Lyra and the Quest for Economic Justice

Today one singular assertion is accepted across the political spectrum, from progressives to alt-righters: the current economic system works only for the top 1%, and essentially fails everybody else. This is very easy to see. In fact, it’s almost impossible not to see it, which explains the broad agreement. All you have to do is look back 40–50 years to perceive what’s happened with economic outcomes. For example, here are wages in the USA from 1964–2018:

Why did this happen? The short answer is: because of financialization and inflation.

Financialization is defined as: “an increase in the role of financial institutions, markets, and executives in a nation’s economy, and its subsequent dominance over the traditional economics of industry and agriculture.” Various other definitions, and some of their implications, are discussed here. The net takeaway is that the more financial institutions are able to channel economic activity, the more wealth concentrates into the hands of the oligarchy.

Inflation likewise benefits the 1% at the expense of the 99%. This is due to something known as the Cantillon Effect. Richard Cantillon was an 18th century French economist, and his eponymous observation was that newly created money is non-neutral. That is, the original recipients of new money receive more benefit from it than later recipients, in effect enjoying a higher standard of living at the expense of those who gain access to the money later. Inflation benefits those closest to the monetary spigot, and harms those farther away, who suffer from the reduced purchasing power of their money.

The Cantillon EFfect explains both of the charts above. In every fiat monetary system run by a central bank (in every country), the major banks, the government, and huge corporations always gain access to the money first. This is because in a debt-based monetary system, money is always loaned into existence, and these parties are always the biggest borrowers (and at the lowest rates!) because they have the biggest lines of credit. Your government can borrow money for decades at only a few percentage points of interest, but you’ll pay many times more interest any time you use your credit card. Mega-corporations can easily finance buy-backs of their own stock, making their earnings per share appear better, which boosts their price, and results in bonuses for their executives. This is why “economic stimulus” (a deceptive name for electronic money printing) doesn’t really stimulate the economy, merely the price of financial assets. But a rising stock market mainly benefits the top 5%, as can be seen in this chart:

Unless you’re in the top 5–10% of your society economically, you will be lucky to maintain your standard of living. And your children will likely have a lower standard of living than you do. Upward mobility is being replaced by downward mobility.

If all of this makes you angry, good — it should. But if it makes you want to join some political campaign to fix things by getting the right people into office, you’d better think again. The politicians, especially those with the seniority to get anything accomplished, are all owned by the billionaire donor class already. They like the system just fine the way it is, because it works perfectly for them.

But let’s assume that somehow the political will to make changes was actually there. What are the fundamental changes that have been proposed to address the growing wealth disparity and increase fairness for the working class? There are two leading theories under consideration, closely related: Modern Monetary Theory (or MMT) and Universal Basic Income (or UBI). Let’s examine them.

MMT is based on the (correct) observation that there is no inherent need for sovereign governments to take out loans from central banks in order to create money. It’s quite possible simply to create and spend new money directly. An example often cited from US history is the issuance of Greenbacks by the Lincoln administration during the so-called Civil War. The idea here is that money can be spent on public goods without incurring interest owed to the banks, or to the rentier class that purchases most government securities. It does have the advantage that nothing is owed by future generations, who being yet unborn do not get a vote on the matter.

UBI is the idea that instead of welfare, food stamps, unemployment, or other supplemental income programs, every citizen should simply be paid enough to afford a basic but adequately civilized lifestyle. This stipend would be paid alike to everyone, whether or not they were also working or otherwise earning an income. Given the threat to incomes posed by the imminence of robotics, UBI is looking very attractive to many. After all, how will people without incomes buy the products and services produced by the robots? Presumably, MMT would be utilized as the funding source for UBI.

However good all this might sound in theory, there are serious problems with it that would almost certainly end up leaving the bottom 90% even worse off. For one thing, additional spending to the public would not be offset by reduced spending at the top of the pyramid. Money spent via government contracts and subsidies for the benefit of the military industrial complex, the financial industrial complex (e.g. bailouts), the medical industrial complex, the insurance industrial complex, the agricultural industrial complex, etc., etc., would continue unabated, and would always outweigh whatever sums got spent on the populace. (Just as it does today.)

Moreover once MMT was widely adopted, deficits would truly no longer matter, and spending would surely balloon across the board, limited only by the relative clout of political lobby groups. We already know that the oligarchs and international corporations have considerably more lobbying power than the public. (Or we wouldn’t be in this situation to begin with!) MMT would do nothing to change this. A few hundred people with billions will always wield more influence than hundreds of millions with very little. Indeed it wouldn’t be hard to imagine that, seeing as deficits no longer matter, tax revenues therefore don’t either, and so tax breaks would be offered to the wealthy as the quid pro quo for their acceptance of UBI. Very likely the 1% would soon be relatively better off than they were before.

