E. C. Riegel wants us to think of dollars as made up of two kinds of money. First there is all that money that people borrowed in bank loans and credit which they will have to pay back, and then some, the interest, which per usual was never created, but matters less because the total value in any of this money must rest in what it bought. The other kind of money is that which the government spends into the economy (Bill Still and his followers, please take note), and in many economies these days government spending amounts to a significant portion of economic transactions. One would say that the health of any economy is measured in inverse proportion to the percentage of economic transactions represented by government spending. If you didn't get that, I said that in a country where the government spends more than anyone else in the country, that country will tend to be economically stagnant or even worse. Each of you who read this can evaluate the state of your own country by this simple measurement.
Likewise a comparable concept is different kinds of money circulating within the same economy. In E. C. Riegel's sense of it, the two kinds of money are represented alike as dollars. Elsewhere they would be whatever the local currency might be. You can't tell the difference between a money instrument that was created through private bank loan or credit (including or especially business loans) and those created through government spending. Riegel called government spending the source of “watering down” of the money supply; inflation, its ONLY cause, by the way.
We want here to go to some lengths to prove that allowing each individual human being the inalienable right to create money to buy without selling back into the market is NOT the equivalent of allowing a government to spend money into the economy, far beyond that which it would otherwise need to take back by FORCE of taxation. Briefly stated, we make the following statements as incontestable:
1. All governments under the central banking / public issue of money model, are the debtors of the central banks and those who control them.
All their money instruments are private notes that belong to them and are lent into existence with interest payable to the central banks. (Bill Still makes the point that all coinage is not in this category and recommended paying off the national debts with sacks of non interest bearing coins.) The circulating notes represent the principle borrowed, the interest was never created but still payable, the core issue of issues, and therefore this extra (the 11th marble) must be grubbed from any and all.
This results directly in a relentless pursuit of economic growth to cover the added value required by the debt which can never be repaid. Riegel's ultimate solution and ours, government must ultimately live within its means; spending must sooner or later equal taxes, resulting in a demand for a balanced budget for all governments everywhere. We wouldn't frankly even mind governments being forced to operate in fiscal surplus, to hold something like an endowment to be used for REAL national emergencies.
2. When the government is the biggest buyer in any economy, it buys what it wants, not what the people want.
We do not really care what rationalizations or other misrepresentations of the truth people attempt to use to argue that governments buy things in the public interest. They buy what they want to buy, or rather what they are told to buy, by as it turns out the same phalanx of economic factors of which Eisenhower and others warned us. Governments buy into wars, surveillance, and a lot of pomp and other nonsense none of us with our own money would ever want to buy. There is no way of guaranteeing anything concerning that which even a representative government can spend, that it will be for what the people want it to be spent on.
Then there is the taxing power, the taking back by FORCE that which the government spends. What a lot of wasted effort and frustration! All for the good of what? Centralization? For what? WHY? For whose benefit exactly? Certainly not ours. Oh yes, those folks behind the curtains who everyone owes forever. You know what? Instead of governments spending money into circulation, why don't we create our own money and spend that into circulation for things we really want, where it counts, in our own communities? It would be a lot cheaper.
3. People at or near subsistence, the poor generally, buy the basic values; governments do not.
The poor want and buy first what everyone else in society buys first and most; food, shelter, clothes, cleanliness, basic healthcare, etc. rather than new and exotic methods of taking out political opponents, or perhaps even entire populations, which make the people on the other sides of those contracts very rich, which results in a trickle down economics where the rich tend to buy things that nobody wants or needs; bling of all sorts ... and no, we aren't jealous or impressed. We have better taste. Any extra money generated by the poor percolates up rather than trickles down into an economy, thus rewarding those who produce the most useful products AND there is a direct relationship between the extra money created by the poor (since they generally cannot take back the money they put into the economy), and the cash requirements of operating businesses.
