Friday, March 25, 2016

#71 Why We Should Fear a Cashless World

Source by Dominic Frisby

This article appeared on Monday 21 March 2016 06.04 EDT. It's subject is always an important component in preserving the independence and anonymity of everyone using money. Some in fact consider nothing but cash to be real money in the same sense that gold bugs consider nothing but gold coins (and silver) to be money. We'll consider this article as a fit subject for a conversation about the proposed Valun system. As usual, the article will be in blue, my comments will be in black:

The health food chain Tossed has just opened the UK’s first cashless cafe. It’s another step towards the death of cash.

This is nothing new. Money is tech. The casting of coins made shells, whales’ teeth and other such primitive forms of money redundant. The printing press did the same for precious metals: we started using paper notes instead. Electronic banking put paid to the cheque. Contactless payment is now doing the same to cash, which is becoming less and less convenient. In the marketplace convenience usually wins.

Now let's examine this. He's saying that the tokens used as money started as shells, later replaced by precious metals, which we have reason to suppose rose in ancient times in the east of Asia and India due to the fact that various state fiat paper systems had been tried and failed (as they always will because state fiat to issue money is stolen from the people from whose fiat only money may arise) and that producers and technicians (in ceramics in China, in iron in India) were getting sick and tired of being cheated by certain classes of merchants, who bought their wares in east Asia and India and sold them around the Mediterranean and Europe all back in ancient times. Once the merchants demanded gold and silver only, the use of those tokens was FORCED on the rest of society who didn't by and large have much of them in the first place. Human slavery was automatically the result!

That’s fine as long as people are making this choice freely. 

Let's stop right there! NOBODY has ever made the choice as to which money they are entitled to use. We have a history of various money systems we have experienced. Most have failed. Precious metals backed systems are no help because 1) precious metals themselves are commodities with some market value in and of themselves (which none but a select few, outside all economies, ever get to determine) and 2) most people don't have any precious metals (except some jewelry) and furthermore really don't want any. Nevertheless, we advise people everywhere to have some in their possession because in the worst case of course they are worth “some thing” but that doesn't make their use or basis a solution. We'd like after all to preserve some civilization. 

What concerns me is the unofficial war on cash that is going on, from the suspicion with which you are treated if you ever use large sums of cash to the campaign in Europe to decommission the €500 note. I’m not sure the consequences have been properly considered.

We already live in a world that is, as far as the distribution of wealth is concerned, about as unequal as it gets. It may even be as unequal as it’s ever been. My worry is that a cashless society may exacerbate inequality even further.

What have we been saying? That wealth without income is not wealth. Maybe it's just stuff and property in and of itself, but wealth is only that capable of rendering a living from its use. Now, what else have we been saying? That capitalism and free enterprise are diametrically opposed. Who then wants to know where all the money in as many transactions as possible is located? The capitalists of course; those people who make money on money without working for it; work in the sense of actually producing anything worth selling back into the marketplace for money in return; a good or service.

It will hand yet more power to the financial sector in that banks and related fintech companies will oversee all transactions. The crash of 2008 showed that, when push comes to shove, banks have already been exempted from the very effective regulation that is bankruptcy – one by which the rest of us must all operate. Do we want this sector to have yet more power and influence?

They have it and will have it as long as their money and their system are accepted, period! What do you want? Violence? That's just what they expect. What they do not expect is for everyone suddenly to walk out on them, stop working for them, stop accepting their money, show them as much indifference and defiance as they have routinely shown the rest of humanity for hundreds, if not thousands of years. But you can't get there overnight. The E. C. Riegel based solution advanced by this blog intends to offer the alternative way forward NOW while their system continues, just as Riegel intended.

In a world without cash, every payment you make will be traceable. Do you want governments (which are not always benevolent), banks or payment processors to have potential access to that information? The power this would hand them is enormous and the potential scope for Orwellian levels of surveillance is terrifying.

One had best get used to the idea that if you do anything that is noticed, they have noticed it too. I don't know what could be more terrifying than the low level terror we have all been subjected to, but perhaps the truth is that for most of history “peace in our day” was in deed a kind of spiritual gift in the seemingly unending stream of mankind's blood down through history. We have to remind ourselves all the time that we are only a short time away from barbarism at all times.

Cash, on the other hand, empowers its users. It enables them to buy and sell, and store their wealth, without being dependent on anyone else. They can stay outside the financial system, if so desired. 