Meanwhile all this money creation, driven by bottomless political greed, is taking place in an economy with a very limited growth rate (if not a negative one), and in a currency which everyone is forced to accept at face value by legal tender laws. The result is not hard to predict: in the race to stay ahead of the rate of currency depreciation, the 1% would again beat out the 99%, and probably end up as the owners of just about everything in sight after the resulting hyper-inflationary collapse. Done politically, MMT and UBI will not create economic justice. Instead, in the end they will make things worse. One hand gives, and the other takes away double.

Samuel Edward Konkin III was a relatively obscure left-libertarian theorist in the late 20th century. In 1980 he published The New Libertarian Manifesto, which described his philosophy of Agorism. From the Greek word for market, agora, the central tenet of agorism is that real reforms can only be effected through peaceful and voluntary means by individuals acting together through free markets. Sometimes characterized as “voting with your dollars,” agorism posits that such alternative economic systems will oppose and eventually supplant the official economy, which is dependent for its continued existence upon the application of violence by the state. In other words, don’t try to seize control of the political machinery controlling the existing economy. (You will either fail, or else corrupt your ends, not to mention yourself, by using an evil, violent means to achieve them.) With the advent of cryptocurrency, Konkin’s agorist ideas have enjoyed a resurgence, since the tools now exist to nourish what he called “counter-economics.”

Just to clarify: we’re not talking here about Silk Road or other black markets. Those are on the fringes, and have never required cryptocurrency to operate, anyway. We’re talking about legal markets for ordinary goods and services, but exchanged in an unofficial or alternative market. This is sometimes called a grey market, or System D. Most of the existing crypto economy today meets this description, although as we speak Wall Street is doing its best to gobble up Bitcoin.

To Konkin’s concepts we must add an observation from Friedrich Hayek, taken from his 1976 book, The Denationalization of Money. His thesis was that money is far too important a commodity to be left to the incompetence and corruption which typify government. He asserted that only private free market monies, in competition with one another for market share, can form a sound basis for an economy. It’s interesting that Hayek did not also claim that such currencies needed to be 100% backed by hard assets such as gold, or strictly limited in their issuance. In fact he noted that a deflationary (upward-valued) currency inherently favored creditors, just as an inflationary (downward-valued) currency inherently favors debtors. Actually neither bias is a good feature over the long term.

Hayek was right about these issues. Legal tender currencies whose acceptance is mandatory (at gunpoint if necessary) will always be used by the politically powerful to exploit the powerless. And his point about currencies with a permanently limited supply favoring creditors (and the wealthy generally) is also valid, and reveals a key weakness of the design of Bitcoin and other fixed-supply cryptos. Like gold they are excellent as a store of value, but Gresham’s Law (that bad money will drive out good) dictates that they will never serve as a currency of general circulation. If your bitcoin is going to go up in value, why would you spent it at Starbucks for a latte, when for everything else there’s Mastercard? Also most first-generation cryptos already feature an oligarchic ownership structure, where a small percentage of wallets hold the vast majority of coins. This makes them essentially just more of the same.

To borrow some terms coined by Karl Marx, money is the foundational base on which the superstructure of the political economy is built. So if your money is inherently a vehicle for exploitation, as national fiat currencies are, your economy will necessarily be full of injustice. A rotten foundation means a crooked house.

This is why you can’t address the fairness of economic outcomes through politics. You’re merely attempting to slap a fresh coat of paint on that crooked, dilapidated house. What you need is a better foundation.

Lyra is a cryptocurrency issued by the Ascension Foundation. Lyra is an asset-backed, private market fiat currency. It is designed to have the innate ability to reverse the Cantillon Effect, so that new money is created from the bottom up, not from the top down.

To achieve this, unlike debt-based currencies Lyra is not loaned into existence. It can be bought into existence (that is, minted in exchange for draining national fiat out of the mainstream economy). It can also be earned into existence, for example through bounties paid for work done to expand and promote the system. And once minted through purchases or labor, it can also be gifted to others.

Lyra’s token distribution model possesses a unique structure. We offer a fixed supply at each price level, and then double the supply at double the price, thus:

The top Tier 6 represents full retail price of $32 (USD). Tier 5 at $16 represents a 50% discount to that, and so on down to Ground Zero which is at or below $1 (a 96.9% discount), with special bonuses in place which can reduce the purchase price to as low as $0.15 per coin for large wholesale purchases. And with staking included, the cost at Ground Zero can actually be reduced to the single digit cents. (Where do founder’s shares get issued? Only at Tier 6, of course!)

Tier 6 is shown as the top of the chart because it’s a target that we feel is quite realistic and are confident to project. However, it is not a hard cap and we will continue the doubling of supply and price when/if Tier 6 sells out (i.e. 64M tokens at $64, 128M tokens at $128, and so forth). In order for this to happen demand has to exceed what can be satisfied in the secondary market, since any existing holder is entitled to step in front of us and sell their Lyra to new buyers at any discount to our fixed offer price. Thus for Tiers 2 and higher, Ascension mints new supply only to satisfy unmet demand. We did not set a hard cap on issuance decided in advance; the market will show us where the cap actually is.

