We need altcoins as long as we interact economically over the net, with people we do not know (or simply with people outside our local communities). If we try to imagine what qualities a “solarpunk coin” should have, what are your thoughts? Do we know any existing coin, checking all boxes? This question is more about political economy of Solarpunk, then its technology.
First of all the reason you seem to get downvoted is the term altcoin, which is very much crypto currency, which has a lot of problems in a solarpunk context.
The fundamental problem currencies try to solve is a lack of trust between parties in a trade. Bascially if you get money, you know you can exchange it for something you want right now or later. So it enables transactions between people who do not know each other and do not trust each other, but trust a the third party issueing the currency. Hence a currency needs to be easy to transfer, so people actually use it, stable in value so people trust it, divisible so people can pay a fair price and recognized, so people can exchange it in as many places as possible for as many different types of goods or services as possible.
The way we usually solve it, is by having a government issue the currency. The reason it has value, is that people living in the country issueing the currency have to pay taxes in that currency. So a lot of people actually do need it. Obviously this require governments and gives those governments a lot of power. However there is another way and that is begging the currency to something, which has value. We do that all the time with coupons and vouchers. The problem with that is that the whatever it is being pegged too, can change in value relative to the entire economy. So if you have your currency fixed to say imaginum and there is only a fixed supply of imaginum in the world, but the economy grows twice in size, you end up with 100% inflation. That was a massive problem with the gold standard btw. It was somewhat fixed, by governments printing more money, then they could actually back with gold. Obviously that is not quite the idea.
So given the options a well run government system seems to me to be better. The good part about that, is that this allows to fund public services as well.
However most currency today is not created by governments today. Instead it is created by banks. When a bank gives you a loan, you get cash and the bank gets a gurantee from you worth the loan. You get cash from the bank and for that the bank gets a gurantee that you pay back the loan. The bank does not use its own money for it, but money other bank cutomers have in their bank accounts. Obviously though those cutomers can still pay with the money they have in their bank account using credit cards for example. So a loan basically doubles the money in the system.
So most money is debt and debt has a big problem in the solarpunk world, as it requires more money to be paid back. Hence you need economic growth and that is a really nasty problem. So making banking illegal would solve a lot of problems.
TLDR: Government issued currency, without banking.
You post starts good, but then gets a few things wrong in the end 😅
For example the leverage banks are allowed to have is more like 1:10, meaning they can increase the money supply tenfold or so. It also doesn’t have to be backed by other customer’s money at all.
Interests on bank loans are also only a small part of why capitalism requires constant growth. In fact the recent years of near or partially even below zero interest rates proove that this basically a neglectable part.
In general, increasing money supply isn’t nearly as big of a problem as some people say, as ultimately money is just a means of exchange with no inherent value of its own, so it it good to be able to adjust the supply easily to account for the real world demand. If you want to read more about that the so called Modern Monetary Theory is a good start.
Personally, I would advocate for the exact opposite: (community) banking without government involvement.
While it is true that taxation gives government issued fiat currencies its primary trust, this is ultimately a coercive methode backed by the threat of violence and imprisionment, which is not something that I can support. It is also only one of many ways to structure a currency and have it being trusted by its users, so I think we will be able to figure out something better 😊
Banks nearly never actually go for the 1:10 limit. The bank usually gives the loan, then the bank tries to find the money for the reserve requirment. However the limit is how risky the loan is and not the reserve requirement. Customer deposits are one of the ways to meet those reserve requirements.
I never claimed that increasing money supply was a problem, but that having private banks control most of the money supply is. Private banks have a tendency to be less then ethical organizations, which tends to cause massive economic crisis, once their unethical behaviour starts causing problems again. Happens way too often.
How do you fund public services, without collecting money from people?
Customer deposits are afaik partially excluded from newer reserve requirements as a result of the 2008 banking crisis. At least my coop bank had to try really hard to convert customer deposits into what are nominally member shares to fulfill these new reserve requirements. And yes, the loan risk is the primary concern, but banks very commonly leverage to the maximum they are allowed.
As for “private” banks… that is a not very precise term and includes coop and farmers’ banks for example, which offer a valuable service to their members. I agree though that many commercial banks are a net negative to society.
The more common way how public works are funded is by the government taking a loan from the central bank, which is essentially printing new money. Taxes play a role in funding ongoing services like payment of state employees and social security, but that highly depends of the specific country. In general taxes are mostly collected to enforce participation in the official governmemt issued fiat currency economy (what is measured in GDP) and are not that relevant to the function of the state itself. Many governments in 3rd world countries hardly collect any taxes from regular citizes at all.
If governments were not taxing people, people would not use the currency. So the government owned central bank can print as much money as it wants, it is not going to fund public services. Which shows fairly well when you compare tax revenue with government spending. Countries usually run a deficit of 2-5%points, but it is pretty close.
However you suggest to not have a central bank at all and you are also against taxes and any other form of coersion to fund public services. So I have to ask: How? There are some charities doing good work, but in terms of money it comes not even close to what is needed to fund infrastructure, schools, public welfare and so forth. The only thing able to do it, is to have large parts of the countries economy be state controlled and the profits from that are used to fund the government. If anything that is even worse, then having just taxes.
As for 3rd world countries, they have low taxes, but they also have low government spending. Also they are 3rd world countries, which ususally refers to countries, which are not doing too well.
Yes, that is more or less how the current system works, although there are structural incentives to hide government loans in various constructs and thus the 2-5% figure is understating the real extend. But even so, government debt at 100%+ of GDP tells a story about how taxes are not very vital for funding government actions.
I think there needs to be a bank that issues a debt voucher (more or less what money is) for a specific purpose, but that doesn’t have to be a monopolistic and state violence enforced single currency.
The 3rd world country example was just to point out that models of government exist that mostly source their income from resource extraction and other means that do not involve taxation.
One technical remark:
Should read “deflation”.
Other than that, I agree - within your assumptions of a well run governemnt. However, there is a whole lot of people within solarpunk realm who do not believe thet “a well run government” can exist (detailed definitions aside) and do want government (governance body) beyond the scale of a community that can directly control it. Thus, any such government-backed currency would still be local. Which puts us back to the field one, lacking the intergovernmental exchange carrier.
Getting a bit more theoretical, I am in favor of two currency-backing values that are IMO elementary and not substitute: energy and time. We see many “timebank” systems run locally, but even if we can say that this is the currency created (though commitment) by individuals, they still follow the pattern of central clearing office, sometimes with added reputation systems.
Energy - which essentially all solar, by the way - is mostly used via proof-of-work schemes, and could probably be used through proof-of-useful-work filter, which to me looks like a good way to fund/support public works.
This way or another, whatever is the source of the currency, we always need to address the risk of double spending and forgery. In absence of a commonly trusted authority (bank or government), public trust and control can be exercised through an openly available, tamper-proof and distributed ledger. Now, blockchain is one way to implement it. Can we imagine something else?
tl;dr: No authority, no blockchain - then what?
As you said, money is debt. The only thing we need is for some solarpunk coins would be a platform to control that debt. Not needing to input value into the system, even just having max debt per person would be enough to have balance. The struggle would be onboarding people, as every good project that has no real lucrative side lol