Metric DC is a digital currency that I’ve introduced to tackle most of the problems of cryptocurrencies, as well as national currencies. Using crypto as money that you buy and sell things with, hasn’t been easy for Bitcoin. Private currencies like Bitcoin or gold backed currencies could have been adopted, but they haven’t. Why is that? Here, I will explain the universal problems that all money faces, and then introduce Metric DC.
The biggest problems in general only need simple fixes, so Metric DC is not a major overhaul of our economic and monetary systems, rather it’s an easier way to consider complex topics, such as what money really is and how much money needs to be created for the economy to work best. Even though we all want a global currency, you’ll see why it really hasn’t been possible until now, how The Federal Reserve and other central banks keep a currency valuable (usually by making it weaker!), and how Metric DC is better.
The right money supply
Money supply is a major part of the problem when it comes to having a strong economy. Usually, a central bank is in charge of making these decisions about how fast or slow to grow money supply, or in the case of crypto, is built in to an algorithm. If new money is created faster than new participants join, the value of the money falls. If new money is created slowly (or not at all), then new participants will find it difficult and eventually impossible to participate in the economy. In both scenarios, prices of goods and services will be volatile and therefore, the new money won’t be adopted.
Here is how Metric DC solved that.
First of all, Metric DC is the first currency based on the Metric Economic Unit. We grow the money supply in a standard and very limited way because the Metric Economic Unit, or MEU, specifies how to create a transparent money supply that every monetary system can use. Our new unit of money is called the Metric and 1 Metric is equal to 1 / 1,000,000th of an MEU *. Don’t be confused, because all you need to know is that the money supply of Metric DC is “price stable” since it is based on the MEU.
In the case of currencies that have a fixed money supply which never change, these always die off because adding new participants into the economy becomes impossible. People hold their money instead of spending it.
Money Traps (liquidity traps)
Money always becomes trapped at the end of economic cycles which is what causes crashes. The classic business cycle consists of an expansionary phase where businesses and consumers borrow money, thus increasing the money supply, thus increasing economic growth, then followed by a contraction phase, where no more money can possibly be lent out or borrowed, the money supply shrinks, businesses and people hold money rather than spend it (deflation), and the economy shrinks.
The later part, this contraction phase, is where central banks and governments must intervene, because the only way to fix every form of money becoming trapped (called a liquidity trap), is by getting money to people. If they don’t, the entire economy stops. The cause of this trap is simple: If you own assets that produce income, then saving money rather than investing or spending it will allow you to buy more assets and cheaper labor at a later date, and now a self-created deflationary spiral has been created whereby participation in the economy falls, and access to money becomes scarce.
The usual money trap fixes
Central banks and governments have an easy fix; get people money. They do this a few ways. The most popular is to lower interest rates, because this makes it easier for people to borrow new money, thus increasing the money supply. However, with interest rates close to zero, governments will eventually have to pay people to borrow money, and this still doesn’t solve the underlying causes of our liquidity traps which will occur again when maximum lending has again been reached.
Another ageless trick to get out of a money trap is to just make more money. If asset holders are worried about inflation from new money being created, they will borrow and spend as fast as possible. This also works to start a new business cycle, but again, it does not solve the underlying problem and comes with other hard questions, for instance, who do you give the new money to? Additionally, if money printing stops, so does the economy. This method has bad side effects, as it lowers the value of money for everyone making labor cheaper which isn’t good for workers, and it also leads to wealth inequality because asset owners see the value of their holdings rise, while families without assets see their purchasing power decline.
Finally, taxation that leads to redistribution of money back in to the economy can go a long way to create a stable national currency, however, this method really only works if you have access to tax the money. Many jurisdictions allow money to sit tax-free indefinitely. Also, when the money has been taxed once, it doesn’t have to be taxed again until it’s spent somewhere else.
There is a nice incentive in taxation in that if you spend the money to build business and pay labor, you reduce your tax burden while increasing wealth. This is how many companies, especially Amazon, paid little in income taxes because their income was reinvested back in to the business. As long as people keep spending money, on anything really, the more stable your economy and currency value will remain.
How Metric DC solves money traps
Central banks introduce an X factor into an economy because you never know exactly what they are going to do, so I dislike this approach very much and want an automated, predictable way to solve the problem of money traps. In the end, we need to accomplish the following :
- Keep participation as high as possible.
- Get people to consume and invest as much as possible.
Solving these two issues will prevent money traps and optimize for a more dynamic economy.
Two simple policies are implemented by Metric DC to eliminate central bank intervention, and they are to 1) tax unproductive (e.g. unused) money, and 2) to redistribute the unproductive money to all participants. Although unintended, some readers will identify this as functionally equivalent to Milton Friedman’s negative income tax scheme, or to the concept of Universal Basic Income (UBI). This UBI style distribution actually keeps the monetary value stable without any effect on money supply.
How this works in practice
- Unused money (e.g. unproductive money) is taxed at 1% monthly. This happens automatically.
- That money is redistributed equally to all participants, equaling a 10,000 Metric per month deposit.
- All participants are securely verified. There can be one and only-one verified account per participant.
As an example, take an account with a 0 balance. 1% is taxed away, totaling 0 metrics, then 10,000 metrics are deposited, leaving the account with a balance of 10,000. The following month, 1% is taxed away, totaling 100 metrics, and 10,000 more are deposited, resulting in a balance of 19,900 metrics. The account will continue to grow like this and at one-million metrics, will reach equilibrium where 1% of the unproductive tax will equal the same as the redistribution payment of 10,000 metrics. Above one-million metrics, the account will slowly decline, for example, an account with two-million metrics will lose 10,000 metrics per month if no other income is added to the account.
As you can see, this creates a strong incentive to spend your metrics, either using them to consume goods or services, or to use them to invest in savings, such as by buying stocks, starting a business, or expanding your labor force. It also gets everyone participating at a basic level in the global economy which optimizes aspects of capitalism, especially choice and competition, and does all this without expanding the money supply.
What is money, really?
In the big picture, how we divide our attention universally is the role of money. The relative worth of money between individuals and nations can change all the time, but the big idea is that we use money to allocate attention to things that are important to us as human beings. This is one reason why with Metric DC, all humans get to participate once they prove their identity, since the money supply is exactly specified and limited, and we’ve removed manipulations caused by governments and central banks.
Money is fascinating because it is so well studied and modeled and yet so poorly understood. If we really understood money, we would find and measure economic value in things that today have no clearly defined value, such as parenting, protecting our climate, creating cohesive communities, caring for elderly, feeding and sheltering vulnerable people, etc, etc, while also rewarding people who are most productive.
This is why Metric DC encourages that everyone has a base level of ability to consume in the economy. After all, money cannot be wasted. If I make a bad decision with some money, that money goes to someone else who has the opportunity to make a different, better decision. If I spend it in my community, then others in my community have more chances to be active in a healthy economy. What’s important is to keep money flowing, and to give people lots of economic chances. Money is not wealth, it’s only how we denominate wealth. Wealth comes from having strong, inclusive, fast paced, and balanced economies.
What is the goal of Metric DC?
Metric DC was built for making transactions, accumulating wealth, and participating in the economy. My hope is that it leads to more choices that will make the future sustainable, get politics and government out of the business of money, and that quality of life will increase for all.
Using Metric DC
Sign up for Metric DC at metricdc.org.
* 1 Metric is the same as 1 MicroMEU