, be it by a rule-based barrier or in the form of explicit restrictions on trading with old goods, or the Prohibition of Speculation, involving top down monitoring of transactions in the general purpose KMK currency,
    • we introduce a special subgroup of CMC currencies intended to be able to buy long lasting property that have a property title with property shares and property usage rights. We call them “slow” currencies.
  • The public sector is not displayed simply as another agent called "town".
    • we propose a special public sector CMC currency which is used to collect taxes and has special rules.
  • As all the money in the system is already self-credit, the system works with no other form of credit or loan.
    • In special, the acquisition of long term assets is not considered and does not need to involve any credit.
    • Small agents, in special households, not issuing any money, and therefore not having any self-credit money, may have the need of cash-flow credit. Example is he credit card instrument. It makes no sense to increase the monetary mass with money representing goods, if the production of that good is not increased. Therefore, for that purpose:
      • either the cash-flow credit is a zero balance private P2P credit at any of the CMC currencies (like a LETs)
      • or it is done in the public sector CMC currency, being the public sector authority the only able to regulate over the overall monetary mass of the public sector CMC and about how much “out of the nothing” temporary money can be tolerated. All other agents have only their interest as the driver and should not have a say in this social interest parameter

Issuing promises of production and delivery

The producers issue vouchers on their own CMC to finance their production cycle. They pay their providers with the vouchers they issue. Typically these costs consist of:
  1. Labor.
  2. Utilities (heating, fuel, communications, electricity).
  3. Any other type of working capital.
  4. Taxes.
  5. Contingencies or reserves. Some vouchers may be issued but not released to circulation.
  6. Margin, meaning a reserve for amortization of long term production means, new capitalization or investment in productivity increases, contingency reserves and profits
There are many ways to program the issuance of vouchers. The only condition is that, if


That is, all vouchers issued along the production cycle addressing a product to be delivered at a given month have to add to the total foreseen production.

It seems a safe approach to issue vouchers progressively in a quantity as required by the production costs, plus the margin, to also sequentially filling the delivery curve at a future time. The production curve and the delivery curve may have different shapes. This approach minimizes the monetary mass in circulation.

Table 2 provides a simulation for a production cycle of one year, for products that once in the market expire in 5 months. In the example, the product delivery follows a strong seasonal curve (as it could be agricultural) while production costs have only moderate seasons and most is steady costs.

However the system gives ample freedom for businesses to design their own issuance policy.

The main freedom is at the policy to issue the quantity corresponding to the margin. We will devote a section to this problem.

The system is as simple as explained above. However, we will explore different parts of the monetary circuitry to watch for possible hidden side effects.

Monetary mechanics

Pricing at the market

We said that the vouchers are denominated in units of production of that special product. That would be liters, kgs, units, meters …

Base Units

However, any producer produces a wide range of products under a main header. Farmers of a poor region not jet under intensive mono culture may grow a wide range of crops, a long list like Rice paddy, Cow's milk whole, fresh, Cattle meat, Pig meat, Chicken meat, Wheat, Soybeans, Tomatoes, Sugar cane, Maize (Corn), Eggs in shell, Potatoes, Vegetables, Grapes, Water Buffalo milk, Cotton lint, Apples, Bananas, Cassava (yuca), Mangos, Mangosteens, Guavas, Sheep, meat, Coffee, Palm oil, Onions, dry, Beans, dry and green, ..., etc. The variety can be huge. Imagine a hardware store, just the list of screws. Issuing a special voucher for each of them is unnecessary and very cumbersome. Subsets of these products can be covered under the same CMC currency umbrella, following probably more farmers territorial grouping than a precise portfolio of products.

At another variant, the range of products could cover the full recycling cycle, like food, restoration, food waste collection, composting and urban or near rural farming. In this case the CMC covers different products of the same cycle.

The only condition is that the Ricardian Contract makes it clear. The fields MERCHANDISES, DEFINITIONS or DESCRIPTIONS, and CONDITIONS provide the necessary fields as usual merchant contracts do.

