Tuesday, September 15, 2015

#62 What it Means to be Working for Your Own Money

This brief paper is in response to many discussions concerning the relationship between labour and money issuance in this blog's proposal. Briefly restated, the proposal advocates only two ways to issue Valuns; either one works for them, or they are allowed you to issue as an indigent. In either case, the actual number of Valuns will certainly not be unlimited. For the indigent, it will have to represent what the community deems to be a subsistence for themselves and their dependents. Each of those dependents will assuredly be allowed to establish their own accounts, but the details of how this will be allowed would have to be decided by a properly constituted International Valun Exchange Society or IVES.

We proposed that IVES be started two years ago and got no response, so we assume, and the figures support this, that as of this date we have less than 20,000 hits. That means our audience at this point in time is quite small. The motion to establish IVES remains on the table however and when enough interest is shown (e-mail me at venlead2013@aol.com) we will proceed further.

E. C. Riegel's solution was not intended to overturn society, to change work patterns, ethics, habits or efforts, to do anything other than to provide a money solution that absolutely trumps all others. His ideas of money confronts and destroys the presumptions of the “gold bugs.” All one needs to do is turn Gresham's Law upside down and make it say “the least expensive form of money will drive all more expensive forms out of circulation,” and since that is observably true as well as historical fact, it is established as a true normative law that has absolute effect on the subject of money. Paper is certainly cheaper than metal and performs the core function of money, to split barter between two people in a trade, and of course it's much easier to transport than metal.

People who rhapsodize about the intrinsic value of their metal and think it's the only money are lunatics! They never like to admit how frustrated they are by the absolute fact that all the value of their metal in terms of other money is controlled, not by them, but by people in far away cities over whom they have no power whatsoever. Fact is, at the point of this blog's proposed Valun's inception, 11/2/2011, an ounce of gold bought something like 35% more than it does now, while the Valun held onto that purchasing power quite nicely because it was designed to do so based on Riegel's concepts.

We began with a Valun worth $2.16 and it has now reached a fair trade value of $2.94. It can't fall below $2.16 by design. Should the value of gold suddenly become nearly priceless, something we honestly can't imagine happening, as there really is enough gold circulating around, but should it reach a value higher than at Valun inception, a properly constituted IVES makes the decision to raise the inception point of the Valun higher, by design it can never be set lower, and the purchasing power of the Valun is preserved as this would affect all extant Valuns immediately.

But Riegel's critical objection to gold, “we're pretty sure it's worth something, just not sure what it is,” would have to include somewhat objections to all who subscribe to the “Austrians” or the mainstream Libertarianism. To us, that branch of politics is just another of their dialectics. Rothbard, who called himself an “Austrian” in his economics, like calling yourself a Liberal in politics, fancied that only metal was money and we should return to a system that basically bartered metal. Well, this immediately begs the question, “just how much is your money today in other things?” You see, money seen this way is a commodity and of course the more rare it is the better. The better for whom? For them, not for you. You had nothing to do with it and you never will. You were just trying to use their money to trade something, which might have included your labour, for their money, so you could buy something you really wanted or needed in exchange for your work, your time, your attention, your labour.

To the “Austrians” or Libertarians out there: Anyone advocating usury as allowable in any form whatsoever is our intellectual enemy; they do not see the fraud in asking back that which was never created. The “Austrians” extol the practise of the taking of interest on loans and in fact many have written great papers describing the supposed positive connection between rising interest rates and rates of economic growth, as if financing something and expecting more in return doesn't in fact involve the destruction of wealth (because all true wealth must produce an income) and the enrichment of the few who happen to be controlling the means to issue money ... their money, not yours.

Riegel advocated a monetary system that would run in parallel with their system until their system falls. He never advocated overthrowing their system as he knew that it was based on fraud and would sooner or later fall. He was not some social idealist who advocated masses of people being forcibly moved into places they didn't want to go simply so some splendid idealistic society could be created by some group of social engineers who supposedly think better than the rest of us and therefore should be entitled to tell the rest of us what to do and when to do it. Riegel advocated free enterprise not capitalism. Capitalism is basically the earning of income through usury rather than free enterprise which is making your talent or goods you grow or produce available to whoever wants to buy them.

