Thursday, March 3, 2016

#69 Self Issued Credit

Most of you were probably never asked to put a dollar amount on yourselves. So depending on the currency you normally use, dollars or something else, try a little experiment: just take a few moments and determine in your own mind to the best of your ability what you are honestly worth in terms of skills you are capable of, things you have acquired the ability to teach, and any ideas you have that could earn you an income. Include in that any current or past employments and what you were paid for them. Come up with a monthly figure in your own currency for what that would be.

What you are doing is determining what your Innate Wealth is. This is going to seem a new concept to some, but please don't let the conventional economics bamboozle you into believing that wealth is merely things or property. Wealth, all wealth, true wealth, is only that capable of generating an income measured in monetary terms; how much in money terms does whatever you have cause to produce that capable of being bartered for other things you need but don't produce? That's getting back to the fundamental use of money, to split barter. Money is a technology or a machine that was and is one of the superb inventions of mankind.

But all money requires that it be accepted in trade. “Surely they'll take my gold,” the gold bug will cry. “Hell no, if the price in dollars continues down,” might be the prudent response of the proprietor. He has taxes to pay and they're easier to pay in the local currency, not gold.

But meanwhile there isn't enough money to suit the needs of most people worldwide. In fact the lack of money properly applied locally where it is needed most, is at the root of most problems. The solution as E. C. Riegel saw it, was for people all by themselves, to set up a parallel monetary system and begin using it. Since our last post, some have asked that were they to be paid in Valuns alongside dollars and have to come up with the extra dollars at tax time, how many Valuns should they be willing to issue and be paid in? The answer is depending on how many dollars one needs to pay any extra taxes, the same as if they'd received a raise, except that in this case the raise would be paid in another money.

An example: a $15 an hour job produces a $30,000 annual income. If the job is really undervalued by $5 an hour, it may be because the employer doesn't have or can't afford that extra money. That would be a $40,000/yr job instead of a $30,000/yr job, an increase of 33%. If no extra dollars, then the extra is paid in Valuns. As of 3 March, 2016 a Valun is $2.77 therefore $5 extra in Valuns is V1.81 or a projected extra annual income of V3,620 or $10,027.40 which is as close as we please to the objective. The A member employee who accepts this offer is prepared to have deducted for tax withholding from his paycheck what that extra would be in dollars, for a $40,000/yr job and receive the balance of his pay in Valuns.

From an accounting standpoint it would amount to the extra pay in Valuns being issued on the first day of a pay period, described in a very simple one page document called a Labour Contract, that would describe how many Valuns would be paid over what period of time and that is all. We have described elsewhere how these Valuns are first issued to the employer who must be a B member in an Independent Exchange and then paid back to the A member on successive paydays. Should the employer wish to use the Valuns between the time they are issued and the time they need to be paid back to the A member who issued them, they are free to do so. This is called float and it is offered to B member employers without interest until it is scheduled to be repaid to the issuing A member employee. At that point the employee has actually been paid in his own money. His labour backed the money he issued and whatever he exchanges for that money among other members of the trading community that decides to use Valuns, will satisfy the terms of his barter; labour for goods and services by the vehicle of money, and his barter transactions will be settled.

Now of course, and we have emphasized this too, both the A member employee and the B member employer have accounts in an Independent Exchange or IE. The real money transfers are made between these accounts. All the real money is in accounts, it always was too, and don't let anyone try and convince you otherwise, even when tokens were precious metals. Facts are, that even under a precious metals basis, very little of those actually circulated. What were circulated were certificates that could be issued by goldsmith/bankers up to 10 to 1 against real reserves. But we are venturing into known territory.

Getting back to the proposal, meanwhile, the evidences of money are in the form of short circulation V Checks which, as a matter of fact, would be bought and paid for in dollars, or whatever local currency, by the B members (all the important privately held “pillars of society” businesses) that would be invited to join a local exchange) and would write off the charge as a legitimate advertising expense, since their businesses would be featured in designs on the reverse sides of all the V-Checks. They would actually be universal coupons. You wouldn't have to spend them at the businesses that paid for the ads on them, but you could. This would also alert everyone in the community as to who was participating in the Valun exchange network or VEN, the basic understanding of a private market.

