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The Secret of Oz – Understanding Money – The Secrets of the Federal Reserve [Video 1h56min]

The Secret of Oz – Understanding Money – The Secrets of the Federal Reserve [Video 1h56min] | Money News | Scoop.it

The world economy is doomed to spiral downwards until we do 2 things: outlaw government borrowing; 2. outlaw fractional reserve lending. Banks should only be allowed to lend out money they actually have and nations do not have to run up a “National Debt”. Remember: It’s not what backs the money, it’s who controls its quantity.

 

Comment: The current system of money creation as bank-owned debt as described in this video using the example of the USA, has crept into use all over the world.

 

So this is not just interesting for Americans... two hours well spent for everyone.

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Economy and currency: Money as a tool, not the bankers' property
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Cato Institute: Bitcoin Will Be Displaced by Cryptocurrencies with Superior Features

Cato Institute: Bitcoin Will Be Displaced by Cryptocurrencies with Superior Features | Money News | Scoop.it

The renowned Libertarian public policy think tank The Cato Institute has a review by Steve H. Hanke of the book “New Private Monies: A Bit Part Player?” by free-banking expert Kevin Dowd, published by the Institute of Economic Affairs.


Both Hanke and Dowd are persuaded that cryptocurrencies are the way of the future, with broad implications that are extremely profound.


However, they are also persuaded that the volatility of the Bitcoin price is an important problem that will force the currency Bitcoin to make way for other cryptocurrencies.


“Though the supply of Bitcoin is limited, the demand is very variable; this variability has made its price very uncertain and created a bubble-bust cycle in the Bitcoin market. Perhaps the safest prediction is that Bitcoin will eventually be displaced by alternative cryptocurrencies with superior features.”

Sepp Hasslberger's insight:

Bitcoin has been an extremely successful experiment. But that is what it is - not a currency for the long term but a first experiment on how to make an electronic currency. 

Better ones will be coming along. They have to work on some important bugs: stability of value, ease of use and the wasteful race of "mining" coins. 

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The economics of digital currencies - an assessment by the Bank of England...

The economics of digital currencies


By Robleh Ali of the Bank’s Financial Market Infrastructure Directorate, John Barrdear of the Bank’s Monetary

Assessment and Strategy Division, and Roger Clews and James Southgate of the Bank’s Markets Directorate.


  • Although digital currencies could, in theory, serve as money for anybody with an internet-enabled

    device, at present they act as money only to a limited extent and only for relatively few people.


  • The economics of the schemes as currently designed, both in terms of individuals’ incentives and at a macroeconomic level, pose significant challenges to their widespread adoption.


  • Digital currencies do not currently pose a material risk to monetary or financial stability in the United Kingdom. The Bank continues to monitor developments in this area. 

Sepp Hasslberger's insight:

According to this report of the Bank of England, digital currencies, and especially Bitcoin, are not ready for widespread adoption.

They are too volatile and the fixed supply is likely to lead to macroeconomic consequences, such as deflation, which would be disruptive to a real economy.

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OpenLETS is taking community management to the virtual currency age

OpenLETS is taking community management to the virtual currency age | Money News | Scoop.it

Meet OpenLETS. It’s a Community Operating-System that offers the known features of share, collaborate and communicate with the novel additions of voting & issuing a currency.

OpenLETS maximises community interaction through a modular engine, where every founder costumizes the monetary & decision making models that are right for them.

Sepp Hasslberger's insight:

Who knows if this idea of mutual credit could not help us get over some economically rough spots that seem to be on the horizon...

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United Kingdom debates the Taxing Question of Land - YouTube Video (30min)

Complex tax systems allow for avoidance, evasion and expensive administration costs to both the public and private purse. At the recent G8 summit, the UK placed tax compliance as one of the most important issues facing the world today.

Sepp Hasslberger's insight:

A tax on the value of land ... to do away with many or perhaps all other taxation. 