A free enterprise network that ultimately will use the Valun as money would be called the Valun Exchange Network or VEN. There are some scoundrels out there who insist that both the size of the VEN and the number of Valuns issued must somehow be planned and managed or inflation, social inequality, etc. etc. would be the result. People who think anything like this have clearly not read this blog, Riegel's works or understood that money is NOT a commodity and to the extent that it becomes one, that commodity actually interferes with the setting of prices. We abandoned all concepts of money as commodity when we took up this banner to spread the word that such thinking, which includes bitcoin and any similar money substitutes as sold to the public as scarcities, is bound to lead straight back to so called fractional reserve banking, etc. We need something entirely different. It is proposed to run parallel with their money until their money fails and to ultimately succeed their money.

Money is strictly speaking that which accomplishes the splitting of barter perfectly in half so that society does not have to fall back on whole barter to accomplish trade and its benefits. It doesn't have to have any intrinsic value, that's an irrelevant idea, and one the bankers sure love to use to hoodwink the public, when in fact the reasons for money being scarce are built into the present system so that those controlling the issuance of money always win. In fact the opposite of what you have been lied to think is true; the cheaper the money is, the more it circulates and the better it works as money.

What most people really want is money that doesn't inflate, that preserves its purchasing power so that what one bought today or in 20 years will be about the same measured by the same yardstick of value, which is all that money is supposed to be, a strictly accounting mechanism.

What working for your own money means:

Your own money is that which YOU issue, not someone else with a bunch of pretentious degrees or titles, or some bank. YOU yourself have value in a Valun system. What you choose to do, with whose help and under what circumstances may be determined by other outside entities and there's nothing anyone can do about that. Some state sets the laws governing what kind of job someone has and the taxes one has to pay at whatever pay level in their money. Riegel never advocated fiddling with any of that. Riegel understood the universal scarcity of their money. He reasoned that if workers were paid in combinations of dollars (since he was in the United States and that was their money in that country) and Valuns, which were to be recognized within a small but hopefully growing market, the VEN, that more people could find employment.

Briefly stated: each employed A member of a local IE would have a contract between himself and his employer, a B member of the same exchange. The amount of Valuns paid out would be on stipulated paydays. The entire amount of Valuns paid out on the contract would appear as a credit on the books of the B member employer from the A member employee's first day of work on that contract. This is the self financing of labour concept: the employer is always paying the employee with money that the employee issued in the first place. The employee buys his / her own job. But the amount of Valuns the employer pays out must be factored into the employer's production and price points in Valuns. Proper and simple cost accounting determines how much anyone gets paid.

Parallel pay contracts – paid in Valuns only – would usually run from a minimum 6 months up to some maximum number of years. We'd probably like to see contracts for no longer than five years. Most contracts are renewable.

As for taxes, they must be paid entirely in their money which is thus shepherded specifically for that purpose and all other uses where their money is the only option. For all other transactions, members would rely on their Valuns.

It may take a while for their system to fail but eventually, and we think when it does it will happen rather suddenly and take a lot of people by surprise, and then what will they do? Go back to whole barter with nothing but precious metals into the breach? What's the future in trading commodities for other commodities? We think it's a stone age concept that it's time humanity outgrows before it kills us all. No, Riegel's idea was strikingly different; money as the instrument to settle terms of barter, to split it equally between buyer and seller and nothing else. He never concerned himself with how much of his money would be circulating. He knew already that there is never enough money anyway because human needs and aspirations are insatiable.

Riegel was keenly sensitive to the needs of the poor and unemployed. He knew that these people represented the only legitimate source of extra money that would fuel a sustainable economic growth and that ultimately as fewer people were poor, that this money issuance would shrink. This was and is his frank response to state socialism. It was a radical idea but it has far more chance of actually ridding the world of poverty eventually than any other solution. The only question is, if it was always this obvious why haven't they picked up on it and done it yet? The answer to that is all around you.

Riegel called for a kind of insurance to be set up to somehow manage how many new Valuns would be created by the truly indigent. To me, this was quite unnecessary as long as a set of somewhat uniform standards could be developed at the IVES level. These would have to do with a system of one time pegging of the income stream of an indigent, expressed as a contract between the indigent A member and the local independent exchange (IE). We could peg these monthly income streams to any point in the Valun's term since inception and some would perhaps wish to extend theirs back as far as the proposed date of inception – 2 November, 2011 – an easy date to remember.