Pricing can be done the way we are used to for example in travel MILES. MILES is the generic denomination, anchoring into real travel miles at some specific (base) type of trip. Then each real travel mile will have a specific price in MILES depending if it is a first class transoceanic flight or an economy class local flight. LETs operating on services may use the HOUR as the unit of exchange, but the services of high level lawyer may cost you several HOURS per hour.

There seems not to be necessary that producers specify further how much they will produce of each, other than making public the numbers issued of their vouchers (the monetary mass), nor what price they commit to put at each of the articles.

Free market and competition seems to be enough to guarantee the appropriate reaction of the customers against unfair prices or scarcity of products, as at any shopping center today.

What has to be clearly specified in the Ricardian Contract is the range of products against which the vouchers can be redeemed, and the value of the total production promised for a given month, expressed in the base unit of that currency (in the farmers example above, for example in KgCROPS).

Value distribution

The producers will aim that the customers perceive fair and stable prices.
If the real production of a given month is
By law, the total value of vouchers issued as a promise for that month has to be able to buy the whole production. So that, by definition
The prices of the different products are set, so that
which is no other than the Quantitative Money Law.
This is the basic pillar law, that the vouchers issued as a promise for that month has to be able to buy the whole production put in the market that month, and occupies a legal positioning similar to anti-fraud or counterfeiting laws.
Prices should be set in a way that customers perceive them fair, and expensive products accepted as expensive, and cheap as cheap. This does not need any further regulation as the market reaction, as it is today.
However, this is not enough. The customers should perceive that this corresponds to the expected P(n) when they accepted the vouchers in exchange of products or services. We analyze this closer at the Redemption Cycle section.

The redemption cycle

Table 3 provides a simulation of the redemption cycle for products that follow a strong cyclic maturation.


Overproduction, for example, at getting an extraordinary harvest, is easily solved. Shortly before maturity, the business may issue the missing money, in order to offer more product at the same prices.
The monetary circuit is guaranteed.
All production costs already passed, the increased issuance will be added directly to the margin quantity. It will probably translate into a decreased percentage of sales of the available stock, an increase of products that expire, and as a result into a not so brilliant margin increase, but otherwise the system manages the situation with the business as usual mechanisms.


Underproduction, for example, at getting a poor harvest because of bad weather (or, in the worst case, trying to cheat), is solved less easy.
With all issued money in circulation, the monetary mass in circulation cannot be decreased.
A good practice is to issue for the whole expected production
but keep some vouchers in reserve out of circulation until the last minute.
The advantage is that the announcement of the total amount of vouchers issued is an indication of production expected. The drawback is that the cancellation of retained vouchers can only be done trough expiration, which is not transparent to what has happened.
The best practice is to issue vouchers for the amounts just needed to pay for the production costs and then treat all cases as overproduction. The expected production can be announced as a forecast by other means.
If things go worst, and there is a disaster production, and the only option, given the pillar law, is to increase prices, and take on the business shoulders the decrease in credibility, putting into risk the acceptance of future issuance of the business CMC. A dead sentence for the business in a normal situation. But not so different as it works now. After a natural disaster, or a drought, agricultural products may sky-rocket. Everybody will damn the situation, but nobody will blame the farmers for it.
But the overall model works as it is. No authority or regulation body is required working on sanctions or ex-post overdraft or credit balancing. Sin carries penance.

