What is SBDM?

This site promotes a form of money that is built around services rather than precious metals, commodities, fiat or debt.

We call it Service-backed, Service-denominated Money. SBDM, for short. Bridge tolls, subway fares, phone minutes and “Forever” postage stamps are examples of SBDM. They already exist. We would like them to circulate and predominate, as a more stable and equitable form of money, fighting inflation, recession, regional impoverishment and the global indebtedness that has become the human rights issue of our time. With SBDM, money is a means of exchange rather than control, and growth is an option rather than a debt-induced imperative.

To understand SBDM, let’s first disregard the physical form of the money instruments we’ve mentioned. Postage has long been metered; bridge crossings and transit fares can be digitized as E-ZPass and MetroCard accounts, and electronically debited.

Now, let’s set aside that you and I may live nowhere near a subway system or a toll bridge. Perhaps we have little direct need for digital bridge tolls or train tickets. No matter. These services merely back and denominate the money. But in an SBDM regime, we’d use these parcels of value for ever more of our purchases, buyer and seller each confident that these units will get their bearers over the bridge or onto the train, or enable them to ship a heavy package to its destination. And confident that, if they don’t intend to cross that bridge any time soon, they’ll easily be able to obtain equivalent value from someone who shares that same warranted confidence.

Moreover, it’s very important that our theoretically digital subway and bridge accounts are denominated in units of the services themselves, rather than in dollars. Our SDBM debit cards hold this many subway rides. That many first-class letters. A baseline standard for bridge crossings of, for example, a four-wheeled vehicle on a particular bridge. Other prices are a fraction or multiple of these units, just as we presently reckon in dollars. Reciprocal arrangements among issuers would assure wide acceptability, eventually enabling complementary forms of SBDM to merge, just as bank notes evolved into Federal Reserve notes.

Finally, let’s keep in mind that workers and contractors in the service industries that issue SBDM would be paid, in part, in SBDM, just as ballplayers are partially compensated in game tickets, and airline personnel in standby seating. These contractors would be selling or exchanging their SBDM in competition with the issuer, creating a market price or floating exchange rate. SBDM is issued by spending, rather than lending.

Those are the mechanics. What then would be the advantages of this sort of alternative or future currency?

In traditional debt-based fiat money, there’s a crude but direct relationship between how much of it is created, and how much any of it is worth. SBDM, as a form of barter, is far less inflationary than fiat currency. The value of a subway token, or a Forever stamp, in no way depends on the number of tokens or stamps in circulation. Each one is a contract, good for one unit of described service by the issuer. Its value depends, not on the scarcity of the medium, but on how much we value the service, and on the value we must produce to obtain it in exchange. There is recourse if the issuing authority fails to deliver on the contract: claims on the productive assets of that authority.

Beyond inflation, there are the matters of recession, unemployment, equity and debt. Of our bailouts, our economic competitiveness, our pension shortfalls. The mess we’re in across the globe.

We in the United States issue our money in the name of a central bank, the beloved or notorious Federal Reserve. Ours is a debt-based money system. That’s an expression that refers not to our debt for the goods and services we purchase, but to the debt we incur for the use of our money. The usury, as it was long so delicately termed. It’s invisible to those of us with cash or debit card in hand, but every dime of that money was created at negligible cost to the issuer, and borrowed, at interest, by somebody, before it was circulated.

This happens to be the primary reason so many of our neighbors and institutions are so deeply in debt. You and I have been good, perhaps, about not borrowing money ourselves. Neither do we kill our own meat. But all of our money is created through loans, through overdrafts, through perpetual and irremediable debt bondage. So we eat the meat, killed and neatly packaged by others. And we use the money, heedless of its origins, while lamenting the recklessness of our neighbors and governments in assuming the very indebtedness that created it.

You’re skeptical. Perhaps you believe that the US operates under a “greenback” system, and that an agency of government creates our money through fiat. Perhaps you believe that one person’s liability is another one’s asset, that the debt obligation stems merely from the delivery of a product in advance of payment. Perhaps our money-creation process is something you’ve only lately begun to study. We’ll agree it’s complex. We’ll work up our sources together in good faith, and document our findings, in time, on these pages.

Whatever your beliefs about how money is created now, and how it might be created in the future, I hope you’ll recognize that today’s money authorities relinquish nothing when they issue money. That money creation is easily and widely manipulated. And that under SBDM, the issuer must provide demonstrable value, and industrial employment, as quid pro quo for the money it creates. And the debt that drives SBDM? It’s owed by the issuer, in the form of essential services that are created and consumed each day. But the issuer makes out splendidly, for that institution can issue — by spending on its contracts — many more claims on its service than it will ever have to redeem. It is, after all, creating a stable, circulating medium of exchange, in addition to the tangible service it provides as backing.

SBDM is a money system based on reciprocity, rather than privilege and predation. Time to demand it in our world.

— EconCCX