Holochain Workshop Part 3: Virginie Glaenzer on How Challenging our beliefs on Economics and Money.

I guess the formal introduction to Virginie will be popped into the chat, but I will just say this workshop is primarily due to Virginie's efforts and for putting up with people like me and a few others and for stitching all of this together and to make it happen. And I think what motivated all of this to happen has been Virginie's personal interest in Holochain and driving her own learning process. And honestly, like, I think that's been quite infectious for all of us. And yeah, as you can see from her bio, she's, you know, a co-author of a book and hosts a podcast, among other things like driving digital marketing strategies and sales funnel strategies. But yeah, with that, I will hand it over to Virginie. Thank you.

Thank you very much, Sid. Yes, my background is not— I'm a technologist from a marketing standpoint. I've been in the tech world my entire career, and I'm coming to this with a curiosity, not just a rejection of what is. I do not want to continue to be part of this economy and this world that is killing our own species and the planet. And then as I reject this world, which I'm still part of, I'm looking for what is the next world? How can I be in relationship with others. And I know that as an individual, my true power is daily what I eat, what I buy, and what I invest in. So I'm putting all my intention into building something new and no longer caring or looking or focusing on changing the existing system. So that's kind of how I came about and I discovered Holochain, and I'm on that pathway of discovering what's next. So in this second part, the objective— we have two objectives. The first one is to introduce doubt and make you see something that might not have been visible until today. It could be a different story that paints a new reality. And the second objective is, as you start questioning your existing belief, we hope that you will find a liminal space in which you can become the artist of the invisible by creating something that doesn't yet exist. So let's begin with economics. And we'll start with the definition. Economics is a social science concerned with the production, distribution, and consumption of goods and services, and it studies how individual businesses, government, and nation make choices about how to allocate resources. This is a definition, and I think it's important to start from what we know. I want to pause for a few seconds here to reflect on some words. Social science— is that what you thought, and is that what it is? And also, making choices on allocating resources What do you think of those allocations? And do you feel that you have a say on how is being— what is being allocated? Now, we are also being given a set of values that are being given as truth, almost inherited in a sense. So here are 5. We're being told that everyone's goal is to make choices that maximize their satisfaction. When we talk about economics, we assume that everyone makes decisions by comparing the costs and benefits of every choice. We learned that due to scarcity, choices must be made and we have to make trade-offs. We assume that every life situation can be explained and analyzed. And finally, when we are being taught about economics, we're being told that scarcity is the basic problem that gives rise to the economics. What I'm presenting here, and that I should have mentioned that at the very beginning, is that it's, it's a thought process as a, as a serial entrepreneur, as a business owner, as a CNO, that's how I came about. So I had to go back to what is economics, what is that world that I'm in. And so that's why we're starting with definition and values. Now, the same way that we're being given values, they are— we're also being told that economics works with principle, and here are some of them. 1. Economics is the study of scarcity. 2. This principle, scarcity, explains the price relationship between dynamic supply and demand, and market equilibrium is achieved when supply equals demand. Disequilibrium is when the supply of a good is greater than the demand, which drives down the price of the good. The reason why I think it's important to start from what we believe is because when we change filters through which we see, our understanding also changes. So my question to you is this one: is economics a social science per its definition, or is it the creation of scarcity? Not the study, but the creation of scarcity. I want to share one story which actually is composed in two. It's the story of money, and I don't know how long ago have you sat in a class of economics and how money is created, but it's really fascinating. So the first story is the one that you've been told. This is the standard story by economics like Adam Smith, and it goes like this: we have evolved from gift to, right, barter to metal to debt. So as we became civilized, we moved from gift to bartering, and then services popped up. Um, banks stored our wealth or coins in exchange of a fee, and finally we moved away from hard money to promise, which are tokens of debt. And again, bank stepped in. Interestingly, there's another story, and this one is hidden and even controversial to this day. This is the story that brought David Grabber, the anthropologist. He wrote a book, and he says that story number 1 has it all backwards. The short story should be told with debt, metal, to barter. And he says that contrary to the history of money, debt is probably the oldest means of trade, with cash and barter transaction being later development. So the first recorded debt system was in the Sumer civilization around 3500 BC. Credit system originally created as means of account long before coins appeared in 600 BC, and barter on the other hand seems primarily to have been used for limited exchange between different societies. Now, why does it matter? Two things come to mind to me. One, if the first story of money in our history books is inaccurate, what other stories have we been told that are also inaccurate? Inaccurate? And I'm just asking the question here. Second, the major argument of the book of David Graeber, which is the second story, is that the imprecise, informal community-building relation with debt has only been replaced by mathematical, precise, firmly enforced debt through the introduction of violence usually state-sponsored violence in some form of military or police. And to end on money, let's be clear on how our money is created today. I stayed, you know, I went in a business school 20 years ago, almost 30 years ago, and I thought that banks were loaning money with some regulation. Well, it happens that we've actually were not there anymore. So when paper currencies and non-precious coins were introduced, money evolved into what is called representative money. Representative money, for those who don't know, was backed by your government or a bank's promise to exchange it for a certain amount of silver and gold. I remember that. But in 1971, President Nixon decoupled the US dollar from gold, and that was the beginning when representative money became and was replaced by fiat money, which is issued as debt. Fiat comes