Stock management

Our starting point is products that expire in a fraction of the production cycle, like, typically, agricultural products, say, months. Each industry would work with an average expiring period, and the vouchers would also have an expiring period and thus an expiring date.8
The model also applies for durable goods like electronics, hardware, computers, cars or even houses. However, the acquisition process is different. At consumables, the voucher buys the product or service to be consumed. You buy an apple, take it away and eat it. At durable goods there is an intermediate step that certifies the right to use it. This certification may range from a guarantee document for a home appliance, to a registered property document of a house. We will deal with the details in section “Durable capital goods”.
Attentive customers will pick up the freshest products, and attentive sellers will tempt the customers with the products closer to expiration. Unavoidably, unless each month all the stock is sold, there will be a certain amount of products that expire in the shelf's.
In this system, the expiration of products has economic implications, but not monetary implications. If the expiring period exp has been properly calculated, the vouchers will be expiring at the same pace as the products, and no monetary stress is produced.
Of course, the voucher holders that don't redeem the vouchers on time will have a loss. The impact should be similar to Silvio Gesell “demurrage”. It discourages any “storage” of vouchers, except for a long expiration period (slow money).
If the stock for sale at a given n-1 month is
And the sales that month n is
Redeem(n) refers to the sales made at any month n with any voucher currently valid.
The redemption is composed by vouchers of different maturity
To avoid making payments a cumbersome process, the IT wallet may take care of choosing first “old” vouchers until the price is fulfilled.
Equally, the goods may come form different deliveries
This does not change the totals, but we take note for the section Debt Clearing.
The leftover for next month is
Next month the stock will be
If we assume that products are taken out of the shelf without preference on expiration, the proportion of goods that remain from the unsold products exp months before is an average fraction of all the stock. In the real world, expiration values will vary around this mean value.

It has to be noted that the monetary mass of vouchers with period of validity at this time is exactly S(n)
However, there is a pending monetary mass of

Promise to Produce, promise to Sell

The system pivots around sales, not around production.

The promise is a promise to sell.

It means that, what counts is

We assume that, if there was a sale, its because the product was there.
It has to be read the following way: I make a promise to sell for value PP(n) at month n. It is my business how I get it done. Either I produced the products enough, or bought the products enough to convince customers to pay me for them PP(n) at month n.
Any other approach pivoted on the real production put on the shelf's involves an intermediate step of a trusted third party making an inventory of products. In our view, this complicates unnecessarily matters.
Apparently, we miss a clear cut register of expectations on unfulfilled promises expressed in product units. Something like I accepted y * vunit (n) expecting y * kg Tomatoes, and I got less. It seems we deviate form the strict Commodity term in the CMC definition.
But we do not. At sales time, because of the basic pillar law, we converge again to a strict CMC definition. At promises time, there is anyhow an uncertainty factor to be build in into the system. If we follow punctually the products inventory path, we would need an external authority to translate it at the end to monetary terms, to impose at the end monetary penalties or rewards.

In this system, lack of product results in price increases that may result in less sales. In the end we get expired vouchers that the producer was not able to put into circulation or the customer was not interested to redeem. Pure monetary Debt Clearing mechanisms may penalize or reward expectations betrayed or surpassed.
The advantage is that it makes the system more flexible.
In the real world there is a mix of producers and sellers. Take a cooperative of crop growing farmers: it is normally the cooperative that puts in place the distribution.
The mechanics is the following:
  • The real producers issue their promises, at their selling price. However, if they circulate them to pay for their costs, they arrive at a unplayable debt, cause no redemption will be made at their name, cause they don't sell. Before circulating and spending, they need an agreement with sellers.
  • The sellers issue their own promises at their selling price. At this moment, we have around double vouchers than production will be. What the sellers do is to come to agreements with producers.
  • When production is ready, sellers redeem from the producers to get the products.
  • At public sales, customers redeem from the sellers.



Producers issue

Sellers issue

Producers spend


Sellers redeem

Sellers spend


Customers redeem


VP = Vouchers issued by Producers
VS = Vouchers issued by Sellers

Debt clearing

Self credit debt

At making a promise at any month for products to be delivered at any future month, producers issue vouchers to make payments today, and thus acquire a personal debt with the system and at the same time, with the society. It is a self-credit authorized by the society.
The vouchers issued by producer X for month n are annotated as a debt of producer X maturing at month n.
Once the producer X releases and circulates these vouchers as a payment for his costs in that CMC currency, the vouchers become anonymous and can be used to cancel the redemption of any product at any other producer (or seller) associated to that CMC currency. What remains is the debt of producer X.
Cancel(n) has a different meaning as Redeem(n). The vouchers issued for V(n) can be cancelled until month n+expRedeem(n) refers to the sales made at any month n with any voucher currently valid (from n to n-exp). Cancel(n) means vouchers with validity start n cancelled at any time until n+exp.
The vouchers used in cancellation do not go to the producers (or seller) pocket, or wallet or liquid account, where he can spend them. He has spend them already. These cancellation vouchers go to cancel this producers debt. Remember that the promise is a promise to sell.
The execution script is the following
DproducerX(n)  DproducerX(n) – Cancel(n);
It means very clearly that producers cannot clear their debt by just delivering products. As explained above, they can only clear their debt by ensuring the sales either selling themselves or arranging a distribution channel as their granted buyer.