Just as Riegel saw, there being no perceptible difference between a dollar and a dollar, though they are quite different, we suggest that economies can, do and should operate using many simultaneously circulating means of splitting barter. Were one paid in public money, while simultaneously receiving private money (all public money is private too, so who is kidding who?), one would very soon distinguish between those things that only public money would pay for and those things private money would buy; pay unto Caesar that which is Caesar's. Of course nowadays, most people use swipe cards. You have some swipe cards that can't be used everywhere. So you would have public and private money swipe cards. The point is that for each hour worked you would be receiving additional value that could be exchanged in a free and relatively black market (our definition) for things that can be bought with other than public money.
But swipe cards, internet transacting of business etc. are not necessarily ever expanding categories of trade for average people. Who knows? There may come a time when no one would even be able to read this because there isn't an internet any longer. Perhaps paper brochures will carry my words after the internet is down forever. Who knows? People are barely used to swipe cards and they have their reasonable drawbacks; they can be made inoperable by a simple chance magnetic contact, are subject to a variety of environmental problems, etc.
Yes, I am suggesting that when the proverbial worldwide financial catastrophe happens and the regular familiar public money is either no longer acceptable or simply no longer available, and especially when or if the internet fails, that people are going to gravitate toward the use of something similar to the proposed Value Unit Exchange Notes and coins, as these are familiar objects for making an exchange. Likewise, checkbooks and checks are known vehicles for trade; people know how to use these things.
Of course, cash in Value Units, as it would be in notes and coins, can circulate and trade anonymously among people who aren't even members of the VEN. We hope they do, as any trade where Value Units are used will tend to substantiate their reputation as the international standard for measuring anything in monetary terms.
There will for a long time be a natural association between money and precious metals, despite the clear fact that precious metals are commodities standing for values in other commodities including time, labour, etc. Simply put, basing a money on something pegged to the prices of precious metals, is like measuring something with a ruler that changes every day ... except for Saturdays, when the brokers in distant cities take the day off. Yes, Riegel made a clever statement about gold and silver; we know its price but aren't sure what it's really worth.
Instead, we want a monetary yardstick that doesn't change; that remains a reliable scale of measurement for generations. The only thing that could serve would be something that otherwise has no intrinsic value; that people would be willing to surrender in trade for values including time and labour. People use swipe cards these days, so what of intrinsic value does any of this money possess? Right, that's an unimportant question except to “gold bugs,” because as the buyer clearly knows, with each purchase, that the money is paid in whatever way and the goods or services become theirs in the trade. Money has done its business of splitting the barter for those things the buyer wanted in trade for that which the buyer already provided the economy, usually in terms of time and labour.
I'm bringing all these things up because basing ANY replacement for the current system on either swipe cards or the internet is kind of like suggesting that only those moving along in trucks or cars can trade. What about those on bicycles or those who can only walk? The basis of trade is going to be need and the ability to pay for it in money that works in ways familiar to most people who are walking in any economy.
As for precious metals, we may see a return to seeing scales in stores, as they were commonly seen in shops several hundred years ago, for measuring precious metals coins and in that case we see a use for casting Value Unit coinage as real percentages of troy ounces to be used in such scales, that's right, to measure against claimed gold or silver coins. We really think that open trade in precious metals coins will account for a fraction of all trade, not its basis. It is in the nature of any commodity, for those holding it to perceive its value in holding it more than its possible value in trade for anything else; people who naturally like to hold gold and silver shall want to continue to hold onto it rather than allowing it to circulate in trade.
Of course there will be a means of entry into the Value Unit economy through gold and silver bullion that will be determined by whatever the brokers of these metals feel like pricing it; the lower the prices go from their prices at the Value Unit's inception, the more each Value Unit will cost in dollars to buy. Should the prices of precious metals rise above their inception levels, these initial Figure 1 positions can be revised upward BUT NEVER DOWNWARD. This would tend to provide a “harder” money over time, in fact there would be no reason why the value in relative purchasing power of the Value Unit would ever fall below $2.16..
