Tuesday, February 5, 2013

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

Here is the link to #20 (now, with this post, #20.1) the previous post in this series.

We got some preliminary feedback, generally positive, on what was shown in #20.1. Sometimes it takes something visual to get the idea across, and we'll give you more in this series. [29 April, 13: Since then, we have received more feedback and a new series of designs will appear here soon.]  The proposed Value Unit is to be money, every bit and in the same sense that any national or supra national currencies are money. Of course there are the hard headed out there who say things like, after the people get so sick and tired of using money in all its paper forms, they will demand a return to gold and silver. These people have been sold the other side of the bankers' own convenient dialectic, because the bankers know damn well who controls the market for gold and silver; they do.

Nevertheless, we are designing a monetary system that does use gold and silver as a means of acquiring useful money, that can transact business anywhere it becomes accepted. Why? Because physical gold and silver cannot fly to distant places to buy things that money can buy. In all senses, gold and silver (and copper too) are medieval conveyances of value and were themselves as artificial as suggesting that 7 she goats = 3 steers ready for slaughter, is a reliable means of measuring value. People do not measure value that way; they use their knowledge of prices and the money they have and work it out, one deal at a time, each and every day.

On this blog, we have been discussing the major flaws in the present money system (matters the present system has no intention of correcting). We have lately heard more people equating what's wrong with the present money being FIAT money backed by nothing [4-29-13: According to Riegel, all government issue is unbacked whether supposedly backed by gold or silver or not because the government being a buyer cannot be a seller without competing with private production and thus becoming a communist regime as an inevitable consequence.]  and that in order for things to be right with the world, there would have to be far fewer people [4-29-13: This too seems an inevitable consequence of government issue under genuine usury.]. Tell me, which people did you have in mind? Tell me, if you can, in all the instances you know of where FIAT money was issued, was any other method but fractional reserve banking / financing used? Were there anyone other than bankers or governments issuing these failed FIAT moneys?

Yes, you can certainly say that in all past instances where FIAT money was issued, that money eventually failed. You cannot infer that the reason was that it was FIAT money any more than you can reasonably say that the old gold, silver and copper based money ever worked for all people during the times it was used, when it clearly did not benefit all the people, but those who had the most gold and silver, again the bankers. [4-29-13: Riegel said that even when they were the only recognized money, gold and silver coins were only capable of transacting a fraction of the normal business and that further we recognize that commodities have a tendency to store rather than circulate, just another reason why we move forward in our representations of value from a commodities based system.]  Nevertheless one hears all kinds of endless baloney about gold and silver representing independence and freedom, etc. when in fact all these precious metals represent is another addiction to commodities, the value of which is under someone else's control, not yours.

Why Gold & Silver Bullion Right Now

Before we go on to consider E. C. Riegel's views on money, we need to cover exactly why those with extra money right now SHOULD be purchasing at least some gold and silver bullion coins. Precious metals really represent votes of “no confidence” in the present monetary system. What one is doing when one buys gold or silver bullion is to place one's purchasing power out of the present monetary system, literally out of the market that is enabled by a particular currency. One hears incessantly about preserving one's wealth, when what one is actually doing is putting one's wealth on ice. Wealth, as will be recalled, is that capable of producing income. There are some who make money lending gold and silver bullion, but those people are certainly not you or me. When inflation is anticipated, well inflation is built right into their system anyway, if you leave your money (what you think of as your money, which is really their money, as has lately been proved in Cyprus) in a bank (their bank, not yours.), it will dwindle in purchasing power and certainly anything they pay you to keep it there will not cover inflation. And what of a bank holiday? No, there hasn't been one since 1933, but that doesn't mean it can't happen again. Cyprus happened after I began writing this, so please pay attention.

What would you do if one day the powers that be decided to halve the value of each dollar? That's a 50% devaluation, and they do it ostensibly to make their debts worth less to pay back, just as was done in Weimar Germany.  In the process people lose their savings and the Middle Class, the bastion of rational civilization everywhere, is  crushed.  All prices instantly double, and they may even demand that all loans now pay double the quantity of dollars demanded. Think that can't happen? How many other astonishing things that you thought might not happen have you seen in your lifetime already? The fact is that you do not control their monetary system AT ALL. You all use it, calling the money you have yours, when it isn't even yours.

The reason people should be buying SOME gold and silver coins is that the present monetary system, which refuses to give up its power or excesses, all traced back to usury, fractional reserve banking and central bank issue of money, will fail, just like all the other cases have failed before. Whether it be this year or next or five years hence, really doesn't matter. Their system will fail. What will you do then? Those with gold and silver imagine that their money will be accepted as they think everyone will want to take their gold and silver for something really valuable, like food, water, shelter, clothing, basic medical supplies, etc. We never know, it might be that ready to eat meals will end up being the best barter instrument in a time of universal chaos. But all this could be avoided with a little common sense, starting with knowing what money really is and what it isn't.

E. C. Riegel recognized that the issue was NOT whether money was created by FIAT, but WHO got to create it. We have had three, and more, grand experiments with bank credit created money in the United States; the 1st and 2nd Banks of the United States and then the Federal Reserve system. The first two failed and the third has really failed already, but nobody has bothered to take them down yet. Who created the money in all three cases? The bankers. It is a mathematical certainty that just as these previous banks failed, and their money with them, the third experiment doing exactly the same thing the previous banks did, and practising what all banks have ever done down through history, will also fail, not because the money was created by FIAT, but because of who created that money. There is also the problem of inter-connected promises to pay; the great worldwide Ponzi scheme that could crash in a day and take the financial system and most governments down with it.