Individual promises, collective promises

The individual promises become individual debts. But once the vouchers start circulating in the market they become a collective promise.
We are now in a better position to explain how the system regulates the penalty of the unfulfilled expectations.
Unless there is a general natural disaster, underproduction comes from specific producers.
Normally, a seller will buy from a collection of producers who focus on production and not on selling.
A cheating or under-performing producer will come up with less products than expected. According the basic law, in order to buy these few products, the seller will need to use all the vouchers the producer has issued, cause the provider has to put them at a price covering his full issuance. It means this producer’s products will be much more expensive than the other producers providing the same seller.
At putting these products on his shelf's, the seller will need to go down to the average prices, thus losing money. He will probably prefer to punish this particular producer by not redeeming his products.
The producer will remain with his full debt.

Debt clearing

Once the expiration period is over, it may turn out that
By any of the reasons explained above, some quantity of vouchers stay unredeemed, and expire by themselves without cancelling any debt, or alternatively, have gone to another producer.
These producers that have consumed goods from the society without returning the same value to society have incurred at an overspending. This overspending is unspecific, social.
The restitution of the debt cannot be a reduction of their capacity to issue new vouchers based on promises of their future production. This would punish the whole society with a reduction of the overall future production. The producer has to produce all it can, the products have to be sold, and therefore the vouchers have to be issued.
What we can do is to deduct it from their capacity to spend them for their purposes, by giving these new vouchers to somebody else. Instead of using them for their ROI, they go to somebody else.
The question is to whom these just issued vouchers should be given. It was a social defraud, it has to be a social restitution, and thus a social expenditure.
Lets assume there is an entity, that we call “authority”, to whom these vouchers are given. To see how the monetary system works, this is enough. It could be the same authority that collects taxes, it could be the producers association, it could be some other authority. Its pretty much a political decision to be taken by democratic means, with many variants possible.

Negative debt or excess cancellation

We can have also the contrary situation: by some reason, there where more sales than promised.
It has to be noted that the excess sales can only consist in redeeming vouchers issued by another producer.
Once the debt for month n of a producer X has been cancelled, any excess of CancelproducerX(n) goes to the producers (or seller) pocket, or wallet or liquid account, where he can spend them before they expire.

Taxes debt

We could consider the VAT debt, directly proportional to the sales.
If we name the VAT multiplier vat, the tax debt for this month is

Debt payment mechanics

There is not an easy mechanism to automatically deduct the debts from newly issued vouchers, because this is a free exercise of future planning covering many months. 
As the whole system is quite transparent, and outstanding debts as well as tax debts are recorded, and these records can be made accessible to any designated authority, we would prefer to leave it as a voluntary action of each producer.
The payment would consist in using newly issued vouchers (of choice) to cancel past debt, be it D(n) or Tx(n).
The authority, same as the the Tax Authority now, can give a margin to the debtors, and could come up with ex-post sanctions if delays are not respected.