from the Latin word 'let it be done.' So money is now given its value by government fiat or decree. Of course, there are rules to prevent, or we're being told that there are rules to prevent the banks loan the same dollar infinitively, and those are called reserve requirement or fractional reserve banking in the US. But today money is loaned into existence, but it's not the way you imagine. Banks are not intermediaries. They create new money when they give out a new loan. And here's how it happens. When you sign a loan contract, the bank says it's an IOU, which they buy and they put it as an asset in their balance sheet. The bank owes you money. The trick, and that's the entire money supply engine that I've discovered, the bank records the same amount on their payable liability account on their balance sheet, but instead They bank deposit, which the legal concept of bank deposit doesn't exist. They just add more liability, and their banking license gives them the right to accept deposits. So they just invent new liability on themselves. In short, banks do not lend money. They simply create it from debt. And I'm going to share two videos in the chat if you'd like to explore more these topics of creation of money. And it's really important because as we look at the next economy, money is what drives the economy. So if we want to create a new world, a new economy, we have to understand the money creation. So as a conclusion, money is created out of thin air and controlled by a small number of people—banks and various financial organizations—who decide who to give it to and what to fund. So when I arrived at this understanding of money, I had to back up. I had to ask myself, hold on, How did we even arrive here? We talked about economics being a social science based on scarcity, and we talked about how money, which has evolved into fiat, is made out, out of thin air by a small number of people. So let's back up. Let's look at the time scale: 100,000 years of human history. And by the way, this presentation is available online. It was done by Arthur Brooke, the founder of Holochain, and it's in 2015. So 100,000 years ago we experienced natural economies. 10,000 years ago we saw the agricultural economies emerging. 500 years ago, the industrial economy. And finally, 50 years ago only, the information economy. Now, if we look at those natural economies through the lens of economics, it really becomes interesting. 100,000 years ago, it started with a natural economy. The land was the primary element, and that gave rise to economies of nature, feminine tribes, hunters and gatherers were following seasonal rhythm of food. At least that's the story we're being told, right? But we'll just assume that's, that's the real story. Then 10,000 years ago, the agriculture economy introduced labor. Now this led to the monarchy, federalism, empire, which resulted in domestication of people and animals for production of food. These resources enabled the increase of population and the specialization that was led by the emerging ruling class and a strong hierarchy. 500 years ago, which we've all studied during school, we saw the birth of the industrial economy with capital. That was the primary element that created capitalism, communism, and socialism. Now, with progress in science and manufacturing coupled with capital, we saw an explosion of population growth, technology, and resource consumption. Now, 50 years ago, we can all easily remember the beginning of the information economy that started with the industrial age, command-and-control organization, and centrally controlled Currencies. So that's where I've arrived looking back. And today we're at the emergence of intelligent organization. That's a game changer. When we look at the economic models created under— actually, today's economy is not a recession. It's an end of era. It's very liberating to realize that we're not in a recession. To me, that gives me hope. When we look at the economic models under— created under the ideology of capitalism, socialism, or communism, these models have three things in common. One, they focus on scarce resources. 2) Currency is the medium of exchange, and 3) Wealth is accumulation. But the information age, which is giving birth to peer networks, this ability that we have to be all together, and this capacity and desire to be in an open knowledge that is creating abundance. If the information age doesn't revolve around scarcity, we need new models, and that's what I've been looking for. We need to move away from thinking about economics, which is everything that we hear. If you are on Twitter, Medium, any kind of media and articles, it's all about economics. We have to move away from this to thinking of wealth and redefining wealth. And actually, that's when I started connecting Holochain and this idea that if we combine the notion of wealth with the notion of trust, the idea that a community holds the debt of each individual, then mutual credit starts to make sense. This becomes an opportunity with a system like Holochain that validates trust and promises. And actually, some people are already starting to create new ways to understand wealth. I forgot to say accumulation is not the same, and we'll talk about this in just a second. So some people are starting to create new ways to understand wealth with quality of life measure, triple bottom line accounting, gross national happiness. So I want to leave you with this: Holochain is challenging the idea of scarcity, and by doing so, it's disrupting the fundamental principle of our economy. Our current definition of economics is stripping away and doesn't leave any room for the idea for the importance of a relationship, the intersect value of people, nature, and relationship, or the spiritual value of a land. So let's pause for just a second and see what have we covered so far, because we've started with Holochain, Ledger, blockchain, reputation currencies. And then we talked about economics, money, uh, trust. And here's how I'm trying to make sense. I'm really a sense maker trying to make sense for my own life. I am acknowledging, and you might agree with me or not, so please use the chat if you don't, but here's what I'm acknowledging. We're today in a world crisis in which the only worldview is scarcity. We believe that we are in a finite world where we have to compete and control the resources. In this worldview, accumulation is wealth, so we have saving and money and multiple and stuff. Money is used to exchange, and transaction defines relationship. I now understand that in our human society, debt is a promise first and foremost. It's a promise between two people. In order to make a promise, you have to trust the person. And for trusting individuals or others or yourself, you have to be in relationship before you actually go into a transaction. That relationship is part of an ecosystem that needs to be taken care of and be in consideration. So I've arrived where I recognize and envision that this information age is not the machine taking over our jobs and life, but it's a world where peer networks and open knowledge are creating abundance. And for that, we need new models and a variety of currencies.