But notice carefully that our money is NOT a receipt for something that an IE holds that is yours; whatever gold or silver coins you may use to buy Value Units. Oh no, we are not going back to the false basis of the present system for any solution. The dollar price for a Value Unit in honest trade would change based on the prices of gold and silver, but within the Value Unit economy, prices for things would tend to change far less. Today, 5 June, 2013 you might buy a hypothetical Value Unit for $2.58.
Within the Value Unit world, an ounce of gold bullion might require close to 1,000 Value Units to buy and there's another wrinkle to all of this; just as there are two kinds of dollars, and of every other kind of public money, there are two kinds of Value Units; those that represent closed transactions (where the money was created and destroyed; a completed monetary circle) and those that were created without a corresponding closing transaction.
A kind of fraud that is possible is for people to create as many “free” Value Units as their community will allow and then using them to buy gold and silver bullion from one of the dealers that will be associated with the VEN, use them to trade back in for more of the public money. Figure it out, they will have gotten something for nothing. And just why is it that something; public money, is valuable at all? Why is it that US dollars have these words on them, “this note is legal tender for all debts public and private?” It was even suggested to me that we need to say something similar on VU notes, something to the effect that VU notes belong to their bearer etc. No. What's involved here in these words is deception pure and simple, backed of course by government FORCE. Without this FORCE, which does effect the markets, people would tend to gravitate toward a means to split barter that does not suffer the same disadvantages that plague other means to trade. As we say, trade is life itself and like life itself, trade will find a way.
We solve this problem by providing safeguards for all affiliated precious metals dealers for those willing to take Value Units in trade for their specie. Within each A member account, there will be fields that indicate how many Value Units in the account were created by that A member and how many Value Units were taken back in trade by that A member. An A member becomes a “black operator” when they are literally running in the black, with a surplus of Value Units they have taken in trade for goods or services they sold back into the economy. Anyone selling gold or silver bullion for Value Units will want to know whether the A member buyer is a “red inker” or a “black operator,” because by the rules, anyone has a right to create enough Value Units to provide for their subsistence based on the rules, but only a genuine “black operator” is exchanging value for value.
Laurence Gilbert and others may demure, but there are realistic reasons why one would need to “pay unto Caesar that which is Caesar's” and there are likewise provisions that need to be taken to eliminate opportunities for fraud. Like it or not, I have more than answered Gilbert's objections, whatever they may have been.
When some of our designs for notes were shown around, we received responses like, “what is this backed by,” etc. Expressed more clearly by their tone of voice was something like, “if only enough people would trust these pieces of paper as much as they routinely trust other pieces of paper with appeals to local nationalism, etc.” People would actually like to have access to buy, sell and build capital in something other than national currencies and they are even growing suspicious of silver and gold too, as they recognize that these are commodities whose prices are determined by people in far away places. Lately some have found it difficult even to acquire specie. Money, real money, is nothing other than that which measures value. Specie's scarcity, contrary to all false arguments to the contrary, diminishes its usefulness as money.
Eventually, when the regular channels for trade are all exposed for what they are; frauds, opportunities for the elites to lie, cheat and steal their way to continued prosperity and rule over we, “the masses,” etc. who they have today and forever treated as nothing but “human resources” a euphemism for cattle, the international standard Value Unit and its network of independent exchanges will be there to take over the basis for trade. Up to that point, people may be paid in Value Units even if there is no means to spend them. We would expect that over time, sufficient “pools of capital” will enable financing and trade to continue. We suggest that the best people to invest with these pools of capital are normal ordinary people whom the system has used and misused; specifically military and law enforcement veterans and even those who currently labour “under the badge,” because when the time comes for the inevitable political crisis precipitated by the inevitable economic collapse, we want these people behind us not against us. It is as simple as that. Too bad people like Laurence Gilbert don't get it.
Over the next few months then, it is our intention to put together a slide show presentation, design and circulate for comment a brochure or two and then go out and meet personally with as many veteran organizations as we possibly can. Perhaps we'll even find members of our Steering Committee among them. We only need 3 IE's to form a VEN. After that, let the vines spread and the flowers grow.
For any further comments, please contact me at email@example.com