Durable capital goods

We refer in this section to goods that have a long expiration period exp and have a price significantly bigger than the monthly cash flow of household or businesses.
Consumables disappear after they are bought (buy an apple, eat it, its gone), but these goods are used once and again, or stay there at disposal, and last for a long time before amortization, from computers (3 years), furniture (10 years), vehicles (15 years), machinery (10 to 20 years), buildings (40 years or more), to civil engineering (100 years or more).
They have an owner, and the ownership is certified by a property title (with shares) or at least a guarantee certificate. The owner has the right to use it, or assign exclusive users, generally for profit (through a renting contract).
As, by large, the main investment of households and businesses in long lasting goods or fixed assets is buildings (or land), we will focus on this example for the reasoning.
The trade of these goods is generally studied using the very paradoxical concept of “financial capital”. But in reality, financial capital is an entelechy, a chimera, constructed on the illusion of “money as a storage of value”. The “financial capital” paradoxical knot can only be cut by two “aha!” conceptual exercises that take this “money as a storage of value” to rigorous terms.
The first “aha!” is that in the real world there is not such a thing as a time tunnel that can transport goods to the future, even less to exactly the moment you chose for your saved money to reappear in the market. So, what exactly happened with the goods this money represented in the past (according the Monetary Fundamental Quantity Law) and you failed to buy, and what goods will pop up in the future out of the nothing that can be bought with this “Lazarus” money? The answer is that only lasting goods store value! Money cant!
The alternative explanation can only be that in the future there is a kind of noise money out of the monetary quantitative normal rules paying for products just sitting there waiting to be bought by the average pop up of money saved in the past. A very complicated and unquantifiable explanation when there is a more simple one: only lasting goods store value! Money cant!
The second “aha!” is that the producers of lasting goods need to survive every day. Manufacturing fixed assets takes usually longer times and bigger costs and concentrated efforts. Labour, and part of the working capital, has to be fed with daily consumables to survive and feed the factory. So, what exactly these producers of lasting goods give away, every day, in exchange of these consumables?
The FRB does it by spending the savings of the last sales, which were one-off sales of the whole ownership for the full price, financed by “financial capital”, provided as a mortgage, which results in a monthly payment of the buyer of a loan, with interest.
But all what the builders need to provide the market with houses is to be paid on a monthly basis to continue the works and survive and pay for the materials, plus a profit, and this is precisely how the buyers prefer to pay or can pay, that is, on a monthly basis.
The one-off sales of the whole ownership for the full price is only there to let the FRB go in between and provide a loan with interest (the so called “financial capital”) for the full. But it can be done in a totally different approach based on CMC promise money. A way that not only separates the financial capital, it eliminates it once for all.
It consists on nothing more complicated than an exchange, at the currency exchange market, of fast money (short term, short expiration), as issued by the producers of consumables, with slow money (longer term, very long expiration), as issued by the fixed asset producers.
The building industry would, as all other industries, issue their own vouchers to pay for they daily running costs (plus margin). They can be redeemed at any moment in time until the expiration date (say, next 40 years). In return of the redemption of these generic (construction industry) vouchers, the customers get two things:
  • Shares of a particular property (or building, or machinery, or factory), meaning shares of the property title.
  • Exclusive usage rights of that property (for example habitation)
The construction voucher Ricardian Contract would describe the details of the agreement, the terms and the conditions. For example, it may say that habitation rights can only be given to somebody having already a 10% of that property, and that habitation rights come along with exclusivity on the acquisition of further shares, and these rights are kept only if the dweller makes a monthly redemption of shares. It may also stipulate what happens if the dweller does not pay and how shares and habitation rights are transmitted to the new dweller. The details can adopt many variants according the market.
All this can be done because the usage of a Richardian contract associated to the voucher, which allows for almost any contractual terms we are used to.
The user has a similar experience as today. He has made some savings. Once a threshold reached, he occupies a house he does not yet own, he engages in a monthly payment until a day where he owns the house and has not to pay any more. The difference is that they do not pay the bank, they pay the builder.
The builders have a more comfortable position with a daily income granted, cause they do not depend on one-off sales, but on a broad constant demand of their vouchers. They get as well long term warnings of the increases or decreases of the demand at looking at the demand for their vouchers, not finding how the market is only when the building is already there.
The only difference is that the ghost nightmare of “financial capital” has gone forever.

Reselling a fixed asset

A final note on reselling.
If an owner of a fixed asset that was bought with fixed asset vouchers, already redeemed, wants to resell the asset, new vouchers have to be issued to provide the monetary mass.
It means the current owner of the shares has to go to the original manufacturing industry to get newly issued valid vouchers, for free.
This is the principle, and there is no further detail needed for a document centred on monetary issues. However we make some remarks: in order not to give full control to the original manufacturers on the resell market, measures could be studied, like for example the issuing of special resell vouchers by another entity. Some guarantees may also be given: shares may be deposited at a third party until the vouchers are redeemed. In summary, the principle is clear and there are ample options for instruments to guarantee the operation.