I think a tax like that would do much to (re)connect us with the land we are living on, to appreciate better what the land gives us, what use we make of it. 

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“Strip private banks of their power to create money”: Financial Times’ Martin Wolf endorses Positive Money’s proposals for reform

“Strip private banks of their power to create money”: Financial Times’ Martin Wolf endorses Positive Money’s proposals for reform | Money News | Scoop.it

Printing counterfeit banknotes is illegal, but creating private money is not.


The interdependence between the state and the businesses that can do this is the source of much of the instability of our economies.


It could – and should – be terminated.


“Our financial system is so unstable because the state first allowed it to create almost all the money in the economy and was then forced to insure it when performing that function. This is a giant hole at the heart of our market economies. It could be closed by separating the provision of money, rightly a function of the state, from the provision of finance, a function of the private sector.”

Sepp Hasslberger's insight:

It would be a giant step forward to take away the banks' ability to create money. The idea isn't so strange any more when the Financial Times picks it up...

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Life in a 'degrowth' economy, and why you might actually enjoy it

Life in a 'degrowth' economy, and why you might actually enjoy it | Money News | Scoop.it
What does genuine economic progress look like? The orthodox answer is that a bigger economy is always better, but this idea is increasingly strained by the knowledge that, on a finite planet, the economy…
Sepp Hasslberger's insight:

Doing more with less ... that is where it's at. 

The writer argues for de-growth and we certainly could do with less stuff. But the aim is to bring us in line with what planetary resources will bear. 


Perhaps paying attention to how we manufacture and making adjustments to use as little of both energy and physical resources as possible, could just work to let everyone enjoy a life of comfort while fitting within the planet's living eco-system.

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Money as a Commons

Money as a Commons | Money News | Scoop.it
Money is either a reward for past work, or (when issued through the device of credit) an advance secured in expectation of future work. From this viewpoint we can see money as an aspirational commons - a Common Pool Resource backed by our collective efforts, that with the right governance regime could be managed equitably and to mutual benefit. By Graham Barnes.
Sepp Hasslberger's insight:

Could money be a Common Pool Resource, instead of being expensive credit created by the banks?

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Ecuador: Introducing the World's First National Digital Currency

Ecuador: Introducing the World's First National Digital Currency | Money News | Scoop.it

Ecuador is on track to become the world’s first nation to create its own digital currency. The country’s central bank announced last week (link in Spanish) that it would begin distributing the yet-to-be-named currency in December.


Backed by liquid assets, the currency will initially rely on demand to dictate how much will enter the marketplace, the bank explained.


Ecuadorian newspaper El Comercio reported (link in Spanish) that the currency will be circulated via the country’s mobile network

Sepp Hasslberger's insight:

Good for Ecuador. A national digital currency that can be used by mobile phone. December they say is the introduction...


and it seems that Peru is preparing to go the same way. They want to introduce their electronic currency by 2015 (article in Spanish)

http://elcomercio.pe/economia/peru/proyecto-dinero-electronico-funcionara-desde-mitad-2015-noticia-1750712 ;

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Bristol pound is just one example of what local currencies can achieve

Bristol pound is just one example of what local currencies can achieve | Money News | Scoop.it

The budgets of local authorities are being cut while the needs of their populations remain the same.


However, borrowing on the money market is not going to do anything for the local economy. Faced with this reality, some councils are discovering that the use of local currencies offers an alternative to more cuts or debt.


Mayor Georg Moosbrugger from the Austrian village of Langenegg, which issues its own Talente currency, puts it best when he says: "Wherever the money rolls, there it has an effect. Local money doesn't roll very far and so it can get to work in my area."


The community council can decide which local taxes may be paid in local currency to subsidise the rural economy, keep purchasing power in the region and support cultural and educational organisations as well as solar energy generation. Social enterprises also accept local money in payment for local food, arts and crafts and holiday lets.


In Britain, local businesses in Brixton and Bristol can pay their rates in local pounds. The local authority uses this income to pay its employees, who then spend it with local businesses...

