…and that’s what such “Schwundgeld” currencies are all about: giving people a strong incentive to focus their thinking on real value and how to create it, rather than on hoarding the economic grease.

as I wrote, the key point is that this “democratic money” is flexible; the rules of the game can be tweaked, and occasionally are. Usually only slightly, of course, because no one would like to use any money that behaves in a different way each new week, but there have been, and are, some on-going experiments how to develop the scheme further.

An interesting question might be: would it be useful to have a how-to-guide for replicating this scheme (or one similar to it)?

Besides changing the reserve ratio back to 1:1 for banks, I think that its crucial for us to come up with a fair and effective tax system that encourages people with the biggest surpluses to contribute more. Ever since Thatcher and Reagan came to power we have been heading in the opposite direction in an alarming rate to the extent of blurring the boundaries between free enterprise and slavery

I mostly agree. Note in particular that what you say implies that I am perfectly free to consider anyone deluded who thinks a pretty much useless curiosity such as “precious metals” have any economic value beyond the few proper uses we know for them. (Gold, for example, forms an eutectic with Silicon that is very useful for bonding ICs.) To me, gold and silver don’t have much of a value. There are a number of other things that do, however. As, for example, clean energy generating capacity. But if someone wanted to purchase my energy paying with gold, I’d tell him: “go find someone first who’s about as deluded as you are and thinks your gold is as valuable in comparison to my energy you think it is, and trade it for something I also consider as valuable.”

Warehousing played the function of present day banks. People store their goods in the warehouse for reasons such as safety and convenience. The warehouses issue certificate of deposit. Instead of physically exchanging products in a trade, people simply exchange the warehouse certificates. Over time, certain commodity became popular and emerge as the choice for money in most transactions. These were various forms of precious metals such as gold and silver. The warehouses continue to evolve into present day banks by storing money as deposits as well as lending out money for interest. As paper technology improves, paper warehouse certificates of gold/silver deposits became more popular. It is much easier and safer to carry paper than actual gold and silver coins that can be quite heavy and voluminous.

Often many different forms of money are available and used in the market. Various gold and silver coins from different minters were available. There were no rules that mandate certain money to be used. Each seller and buyer are free to accept and offer any form of money they wish. In any case, there is a commodity backing the money.

Fast forward to present days, money is no longer backed by any commodity such that it necessitates the legal tender law in order to force acceptance by the market. We all grew up in the time where money is believed to be a special object that needs to be specially regulated. But it is not true. Money is a commodity, just like any others. Money originated in the free market, out of productive activities by the people. That, we need to understand before we can identify the roots of current economic problems and think of a fix.

[1] http://mises.org/mysteryofbanking/mysteryofbanking.pdf

Personally, I like the idea of a clean energy production capacity backed money system. But I’m undecided yet whether basing money e.g. on clean water might actually make more sense.

Any expansion of the money supply must come as a result of increased productivity and thus increased true wealth. This is in contrast to the current fiat system whereby any increase in the money supply will result in destruction of its value (inflation) and thus making people poorer. Expansion of money supply by a central bank also redistributes wealth unfairly in the sense that early recipients benefit by being able to spend more at today’s prices before the effect of inflation sets. Eventually, the increased money will trickle to everyone, but those who receive the increase later will be worse off because prices have risen and thus the value of their money would have decreased. Often the decrease in money value is more than the increased supply received. (Has your wage rises keep up with inflation rate?)