Now that's what everyone thinks they want and doesn't have now. But they love those swipe cards, which aren't cash and always leave a trail for the speculators to gamble on, etc. Also notice how the notion of “held value” as in possessions has been equated with “wealth” here, as a concept and in its very word changed to associate with mere property or “stuff” regardless of whether that property or stuff ever returns a dime on its “investment.” We're not holding Frisby in particular responsible for this. He's been misled too. How have they lied to you? By cutting away the true context of wealth which was always to earn a living, an income.

Now, the notion of being independent or anonymous when using cash is one of its attributes. By itself, if the monetary system is honest, the mere holding of cash should allow one to participate, when one wishes, in the commerce of a community where those tokens circulate in trade for goods and services, the end result of bartering your labour for things you really want via the vehicle of money. 

Our proposal would like to preserve the idea of money as cash tokens. Where they show up in our proposal is the V-Check and eventually the Exchange Note. The V-Check provides a stable currency that can be used as all cash is. People can shop anonymously using it. The third party in any transaction using V-Checks is the local IE that you got them from. But if they are yours, you either issued them yourself or you received Valuns from other VEN members. The real actual money is all in accounts, the account for V-Checks is a separate IE account that gets its Valuns for V-Checks from member accounts. The circulating tokens, V-Checks, convey the idea of independence and anonymity in acts of trade and at this time operate as the “cash” equivalent in the proposed system.

There are many reasons, both moral and practical, to want this [cash]. In 2008 many rushed to take their money out of the banks. If the financial system really was as close to breaking point as we are told it was, then such actions are quite justified. When Cyprus’s banks teetered on the cliff of financial disaster in 2011, we saw bail-ins. Ordinary people’s money in deposit accounts was sequestered to bail out the system. If your life savings were threatened with confiscation to bail out a corporation you considered profligate, I imagine you too would rush to withdraw them.

Of course you would. But these banks are all “fractional reserve” lending businesses, so your money on account in them is always subject to the rules the bank uses to make loans. As well, most have no idea whatsoever that “their money” in or out of a bank, is not really theirs. This is a BIG issue, folks!

An independent exchange (IE) is only in the transaction clearing business. They shall be forbidden in the eventual IVES charter, from even engaging in lending money. Those wishing to make money on money by lending it will have to operate separate from the IE and whether they have accounts in the IE or not (they will have accounts in the IE's in which they operate), if their business fails, it will not take down the entire monetary structure with it. There wont be “too big to fails” in the VEN.

We have seen similar panics in Greece and, to a lesser extent, across southern Europe. Mervyn King, the former governor of the Bank of England, recently declared that banking was not fixed and that we would see financial panic again. In Japan, the central bank has imposed negative rates and you are charged by banks to store money. This is to try and goad people into spending, rather than saving. So much cash has been withdrawn from banks that there are now reports that the country has sold out of safes.

We always marvel at this. People spend some of the money they have that's not theirs in the first place on safes to keep it rather than spending it. What are they doing? Those papers in that safe are the debt instruments of the central banks that issued them and entirely due to the mismatch between government spending and taxation, the number of them floating around is always increasing and always in the wrong hands when the government spends more into circulation, the result being inevitable price inflation. Actually, by not spending them, savers are actually preventing price inflation since their money is not engaged in the bidding process for goods and services brought on by the nature of competition itself.

These are all quite legitimate reasons to want to exit the system. I’m not saying we should all take our money out of the bank, but that we should all have the option to. Cash gives you that option. Why remove it? It’s our money. Not the banks’.

Correction, seriously Frisby, just saying it's so, as everyone thinks or believes it, does not make it reality. First of all, the money, all their money (including silver and gold coins), is not yours, mine or the people's that use it. It says right on it what it is and who owns it. It belongs to the banks that issued it and the name of the state on it appears as a fake out to the people who imagine that they and the state are the same; that their governments are “of, by and for the people,” etc. when they clearly are “of, by and for the banks and corporations,” which aren't even real human beings. So one thing we advise all the time is getting your facts and terms straight. Frisby, seriously pal, get an education or maybe they don't let you write for the Guardian or whoever without accepting their line. In that case, it's time to consider pulling out, or at least being part of an alternative solution. What does it do to pull your cash out of their system? Not much. Your money is still inflating because the system is built that way. If you want money that doesn't inflate, you have to design it that way and when you find it you would really want to spread its use.

The telephone teaches us a useful lesson. At its peak in 2008, there were 1.3bn landlines for a global population close to 7 billion. Today more than 6 billion people have a mobile phone – more than have access to a toilet, according to a UN study. Many assume that the mobile succeeded where the landline failed, because the superior technology made widespread coverage more possible. There is something to that.