Sepp Hasslberger's insight:

Quite some experimentation with local currencies going on. Now city Councils catch on and accept them in payment for their rates and taxes...

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Money vs Credit

Money vs Credit | Money News | Scoop.it

A person may go irremediably negative for perfectly understandable reasons that do not imply any need for discipline while another may go negative foolishly and people who go positive can be abusive with their earnings.


But in all those cases the measure of value of what was consumed can be equally valid, that is the function of money is to measure value it is not a measure of credit or credibility at most it is just one of many possible indicators of credibilty.


We need to graduate to where personal human behaviour is controlled in the context of an empowered and wholesome community i.e. where all can expect to eat and be housed and rarely does anyone procure things without a sound reason irrespective of their balance. 


This in our current society seems impossible because all motivation is framed in terms of excesses the objective being not a wholesome existence but rather the ability to satisfy whims. 


We live in a society where being mindful of money is the key to freeing oneself of having to be mindful in most other domains.

Sepp Hasslberger's insight:

This is in the context of BIBO currency, where money is seen as a record, an outcome, of transactions, not as a necessary input. Transactions create money, rather than the other way around. It envisions a world where you can buy what you need without having to have accumulated money (or credit) to do so...

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Interview with Steve Keen: A Computer Simulation of Monetary Dynamics - YouTube (11min)

The financial crisis that ran from 2007 to 2009 has been called a "Minsky Moment," meaning it offered a much-needed reminder to all economists of Hyman Minsky's neglected dictum that "capitalism is essentially a financial system."

But even with this reminder, it is hard to know what to do next, since it is difficult to express Minsky's vision using the standard equilibrium methods of economics. Arguably that is one reason that Minsky has remained a minority taste in economics. 

Steve Keen, a grantee of the Institute for New Economic Thinking, wants to change all that by developing a computer simulation tool that captures the monetary side of the economy in a realistic way, including its non-linear dynamic development over time.

Sepp Hasslberger's insight:

We might learn some surprising things about economics once this tool to analyse the monetary side of things, becomes available...

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You Can Only Be Against Basic Income Based On Morals, Not Evidence - Falkvinge on Infopolicy

You Can Only Be Against Basic Income Based On Morals, Not Evidence - Falkvinge on Infopolicy | Money News | Scoop.it
There are all sorts of arguments against giving everyone an unconditional minimum income. But the only one that stands up to reality is, "I don't like it."
Sepp Hasslberger's insight:

Basic income... 

"There is no catastrophic disincentive to work, or incentive to be lazy, like basic income opponents predict. Everyone does not start sitting around at home. People who are able to work and keep society running continue to do so."

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International system of wealth extraction makes poor countries poorer, concentrates riches with the already rich

International system of wealth extraction makes poor countries poorer, concentrates riches with the already rich | Money News | Scoop.it

One of the early promises of neoliberal globalization was that it would bring prosperity to poor countries, drive development, and reduce inequalities, ultimately helping poor countries gradually converge with rich countries.


But exactly the opposite has happened. Globalization has made inequality worse, both between countries and within them.


If we want to put an end to poverty and extreme inequality, we need to dismantle the global wealth extraction system that draws our planet’s wealth to the rich at the expense of the poor.


We need to democratize the institutions that control global economic policy.


We need to put control of money creation and the money supply back in public hands...

Sepp Hasslberger's insight:

It's our monetary and economic system that's rigged to create ever greater inequality, and to concentrate resources and riches with those who already have them.

Time to re-think things...

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The End of Banking - a financial reform proposal (book) | P2P Foundation

The End of Banking - a financial reform proposal (book) | P2P Foundation | Money News | Scoop.it

"The End of Banking" proposes to end money creation by banks, requiring 100% asset backing for liabilities on financial institution balance sheets.