These V-Checks would be the nicest paper money you've ever seen. On the obverse or front side would be each IE's identification, the number assigned to each V-Check upon transfer of Valuns to obtain it and its date of expiration. Upon expiration, each V-Check could be exchanged for a new one or deposited regardless of whether it had expired or not. While the V-Checks are circulating, the real money is in each IE's V-Check account. But each member has their own Valuns in their own account. All member accounts are private and none of the Valuns in any account may belong to the IE for the usual purposes of lending fractions of a reserve as is common in the usual banking models, so no deposit insurance is required. As we've described elsewhere, all finance operations will be handled by separate private companies, B members of the IE's. The IE's will only follow the orders of their members based on Labour or Credit contracts or any analogous contracts that may be devised.

The glue holding everything together is a proposed properly constituted organization to serve all the IE's and to maintain uniform acceptance and adherence to the basic rules. If one keeps it simple then even the simple might understand it. We identified this organization as IVES, the International Valun (or Value) Exchange Society. We have lately begun thinking of this organization as “not for profit,” because we really don't want to give an incentive to this organization to profit from any of its operations. If IVES isn't designed for profit, then all its affiliate IE's, which would be “for profit” organizations, since they earn a tiny fee for each transaction, would be required to pay some dues to support it. IVES as said elsewhere would be a B member of every Independent Exchange as every IE would be a B member of itself.

We also indicated that we'd prefer to think of starting up with a minimum of three counties in one state (for the US). Each county would have its own IE hence its own designs for V-Checks (there will be so many different designs that counterfeiting would be pointless).

The denominations of V-Checks projected would begin with the 1/2 Valun, currently at $1.38 and designed to fall no lower than $1.08 (so we meet some existing public laws concerning alternative circulating money), then the 1 Valun, 2 Valun, 5 Valun and 10 Valun. Ten Valuns is almost $30. Other larger denomination V-Checks may be offered eventually. For any size transaction, personal checks would also be devised. As E. C. Riegel indicated, a community of traders could get along with a common accountant and each member given a check book.  (V-Checks would have an expiration date six months ahead of the date they are exchanged for circulation.  After they expire, they can either be exchanged for a newer V-Check or deposited.  This provision is also proposed to satisfy other public laws.  More legal research on these matters on a state by state, country by country basis, is required.)

Now, above we described what a $10,000 raise in Valuns would represent. Here are comparable equivalents at this point in time, with a Valun equal to $2.77 on 3 March, 2016:

$5,000/yr = $2.50/hr = V .90/hr = V1,800/yr
$10,000/yr = $5.00/hr = V1.81/hr = V3.620/yr
$15,000/yr = $7.50/hr = V2.71/hr = V5,420/yr
$20,000/yr = $10.00/hr = V3.61/hr = V7,220/yr
$25,000/yr = $12.50/hr = V4.51/hr = V9,020/yr
$30,000/yr = $15.00/hr = V5.41/hr = V10,820/yr
$35,000/yr = $17.50/hr = V6.31/hr = V12,620/yr
$40,000/yr = $20.00/hr = V7.22/hr = V14,440/yr
$45,000/yr = $22.50/hr = V8.12/hr = V16,240/yr
$50,000/yr = $25.00/hr = V9.03/hr = V18,060/yr
$55,000/yr = $27.50/hr = V9.93/hr = V19,860/yr
$60,000/yr = $30.00/hr = V10.83/hr = V21,660/yr
$65,000/yr = $32.50/hr = V11.73/hr = V23,460/yr
$70,000/yr = $35.00/hr = V12.64/hr = V25,280/yr
$75,000/yr = $37.50/hr = V13.54/hr = V27,080/yr
$80,000/yr = $40.00/hr = V14.44/hr = V28,880/yr
$85,000/yr = $42.50/hr = V15.34/hr = V30,680/yr
$90,000/yr = $45.00/hr = V16.25/hr = V32,500/yr
$95,000/yr = $47.50/hr = V17.15/hr = V34,300/yr
$100,000/yr = $50.00/hr = V18.05/hr = V36,100/yr