We have now the concepts needed to deal with the mechanics of the margin.
As we said above, the quantity of vouchers to be issued beforehand has to be for the full price of the whole production, that is, costs plus margin or profit.
However, the real profit cannot be known until the sales have been done and we know how many vouchers have been really redeemed and how much has expired and production has been lost.
Profit is used for two main purposes:
One part goes to investments to improve productivity. It means we exchange our CMC vouchers for vouchers representing machinery, or buildings or any other fixed production means. It means we acquire slow money. It will not have expired by the time we do our sales.
Another part goes to pay the shareholders their ROI. To simplify, we assume it goes to pay their luxury life. It will have expired by the time we do our sales. Too late if the sales went bad!
The mechanics to deal with the sales uncertainty, and compensate shareholders with a ROI according to sales, is to preventively buy only slow money, and only convert it again to fast money to pay the shareholders once we know the real profit.

Tax money

Tax money is a special CMC money. In a way, its a cycle that turns counter-clock the other cycles.
Governments deliver goods and services such as healthcare, education, security, infrastructure and others. But they are universally provided not according to payment but according to needs. Citizens provide the funding for these services not according consumption, but according to wealth and other taxes criteria.
It can be treated as a variant of CMC money, but it deserves a full article to properly explain the mechanics.
The product that is on the market is your citizenship.
The “state” (be it local, regional, national), discuses and approves the Public Budget and the Tax Policy through its democratic bodies.
Each year the “state” pays the public costs (teaches, doctors, police,…) costs by issuing a number of vouchers
It splits it into the direct taxation and indirect taxation.
Then, it puts a price to each citizen according the Tax Policy with his part on direct taxation.
Each year every citizen has to buy the renewal of his/her citizen rights.
It has to be noted that the same procedure can be applied to the financing of other autonomous self-governance social bodies, like NGO ‘s. In this case, it is the volunteers that play the role of public servants.

Monetary plurality

Open money means that buyers and sellers should be free to use any payment medium that is mutually agreeable to them, including the issuance and acceptance of their own currencies. Only the issuer of a currency should be obliged to accept it as payment, and must always accept it at face value (“at par”).
In the scenario above only labor will easily accept to be paid in the business CMC currency. In order to balance their shopping basket, employees will go to the currencies market to obtain the vouchers of the products they need. Instead of a universal currency solving the double coincidence of wants we have as replacement a currency market. The experience with crypto-currency exchange markets shows that this operation is now not more complicated that the monthly exercise of distributing the salary along the different household bank accounts and credit cards, which in fact follow destination paths. As reported by Georgina M. Gomez about the Argentinian experience9, a moderated multiplicity of targeted currencies is perfectly workable for households.
Utilities have strong dominating positions, cause everybody needs their product, and will probably impose their own CMC (LtrFUEL, LtrWATTER, MBIT, WATTS). At issuing, the business will probably be forced to exchange their CMC currency into theirs before even paying. To be noted that these currencies (except, probably, WATTS in a renewable scenario) have steady prices, steady production and no expiration date, and a certain degree of accumulation is never risky.
All other forms of working capital will probably have a mixed situation, partly accepting the business CMC (in special if there is a mutual B2B relationship), party imposing their own CMC, and partly using a third party CMC, like for example a CMC used for B2B barter.
Margin quantity has to be issued at production time, so that the monetary mass covers the full price, which includes margin. Otherwise there will not be enough money in circulation to buy the full production at sales price, only at costs price. However it cannot be spend until sales have been confirmed. But by the time the sales is over, the vouchers have reached their expiration date. We leave to another section where this margin can be exchanged for “provisional storage”.