The book addresses banking, not just banks, because banking, which the authors define as the creation of private or “inside” money, is not an activity limited to banks. Other, non-bank financial institutions are also involved in the money creation business. 


“Calling for the end of banking might sound too simplistic to solve today’s problems in the financial system. Such a notion likely stems from a vague definition of banking.


Some label all activities undertaken by banks as banking. Others think of banking as a bundle of financial services such as asset management or securities underwriting.


We adopt a macroeconomic perspective and define banking as the creation of money out of credit.”

Sepp Hasslberger's insight:

The End of Banking is a very readable book for anyone interested in matters of finance. The authors propose a surprisingly simple step to end the creation of money by private interests, including banks.

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David Week's curator insight, November 25, 7:05 PM

If I look at the impact on communities in the United States of out-of-control digitalised lending, what I see is this:

- loans were extended to people that could not repay
- the mortgages were then bundled into traceable instruments, and onsold
- this bundling and unselling created a situation in which for many houses, no-one knows any more who owns them after the borrowers default
- they sit vacant, decaying, and degrading the neighbourhood around them psychologically and economically
- the bundling and onselling also provided an incentive to the original lender to act carelessly, because they did not carry the can if the mortgage went sour
- the bundling and repetitive unselling, with poor paperwork, was facilitated by the fast flow of trade and capital flows in a digital world.

In Australia, my bank cannot sell my mortgage. I don't know whether that's through prudence or law, but I would not take a mortgage if I thought it could end up bundled with others in a globalised capital market.

I'm pre-ordering the book. 

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Money supply – a public service in private hands

Money supply – a public service in private hands | Money News | Scoop.it

The way money enters and leaves the economy is crucial to fixing some of society’s biggest problems. So it’s a surprise that general awareness of this mechanism is so low, despite the attention created by unconventional central bank policies. 


A new book, written under the pseudonym of Jonathan McMillan, The End of Banking: Money, Credit, and the Digital Revolution [to be published in November] explains that “the digital revolution unsettled the balance of government guarantees and banking regulation”. The authors claim that the possibility to record credit electronically made all the difference and helped provoke the collapse of the regulatory scheme of the 20th century. 


But why is it problematic that banks create money? After all, banks face market and regulatory constraints, so that “setting monetary policy appropriately […] should ultimately ensure a stable rate of credit and money creation” (Bank of England, 2014). But central banks do not seem able to control the “credit cycle”, or how much credit is in the system, however hard they try...

Sepp Hasslberger's insight:

Money created out of credit by commercial banks, seems to be one of the worst features of the present system. It is completely out of control, so the economy is drifting...

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The End of Banking

The End of Banking | Money News | Scoop.it

Find out more about the root cause of today’s problems with banking and how we can prevent the next Lehman moment. The End of Banking presents a way to redesign the financial system that stands out against existing reform proposals.


This book is for you if you think that

 

  • the problems that caused the financial crisis of 2007-08 remain unsolved;
  • the leading experts who were largely blind to the systemic risks prior to the last financial crisis are not the right ones to deal with these problems;
  • that we need fresh and innovative ideas to organize a better financial system for the digital age.
Sepp Hasslberger's insight:

I have read an early copy of this book and in my view, it is definitely worth reading. It details the financial shenanigans that have made commercial banks and other financial institutions the de facto suppliers of money in our world, and it makes a simple proposal to end this practice, called "banking" by the authors...

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M-PESA is back: Vodacom relaunches mobile money in South Africa

M-PESA is back: Vodacom relaunches mobile money in South Africa | Money News | Scoop.it

Second time's a charm for groundbreaking mobile money system in South Africa.


M-PESA originally launched in Kenya in 2007, as a simple mechanism for transferring cash amounts between phone owners via SMS. Customers bought a PIN number from participating agents which they could SMS to anyone else in the country, who could then redeem that voucher for the face amount – less a handling fee – at any M-PESA agent.


It found a huge audience as a mechanism for transferring cash from city workers to their rural families, and is now used by 70% of the Kenyan population.