Being paid in your own money requires others to recognize your money. It's no good to split barter with unless it is recognized. It should be pointed out that already a proposed International Standard Value Unit, Valun, which is designed to function as a unit of Value in a trade, has already proved its superiority to dollars and gold (silver too) in terms of holding its relative value. At inception, (11/2/2011) 1 Valun was $2.16. At the present time a Valun is $2.94 a gain of 78 cents or a 36% gain. Now, like it or not the other feature of money that people like to have is that it holds its value. The proposed Valun holds its value and it cannot fall below $2.16 without calling for a reset upward of its inception based on a higher price for an ounce of gold. We chose an ounce of gold on the close of business on 11/2/2011 (an ounce of silver too) as a reasonable high point in the prices of the precious metals so that the basis for the Valun in terms of purchasing power would always be above that of the precious metals. So the swings from $2.16 to the $2.90 are the result of the fall in the value expressed in dollars (or any other common currency) of the precious metals. In 2015, the precious metals clearly do not buy as much as they did in 2011. The dollar appears strong, but what happens during a Weimar meltdown?

To stave off such a crisis the present machine needs more debt to pay off previous debt to pay off previous debt which ultimately resides in the governments which can never charge people enough in taxes to pay off their debts. There is usually a bond collapse and then a general collapse where no one lends anyone any more money because either they have none or their money has become worthless. So how to get more people to pay into their Ponzi scheme? They go after the rest of the underdeveloped world and get all those people into their clutches. Of course it doesn't matter. None of these people can save them, because they are too small and too local and too indifferent to their system to even want to participate in it. They must somehow know that it's a fraud. Most primitive people are not easily fooled. Of course they are more easily disposed of and that's the real agenda for the “useless eaters” as these people are usually called by the elites who call the rest of us “the masses,” a phrase I wish our colleagues would cease from using.

I suppose at this time it's OK to bring up one of the reasons why I posted Congressman McFadden's testimonies. It had to do with the banker practise of lending of whatever national money, to foreigners. In fact McFadden described instances of lending done, products produced and sold in foreign countries which never saw entry for any reason into the trade of the United States. The practise of lending the national money to foreigners is like using a franchise -in this case the United States of America- as some kind of assurance to business transactions; that banking (usury of course since only the principal is ever created) can be transacted better in those currencies that can be sold to gullible foreigners as more worthy instruments of trade than any other money. I hope most of you see exactly how this fraud works. It's a fraud to base value on something that never sees entry into the national market represented by that money. But it's done routinely every day of the week and it's a scam that everyone puts up with, until they don't. But then what? This proposal is the answer.

What's anything worth -including one's labour? How does one find out? There are many people involved with planning, budgeting, determining how to do what with what, etc. but when it all comes down to it, each multiple is made up of dozens of individual transactions. We cannot say whether a gallon of gasoline will always be 1.25 Valuns. That's $3.68 right now. We cannot say right now how in the scheme of all that which one buys with how many Valuns per month, per week, per day, etc. what the prices for things will become in Valuns. That's strictly up to how the parallel economies develop; the taxes are paid in their money, the value in Valuns.

This totally private system (no governments or public corporations are allowed as members) is basically an accounting system with the only visible representations of Valuns being circulating checks between members. The cash variety we called V Checks. Personal checks would also be devised and would circulate where adequate trust had developed. The V Check format would be registered with IVES and on one side would have a design specific to each independent exchange or IE. The other would be business advertisements of the various members. Each V Check would have an expiration date six months from its date of issue. If a member has an expired V Check they can get a new V Check or deposit it into an account. The number of designs of circulating V Checks would make counterfeiting any of them a waste of time. They would be available in denominations beginning with a 1/2 Valun, 1 Valun, 2 Valuns, 5 Valuns and 10 Valuns. A Valun is nearly $3. Half a Valun nearly $1.50. 5 Valuns is around $15 and 10 Valuns around $30. Smaller change than $1.50 can be paid in their money as well as taxes. The rest is in your money.