But the main reason, simply, is that, to get a landline, you need a bank account and credit. About half of the world’s population is “unbanked”, without access to the basic financial services you need. Telecoms companies saw no potential custom, the infrastructure was never built and many were left with fewer possibilities to communicate. But a mobile phone and its airtime you can buy with cash. You don’t need to be banked. Almost anyone can get a mobile – and they have. The financial system was actually a barrier to progress for the world’s poor, while cash was a facilitator for them.

There are several things to notice in this analogy. You see the word “unbanked” which means that most people don't have bank accounts. But they do know what cash is and how to use it. In a Valun system, since it would be designed to operate using minimal technology; laptops and thumb drives, everyone is potentially an account holder and we even give them some of our tokens for free. Our cash takes the form of V-Checks. Now, when V-Checks circulate among people who aren't members? This can happen, why not? As long as the V-Check hasn't expired, it could be circulated as we understand all cash does; you accept it because you know where you can spend it. For Valuns to be accepted, there have to be enough businesses that will accept them in trade for goods and services. We sincerely hope all businesses and farmers out there are paying attention; if you want something else, you have to start something else that runs alongside the present system.

Six billion people around the world will have a smartphone by 2020. They will have pretty much everything they need to participate in e-commerce – internet access, basically – except the financial inclusion. Which is why there will be a huge role to play in the future for new forms of digital cash – from Kenya’s M-Pesa to bitcoin – money you can use even if you are not financially included.

Continuing the discussion from the last comment: digital cash always leaves a trail, so is it really cash? Paper tokens passed around in trade as currency do not. At the end of each business day, any shop keeper regards the records of his sales and counts his cash drawer and that's it. We can offer everyone very minimal financial inclusion; their accounts wont even require deposit insurance since none of their funds will belong to anyone else or be subject to their use. They might choose to come in every month and just cash out their funds into V-Checks. Some people actually live this way anyway; they deal with all their money in cash form and until the convenience of swipe cards, which all leave a trail and so are not cash, most people preferred to deal in cash. In some countries, shop keepers will not take swipe cards; it's cash only. Using an alternative currency is like having a separate cash register or a separate cash drawer for Valuns. All taxes of course should be paid in the “public” de jour money.

Cash has its uses for small transactions – a chocolate bar, a newspaper, a pint of milk – which, in the UK, are still uneconomic to process by other means. It will always be the fastest and most direct form of payment there is. I like to tip waiters, for example, in cash, knowing they will receive that money, without it being siphoned off by some unscrupulous employer. I also like to shop in markets, where I can buy directly from the producer knowing they will receive the money, without middle men shaving off their percentages.

Yes, we want these features preserved. Our solution is the V-Check, an instrument that has an expiration date six months from the date it is “delivered” to a member for his/her Valuns on account. What anyone does when they “cash out” are take money on account and exchange it for paper notes. This is exactly the same procedure any IE would use. We've also thought that all the usual proposed transaction fees for this kind of movement, from an account to a V-Check, and likewise for recapture of the V-Checks when they are retired and the funds transferred to a member's account, should be removed. We want to encourage the use of cash as far as possible.

It also has its uses for private transactions, for which there are many possible reasons, and by no means all of them illegal. Small businesses starting out need the cash economy. Poor people need the cash economy. The war on cash is a war on them.

This is a profound statement and very true. What good is an alternative monetary system that benefits the present rich at the expense of everyone else? They already have their system. We know that they don't want anyone to join them on top of the heap, etc. They're still trying to play “king of the mountain” while most of us are just trying to live productive and interesting lives. Therefore, an alternative cash monetary system was always a goal of our proposal. We think people would take greater pride in themselves and their communities if they were daily confronted by emblems of it in their wallets; genuine pieces of the equity in their own communities that they issued; their own money.

If you listen to the scaremongering, you’d start to think that all cash users are either criminals, tax evaders or terrorists. Sure, some use cash to evade tax, but it’s paltry compared to the tax avoidance schemes Google and Facebook have employed. Google doesn’t use cash to avoid tax. It’s all done via legislative means.

Frisby just called Google a privileged tax cheat and whether we agree or not, so what? He knows and we know, that whatever they want, they'll get, until they don't and in any case, we aren't concerned as we have decided to start doing something else; our own thing. Remember that? Yeah, this proposal is clearly about doing your thing, rather than their thing. Since their legitimacy is being challenged every day and more and more are growing sick (physically, mentally, monetarily, etc. etc.) of the present order and are beginning to suspect that FORCE is the only thing upholding it, more and more will move away from them and their evil fraudulent system and it will crash, burn, fade away. A return to barbarism is not required or even necessary. As we've said, most people are aware of SANITY in others and wish to live under the REASONABLE EXPECTATION of continuing peace. People would interact with one another under these usually well understood rules, whether there is or is not a state. We trust that is well understood too.

