Rainbow Money

Did you ever walk past a homeless person, and they asked you for money - but then that little voice in your head said, 'they'll just buy alcohol and drugs with that money. Don't give them our precious, precious money for that.'. So you end up walking past them, trying your hardest to ignore them. You probably also felt a little bit bad about the whole situation, very unpleasant all around.

Now listen, I have no problem giving some homeless alcoholic with shaking hands some relief money. I would want people to give me money for alcohol if I was in their situation. So, instead of judgment they get a bit of cash from me. But wouldn't it be cool if you could give them money that's earmarked for a specific purpose, like food or medicine? Then you wouldn't have to worry about your generous donation going to waste - and it would make you feel doubly bad for not giving to those poor souls!

This obviously can't be done with cash, because the store clerk doesn't know or care that the 10€ note I gave the homeless person shouldn't be used to purchase liquor. But a lot of places already function 100% cash-less, Obviously not Germany, but if you look at Norway, Sweden or Hong Kong they only have a low single digit percent number of sales made in cash. so let's image they tear off the band-aid and make a law that all payments need to be made with a debit card or mobile pay app. What could we do with that?

Paint me like one of your French girls

If all the money is digital, we can attach some metadata to it, similar to a lot of crypto coins like Bitcoin can track additional information with each piece of currency. Let's say we allow you to paint part of your money with a certain color, then we could make all kinds of interesting laws and regulations to control the flow of said money. Most money starts out as colorless, so pretty much the all-purpose money you have now.

We'll now make a law that blue money can only be used to purchase food and other basic necessities, like hygiene articles. The blue color can only be removed by vendors, but not regular people. So if you give blue money to a homeless guy, you know he can only use it for a specific purpose - if he wants to trade it back for colorless money he'll probably have to do so at an abysmal rate.

'That's just a fancy food stamp', I hear you say. But it's better than a food stamp, because it can be created in any amount by any person and there is no stigma attached to it. If you're down on your luck and you buy some groceries with your government-issued blue money, you just pay for it like everybody else.

We could also cut loads of bureaucracy and paper work from the social security system with this. I can only talk about Germany here, but it probably applies to a lot of industrialized countries as well. People receiving social security will get extra money to pay for things like rent, food or language courses - but they have to fill out paperwork for every one of those things. This paperwork then has to be checked and the government also doesn't want to give them the money directly and prefers to pay existing bills. Many taxpayers then look at this and get angry because their taxes are used to pay someone else's rent, while they have to pay it themselves. Damn those freeloaders! But if the government gave out blue money, it would give people more agency, wouldn't have to track everything and I also think that the taxpayers wouldn't be as angry. At least for a while.

May the druids rule again

Another cool thing we can do is that some things require more than one color money to buy. Let's say every person gets the same amount of green money every year. This green money can't be used to buy anything on its own, but it's tacked onto the price of some environmentally unfriendly goods. Wanna buy that big dirty SUV? Costs a lot of green money in addition to the normal price. That electric vehicle might be more expensive, but it doesn't cost any green money. But we can make this more interesting with some additional rules:

• When green money changes hands, it becomes red money. This is like a hot potato that you don't want to hold onto for too long. If you have to declare taxes and have a bunch of red money lying around, you'll have to pay a hefty fine (in non-red money).

• You can't transfer red and green money to other entities, except when buying something where it's part of the price. If red money changes hands, it vanishes.

• Each person gets an amount of red or green money based on the nations environmental capital that year. If everything is fine, people get a lot of green money to spend. If climate change rips up your coastline, oil spills pollute your sea and monoculture kills your crops, then we dish out some red money.

• Companies don't get any yearly green or red money, like regular people do. Instead, their environmentally friendly offers can have a red money price and the unfriendly have a green money price (like the SUV example).

• If somebody want to buy something that requires green money that they don't have, they can still buy it, but then both buyer and seller will receive red money (instead of just the seller).

What will happen then is that not only will everybody become aware of the environmental impact of goods, the consumers and existing market forces get to decide how to distribute the environmental budget or deficit. A company planting trees can sell a service to plant trees for 10 colorless €, or it can sell a tree for 20 colorless and 1 red €. Companies that have to get rid of their red money will happily pay a premium for it.

'That's just a fancy CO2 certificate', I hear you say. But it's not, because it puts the people in charge. If I go into a supermarket and pick up a pound of beef and a happy cow on the packaging says 'this is the equivalent of 80kg of CO2', then what am I supposed to do with that information? I neither trade in CO2 certificates, nor do I know if 80kg is a lot. But if I see that a pound of beef costs 1 green € and my holiday flight costs 12 green €, I get a direct sense for the relation of those goods. Yes, according to a quick internet search, one transatlantic flight emits about as much CO2 per person as producing 6kg of beef. Bet you didn't know that.

If the next Exxon Valdez spills thousands of tons of oil into the sea, the company won't just a regular fine, it will get a huge fine in red money. The difference is that you can't just pay it off like that, you have to work really hard and buy environmentally friendly offers from other companies. There probably are not even enough offers around to pay down the fine at once, so Exxon would have to pay huge tax fines every year that they hold the red money. They also can't easily bribe their way out of it, as you can only get rid of your red money by restoring the environment.

Thinking outside the box

I hope I got the idea across at this point, but just to hammer the point home - once you adapt a new paradigm there are sooo many things you can do with it if you start to think outside the box. Here are some additional example of rainbow money:

• Instead of an increasing tax rate, income at some point is turned into black money. You can't spend black money on anything, but you can donate it to charitable organizations, which turns it colorless again. I guarantee you that people would tolerate way higher taxes this way, because they get a say how the money is used.

• For scientific, artistic and societal achievements, people can get awards in golden money. It doesn't have any special rules, but everytime you pay with it for something, the checkout register plays a little song for you, so you get some street cred.

• We could allow mixing of colors! For example, red and green money don't go together, but if you have both we could allow you to mix them together to get yellow money. Yellow money can be used like red money, but it only has a very small tax penalty and can be freely transferred to other entities. It's like you're cooling down your red money with a part of your green budget.

Feel free to come up with other neat ideas for colored money! Remember that all we did to get here is to simply attach some digital color to our money - and suddenly it opened the door to all kinds of potential.