I'll repeat that ALL the arguments expressing disgust for FIAT money play right into the hands of the people who control the markets for precious metals and they happen to be the same people who control the issuance of bank credit; the two sides of the same monetary dialectic.  My suggestion, a very good one, if some people had paid attention, was in effect to fuse the two sides of the same dialectic and thus extinguish both sides. This is accomplished by using gold and silver as the only mediation between Value Units and any other money, but thereafter using the stability of an independent yardstick, the Value Unit, as the measure of value in commercial transactions of all kinds; money in all the usual forms we see used today.[4-29-13: By this is understood that after VU inception, there is a distinct departure from the Value Unit and precious metals, as metals prices are determined elsewhere.  This is entirely in keeping with Riegel's proposal that after the Value Unit is launched based on its Figure 1, that thereafter the Value Unit would maintain its stability regardless of what the basis does after the VU's inception.  This seems a difficult concept for some.]  

Buying some gold and silver in the event that not if, but when the present system finally crashes, is these days a reasonably sound decision. Some would think that buying a gun and ammunition makes even more sense. Some are placing their bets on heirloom seeds, not even planting them, but buying them to barter with others when times get really tough.

Now, one has the Bill Stills out there, who talk about giving the power to issue usury free money back to the US government, to Congress specifically, since that's where the Constitution IN ERROR vested the power, and that we could expect the government to issue debt free money by FIAT and spend it into the economy for things that the government deems “in the public interest.” Then it is suggested the government merely taxes the rest back and some special agency set up by the states and the Federal government jointly works out whether or not too much money was being created, etc. All the usual rules dealing with bank reserves and fractional reserve lending get to continue.

Come on, Bill. Tell me, what exactly are these things the government would buy “in the public interest?” How about the military budget, Bill? How about all the surveillance? How about all the various wars on this or that, people, practice or thing?

No, there must be a separation between government and money, else they will control the buying and have the say, not us. We intend on making a lot of things very different and one of the biggest objectives is to divorce the people from monetary dependence on their governments, by offering an alternative to government money. People want an end to inflation, but prices for things are constantly changing as they need to do to represent economies of production or scale. But for a price for something in common use, like a litre of milk or gasoline, to fluctuate in price so dramatically, as happened famously in Weimar Germany, when they tried to make reparations payments in inflated currency, one usually has to look at other historical causes, not the simplistic and frankly ignorant view that it all has to do with the means of exchange being created by FIAT.

This is a lot like saying that all the great wars were fought for religious reasons, when history reveals again that the principal factors in making war were those who financed it, and that goes back ultimately to at least Babylon. So one must be careful about uncritically accepting such glib statements as “wants are unlimited, means are scarce” that may tell you nothing important about anything.

Design

Designing the next money is going to become an occupation, because the number of obverse (front) designs will be almost unlimited, while the reverse (back) designs maintain a simple set of design rules. Right at the moment these are proposals only because no one person or group of interested persons has come forward with any better suggestions. I'm sure there will be some.

As I was pondering this business having completed a set of designs for the reverse (back) sides of these VU Exchange Notes, I saw that for openers there would be a need for a generic series that any particular geographical area could use to get started. What follows then are the generic designs for the eight proposed Exchange Notes. I should add that not all of these would be made available at the beginning. Perhaps only the first four at first. So here they are:

The 1 VU Exchange Note
The 5 VU Exchange Note
The 10 VU Exchange Note
The 20 VU Exchange Note
The 50 VU Exchange Note
The 100 VU Exchange Note

The 500 VU Exchange Note

The 1000 VU Exchange Note
[There is currently no note in this design series]
 
The obverse (front) of each of these generic designs has the following characteristics:

1) They all indicate “The People of” a place as identifying the IE.
2) They all show the denomination in the lower right corner in BIG numerals.
3) They all display a circle inside which are the words “MEMBER IVES” which signifies that the note is recognized as legitimate by the International Value Exchange Society. This body, which is to be a B member in all established IEs, of course does not exist yet. It needs to be established, as at this time a committee of interested people, then over time it can grow into the SERVANT organization of all the local IEs.

I want that thought to sink in. We are not interested in replacing one overlord with another of our own making. One who saw the reverse (back) designs said, “so this is going to be worldwide money.” He thought the map of the world might bring to some people's minds the idea of a New World Order or Big Brother, etc. No, we are asserting that THEY do not own the world, that by our creation of the Value Exchange Network (VEN), we are taking our world back from THEM. The IVES is to be organized as a unicameral policy body with a revolving head similar to the way the Swiss Federal Council operates, but of course we will have many more members, one from each IE. As was said before, the IVES cannot and will not initiate policies that have not been tried by at least three of its IE members, for universal application across the VEN.

If you've noticed, we want to create something that obtains its power and backing from the ground up, rather than from on high raining down. Percolate up economics is what we have in mind, not trickle down. One reason why the present system is failing and why it will eventually fail completely, is that you simply cannot operate an efficient monetary system where most of the money is in the fewest hands. That limits trade all across the board and everywhere. Instead the only new money allowed will be from the “red inkers” below. [Laurence Gilbert denies it, but he mentioned “red inkers in #1 on this blog.]

Once one, an A member, has achieved a level of income, savings and resources above the level of subsistence, they are no longer eligible to create money as they will have enough. However, if ever there would come a time where failure happens, one would have a right to subsistence as part of the very fabric of the way the system works. We can say again that this will mark the end of collectivism, socialism and all other schemes to nanny people around who really would be better off with a real chance at an independent livelihood.

David Burton

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