Cash means total financial inclusion, a luxury the better-off take for granted. Without financial inclusion – and there will always be some who, for whatever reason, won’t have it – you are trapped in poverty. So beware the war on cash. 

Thank-you, Dominic Frisby. We will be aware of it. We'd like to hear from any familiar with print technology, specifically with using waterproof inks on some rather nice paper or suitable substitute. We'd like our V-Checks to pass the washing machine test that all currency passes. They'd all be printed as designs on paper; their designs and everything would be printed, except for the places for the expiration date and unique identification number, which would be left blank. Each IE would have a program on a computer that would print these identifications on the blank V-Checks in waterproof ink. Of course all activity with V-Checks would be recorded and IVES would have specific responsibilities over much of this.

It might happen that each IE would know ahead of time, every business day, about how much cash in V-Checks would be required, so they could prepare a certain amount of cash to meet the projected needs of its customers. After all, members do not want to wait around for their cash to be prepared, though in some instances they might have to. Remember, as long as any of this cash is not exchanged for Valuns in a member's account, it isn't even money. And in order for it to pass as money, it will have to be accepted by another member and that member must have complete implicit confidence that the V-Check submitted is genuine; that it actually came out of a member's account.

Someone suggested that each IE could take “cash orders” with a day's notice and that part of the IE's job each day would be preparation of V-Checks. It sounds likely this would work better to help resolve this kind of issue.

We should also indicate right here that the original proposal was for the circulation of what we called Exchange Notes; they would be instruments for settlement of pure barter situations using them. Their management would have been about the same as with V-Checks except that we'd let them run until they physically wore out and would replace them in roughly seven year intervals. Exchange Notes would be cheaper than V-Checks and ultimately, when the public laws regarding them can be abolished, we'd like to circulate weights that would be coins, probably made of some virtually eternal metal that would stand up to everyday common wear. The half Valun, quarter Valun and tenth Valun would probably be the best candidates for these. One has to dream before things are made reality. The same was true of virtually all technical innovations to date. A new and better monetary system is really no different.

David Burton

Current Hypothetical Value of a Hypothetical Value Unit

[26 March, 2016: Perhaps you are missing something. Anyone with a lot of money CAN earn income from it through capitalism as you have said. Money IS wealth by your definition as long as there's capitalism. Ben, Iowa

Ben is of course stating the facts. Their money is entirely wrapped up in usury; earning back on loaned money, money that was never created. We want you to hear that giant sucking sound. Well, we are aware of plenty of expenses in this life; people's services that everyone must pay for. We take these things for granted and some may even have the exalted opinion that by paying taxes, etc. they are contributing members of society. I personally felt that paying taxes was and is a measure of one's material success; the more taxes you had to pay the better off you were. That was the understood Democratic perspective I was raised with. I felt strongly that E. C. Riegel observed many things in the same light. Truly, there would be no other reason to offer an alternative solution to this, among the great matters of this world, but to help people everywhere and in so doing, help the whole world.

We cannot be blamed for having been born, raised, educated, found reasonable success, etc. in a society allowing usury and its evil cousin speculation. These activities are by our definition included under capitalism as would be any other form of gaming. Both these activities allow certain people, now in the many tens of thousands at least, to earn an income from that sucking sound, of taking uncreated money out of the system as interest. Interest is their income. It is mother's milk to them. Bank credit is their monopoly. It allows them to play god.

But we don't have to participate, or we might at least cut down on our participation, because fundamentally what these people are doing is parasitically living from the productivity of others; stealing, thieving and much worse. They are in fact “the useless eaters” they complain about, not us. It's an ideological dilemma, let's face it, but this happens to be the correct line to draw. It always was, too.

If a mode of life is wrong from an ethical standpoint (participation in usury), how can anything one gets from it (capitalism) ultimately be any good? It hasn't; we are still at war somewhere in the world and perhaps billions of people are on the edge of starvation, etc. We've tried Communism and we have Capitalism. They are two sides of the same coin; you can't have one without the other; part of the money that's stolen from the system has to be plowed back into society to keep “the masses” (their words, not ours) satisfied enough with their lot in life, etc. I hope more people begin to get it. Thanks, Ben.]

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