If one has a lot of Valuns and wants to earn more they can always buy something for someone who can't afford it and sell it back to him on terms acceptable to you both. That's basic finance. Where usury departs from honest finance concerns the money issuance. The financier in a Valun system must have all the money up front to finance a transaction.

Let's say Mr. Brown wants a refrigerator selling for 100 Valuns (around $300) but he's only got 25 Valuns today. Mr. Green has the 100 Valuns and buys the refrigerator for Mr. Brown and takes his 25 Valuns as a down payment and gives him a simple contract so Mr. Brown can pay Mr. Green off in time instalments. Let's say they amount to Mr. Brown having to pay as much as 200 Valuns for that refrigerator because Mr. Brown wants as much time to pay off the refrigerator as the present use of that refrigerator offers him in making more Valuns through ... I don't know, selling ice cream or something. It doesn't matter whether someone like Mr. Green gets a refrigerator for its market entry and availability at 100 Valuns whilst a Mr. Brown requires the time to pay for it and ends up paying twice the price Mr. Green did for the identical thing. People use their money differently, simple as that and they should require no interference in their honest business transactions. Notice especially in this example that both Mr. Green and Mr. Brown were using Valuns that had already been created elsewhere. There was nothing about financing this transaction that required paying a percentage fee for the use of the money. That would have been usury as nowhere in the transaction can that fee be traced back to money that had already existed.

So how many degrees of speciality might result from financing of various kinds of business? These finance organizations might be quite small, quite local, specialize in some particular service or thing. They could become diverse entities (usually B members of their local exchanges) that would rise and fall as dictated by economics without disturbing the actual transaction clearing mechanisms of the independent exchanges.

Notice in the above example that the whole concept of how much should something cost being determined by some distant planners is rendered irrelevant and ridiculous. Who knows and who cares? Only LOCAL concerns should prevail as they stand the best chance of satisfying a truly diverse development, strengthening each local economy. We recognize that there are economies of scale for all kinds of products and would like to observe the law of perfect product permeability as far as is possible. But we are proposing to operate first and foremost as a parallel monetary system.

Others have asked how objects of any size or kind can be brought into the VEN and sold for Valuns. Well, how about a dozen fresh organic eggs? A Valun seems a little high, perhaps a half Valun would do. Lots of things will find prices like that because that's what money does naturally anyway; people take a few dollars out of their pocket, understand basically what a dollar is buying now and compare that to what a dollar can buy right now in a variety of places for a variety of things and the choices are made based on these comparisons. They are made all the time in a mindless manner that economists waste time chasing the particulars of. None of that matters. Money is a machine to drive commerce. If it is there and cheap enough, and stable enough, it will be used. We propose that our system be from the outset the strongest, sturdiest, most crime resistant money on the planet. It's going to be our money, not theirs. Eventually if they want any of it, they'll have to join us, on our terms. That is the only real road to independence, freedom and liberty and anything else you're hearing now as a way out is usually wrong and probably bunk. If you've already had enough, I look forward to hearing from you.

David Burton

[9-18-15: I am confused by your definition of commodity money, and non-commodity money. Can you elaborate more simply for me?
Read the rest of this blog, there is more than enough written on here already to explain it, John.

Do you think labor is a commodity?

No and I doubt Riegel would have either. “Human resources” is a department name in any big corporation so obviously they do.

Do you have any plans, if THEIR systems fails before the VEN system gains following?

Personal plans? Those are private. Everyone thinks they know what they'll do when the inevitable comes, but calamities reveal both heroes and cowards alike.

Was the Weimar crisis about inflation? I've been reviewing statements from bankers, and it sounds to me they are more afraid of deflation, and it sounds to me they would very much appreciate IF a Weimar type of crisis would happen, even if such a turn of events appears to be totally unrealistic, at this time. What do you think about that?

Bankers and governments far prefer inflation as that insures more profit more quickly for them and tends to keep business flowing as more people decide to buy something they really want rather than waiting with the expectation that prices will just get higher.  But deflation is a natural result of debt and adding more debt created money eventually brings about a total collapse brought about by governments and institutions of size failing to be able to cover their obligations leading eventually to a general repudiation of all debts large and small. Then you'd see some kind of mad rush back to precious metals whose prices could go stratospheric but only for a short time as there really is enough gold and silver to circulate, but it would mean the doom of over three quarters of the world's population were that to happen and needlessly, all because of money? Will humanity just take it?  I doubt it. So expect some chaos.

