Tuesday, December 13, 2011

#3 The VEN Revolution

[9/7/16: There is now a crypto-currency called VEN. #73 Ven Is a Global Digital Currency –Hub Culture We intend it on this blog to refer to OUR private market the Valun exchange network or VEN.] 

E. C. Riegel did not advocate political or social revolution. There is no such thing as Riegelism, nor shall there ever be, because Riegel's ideas about money are what everyone experiences through using it; the means to buy things and the reward expected for honest labour. We contrast that with the attitude and perception of a well known revolutionary, of whom it is now fully known that he was in the pay of certain very well connected sources of the kind of money Riegel would have considered illegitimate. Among other things, here is what he said:

The classes and the races too weak to master the new conditions of life, must give way. They must perish in the revolutionary holocaust.” Karl Marx.

We find this an excellent quote with which to take issue, as it will certainly show the basic differences between a Value Exchange Network (VEN) and any flavour of state socialism.

We do not consider any issues of class, race, gender, religious persuasion, sexual orientation, sex appeal, or any other artificial criteria to be of any value whatsoever in considering economic and social affairs, certainly anything having to do with basic trade among people. In fact, we consider any of these criteria to be divisive tricks of the powers behind the present political economic scene and nothing more.

Secondly, we note and emphasise that all so called socialists have advocated violence. In fact they have advocated mass violence. In fact they have succeeded in bringing about mass extermination campaigns. Ask anyone who has lived under communism, including modern China. They'll recount stories, where in effect the state went after people and killed them. There was nothing particularly just or civilized in the way the killing was done either. Just ask any Russian. They'll tell you.

Thirdly we notice Marx's mention of “new conditions of life.” That's certainly what the Marxists had in mind, starting with mass exterminations of anyone who stood a good chance of thwarting them. Marxism is a brutal, violent and inhuman programme designed and paid for cynically by those who would never suffer it. The same people paid for Hitler with the same equanimity, after all, Hitler too was a socialist, though of a more “corporate” kind. Their ultimate goal is a comic book fantasy; to rule the world. They're still at it too under different cover, being insane. Being rich certainly helps too. I'm speaking of not only prominent Marxists like Zbigniew Brzezinski, but especially of those who finance them. These people, having control over state finances, some for hundreds of years, certainly have had many opportunities to start conflicts and profit handsomely from them, as did Rothschild during the Napoleonic wars. When you hear the name Rothschild, you should immediately think “war profiteer with blood on his hands.”

These “new conditions of life” Marx refers to might be best described as a period of prolonged repressed technological development, in which most of humanity is culled, KILLED, and the rest mostly live in concentration camps, where they are systematically worked and starved to death. Meanwhile, those who are of the ruling elite, get to live the lives of billionaires.

That's what the socialists want for you. Why do you follow them? Why do you trust them? Why do you tolerate their ideas? Their record is an abysmal failure, unless it is measured in human lives snuffed out; make that in excess of 100,000,000 people in 100 years! That's probably being conservative too [We now know of reliable estimates that place the figure closer to 250 million people in 100 years]. To put that number in perspective, all the casualties in all the wars up until 1900, going back into classical times, if not ancient times, certainly any wars that had anything to do with religion, all of those deaths combined would not have matched those killed by the communists in 100 years!

What they never tell you in school, is that even back in the old days, back when they fought really long wars over so called religious issues, these wars would not have been possible, had it not been for the bankers and their networks of suppliers for the vast military equipage required. Those who had control over the money controlled the foreign policies of nations, lured them into wars, and profited whichever way went the outcome. The fact is impossible to ignore; all men who ever died in any regular war, have died for the profit of the bankers!

We would also like to remind you that all the money back then and its issuance, was by the same method as today; all loaned at interest.

And finally the “revolutionary holocaust” is something the bankers and militarists want desperately. They are buying it right now. They currently create the money, no one else has that power. They are doing the buying, and they buy what they want. They bought Marx hoping you'd buy him. They bought Hitler too, hoping a few more would buy him. They have bought and paid for every rise and fall of every petty dictator and supposedly great statesman you've ever heard of. How could it be otherwise? They had the power to issue the money. They were always doing the buying, not you. Once you have clearly seen this for what it is and by it what it infers, all politics becomes irrelevant.

1. The state issuance of money is invalid, since the state has nothing to give back for what it buys.
2. The issuance of money by a central bank is a monstrosity, since interest is charged for which money to pay it is not created. Moreover Riegel was repelled by the fractional reserve banking model and correctly called it a scam.
3. Only those who do not have money are entitled to create it.

The third point is our direct response to Marxism, socialism, communism, corporate fascism, statism, world government, etc. It is to go to the ground; we will adopt a “don't tread on me” attitude, while we go about starting something that once it gets going shall be like draining the financial oceans out from under the banking and militarist tyrants. Since we do not require any prejudice toward any human being to spread our proposed solution, we shall attract all the talent we need to make it a reality from all over the world.

We invite that talent to join us now. We will need those who see the future in the VEN proposal and are willing to be remunerated in Value Units. The special kinds of talent we will need are lawyers to defend us, accountants and computer people to assist us, the cooperation of many dealers in precious metals around the world, and yes even bankers who have awakened to the terrible truths concerning their piratical methods of finance. We want to attract and enlist all the small businessmen of the earth, all the entrepreneurs, all the artisans, professionals in medicine and the sciences, and especially family farmers and holistic agriculturally related fields.

We intend to uplift the common people of this earth. There is no hope, no political solution, nothing at all that can ever be right, until the right to create our own money is secured and accepted by all.

David Burton


Saturday, November 5, 2011

#2 The Price of Gold in Value Units

Required reading:
      E. C. Riegel, New Approach to Freedom
      E. C. Riegel, Private Enterprise Money
      E. C. Riegel. Flight from Inflation 

[Note 3 May, 2013: It will turn out that this paper was the initial cause of my departure from Laurence Gilbert (and possibly Thomas Greco as well).  They may decide that they know better than anyone else and are unwilling to discuss their ideas openly and freely with others.  Regrettably, I have come to accept that both Gilbert and Greco are clowns without the slightest conviction concerning the potential power of Riegel's ideas to redress grievous injustices and eliminate both war and poverty from the face of the earth.  They are also quite obviously woefully deficient in their powers to convince people to consider leaving the present system for anything much other than "supplemental" trade or on line games.  Meanwhile both would like to dismiss precious metals without considering their present and future uses.]  [15 September, 2014: Regrettably, I too find myself in that category.  See #V1.2]  

As I begin to write about this subject, it is 11/02/2011, the spot price of gold is $1,726.10 the ounce and that of silver is $33.67 at a current ratio of 51.27 to 1. This means that at current prices represented in US Federal Reserve Notes, it takes slightly more than 51 ¼ ounces of silver to represent the price of an ounce of gold; 51 ¼ oz. of silver would buy me 1 oz. of gold. Will the ratio of market value between silver and gold always remain the same? Of course not. Historically under any basis of representation, there have been times when the ratio was 20 to 1. There have undoubtedly been times when the ratio was closer to 60 to 1. In fact there's good reason to expect that the ratio could rise to well beyond 75 to 1 in the near future, although I expect them both to rise in price as represented in US Federal Reserve Notes.  

[5/16/16: At the time this paper war written, I was new to the project of devising an E. C. Riegel inspired monetary system. I predicted the price of gold and silver to rise in 2011, because I didn't trust the signals were right for downward momentum. Recalling now that deflation is natural, as everything except that which is new, diminishes in value as measured in ANY money, gold and silver would eventually be falling in price. There are exceptions to the general downward trend of prices however and eventually in later papers, we shall cover many aspects where the nearly valueless can be in some cases redeemed in value. Nevertheless, at the time this paper was written, the price of gold had already seen its peak and was beginning with only a few exceptions to fall, and silver along with it.

One thing that the ongoing experiment has achieved, was to demonstrate what would happen with a transaction of 1 Au oz = $2,160 / 1,000 = $2.16 (the chosen hypothetical basis) against a falling price of precious metals would be that the dollar equivalent of a Valun would rise, and that is what it is meant to achieve, the preservation of purchasing power, measurable in all other currencies. Since it is all THEIR money including precious metals, all we do is set a transaction as our Figure 1. The transaction chosen for the Figure 1 has to be at or near the relative top in price for this to work.

Riegel suspected as much when he attempted to advocate the use of a dollar at the end of a particular year; what was the Valun worth based on 1939 dollar prices in 1953? One chooses the lower prices of 1933 as a basis. If one used dollars, one would like a basis where the currency was strong (bought more) compared to now. For precious metals, one does the opposite, one chooses the high end and then lets all THEIR markets determine what that transaction is worth today, in any of THEIR money. What this does is tell us what any of THEIR money is worth to us. The experiment demonstrating the power of the alternative has been going on since 2011: Current Hypothetical Value of a Hypothetical Value Unit.

Likewise, we saw where the relative value of the stated proposed Valun would fall as the Valun's initial price for gold was eclipsed. When that happened, a new high would represent an automatic reset of all Valuns at the higher exchange rate. The rate; figure 1 is what Riegel called it, is thereafter and never allowed to fall and the result as precious metals begin to fall again as they must, the Valun increases in purchasing power against them. This is actually a semi-official acknowledgement that this necessarily follows from Riegel's observation.]

A key element of E. C. Riegel's understanding of money was the simple, mundane and non complex role of setting prices for things relative to the accepted representation of value used as a medium of exchange. This idea is called price relativity. It explains in plain simple terms why a currency “backed” by precious metals can never be suitable, with simple obvious illustrations which can literally be demonstrated to apply to any community on earth. Thence, with such simple understanding, growing trading networks of economic connectivity and a means to spread the benefits of this system and the prosperity it generates far and wide become possible. All these examples show in every respect that price is always relative. This relativity in price is based on supply and demand, expanded truly free market competition and all the usual jejune economic rules that apply.

Understanding the concept of price relativity, it follows that there can never be any successful currency pegged to the market price of gold or silver, because rather than representing the actual spot price of that commodity, the “backed” currency fluctuates with that value only, directly effecting the prices of everything else. We have every good reason to ask why the local price of a dozen eggs should have anything to do with the price of an ounce of gold or silver. Since they clearly do not, we would prefer to be using a medium of exchange to represent the halves of our natural barter, that represent prices relative to a set of convenient units with which to assess any one value relative to any other value in the normal terms of trade.

So the reason for discussing the price of gold (and silver) relative to Value Units or VU's, as I believe the new money must be called (since calling it a Riegel is for now the intellectual property of Laurence Gilbert), is that for the time being, trade will continue in national political currencies as the Value Unit gains understanding, recognition, acceptance and eventual domination of trade worldwide. Many of us have seen charts showing the price of gold relative to real estate and have been surprised and impressed to see the relative price stability as represented by gold vs. US Federal Reserve Notes. We will want the Value Unit to have this similar record of price stability.

[5/16/16: With greater understanding comes some rescissions; we expect that gold and silver are going to do what they will do, and the same with land values as measured in THEIR money, always tending to the upside as literally even if you can sell for more than you paid for it, that may not mean anything more than you get more of THEIR money which has meanwhile been diminishing in value. If you paid three times the stated value over the time you lived there, and you did, then really what profit did they get out of you, compared to what you actually get to use as equity in your next purchase? Again the argument for the choice of gold has really two bases 1) we are allowed by THEM to hold it, and we are not allowed to hold their currencies for similar reasons and 2) it gives us universal convertibility with all the rest of THEIR money.] 

Since we are in one of those turning points in human history, it falls to some of us to make momentous decisions that set the stage for future developments. For despite all efforts to the contrary, it is clear to many that the future of US Federal Reserve Notes and of all other similarly based national or supra-national currencies for that matter, is uncertain. I am going to take liberties to make some historical observations:

1. E. C. Riegel thought to have the Valun system trading in price relative to dollars. That was back in the 1940's and 1950's. His reasoning was that the price structures of things in Valuns would find more acceptance if they were the same as in dollars, at least for a while. The subject of “pegging” a new unit of measure (representation of value) is important, as it sets a scale of these relative units with which to set other relative values throughout the entire economy. Riegel thought that the Valun could be purchased with dollars, but that no dollars would be purchased with Valuns. His “dollar pool” was basically a sinking fund to attempt to get “backing” for the Valuns in dollars.

This is silly in fact, as Riegel probably knew himself, because his great contributions to our understanding of what money really is and is supposed to accomplish, defies any notion of “backing” by anything other than what it buys. This was merely an attempt to gain public recognition for the Valun when none of this “backing” was really necessary. His intention was to try and preserve any money investors might have sunk into this fund. We will hopefully be able to explain in future reports, why eventually the entire notion of trading Value Units for any currency is unthinkable. But our first objection to E. C. Riegel's original proposal is that in 2011, we want a Value Unit that has a value relative to the price of gold, rather than relative to the US dollar.

2. We have mostly come to recognize that any currency “pegged” to gold (or silver) becomes dependent on those who control the price of gold and the sources of supply. By “pegging” we are saying that the price of some external commodity like gold or silver directly affects the value of the currency it supposedly backs, thereby affecting the prices of everything else regardless of sense or utility. In ancient times, these bullion brokerage functions were centred in Babylon, hence the significance of much lore, mystery and prophecy associated with that place. The Babylonian Woe by David Astle, a Canadian researcher, is a difficult read for many, but provides well documented evidence you were likely never taught in school.

The gold trade involved the international economics of war, plunder, and slaves, and the deliberately engineered rise and fall of many empires. In fact to this system, rigorously enforced and never questioned for thousands of years, are associated the ancient alliances between bankers and military industrialists and the scam of luring nations into engaging in pointless wars through acquiring national debt.

I really think it's worth pausing to ponder how far mankind might have gone had this terrible correlation of interests and forces been unmasked many hundreds of years ago, for the business model used is the creature of swindlers, thieves, warmongers and insane megalomaniacs, then as now. 

The reason gold has been money for the last 6,000 years amounts to a trick of magic called fractional reserve banking, which is based on creating currency from fraudulent promises to pay gold, these “bad notes” traditionally produced at ratios of 9 to 1, but these days in ratios of 40 to 1 or even 90 to 1. This tremendous leverage, plus usually the exclusive authority to create and destroy money, and the ability to ensnare the property of others through the accordion tricks of lending and repossession, are all based on the magical idea that gold should be the value upon which all other commercial value is measured and the best place to store something so valuable is in a bank.

3. The end of banking as we know it, with severe limitations on vehicles of speculation certain to ensue, promises to create a vacuum for means of exchange, a condition that in fact already exists in much of the underdeveloped world. Riegel's solution is simple and convincing; poor people need money to buy things, so give it to them! But that money is not loaned in the traditional sense, because as Riegel proves so convincingly, money is not created until someone buys something. Those Value Units could stay in someone's account for years and never be money. They only acquire that status when they actually buy something. Until a purchase is made using money to facilitate splitting of the natural barter, Value Units in an account are only potentially money. Until they purchase something, they have no active participation in the economy. 

But at the point of purchase what backed up that money? What proved that it had any value in the trade, what enabled it to be be accepted instead of pure barter? That someone took it in trade for tangible goods backed it with the purchased goods! Nothing else. Prove it today with a friend. Offer to buy a pen from him for 1 US Federal Reserve Note. Then ask him if he cares that the dollar he just took from you isn't backed by gold. He wont care, because he knows what he can buy with that dollar. The same would be true of Value Units.

As Laurence Gilbert has put it,  

“Our understanding of Riegel's view of money would state that yes, “money is not created until someone buys something”, i.e., the 'Buyer' creates money. BUT, only a Buyer who is 'money-less', i.e., either at zero or already in a debit status. These are the money creators in the system, the only ones who can as Riegel describes it, the “red inkers” as they may come to be known. Those in the black, the “black inkers” are sterile and cannot contribute any more money to the system because they already have all they require.

“If Riegels
[The use of E. C. Riegel's name for the money unit is at the moment the intellectual property of Laurence Gilbert] exist in someone's account they are very much money as they are evidence of an in-completed exchange, and that is what money is. Money is information concerning exchange. The form it takes, currency, coin, digital, ledger book entry, etc., is of less importance than the value of the incomplete exchange as evidenced within the information (money) itself. This information (true money) exists until such time as the original Buyer redeems, or cancels out, the original split-barter exchange by selling that much value back into the system (or to the original Seller directly), at which time there is no more need for this record of the split-barter transaction in the form of information (money), as it is now completed.

The needful point of liquidity, as I see it, revolves around the ability of many people being able to use this money between the point of it's creation and redemption. This is what allows for both A and B participants to function fully in all forms of exchange.”

A and B participants are either A = individual human beings or B = organizations made up A's.

4. By historical evidence, it is more likely that the value of Value Units will be more stable if its units are initially set to the price of an ounce of gold, where-after, the price of gold will fluctuate in Value Units around where it began. in fact, as a new representation of that price in decimals. It would serve as a better and more reliable representation of relative value than to do the same with US Federal Reserve Notes.

There's some concern about what an initial setting of a decimal base of Value Units to an ounce of gold might do to prices, since the price of gold is controlled from outside the Value Exchange monetary network, or whether it might be best to use local baskets of goods to determine an initial price setting for Value Units.

There are really two reasons to base a new worldwide monetary unit on a relative price of gold; it's what people say they want and it functions better over time than anything else.

First, people will want something more stable than what they are currently using. They are universally tired of inflation. We have the answer, and it isn't “backed” by anything , but it is “based” on something that people want it to be based on; as good as gold. That initial basis will greatly gain acceptance for the Value Unit.

And secondly, again based on historical evidence, basing a means of exchange on something that varies less in price than say a basket of agricultural goods makes far more sense.

     Date           Price of Gold in Dollars      Price of Gold in VU's
     11/02/11    $1,726.10                           VU1,000.00
     11/04/11    $1,754.05                           VU1,016.19
     11/07/11    $1,726.00                           VU   999.94
     11/08/11    $1,718.21                           VU   995.43

This example shows price relativity in action; the VU's inception began it's relative setting to an ounce of gold in dollars on 2 November 2011. On November 4th the price of gold was higher by $27.95 but by only VU16.19. We are using Option 2 as described more fully below; VU1,000 = 1 ounce of gold. The prices for the 7th and 8th of November are hypothetical, but they show the kinds of fluctuations one might expect trading gold in Value Units; far smaller fluctuations in price. That is why I would choose to use gold for a relative price at the inception of the Value Unit. It has to do with the long term historical record of stability in the value of gold relative to things like houses, cars, real estate and fine art. 
[5/16/16: Maybe, but as we said above, we really don't care. Our solution has to be more stable than anyone's or why bother?]  Values and prices of agricultural commodities or meat can fluctuate widely and of course we expect all political currencies to degenerate in purchasing power until they are no longer accepted as reliable vehicles for trade and contract. What would happen in any case is that there would be from day to day a different price for gold in Value Units that would fluctuate relative to some price initially set to a value of a decimal quantity. 

Let's consider a few options:

Option 1: VU 100 = 1 ounce of gold 
[5/16/16: The values used in this article were approximations based on spot prices not actual “in your possession” acquisition price which is what the initial transaction of 1 Au oz = $2,160 / 1000 accomplishes. From the papers right after this one, this basis is used.]

We assume that prices in Value Units will be stated as VU 100 for 100 Value Units and so on. At current prices, if VU 100 bought an ounce of gold, each VU would have the comparative purchasing power of $17.26 and become perhaps the heaviest money in the world. Prices under this system would seem ridiculously low compared to prices in dollars and every fractional coin would have more value than we are accustomed to. The hundredth part of a VU will be known as the cend, multiple cends. In this example 1 cend is 17¢. E. C. Riegel was quite clear that upon the launching of the Valun, the smallest fraction should be capable of purchasing something of relatively nominal value, perhaps a tiny pencil or piece of chewing gum or candy. Under this option, remuneration of VU1 an hour would be pretty good pay. If you made VU5 an hour, you'd be making the equivalent of $86.30 an hour. $100,000.00 would be only VU 5,793.74 so a millionaire in VU's would be worth $17,260,000.00! It would seem like a retro world. A gallon of gasoline selling for $3.49 would be worth 18 cends.

[5/16/16: This would be a good point to point out the obvious; this is how much the purchasing power of US dollars has diminished since the late 1950's as back then a gallon of gas would have cost around 17 cents.]

Lets use this option to acquaint ourselves with the VU's sub-divisions as we see their equivalent values in US Federal Reserve Notes. But before we do this, let's review some of what E. C. Riegel had to say,

“The currency bills need but carry the word VALUN and the denomination.”
We accept here Thomas H. Greco's criticism:

“The Valun is a unit of measure, not a currency. It’s value is always equal to the things that define it. A currency is a credit instrument of an issuer. Any currency may be debased by the issuer by improper and over-issuance. If that occurs, the market will refuse or discount the currency, i.e., accept it at less than its face value. Only legal tender status (FORCED acceptance at face value) can prevent that.” 

Therefore here again, Riegel's work requires a timely update; ALL currencies as Greco describes them are, under Riegel's observations, unlawful money as representations of value in an exchange, whether any government makes it “legal” or not. Acceptance of this open fallacy leads to acceptance of tyranny and slavery. It is likewise considered insane to keep doing what one does, knowing that it never works. The entire present financial structure of the world is based on such follies. Riegel continues,

“Coins need carry only the word VALUN with the fraction they represent such as 1/100, 1/20, 1/10, 1/4, 1/2. The name of the 1/100 would be cend, (Esperanto) the five cend piece might be called the quin, the ten cend piece, the tenth. The material from which the coins would be stamped should be the most inexpensive that would serve the purposes of wear and weight. Some concession might be made to the vending machine industry.”

We'll return to his last sentence in a moment, as this option provides users of Value Units with a largely coin based economy. Under this option (VU 100 = 1 ounce of gold), the following relative values would apply:

VU                                  VU 1.00 = $17.26
Half VU        50 cend        VU .50   = $ 8.63
Quarter VU  25 cend        VU .25   = $ 4.32
20 cend                                  VU .20   = $ 3.40
Tenth 10 cend                       VU .10   = $ 1.70
Quin 5 cend                           VU .05   = 85¢
Cend                                      VU .01   = 17¢

Taking the trouble of looking up the word cent in an Esperanto dictionary, I got cendo. If this is correct, here is another update. All references to cends then become cendos. Well whatever works. And that's precisely it, with Value Units it will be whatever the people decide works.

Under this option, with the various coins representing much higher relative values than we would be used to, the opportunities for vending machine operations for a whole host of goods becomes very attractive. We recommend that all VU coins be made of hardened steel and developed with regard to sufficient variances in weight as to aid this natural trade supplied by vending machines. This suggestion applies to these coins no matter which option is selected. 

[5/16/16: We did not know at the time that ALL coins that are specifically determined to function as money are virtually prohibited. Of course you can barter using various kinds of “medallions” but the government usually likes it if all of them buy more than a circulating dollar. 

Secondly, though Greco's criticism still stands, there's confusion on the point of what money, ALL money represents, which is uncleared barter transactions. Thus ALL money, silver and gold used as money are no exceptions, represents debt and the same would go for Valuns. ALL money represents uncleared barter and that's all it represents. Greco's criticism is ours, and Riegel's, that most of THEIR currency represents false claims “bad notes” as it was lent into existence based on fractions of reserves (if that) rather than full reserves. Since when does someone lend what one does not actually have? Since when do people who put money into a bank assume that their money (another huge scam since none of it is ours) wont be lent out? Since forever. Getting it yet?]

Option 2: VU 1,000 = 1 ounce of gold

This option provides a VU with a relative value of around $1.72 which is most similar to the British pound sterling relative to US dollars. One would expect that the British people would find such a system gives the most familiar price structure and therefore perhaps gain easier acceptance. It should also be noticed that this relative valuation is pegged high enough above sterling (and well above dollars) that eventually all trades will gravitate to it. We can easily see how this arrangement might save the people of Britain. VU's when used in trade alongside any currency will also serve as a temporary hedge against rising prices as represented in every currency. The following relative values for this option are:

VU                                     VU 1.00 = $ 1.72
Half VU        50 cend         VU .50 = $ .86
Quarter VU  25 cend         VU .25 = $ .43
20 cend                                  VU .20 = $ .34
Tenth 10 cend                        VU .10 = $ .17
Quin 5 cend                            VU .05 = 9¢
Cend                                       VU .01 = 2¢

Option 3: VU 10,000 = 1 ounce of gold

This gives a VU with a relative value of $0.17 and may virtually eliminates the need for cends and quins. Under such a system, prices would be high measured in numbers of VU's exchanged in trade. Perhaps some would find this suitable as they have long been accustomed to dealing in prices expressed in inflated currencies. This would be a representation of value that would probably look like play money. We present the relative values this option produces, though we doubt there would be any sense in imitating inflated prices as expressed in currencies:

VU                                      VU 1.00 = $ .17
Half VU         50 cend          VU .50  = $ .09
Quarter VU   25 cend          VU .25  = $ .05
20 cend                                     VU .20 = $ .03
Tenth 10 cend                          VU .10 = $ .02

VU paper money (I'm going to suggest these be called Exchange Notes from now on)

5 VU's                                   VU 5 = $ .85
10 VU's                                 VU 10 = $ 1.70
20 VU's                                 VU 20 = $ 3.40
50 VU's                                 VU 50 = $ 8.50
100 VU's                               VU 100 = $ 17.00
200 VU's                               VU 200 = $ 34.00
500 VU's                               VU 500 = $ 85.00
1,000 VU's                            VU 1,000 = $ 170.00

We note though that since this option implies a medium of exchange mostly using durable paper money which we shall hereafter call Exchange Notes, that there might be some interesting developments if this option is accepted.

Should this option be chosen, I am making the following suggestion: all issues of Exchange Notes under the agreements that will be entered upon privately by all Independent Exchanges throughout the world, an issue to be discussed in another report, will have the words Value Unit and the denomination of VU's so indicated in a standard worldwide design on one side (reverse), while on the obverse side shall be some artistic design, depicting the community from whence the VU's sprang, especially including the name of the Exchange with the words “The People of” as well as some geographical name designating the provenance of the Exchange that issued it. Such Exchanges could claim to be “The People of Paris,” “The People of Guam,” “The People of Rhodes,” “The People of Goa in India,” “The People of South London” or even, yes it's possible, “The People of South Sudan.” My proposal is that whether this option is accepted or not, Value Unit Exchange Notes will also have a local design on one side of them (which will of course change from time to time) and that as these VU's circulate in trade around the world, their provenance will be added market information and a stimulus to further trade; “these VU's came from those people over there, they must have something we want to buy from them.” The more trade made possible, the greater the opportunities for prosperity.

It is certainly quite obvious that perhaps the preponderance of trade in VU's will occur over the internet, after all this is the 21st Century. And there may be other opportunities to represent VU's as well. Probably eventually too as our typical swipe cards and of course people who use VU's will be writing checks. But the idea of stirring people's imaginations everywhere around the world with the new concept that every human being has a right to create their own money with which to trade, requires us to imagine the kind of efficient durable money we would want to use. After all, many people who may never have access to the internet and are used to barter or exchange with worthless or scarce currencies, must still be able to exercise their right to create their own money.  All that being said, we must from the outset design a system that could survive the demise of the Internet (since we do not have any control over it) and would work as all commercial and financial transactions worked prior to the advent of electricity.  

This reverse side feature or Exchange side of VU Exchange Notes, would give market information of a new and as yet underdeveloped kind; we would know which communities were trading with whom and it would spur further interest in trade and ultimately, sorry Globalists, give an entirely different dimension to notions such as nationality, locality, community, etc. As all VU exchanges will be private affairs, no governments are allowed the status of human beings under this system (a report on limiting money creating power to human beings as a further clarification of Riegel's ideas is probably required), each exchange might represent itself as “The People of” a country, a state, a city, a county, even a part of a populous unincorporated area. In the private VU money system, every individual human being is important, as they generate money by buying things. Each VU Exchange becomes a private community of member traders that has already made the private agreement to trade with one another. As long as people privately decide to trade using VU's, and those VU's are uniform to certain standards, then there is no reason not to accept them from any VU Exchange community on earth. Why not place something beautiful on one side of your Value Units to show your pride of place, customs, natural wonders, etc.?

We hesitate to associate or base a VU Exchange on anything other than a region or geographical area. One reason is that to do otherwise begins to bring in “subjective” criteria and / or mindsets of separation of people by class, profession, ideas, whatever, whereas geography is always pertinent to every trading community.

Our next reports shall stress the following points:

1. The VU system is
private money based on private agreements secured between traders to settle trades in lieu of barter. The notion of public money generated as currency, representing debt of a state and created and destroyed by a bank, really has no basis for trade or comparison with VU's, in that all currencies rely on enforced trade agreements backed by FORCE (such as the government FORCING its citizen to buy something from a particular set of providers), deceit, fraud, leverage and other criminal follies. There is no reasonable basis of exchange for any currency with a VU, because currencies have all been issued erroneously and are debt instruments, for which the interest portion of the debt was never created so it can never be repaid, but must be grubbed from our neighbours, thus producing the fatal flaw of the entire present financial system, the flaw which shall shorty bring it down.

2. At the heart of E. C. Riegel's system is the idea of shared credit or allowing what would normally be an overdraft to every human being he described as a Class A member of an exchange. All organizations, including governments. are entitled to Class B membership and there are ways in which their participation can be encouraged, but class B members are denied overdraft in every case; they cannot be allowed ever again to create money, because they are not human beings.

This is the fundamental concept. No one but a flesh and blood autonomous and "sovereign" human being, may be allowed to create money. This is a concept central to Riegel's system. Riegel wrote an essay describing how organizations can profit from joining as Class B members of an exchange. The ideas are of course revolutionary and will change every notion of business forever once they are observed in action.

It is obvious to me that there is a parallel fight at law at the moment concerning the definition of a person, for political reasons and the economic leverage the usual financial backers believe they shall have by force. Some people seem to think that a public or private corporation is a person just the same as a human being. A corporation is not only obviously not a flesh and blood human being, but is apparently the slave of its owners, who are either other human beings or even other corporations. A corporation, though considered a person at law with full rights of personhood, is clearly not a human being and can never be other than the slave of its owners, in defiance of law against the slavery of persons. Nevertheless the law seems confused enough on the matter as to place even the political vote in jeopardy by ultimately allowing corporations to be considered the same as persons.

How something so obvious got so complicated is a matter of plain public record, showing the clear deceit of the present system and its criminal tendencies in light that it defies natural law and will soon fall as a consequence. Well, we will not so easily fall for the ridiculous. A Class A member of a VU Exchange, the only members allowed to begin on credit with the rest of the trading community, will be limited to human beings only.

At this point we admonish everyone that there is nothing to “fix” about the present system, it is based on a fatally flawed business plan that has done incalculable harm to humanity. An alternative clearly exists and should take advantage of current stressed economic situations in countries around the world and soon here at home in the developed world to fill the inevitable void that will be created by the imminent failure of the present financial and monetary systems.

3. Laurence Gilbert - “Another consideration for us, that being that it is exactly because of the fact that the Riegels [The use of E. C. Riegel's name for the money unit is at the moment the intellectual property of Laurence Gilbert] in someone's account are money, and could sit there for years, that we need to consider how this could play out as regards A and B participants. We DO NOT want a situation to occur which is common with many other 'alternative currency' models in their experience where people want to hoard it. I believe this relates to the commonly promoted mindset and myth that 'money' is a “store of value” in and of itself, which it cannot be if functioning in it's proper modality. My question then is do you see a potential problem area here, and if so, how do we best prevent such from occurring? The common remedy offered for this is a 'demurriage' charge. What's your take on these things?”

A demurriage is a bank charge associated with changing bullion into notes. There isn't any need for that. There will be minute charges for transaction clearing, which is how the VU Exchanges will make most of their money. I recommend that the Exchanges on either end of an international trade split the charge, all charges for transfers within an Exchange remain in that Exchange. But the easiest answer to your question regarding how best to prevent hoarding is simply not to reward it.

This brings us directly to confronting the double edged sword we have been playing with forever (and it was strictly forbidden too), it's called the taking of interest on a loan, otherwise known as usury. The compounding of interest is taking something bad and making it exponentially worse. Generally speaking the greatest error this causes is the stacking up of economically useless money, which is not functioning in the service of trade. It got piled up that way because certain games were allowed whereby it was possible to generate money out of nothing and then to make more money from securities manipulation and leverage without actually producing anything of value. If you think about what Riegel says about what money is supposed to represent, none of this financial business is valid and none of it will be supported by VU Exchanges.  Therefore we expect that it will eventually be marginalized as an activity.  I suppose no human folly can be fully eradicated.

Here are the problems with usury:

In the first place the taking back of interest on a loan is asking the borrower to fetch something extra besides the money he was loaned. He must get that extra from a sea of money that is all borrowed under the same terms and conditions, so there's never enough to go around. It's like a terrible kind of economic “musical chairs,” the system inevitably produces losers, bankrupts, people who will never live up to their potential because the present financial system has failed them by entangling them in endless debt they can never repay.

But then there's the reverse problem of what happens to stores of money and people who live off the interest payments for lending it out. They often seek the highest yields, unmindful of risk, and due to their unreasonable demands, they are often preyed upon by unscrupulous con-men (and these days a few con-women), who can rarely show convincing evidence of past stellar performance. Many of these people got hooked on such follies as day trading and swing trading of securities, or purchasing complex sets of options, or even trying to play the commodities futures markets without proper understanding.

The constant need for more money has driven people to do absurd things to try and get it. It's all going to come crashing down, simply because the debt is so large as to be unpayable. They can pour as much fraudulent “money” into the system as they please, “watering down” as Riegel liked to describe it, the purchasing power of their currencies. It wont save them, because the system will eventually have reached a political impasse; the people simply will not stand for the terms of debt service of their governments any longer.

The Value Unit Exchanges are needed where the IMF, BIS, World Bank and others have badly swindled the natural resources form the poor. They will be needed everywhere soon because it's better to have something in place to continue trade than to allow everything to fall back into barter and barbarism.

David Burton

Addendum: 14 December 2011

The discussion above was theoretical in the sense that the price of gold chosen was a “spot price” which is a “paper price” where the commodities exchanges may not even have the gold for delivery at their prices. Therefore the spot price does not reflect the actual prices at which gold bullion would normally trade in the usual markets. We have reason to expect that the actual and eventual value of a decimal stack of Value Units at inception will be in excess of $1,726.10 and could be much higher, depending on current events.

[18 July 2012: In reply to Dr. Thomas Greco ... his remarks appear in blue.
Thank-you, Dr Greco for your comments and your interest in this forum. [Doubtless by this time Dr. Tom Greco knows of me and this site and he is still capable of getting in touch with me, but since this criticism, has not contacted me.]

“In your example, you have defined the VU in terms of dollars, not gold.”

I agree with you, but I wanted to post the ideas in this essay the way I have in order to get a few concepts out on the table, one of them being how to perceive relative price levels within any arbitrary decimal stack of hypothetical Value Units at inception with the method most likely to succeed by which exchange with dollars or any other currency would be affected.  The matter of how to exchange for other currencies out there, right from the beginning, is of crucial importance.  

Anyone may think what they like concerning whatever basket of resources might be used as a measure of value within a VU only trading community, however history belongs with precious metals as they relate to all other common currencies and there's no way you can get around it when exchanging other currencies for VU's and VU's for other currencies. Anything else will render the alternative system merely local and of no real value except within its own market, which would be isolated without this exchange. Until the other currencies are no longer used, something must be used to bridge the gap in the exchange. You can't use anything else but precious metals.

The idea lying behind this essay is that there MUST be something used as a MEDIUM OF EXCHANGE BETWEEN DOLLARS (OR OTHER CURRENCIES) AND VU's. This is even more so the case since the Federal Reserve's latest power grab, in the latest financial legislation, allows them to shut down any business dealing in dollars. No VU Exchange must ever deal in anything but VU's.

“If, you define the value of the VU in terms of gold, the gold price in terms of VU's will be INVARIANT.”

Not quite. E. C. Riegel recognized “price relativity” as a necessary given in any market. If the essential value of the VU is to be a reliable measure it must not move relative to what it measures. In this example the price of gold in VU's begins at 1,000 VU's = 1 oz. of gold. As the actual price of gold is effected by the exchanges with dollars, as indeed all major transactions must at the beginning of this system, gold's price will wobble around 1,000 VU's as it should. I even envision a time when the price of gold might drop so that one might pick up an oz. for 500 VU's or even less. A similar arrangement is made in the case of silver. In any case, the stability of the VU  itself shall indicate to everyone who uses them for long term transactions what prices shall be established within all markets that use VU's exclusively.