Sales for fiat (or other cryptos) are only a part of the story. Lyra can also be earned, in the form of bounties (which resemble commissions) paid to our agents for referring buyers of Lyra. While signing up as such an agent is entirely optional, we encourage our agents to gift some of their Lyra to those they are introducing. (And we’ve provided a convenient mechanism for doing this.) In this way each person who joins the Lyra economy can “pay it forward” to others. The fact is, if you want to establish a new money as the basis for an alternative economy, you’ll need a lot of value residing in the system plus a large user base in order to make for an attractive, viable marketplace. So you’d better have some economic incentives in place to motivate lots of people to participate. It’s just the way things are.

So how is Lyra better money? In several ways. First, holders of Lyra can get paid for using it. This is done through “staking” programs in which Lyra is deployed in order to earn a return on some economic activity involving Lyra. These activities can be related to sharing in the Ascension Foundation’s sales revenue, or to increasing one’s own bounty eligibility, or even participating in dynamic hedging algorithms. (These algorithms are still experimental, and will be the subject of a separate future post. Briefly, for now, we can share that Lyra can be used as a hedge, and ultimately, insurance against loss of other crypto value, in applications involving sports betting, crypto leveraged trading, binary options, contracts for difference, and cyrpto money markets.) Here’s the bottom line: whenever Lyra is put to work somewhere, any new mintage derived from that use goes to the people, the Lyra users, not to some bank or government. This means the Cantillon Effect works in reverse. New mintage bubbles up from the bottom, it doesn’t trickle down from the top.

Next, Lyra is fractionally backed. The Ascension Foundation will use net sales revenue for R&D, marketing, legal, administration, all the usual things, and to acquire reserves. Current projections are that Lyra in circulation will ultimately be backed approximately 30% by a basket of hard assets, such as precious metals, bitcoin, litecoin, ether, and other leading crypto assets. While this is a far cry from being fully backed, we note that the goal is to compete with fiat currencies, and those have no backing at all! We predict that as these continue to inflate away, Lyra will gain purchasing power against them due to its partial backing. It is also likely that our selected reserve assets will rise in price against pure fiat, due to their limited supply. Holders of Lyra will therefore see either an increasing Lyra price, or an increase in the quantity of Lyra they hold (if they are staking), or possibly some of both.

Lyra can already circulate invisibly and untraceably over Ascension’s wallet payment network. We actually built our scalability and privacy solution first, and are building down to the blockchain rather than on top of it. Lyra’s blockchain will be used to provide transparent data on the issuance of Lyra and the holdings and reserves of the Ascension Foundation, and also to facilitate interfacing with third-party crypto exchanges and merchant gateways. Because our ultimate goal is to build a community who actually use Lyra, our unique wallet client is also a fully functional instant messaging chat client which allows users to communicate securely.

So how big can Lyra get? The honest answer is that we don’t know. We think it can get at least as far as selling out the allotment at the full retail price of $32. That would put its market cap in the single digit billions of dollars, which is a milestone reached by a significant number of cryptocurrencies already. But then, we’re not just another cryptocurrency. Our vision is much bigger. New technologies should always endeavor to solve significant problems. The bigger the problem, the bigger the potential for success. We’re taking aim at one of the biggest problems in history!

Lyra is an attempt to spin up a more equitable type of money that can serve as the basis of an economic system which will not be susceptible to political manipulation, and being hijacked for class warfare. But as it becomes successful, it will surely be imitated — and that’s fine. One currency to rule them all is hardly what Hayek had in mind. (And would be a really terrible idea anyway, one worthy of the IMF.)

Lyra is a hybrid of a fiat currency and a reserve currency.

Lyra is the native token for the Ascension platform.

Lyra is a digital currency with the privacy of physical cash.

Lyra is ultimately created on a blockchain, but scalable.

Lyra is an equitable currency: new mintage goes not to banks and fat cats first, but to those who buy it, earn it, or put it to productive use. To all of them, large or small, according to the same set of rules.

Lyra is the gas that fuels Ascension’s borderless, wealth generating, free market ecosystem.

Lyra is neither an inflationary nor a deflationary currency. Again, it’s a hybrid.

Lyra is a private sector currency competing for market share. There are no guns aimed at anyone forcing them to buy or accept Lyra. To remain competitive, in the future Ascension must manage its currency well. Unlike a central bank, Ascension must operate for the benefit of its users, not to rob them, or it will not survive.

Lyra is a currency meant for a peaceful and voluntary community.

Lyra is the foundational basis for an equitable, transparent, and sustainable monetary system of wealth distribution.

Lyra is a currency of generosity, which also extends its reach by sharing and gifting.

Lyra offers an opportunity to press the economic reset button to achieve economic justice, where wealth is determined by how well you’ve served others, not by how well you sucked up to the powers that be. There’s nothing wrong with being rich. What matters is how you got that way.

Lyra is philosophically revolutionary.

Lyra is a great way to roll your own UBI program!

Lyra is a currency of the future, available today.

— The Ascension Foundation

This is the blog of the Ascension cryptocurrency project.

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