The system should run smoothly and self regulate by market mechanisms except for two rules to be enforced by authority, minimizing the role of any authority:
The pillar law that should be enforced by authority is that the vouchers issued as a promise for that month has to be able to buy the whole production put in the market that month. It means, exactly, that producers cannot be discovered selling products at other markets (say euros) letting their vouchers expire. They may put any prices they like, but the total price in CMC of all the stock in the CMC market has to add to the total value of vouchers issued. If this is granted, they may sell the rest of their production at any other market. We have already seen how they are automatically punished if they want to cheat by allocating too little to the CMC market. Enforcing this law may require inspections and other actions by the authority.
There is a prohibition of exchanging any of the CMC currencies of the community with any other external currency, outside the mechanisms and institution ruled by the local authority. The main purpose is to avoid the usage of free floating external currencies to purchase significant amounts of future production to speculate without the limiting factors explained above for the internal CMC currencies of the community.
All CMC currencies of the community can be freely exchanged in the currency market at any exchange rate mutually agreed by the traders. That means that as the maturity of a product approaches, its CMC currency will rise in price. This has the beneficial effect to speed up the circulation of the vouchers from the users less certain to need them to the users certain to need to redeem them, thus stimulating that all monetary mass is redeemed. If exchange with external fiat money is regulated, speculation is expected to be minimal since the vouchers have an expiration date, and speculators investing in currencies they don't need by currencies they need have the risk to arrive at expiration when they want to re-invest the gains into the currencies they need for their expenditures.

Take off notes

Discount vouchers are widely extended amongst big corporations and retail store networks. Google Play and Apple Store are full of of Apps to manage these vouchers, most of them following adaptations of the Apple Wallet Pass specification, which are derivations of the Ricardian Contract embedded in the Apple platform.


We could see an easy adoption of the economic agents at regional levels if the necessary implementation, design and technology support is given. The support does not need to be for free.
Big corporations play in these circuits small amounts of their overall turnover. In order to get the more popular economical agents to risk more significant amounts of their business into an increasing virtual circle, some institutional framework should be provided.
- Monitoring of the pillar law.
- A protected internal currencies exchange market, that keeps them protected against the main vulnerability, which is external speculative capital.
One mechanism of protection is not to allow external exchanges in the electronic exchange market, but nothing prevents exchanges between particulars. Another layer of protection is to raise a membership barrier, by which only members can hold the vouchers (a particular CMC, or any of the CMCs of the region). Membership can be associated to the citizenship accounts, but it is making the system a bit more cumbersome.
The existence of a Tax Money CMC facilitates things. Its the “water” currency in which all the others may “swim”. As the universally wanted currency, it may facilitate the “double coincidence of wants” between CMC currencies.


The only technology able to scale up to numbers, has flexibility to build all functions and parameters, has low design costs and no investment costs, as well as easy to use smart phone Apps suited for the daily shopping, is ethereum
An open source development example can be found here