At proposed inception of 2 November, 2011 the Valun began at $2.16 whoich would have rendered lower numbers. Even so, the Valun should be understood to be a “heavy” currency; each unit carrying more purchasing power than the usual money (almost 3 times that of $1 at the moment) and would never fall below inception, unless gold struck a new high at which time the Valun's inception point is set higher, never lower, to compensate and each and every last Valun in existence becomes even harder. E. C. Riegel and Arthur Kitson before him, stumbled upon the fundamental basis for setting up a monetary system in terms of a Figure 1 transaction. That transaction was one ounce of fungible gold bullion = $2,160 on 2 November, 2011. We just divide $2,160 by a thousand and that's your Valun = $2.16. As the price of gold has fallen against this benchmark transaction, all Valuns have been revalued up in purchasing power against both dollars and gold. We point out that none of us had any part in any decision as to what gold or silver should be worth. We left that up to the speculators on those commodities, and the same goes for those that perform the same function with dollars (since they are also a commodity posturing as money). Meanwhile we conduct our business in Valuns and achieve stable prices for years to come.

We have just provided you with sufficient information to enable you to figure out what it might be like to start earning Valuns. But rather than a “trickle down” economics, this system features a “bubble up” economics. The question is, how much of this self issued credit to allow the poor who are the only people allowed to issue money as we would say, from nothing, because they have nothing?

We get some kind of clue from what state authorities are currently willing to grant people in desperate straits or even those who have retired on Social Security. But we have to understand exactly why these social programs exist. Honestly, for the time being, and because these programs were the necessary concomitant to allowing Capitalism to run wild; as we have said before you can't have Capitalism without eventually having to allow Socialism because Capitalism uses the protection of the state to destroy wealth in the process of creating greater and ever greater concentrations of, what is it? Wealth?

To them it's wealth because it's a lot of cash, stuff and property, but we say that wealth is only wealth when it produces an income. Therefore and get this please, all those “mom and pop” businesses that used to provide adequate income were wealth that the monopolist corporations funded by Capitalism (the mere making of money on money without working for it) destroyed.

Capitalism ultimately destroys wealth it does not create it. It creates lots of stuff in the hands of fewer and fewer people who can claim THEY are wealthy while the rest of the population has no wealth, because they have no means of earning an income.

To all of you facing the headwinds of the usual economic baloney, all of this may seem impossible to grasp. All you have to know is that a group of people have been at this whole dastardly business for hundreds of years and what they do generally explains why everything doesn't work as well as it could and why there are senseless wars, even more senseless investments in technologies which should be banned, etc.

So anyway we presently need Socialism because without it the vast majority of humanity would simply rise up and destroy the rich and the so called “wealthy” who have actually destroyed wealth in the process of amassing it. All we say is, we at the local community level will ultimately take care of our own, we will insure them an income, we will guarantee a definite floor below which no one need fall. Bringing an end to poverty will be so simple that only a banker wouldn't understand it. And they don't want you to know or understand it either. That's why they're so good at confusing you with the words they use, like wealth.

So let's take a cue from a local area resident that figures $1,500 a month would be enough to cover shelter, food, basic necessities. That's $18,000/yr. I shudder to think that back in the mid 1960's we used to pay high school teachers that much, but meanwhile the purchasing power of that amount of money has shrunk by probably half. Anyway, $18,000 in today's Valuns is V6,498.19 or V541.52 per month or around V3.25/hr. V3.25 = $9/hr which means that according to our simple boneheaded analysis, the minimum wage job should be above $9/hr. Most people wont work for that little money right now so we know we're close to the break point where work is one road and poverty is another. Question: if you are so concerned that the poor get to issue money even if it's very little, tell me, who ends up with that extra money? Answer: the most productive will end up with it.

All we're trying to demonstrate here is that it's getting time to start thinking about things differently, especially about money. Once you begin to do that a lot of things must fall under question.

David Burton

Current Hypothetical Value of a Hypothetical Value Unit

[4 March, 2016: Pardon me, you're going to think I'm dumb but you basically have dollars which are inflating, that is losing purchasing power, and then you have gold and some other people overseas decide what that's worth, so it goes up and down in value relative to everything else and anyway it doesn't circulate very much because people want to hoard it, and then you have your proposed valun which is somehow based on gold and dollars. Why do you need gold in there? What's wrong with say making that $9 you came up with as minimum wage the basis for the valun?