Isn't THEIR system, not only in charge of banks, but also in charge of most corporations? Said corporations, are indeed the parties who put together the assets traded in market places that we need, to live, right?
Do you think we can obtain these life essential assets from THEM, for the purpose of running a parallel system to THEIRS?

So, do you believe that the present structure has anything like that kind of monopoly on things yet?  Oh, they'd like it.  Know what mercantilism is John?  Look it up.  Soviet communism was mercantilism on steroids and fuelled by plenty of loaned foreign money at interest (never created) that they had to pay back. But those deals were settled in dirt cheap prices for vast amounts of things like rare earth metals and other materials lacking in other parts of the world. Eurasia was a huge prize for certain banking circles. But they were running two experiments long term (that's like 100 years for a banking establishment) simultaneously. This was revealed by Quigley and Sutton, but known by others. Communism lost because they realized they had to accord the working “masses” some modicum of comfort and freedom to keep production humming along.

Or do you think these life essential assets would need to be put together, from scratch, so to speak, in the VEN system?
I really do expect, John, that people around the globe are a lot better prepared to create, grow, supply, etc. anything they truly need, by themselves without any corporate, government or banking help, when the system fails. I have stories from folks in Argentina as well as stories coming in from other parts of the world that confirm this. Believe me, I have more faith in my fellow individual man or woman than I ever did in some behemoth organization whose size had outgrown its scale but had to be kept in business just to pay off the debt they had incurred.]
[9-19-15: John, the troll, asks whether I'll publish his further remarks since I have blocked him elsewhere. I'll ask others whether I should bother with John. But let's get a few things straight:

One thing I have counselled people to be aware of on this blog and elsewhere is how easy it is to fall into the habit of ASSUMING things and JEERING others. I have also admonished people of true intention to be on guard against those who jeer them. Any time someone laughs at you, be prepared for violence, as they intended that, but so far don't have the guts to do what they are inclined to do. I have sustained much jeering already from people who should have known better. These are not laughing matters. The ideas on this blog strike right to the heart of much that is wrong in this world and aim at a real solution. I advised to let a jeering person know when you have been jeered; let them know you are aware of their jeering and let them know that further jeering will not be merely accepted or tolerated. The best response is always to walk away from someone who jeers you; NEVER confront them. You have the freedom to leave the person jeering you. It may be one of the few freedoms you have left. In this case, John, someone old enough to be my son or grandson, without the knowledge, understanding or experience that I have, often jeers where he frankly does not know much. Should I wash my hands of John? Perhaps it would serve him better. But the actual practise is to encourage them to do as well as they can even when they can never do well. Their works will show who and what they are. John assumes much concerning me, this blog, etc. none of which happen to be true. I am not a paid agent of anybody. This was begun as an act of love and as a hobby. The resources for posting it here cost me nothing but internet access. I live on a fixed income, am retired (though could go to work doing something else at any time and probably will soon) and am legally blind, though I often see plenty. Occasionally I receive valuable comments from elsewhere from people who do understand exactly what this blog's proposal is all about. Sometimes I post their brief comments or questions. Someone like John, a troll, only wants to disrupt, discourage, destroy and dissolve that which he couldn't possibly control, as he has said of himself mighty things concerning his knowledge of “economics” which this blog soundly uncovers as itself a fraud.]

[9-20-15: Well, that didn't take long, this being a weekend too. I got 13 responses to my specific e-mail request which sustained my decision to block John from further postings here. Perhaps this said it best:

John you call him, I remember his name, if that is really his name. A golf professional has the same name, so you do not know. He is nothing but a young punk. I am probably close to his age and have been following your blog since 2012. People my age are looking for hope because there is not much from anywhere at all right now. We do not need to hear from someone who either does not get the proposal or more likely has his own agenda. He is just the kind what likes to screw things up and laugh. I told you he is just the kind that tries to tear down what he does not like or does not understand. Turn your back on him. We will all like it better if you do.

Bonnie in BC Canada]

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