We have tighten the concept of money even closer to the marxian concept of COMMODITY – MONEY – COMMODITY, by never allowing MONEY to become abstract or universal, always stranded to some description of the COMMODITY it represents, tied to the time this COMMODITY is in the market, and tied to the producer that will produce it.
As a drawback we have a tolerable increase in the effort to manage a Monetary plurality at the currencies exchange market. Blockchain technology has just lowered very much this barrier.
As benefits we have:
  • Deleted financial capital, the need for FRB, the need for banks and the need for interest.
  • Provided companies with steady working capital and granted cash flow.
  • Provided fixed capital manufacturers with tools to smoothly adapt for long terms market variations.
Table 1 Sectors that could be included in a closed loop economy at an enlarged urban area
Extended Urban area and Region
Distance km
2 million
Urban Farms, Vertical Farming
Construction materials
Small Manufacturing
Advanced manufacturing, Just in Time assembly
Micro renewable’s
Renewable farms
Textile makeup
Food processing
Civil works
Food recycling
TV production
Transport infrastructure
Vehicle assembly
Proximity shops
Big shopping centres
Fresh food
Food packaging
Daily consumables
Seeds and agricultural products
General medical care
Regional and specialty hospitals
Public health
Brico, DIY
Police, Security
Restaurants, Hotels, Tourism
Legal services
Waste recycling
Industrial recycling
Public transport (bus, subway)
Public transport (regional train)
Table 2 Issuance cycle
Example of cyclic industry
Month Salaries Utilities Working capital Costs Margin Issued Delivery Redeemed
-11 3.250 2.000 6.000 11.250 1.221 12.471
-10 3.433 2.000 7.464 12.897 1.399 14.296
-9 3.500 2.000 8.000 13.500 1.465 14.965
-8 3.433 2.000 7.464 12.897 1.399 14.296
-7 3.250 2.000 6.000 11.250 1.221 12.471
-6 3.000 2.000 4.000 9.000 976 9.976
-5 2.750 2.000 2.000 6.750 732 7.482
-4 2.567 2.000 536 5.103 554 5.657
-3 2.500 2.000 0 4.500 488 4.988
-2 2.567 2.000 536 5.103 554 5.657
-1 2.750 2.000 2.000 6.750 732 7.482
0 3.000 2.000 4.000 9.000 976 9.976
1 3.250 2.000 6.000 11.250 1.221 12.471 15.000 13.914
2 3.433 2.000 7.464 12.897 1.399 14.296 18.660 19.195
3 3.500 2.000 8.000 13.500 1.465 14.965 20.000 20.479
4 3.433 2.000 7.464 12.897 1.399 14.296 18.660 15.035
5 3.250 2.000 6.000 11.250 1.221 12.471 15.000 16.954
6 3.000 2.000 4.000 9.000 976 9.976 10.000 9.473
7 2.750 2.000 2.000 6.750 732 7.482 5.000 6.736
8 2.567 2.000 536 5.103 554 5.657 1.340 1.772
9 2.500 2.000 0 4.500 488 4.988 0 86
10 2.567 2.000 536 5.103 554 5.657 1.340 1.192
11 2.750 2.000 2.000 6.750 732 7.482 5.000 5.055
12 3.000 2.000 4.000 9.000 976 9.976 10.000 9.608
Table 3 Redemption cycle for a seasonal product
Month Production Start Expires Stock % sold Redeemed Unsold % expiring Expiring Final stock
1 15.000 1 5 15.000 92,76 % 13.914 1.086 1.086
2 18.660 2 6 19.746 97,21 % 19.195 551 551
3 20.000 3 7 20.551 99,65 % 20.479 72 72
4 18.660 4 8 18.732 80,26 % 15.035 3.697 3.697
5 15.000 5 9 18.697 90,68 % 16.954 1.743 15,19 % 265 1.743
6 10.000 6 10 11.743 80,67 % 9.473 2.270 6,61 % 150 2.270
7 5.000 7 11 7.270 92,65 % 6.736 534 0,86 % 5 534
8 1.340 8 12 1.874 94,54 % 1.772 102 44,29 % 45 102
9 0 9 13 102 83,78 % 86 17 37,35 % 6 17
10 1.340 10 14 1.356 87,91 % 1.192 164 73,53 % 121 164
11 5.000 11 15 5.164 97,89 % 5.055 109 57,69 % 63 109
1 Samo Kavčič, THE “COMMODITY – MONEY – COMMODITY” MUTUAL CREDIT COMPLEMENTARY CURRENCY SYSTEM, Marxian money to promote community trade and market economy, International Journal of Community Currency Research, 2016, VOLUME 20 (S UMMER ) 41-53
2 Samo Kavčič, Monetary Separation of the Real and the Financial Exchange Circles, IV International Conference on Social and Complementary Currencies: Money, Consciousness and Values for Social Change,
3 Paul Grignon, Digital Coin, January 1, 2008. Revised August 14, 2009
4 Paul Grignon, Digital Coin in Brief - July 17 2009 and accompanying documents: Digital Coin Technology, Digital Coin Specifications, Mortgages in the Credit Coin System
6 The Ricardian Financial Instrument Contract
7 The Great Transition, New Economics Foundation, Jan 2012, The Great Localisation and Engagement, Criteria for determining appropriate scale, page 60
8 INTERNET-DRAFT XML Voucher: Generic Voucher Language <draft-ietf-trade-voucher-lang-07.txt>
9 Georgina Gomez, How does monetary plurality really work? Reflections on the Argentine experience (2000-2005), IV International Conference on Social and Complementary Currencies

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