In South Africa, however, the story has so far been far less of a success for Vodacom. Initially launched in 2010 the system was suspended earlier in the year due to lack of interest among customers.


Today’s new improved M-PESA has been redesigned from scratch, says Vodacom’s Herman Singh.

Sepp Hasslberger's insight:

Bypassing the banks ... you can send money with an SMS in several countries on the African continent.

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Why Apple Pay Is A Threat To Bitcoin

Why Apple Pay Is A Threat To Bitcoin | Money News | Scoop.it

The imminent arrival of Apple Pay should be worrying bitcoin advocates, and here's why.


Apple Pay isn’t even here yet and, arguably, it’s already winning the war against bitcoin.


Like the digital currency, Apple is disrupting the payments system, but people will probably use it more than they use bitcoin.


Cupertino has carefully focused on three areas to make sure that happens: front-end experience, financial institutions, and merchants...

Sepp Hasslberger's insight:

Apple has the great advantage of user experience, but it does come with certain concerns, as explained in the article.

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The economics of digital currencies - Bank of England says they are no threat to financial stability (vid 5min)

A key question surrounding digital currencies like Bitcoin is: to what extent should they be considered as money? This video answers that question by considering the roles we expect money to serve, and how much digital currencies are currently used in those ways.

Sepp Hasslberger's insight:

The Bank of England seems to have a substantially positive view of digital currencies such as Bitcoin.

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UK Chancellor to Outline Bitcoin Measures in Budget 2015

UK Chancellor to Outline Bitcoin Measures in Budget 2015 | Money News | Scoop.it

The budget is one of the most important days on the UK political calendar as the Chancellor declares new taxation rules, new financial measures to help grow the economy and sets the public spending levels. It is often held in March and is closely watched due to its potential to affect the wealth of millions of individuals and businesses.


A spokesman for the UK Treasury revealed for CCN that a study was being undertaken, led by the Treasury working together with different government agencies, on Bitcoin’s potential for innovation on financial commerce and Bitcoin’s potential risk. The study will conclude with proposals for the budget of 2015 which the Chancellor is expected to announce in Parliament. 


The United Kingdom is seen as one of the friendliest legal jurisdiction for Bitcoin businesses. Following the New York’s highly criticized Bitlicense proposals, the Chancellor announced his support for Bitcoin, stating: 


I believe we can make London the Fin Tech capital of the world. It has to be what the City becomes in the future.

Sepp Hasslberger's insight:

The City of London is apparently set to lead the way on how to integrate Bitcoin into the economy of banks and finance...

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Crowdfunding a Basic Income: This German Guy Wants To Give You A Bunch Of Money To Do Nothing

Crowdfunding a Basic Income: This German Guy Wants To Give You A Bunch Of Money To Do Nothing | Money News | Scoop.it

What would you do with your life if you didn’t have to worry about your source of income? Would you just sit around all day and do nothing with your life? Or would you spend your time following your dreams and doing something meaningful with your life? A 29 year old founder of a tech startup company from Berlin was interested in finding out.


Michael Bohmeyer stopped working earlier this year and now lives off the $1,300 he makes from his startup each month. He says from the moment he made the decision to do this his life radically changed. So he started “My Basic Income”, a new project looking to raise enough money to pay someone $1,300 a month for a year, no strings attached!


Read more at http://higherperspective.com/2014/09/free-money.html#KEHGehWg56IRgjD4.99

Sepp Hasslberger's insight:

This guy is out to make a case: People who receive a basic income don't get more lazy, they all of a sudden like to work and have fun at what they choose to do...

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What if everybody got free cash? Myths and facts about Unconditional Basic Income - YouTube video (30min)

What if everybody received every month enough money to live by?


Will society collapse?


Will we all become slackers?


Myths and facts about Unconditional Basic Income, with analysis from a real world experiment conducted in India between 2011-2013.