Ben in Utah

A few points first: dollars are also a commodity that speculators bet on relative to everything else denominated in dollars including gold. Why gold was chosen as the vehicle part of the initial transaction is because we can currently hold gold while we cannot at this time hold dollars without coming under their assumptions concerning everything and anything having to do with our business. Gold is a good barrier to outside forces and allows a means to cover any costs as gold can always be sold back into the market to buy dollars for paying taxes and whatever other fees they devise might entail. We have an initial value established for silver as well as gold so we would be willing to acquire either.

Initial values: 11/2/11
gold: $2,160 = 1 oz Au = V1,000 : V1 = $2.16
silver: $42.24 = 1 oz Ag = V9.55

Present values: 3/4/16
gold: $2,160 = 1.37 oz = V729.22 : V1 = $2.74 *
silver: $42.24 = 2.23 oz Ag = V8.78

In acquiring precious metals, we would also effectively retire them from circulation, which would make gold bugs happier since their stores would only rise in value. Over the long haul, especially if mankind chooses freedom instead of slavery, the value of gold will drop low enough that we will actually be able to walk on them as pebbles in the street. Historically, when gold is not worth much relative to other more useful things, people are generally better off.

* The Valun went from $2.77 to $2.74 as gold of late has been making a fierce run up above $1,250. If it goes higher, we anticipate more trouble in the paper markets. As we said, if gold suddenly breaks over our initial values, we will set higher ones and those will stay when gold falls again making the Valun that much stronger.
4 March, 2016: I was asked what exactly determined how much a job was paid in Valuns. I answered that regardless of the proposed “self financing of labour” arrangement, where the employee issued his own Valuns to “buy his job” as some have said, that on the balance sheet of the business, the concern must remain profitable; at the end of the day, it must pay all its expenses for being in business and that any Valuns paid to labour would still remain a cost of doing business. This also means that accounting would concern itself with how much product, good or service was purchased in Valuns. I hope this is properly understood.

The principle behind this blog's proposal is not to gain an attachment to money or a greed for a lot of it, but to be able to use your own money as the way to settle a barter between your labour and the things you need; shelter, food, clothing, etc. The way you live and the things you use to live it are the real concern. Why should someone else's failed monetary system mean that you have to endure poverty or stagnation in your standard of living? It's time to think straight, wake up and begin taking proactive action which is not getting involved in politics.

About the first thing one does when waking up is notice all the clowns pretending to know things and convince you that they're right. Look at the results and what they do, not just what they say. Find out who has honestly made a decent living for himself and herself by their expertise and enterprise and emulate them. These people are the real “pillars of society” the John and Jane Galts, etc. If you are one of them, you should definitely read the whole of this blog, consider its proposal and help to bring this only real alternative to everything out there, into reality. Best!

[7 March, 2016: I realized that I hadn't answered your questions. You asked, Why do you need gold in there? What's wrong with say making that $9 you came up with as minimum wage the basis for the valun?

I think we adequately explained why we based our Figure 1 on a transaction involving gold and dollars. With gold (and silver) we get instant currency exchange for every widely traded currency on earth. It's the only choice for its function. As Independent Exchanges or IE's acquire more gold and silver through currency exchange, more gold and silver is extinguished as a basis for money. Those trading outside the natural pull of the VEN exchanges collectively would see an upward appreciation for their gold and silver holdings as the intention by design is to have the IE's pull more precious metals out of the market, thus tending to pull up the prices of remaining supplies.

But now Ben, let's take a look at what your $9 Valun might be like. First, you'd have a set labour rate of no lower than $9 an hour, which might be accomplished elsewhere. Let's say someone worked 40 hours in a week, they'd expect to earn $360 before taxes. That would be V40 or 40 Valuns. Some communities might set a limit of V40 a week for subsistence living for a single adult. I covered the topic of price structures possible under such a system, but one that merely takes a multiple of their money per time as a Figure 1 is
still using their money as a measure of value. What we would expect under a system based on their money is that prices would tend to conform to those in dollars, euros, yen, etc. They would all tend to inflate or rise. What we would tend to expect over much time, five years or longer, that prices under a truly independent Valun system would tend to remain more stable. We consider that Riegel and Kitson before him had pretty much solved the issue of inflation as a result of fabulous amounts of government spending and the public debt that was never intended ever to be paid off, etc. Hopefully, more people will spread this blog's proposal more widely. Best!]

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