Critique of Bernard Lietaer's Thesis of
"The Fundamental Problem With Current Money"

By Marc Gauvin (c) 12/12/2013 Rev. 16/6/2017

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“Money is an agreement to use something as a medium of exchange in a community of trust.”  Bernard Lietaer

Sounds good but it is actually incoherent here is why:

It is clear that money cannot be both the agreement to use a medium as well as the medium being used.  Therefore, if money is the “medium of exchange” being used then it cannot be the "agreement" but rather it is a component of the agreement.  In any case,  Lietaer’s definition is circular as shown by substituting “medium of exchange” with the term “money” producing:

“Money" is the agreement to use something as a "money”

Which is meaningless.

Now, his other proposition:  “The fundamental problem with our current monetary system is that it is not sufficiently diverse, and as a result it dams and bottlenecks our creative energies,..."

Because it is incorrect to use the adjective "diverse" to talk about an instance rather than a class of instances, we can only assume he means to say that the current system has limited scope of application or lacks diversity of application. But if this is the case, his reasoning is flawed and certainly not based on any principle of "biodiversity" while it certainly dodges the real issue of the lack of any valid definition of money.

Nature NEVER codes different methods to perform the same function, as the logic and functional requirements of a function do not change because of why the function is used,  the function of summing doesn't require modification on the bases of what is being summed!

As for biological systems, nature in its mind boggling diversity has no tolerance for functional redundancy.  To take just two examples and without in any way destabilising the unfathomable diversity of the resultant dynamic life matrix,  ALL life forms use ONLY one universal standard called ATP for energy transport as well as ONLY one common standard for coding their biology called DNA.  Both of which happen to be Passive BIBO systems.  So, it is fallacious to claim that biodiversity is the result of the diversity of ways to perform a given function, as nature has no problem whatsoever maintaining stability without EVER resorting to "diversifying" methods for performing functions.
Finally, since we can and do use the current money system for almost everything and anything, lack of diversity of application can hardly be considered "the fundamental problem".

So what then is the fundamental problem?  To answer that question,  it is imperative that we first define the function in question in this case money,  logically and unequivocally, precisely what Bernard fails to do.  We cannot use the banking industry standard definition (i.e. money is a store, medium and measure of value), as it too fails to be logically conclusive.   For a complete treatment of this issue see "The Money PSYOP" and this Formal Semantic Analysis.

Thus, the "fundamental problem" is that there is no rational intelligible definition of money.

So what definition can we use?  To answer that question see this explanation that also indicates what the fundamental problem is. 

The money problem is serious stuff, billions of people are having their livelihoods destroyed, truncated or whimsically capped.  We cannot afford to be imprecise and at this level of discussion, given the amount of serious work being done, it is disheartening that a self styled "world's authority" would miss the mark so badly.  Before Lietaer,  there were many others who have put forth valuable work that he has not improved on including our work that has permitted the following list of distinguishing claims. I invite Lietaer to discuss these, comment, correct or add to them.

The unprecedented realisation that all money systems are Discrete (sampled) LTI Systems sets an historical before and after in financial theory,  as now financial stability no longer is a mystery and the functional scope of financial stability vs economic stability has been, for the first time, irrefutably delimited of separate and fundamentally independent scopes,  measuring value is independent of generating value i.e. stability of money does not depend on the stability of the economy and although unstable money will undoubtedly destabilise any economy,  stable money does not necessarily imply that the economy will be stable.  Also, the tenet that monetary stability is a function of the relative stability of the economy,  is exposed as an oxymoron for the simple reason that you can only conclude economic instability through money on the basis of a stable measure i.e. stable monetary unit!  Whereas, it is as trivial to determine instability of money systems as it is to keep them stable.  Due to its logically inconsistent foundations and incoherent definitions and precepts,  the problem with the current system is that in practice,  it confuses the annotation (mere representation) of a measure of value of goods and services with the real value of those instances of wealth,  without realising that such a proposition is logically untenable because the value of goods and services is inseparable from these or whatever has consumed them, i.e. money cannot retain any value of things, it can only refer to it. 

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