The video is of a Keynote speech by Federico Pistono at the Future of Work Summit, NASA Ames Research Park, California, June 30, 2014.

Sepp Hasslberger's insight:

This is a talk on unconditional basic income, based on a real world experiment they did in India. 

Compared to matched controls, people receiving the (rather small) monthly payment in the pilot program were 

-twice as likely to have increased their production at work

- able to increase their livestock by 70%

- more likely to increase their income from work

- three times as likely to start a new business or production activity as others 


- significantly reduce their indebtedness


- significantly increase their savings 


- more likely to make improvements to their dwellings, repairing walls and roofs, switching to better sources of drinking water


- having improvement in children's weight for age


- consuming more varied diets


but they were not more likely than others to increase spending on "private bass" such as alcohol or tobacco

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Ecuador: The First Nation to Create its own Digital Currency

Ecuador: The First Nation to Create its own Digital Currency | Money News | Scoop.it

Over the weekend, CCN reported on the government of Ecuador's decision to ban Bitcoin, along with all other cryptocurrencies, via a National Assembly majority vote on July 23rd.


Ecuador currently uses the US dollar as its official currency, and the new national cryptocurrency will be integrated alongside the Dollar.


The National Assembly’s explicit intention that their central bank’s cryptocurrency “allow government to make payments in digital currency” makes clear their plan to


a) institutionalize the use of a national currency for internal cash flow, and


b) eliminate Dollar and foreign currency dependency.


The cryptocentavo’s example of a centralized implementation of an essentially decentralized technology is going to be watched, internationally, with great interest.

Sepp Hasslberger's insight:

Ecuador will be the first country with its very own crypto currency. 


They banned Bitcoin and are ready to have their central bank issue ... something similar.

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California Passes Bill to Legalize Complementary Currencies

California Passes Bill to Legalize Complementary Currencies | Money News | Scoop.it

Dating back to the California Constitution of 1849, Section 107 of the California Corporations Code stated:


  • No corporation, flexible purpose corporation, association or individual shall issue or put in circulation, as money, anything but the lawful money of the United States.


The Alternative Currencies Act removes Section 107, an outdated yet significant legal barrier to the creation and circulation of complementary currencies (and, arguably, other forms of exchange such as frequent flier miles, Amazon Coins, and other similar reward systems).


This relatively minor change to the Corporations Code – removing a single sentence – nonetheless represents a significant step toward further legitimizing complementary currencies, and reflects the growth of a diverse range of new payment systems and community-based means of exchange that have flourished in recent years.

Sepp Hasslberger's insight:

Way to go!

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A New Paradigm in Economic Thinking - Local Economic Direct Democracy combines economy, politics

A New Paradigm in Economic Thinking - Local Economic Direct Democracy combines economy, politics | Money News | Scoop.it

Communities worldwide want economies that are stronger, greener, fairer, more resilient, more democratic, and more diverse. Jobs must be created, climate change addressed, infrastructure repaired, schools upgraded, and more. The LEDDA economic direct democracy framework, now under development, offers a bold yet practical solution.


The LEDDA framework “pays” people to participate. Family incomes for members rise, and income inequality shrinks. Jobs are created, and funds generated for schools, nonprofits, and public service agencies.


The framework is designed to help cities, counties, and local regions lead the way in meeting their challenges, and in transforming local economies into ones that are vibrant, sustainable, resilient, and fair.


A complete description is given in the book Economic Direct Democracy: A Framework to End Poverty and Maximize Well-Being.


http://www.principledsocietiesproject.org/download/

Sepp Hasslberger's insight:

This seems like an interesting project to look into. I haven't done so yet, but if you are inclined, there's the link to the site... 


http://www.principledsocietiesproject.org/

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David Week's curator insight, July 15, 10:21 AM

Cities are aggregation economies, but our formal concept of economic value is too narrow. Works like this may not be technically sophisticated, but provide ways of seeing the city as a more complex field of value creation, all of which needs recognition.