Sunday, April 3, 2016

#75 Durability Issues

The dullest pencil is better than the sharpest memory.” Mark Twain

This morning we had an arctic clipper come through with a lot of wind and even some snow and for a time the power was out and the internet too. It got me to thinking about all the things we take for granted that are based on these technologies ... while in the 19th century people used banknotes, coins and tallied transactions in big books. Everything had physical properties, including money. There was nothing virtual about any of it except the trust people assumed while using it (that is, THEIR system).  Somehow when it comes to an alternative currency/money, I'd prefer one that was less virtual than actual; give me that piece of paper. 

In any case, where there is a will to make, harvest and trade things, money will be made of anything commonly available. Across farthest distances, it was not precious metals themselves, but promises to pay precious metals upon delivery of a receipt that was still a piece of paper, that was used as money. That piece of paper had some identifying information on it and the ink used was likely of a type not to run or fade under exposure to moisture, light, heat, etc. People with common knowledge of the printing arts knew how best to employ them for the times they were used.

Now we live in a time where many human activities literally stop until the machinery can be fixed or some temporary technological problem solved. We have in the process outsourced a lot of our common rudimentary thinking to machines, be they hardware or software. While even digital backup to a thumb drive is possible, what happens when there's no power anymore and your battery is almost dead? You see what I mean?

So maybe the idea of having physical tokens representing money isn't such a worn out idea after all and perhaps keeping paper records that preserve transaction activity without divulging personal identity of the account holder is a good idea just in case electricity goes out for a while. There's a few simple ways this can be done; usually there's some unique index code associated with the account holder and all the records pertaining to that account. It doesn't make sense to include and repeat all personal information of the account holder on every record of transaction details. Then at the end of some convenient reporting period, perhaps chosen by the account holder, all the transaction records are collected and tallied into statements of account. These printed transaction reports could be generated at the close of every business day or week or month. There would be a hard copy backup as well as thumb drive backups, etc. Under all the principles of honest business management, fiduciary responsibility ranks among the highest. Keeping hard copy records of all the money one's customers have entrusted with your accounting activity is central to that responsibility.

Eventually there will be transactions that involve transfers of Valuns from one IE to another. How is that to be done in the most expeditions manner? Well, we have electricity and the internet, but what if those would fail? We'd always need a hard copy paper trail of everything, so that in case of a crash or a catastrophe, we would have the means of recovery.

I also discovered once again today, after sharing the article that preceded this one, that most people really don't read or maybe they don't understand what they read. When I make statements about wealth to the effect that nothing incapable of producing an income is wealth, I mean that acquiring this perception is a key component to understanding money. If you don't get this one, right out of the shoot, you've missed it. Wealth is not just stuff or property, it is not just cash money. Wealth by the definition we are imposing on the term in this blog and for which we believe our narrower definition is the more correct one, is not wealth unless it produces an income. When anyone advises you to “invest” in something deemed an acquisition of wealth, ask them the income it is capable of producing in dollar terms by the month. If they have no answer for you, turn away. There is no deeper understanding there.

I likewise received this from a man we'll call Bill: The ONLY useful function of MONEY is as a legal representation of WEALTH in order to facilitate TRADE on a wide enough scale to give us access to everything we need in order to meet our own needs and facilitate our own CREATION. Any other use of it completely negates it's ability to perform it's ONLY USEFUL FUNCTION. 

This seems reasonable, doesn't it? You should immediately see that Bill has not grasped this blog's narrower and more useful definition of wealth. We could as well reiterate here the usefulness of a third party in a split barter trade as the legal witness that the trade took place and of course dealing in money that is “cash” makes deals anonymous, which is another human right afforded cash, the right to engage in truly private trade. But in any case, the third party to any trade involves the money used. That's what the use of ANY money implies, including as we have stated, pieces of gold or silver.

IF we issue and manage it as a PUBLIC BENEFIT / UTILITY to ourselves and back the money with EXACTLY the USEFUL WEALTH it is needed to trade for so we can maintain a 1:1 ratio in circulation, ON PURPOSE and ALL THE TIME, in order to facilitate TRADE for the full volume of our own creation, then we have things WORKING. 

But Bill and everyone else, we do not know what that ratio of “useful wealth” to money would ever be and only market speculators would really care to know this. This kind of talk (about ratios to try and achieve by ARTIFICIAL MEANS an end to price inflation) is of the same idiots advocating deliberate scarcity of money to solve the inflation problem, the “commodity as money” crowd of speculators. Really people! Stop listening to this dearly treasured LIE of the money lenders. We don't care about anything regarding how much money may be generated or circulating or any of that. Since our money will NOT be rewarded for remaining idle, since that is stealing from the rest of the community, anyone keeping it on account or in physical tokens is assumed to be saving their money for some future use, knowing that cash gets the best price. We in fact get money to circulate as it must, by NOT rewarding its idleness. 

This also involves giving ourselves the ability to FREELY INJECT NEW PURCHASING POWER into the system, as a PUBLIC BENEFIT in order to facilitate TRADE for the EXPONENTIAL ECONOMIC GROWTH and TECHNOLOGICAL DEVELOPMENT which will be freely and naturally generated as a simple result of giving ourselves the ability to TRADE the FULL VOLUME of what we can actually DO, hence we've established a 100% tax free economy and eliminated poverty across the board in the process.

Well, we still live with a government and it uses THEIR money not ours, so we do not advocate a tax free or tax dodge approach to our current social and economic problems. (That's what THEY do. THEY set up “not for profit” companies and foundations to push their favourite causes, instead of paying their taxes!) No, we do not advocate dodging taxes fairly delivered. We agree to pay our taxes in THEIR money for the amount of extra trade our money creates ... until changes in the public law no longer require it; until the laws are repealed. You want tax reform? Repeal the laws. This proposal is about the exercise of our natural rights, not about provoking any tax dispute with a government concerning the use of THEIR money vs. ours, certainly not.

Yes, our money proposal really does inject new purchasing power into the general economy, but it specifically eliminates usury (the demand back of what was never created) and eliminates from consideration as members any business structures that allow outsiders to own what is not outright sold to them; “Hey, you want a piece of my business? I'll sell it to you and YOU run it” rather than “Sell me shares in your business that I can in turn sell to millions of other guys out there who will demand that you grow your business, take on lots of OUR debt, etc. I hope you understand the difference.

We are opposed to corporatism, another social ism, in its many forms as the current “public” corporations allow those who did not start and grow a business to become its owners, to literally buy it out from under the people who started it. A business raising money by selling shares of itself to outsiders, is a feature sited as a positive attribute of capitalism by the typical academic economist. We regard such species of business as sharks among prey and suggest that their predations combined with usury poison economies, destroy wealth (because they destroy jobs and income streams), concentrate power (flouting the diminishing returns to scale law), leading ultimately to failure, which is kept alive with continual colossal injections of fictitious money, until inevitably the whole damn thing explodes and everyone but the money issuers lose, humanity becoming their slaves; “they own you” as George Carlin said.

All that being said however, we certainly know that these days, in order to reap acceptable tax write-offs, most businesses, even sole proprietors are registered state corporations. Doing this does imply that the corporate owner has the right to sell or even give away shares in his business to others and these matters have legal and tax implications. But these businesses would be acceptable B members of any independent exchange (IE) because they are either wholly owned or tightly owned. We'd like that all owners of such businesses be A members of our IEs as well.

Also allows technology to develop to take the place of human drudgery while simply GIVING people the purchasing power to obtain it's benefits as opposed to it making itself useless by putting people out of work. 

Well, there are market makers, market dominators, etc. We have seen all sorts of new household products the result of associating various new technologies, but we do also hope that the added purchasing power in the right places, down near the bottom of society, would tend to help spur some really strong healthy regional and even national (USA wide) businesses. 

Either WE own the money and make it serve us, or the money will own US and we will serve it as we always have. 

That's about the size of it and we're in the latter category right now; THEIR money clearly owns us. That's why most of us have had a distinctly negative perception of money, because most of us do recognize that there's something about money that isn't ours and that if it really were ours things might be quite different.

Again and as always we live in a very SIMPLE world which is COMPLICATED by IDIOTS. 

Well Bill, we'd like to uncomplicate it as much as we can. The first things to throw away are any concern for how much money is issued vs. circulation and inflation. I know it's hard, but you have to do it. The fact is that not all money in circulation participates in every sale. The reason for inflation is not quantity of money per se, it relates to how many money circles have been left open because money that was used to buy something was not cancelled by the same person accepting back money for something else. Too much money in circulation either goes in two directions; back to the government or into the trash can.

Then the next is getting rid of the worthless concept of wealth as just things, stuff, property, cash, etc. None of that is wealth unless it produces a monthly income. Of course we've ruled out making money on money, which is capitalism.

Under our proposal, one can get into finance and lend one's money (or other member's money per arrangement) as long as one abides by certain rules. After that, it's pretty much whatever the Valun market will bear. Rates for borrowed money would all be based on common debt contracts for a year (a bill), out to seven years (a note) or out to forty nine years (a bond / mortgage). No compounding is allowed and all money paid must have been created elsewhere. There's no lending what one does not have. The total amount of money actually loaned as well as all schedules required to meet payments are included on what should normally be a one page document, a credit contract, a copy filed at your local IE.

Those engaging in Valun finance would do so at their own risk and all credit contracts would have to be approved by a committee of the local IE and each successful completed credit contract would raise one's credit score, same as in THEIR system, with some important considerations. Those who pay their bills regularly will be rewarded as is the case in THEIR system except that everyone will be able to get their score absolutely free and scores would be available freely to other members. Should you go into Valun finance and fail, your demise as a business does not bring down the entire transaction clearing function of the local IE or the money, because we aren't allowing anything but 100% reserve finance. Understood?

Yes, some would like to know how I came to use the world “understood” in the way I do. I got it from a very good friend of mine, a well known (now deceased) Soviet era Ukrainian dissident who spent years in a gulag where things were either understood or perhaps you'd not survive. Understood?

So, don't worry about the quantity of money having anything whatsoever to do with its value. We have already said that all Valuns regardless of how many there are out there are understood, there's that word again folks, to represent a piece of purchasing power at the money's inception back on 11/2/11. That transaction involved an ounce of gold and $2,160. Now take a thousandth of that and that's what the Valun would have been worth on 11/3/11; $2.16. But because they have manipulated the prices of both dollars and gold since 11/2/11, right now you'd need $2.78 (4/2/16) to trade for that Valun. That's all you ever need to know. Whether there are 6, 60,000 or 600 million Valuns out there doesn't matter, they all trade for $2.78 apiece, or whatever it is. No one gets any volume discounts either, because like it or not, this money isn't a commodity that anyone but a speculator cares to know the quantity of.

So lets get back down to durability issues. We're going to need to print some things; not just V-Checks and check books, but also pamphlets and advertising. We'll need to decide what the designs are after our first IVES meeting. Yes, it will take some of THEIR money to get up and running OUR money, probably some sort of nominal dues for A members, like maybe $5 a year. We expect that most of the cost to start up would come from businesses (B members) as a legitimate write off to advertising, since their businesses would be featured on the backs of all circulating V-Checks.

V-Checks should be designed to last longer than six months (on paper that is similar to parchment or banknote paper), although that's as long as they'd run in common circulation before either 1) depositing them into an account or 2) acquiring a replacement.

Yes, you take in a V-Check and ask that it be deposited although it has expired. The IE clerk runs the numbers on the check to determine if it's still good, usually a formality, but necessary nonetheless and deposits the check into your account. Or, you have some expired V-Checks you want to spend, but they're expired; your IE clerk gives you new ones with expiration dates six months further out in time.

We eventually intend that IEs should issue check books too and those would probably be slightly unlike THEIRS. