Sunday, February 3, 2013

#20.1 A Preliminary Standard for Value Unit (VU) Exchange Notes & Coins

[5-20-13: Updated with 7th Edition 2013 Reverse designs]

In the #19 series on the Austrian school, we said that everyone knew what money was, what it looked like and how to use it. We know how money looks as currency notes and coins, as checks and as magnetic cards. We also know what it looks like as electronically tabulated sums in on line accounts. In all cases the uses of money are the same; we use money as a means to split barter allowing us to trade our own labour, energies and production for goods and services that are useful to us in return. This is the primary function of money. Most of the rest of the things attributed to money are either erroneous or deliberately misleading, every bit as misleading as the simple notion that it's right and fair for bankers to expect return on the loan of money in the form of interest, which was not created at the time of issue, or that a banker / financier has the right to use his customer's accounts, for which he has assumed fiduciary responsibility, as the basis to loan money to others.

In a conversation with Laurence Gilbert over a year ago, we discussed many things about the Riegel, including what it might look like. [At this time of course, we have severed any connection to any idea of money called a Riegel, because that is the trademarked property of Mr. Gilbert, the Founder of the RMES. Therefore, nothing said here implies anything whatsoever about what forms Mr. Gilbert's money might take. This discussion is limited to the new terms placed throughout this blog; to the Value Unit, IE's and the VEN.]  I also discussed some ideas with close friends who offered me a few suggestions.

Most advised me that the paper notes should all be the same size and different colours to distinguish quantities. [4-29-13: Our inclination now is to produce notes of different sizes so that any blind man could distinguish them.  A new series will appear here soon.]  My inclination is to make them slightly larger than Federal Reserve notes, up to 3.5” by 7”. We want them to look good as well as wear well. They should be made of a durable bank note quality paper, usually in excess of 80 pounds to the square inch. Most said they would like it to be hemp paper, but we'll just have to see about other realistic alternatives. [We will probably produce blanks with some kind of watermark in them too. My suggestion, without leave from the Founder of the RMES, is to use the visage of E. C. Riegel, for after all, he is truly the Founder, not Mr. Gilbert.]

Value Unit Exchange Notes

As you may recall, we described these Value Unit (VU) exchange notes as having a series of backs (reverse) that would have about the same design, but that each Independent Exchange (IE) would have its own set of fronts (obverse). [The verification data would be located on both sides, so that any IE could instantly verify that the notes are legitimate.] One reason we wanted to have maximum variety of the fronts is to dissuade counterfeiting by creating so many possible designs that no crooks could possibly keep up. [There are other features we are looking into as well that would instantly identify a bad note.  One would be a requirement that every obverse side would allow space for a signator, so only signed notes are valid.]

Each front (obverse) would identify the individual exchange (Independent Exchange - IE) as “The people of” some distinct geographical community, town, neighbourhood, city or county, perhaps a state, maybe even an entire nation. It would largely depend on population densities, all related again to economies of scale, knowing that for any enterprise known to man, there is an optimum size beyond which practical responsibility diminishes to scale. This again, ladies and gentlemen, is the timeless  lesson of “too big to fail.” We will want our IE's to cover whatever area it takes to service anywhere from an estimated low of 25,000 people to an estimated high of a few million people. So perhaps a city like Paris or New York might have many neighbourhood IE's, not just one big one. Each of these would be circulating its own bills among themselves and circulating them through trade with other IE's. We presume at the moment that it would take the simultaneous launch of three IE's to get the VEN started. It would grow from there.

For the backs (reverse), I wanted only a map of the world, the identification of the International Value Exchange Society (IVES), as the group within the VEN that would be designated as having responsibility for producing and distributing the notes and coins, the number of Value Units and places along the corners for other common non-Western symbols used by large populations to represent numbers [It turns out that there are none other than common Indo-Arabic numerals in wide use]. Someone even suggested that some Braille could be embedded somehow in each note to serve the needs of the blind.  [We included the words "International Standard" because this is exactly what we intend; the establishment of an international standard for value measurement.  We have also adopted the word Valun as the word chosen by Riegel himself to be the name of his independent value unit.  The steering committee once it gets formed may decide to do things differently including deciding on another name for this new international standard.]

I have come up with designs for the backs of all the bills, depicting a map of the world with the words Value Unit Exchange Note running across the top of each and along the bottom, the number of VU's with the denomination in each of the 4 corners of the bill in alternative symbol systems, perhaps Chinese and other non Western languages, etc. [These would be common translations of the words Value Unit in the local languages.  5-19-13: The latest set of designs has bills that are graduated in size and scale so they would be easily distinguishable.  The same design is used for all of them, only the colours change.  Each bill has some feature to set it apart from its predecessor.]  I have designed 8 bills as most useful:

The 1 Value Unit bill.
8.1  7 cm x 14.7 cm
Just about everyone would prefer a 1 Value Unit bill to a 1 Value Unit coin. We'll be looking into the cost advantages of each. As of this writing, a hypothetical Value Unit has about the same purchasing power as $2.24 so you could buy things like a dozen eggs, perhaps a litre of milk, perhaps a loaf of bread, for one Value Unit. Of course we'll just have to see how much these things really cost, as the VU finds its own prices for things. [5-24-13: a hypothetical Value Unit has about the same purchasing power as $2.58]

The 5 Value Unit bill
8.1  7.2 cm x 15 cm
With a purchasing power right now approximating $11.20, the 5 Value Unit bill is your new slightly heavier $10 bill. [5-23-13: 5 hypothetical Value Units have about the same purchasing power as $12.90]
 
The 10 Value Unit bill
8.1  7.4 cm x 15.2 cm
With a purchasing power right now approximating $22.40 , the 10 Value Unit bill is your new slightly heavier $20 bill. [5-23-13: 10 hypothetical Value Units have about the same purchasing power as $25.80]

The 20 Value Unit bill
8.1  7.6 cm x 15.4 cm
With a purchasing power right now approximating $44.80 , the 20 Value Unit bill is like having two slightly heavier $20 bills.  [5-23-13: 20 hypothetical Value Units have about the same purchasing power as $51.60]

The 50 Value Unit bill
8.1  7.8 cm x 15.6 cm
With a purchasing power right now approximating $112 , the 50 Value Unit bill is like having a heavy $100 bill.  [5-23-13: 50 hypothetical Value Units have about the same purchasing power as $129.00]

The 100 Value Unit bill
8.1  8 cm x 15.8 cm
With a purchasing power right now approximating $224 , the 100 Value Unit bill is like having two heavy $100 bills. [5-23-13: 100 hypothetical Value Units have about the same purchasing power as $258.00]

The 500 Value Unit bill
8.1  8.2 cm x 16 cm
With a purchasing power right now approximating $1,120 , this is your new slightly heavy $1,000 bill. [5-23-13: 500 hypothetical Value Units have about the same purchasing power as $1,290.00]

The 1,000 Value Unit bill
[There is currently no note in this design series]

With a purchasing power right now approximating $2,240 , this is your new heavier $2,000 bill. [5-23-13: 1,000 hypothetical Value Units have about the same purchasing power as $2,580.00]

Coins

E. C. Riegel proposed that coins should only be issued whee there were items for sale that were cheap enough to justify them. We'd also prefer these to be distinguishable by feel rather than by metal content. Each coin should have an identifiable size and weight. If they were all made of the same durable metal, they would last a good long time. Stamped surgical steel would be adequate. So what are the values associated with each of the probable coins and what should they be like?

VU .50 or 50/100 coin up to 14.175 grams = 1/2 oz.
VU .25 or 25/100 coin 7.0874 grams = 1/4 oz.
VU .10 or 10/100 coin 3.5437 grams = 1/8 oz.
VU .05 or 5/100 coin 3 grams
VU .01 or penny 2.5 grams

Each coin would be so distinguishable by feel (dimensions) and weight that you could instantly tell what they are in your pocket or purse without any trouble at all.

Current approximate theoretical values for these would be:

VU .50 or 50/100 coin $1.12 [5-23-13: $1.29] Your new dollar coin.
VU .25 or 25/100 coin 56 cents [5-23-13: $ .645]
VU .10 or 10/100 coin 22 cents [5-23-13: $ .258]
VU .05 or 5/100 coin 11 cents [5-23-13: $ .129]
VU .01 or penny 2.2 cents [5-23-13: $ .0258]

It would be a good idea to have these coins designed to operate well in vending machines, as each carries more value, and will, than other coins used as tokens of trade.

David Burton

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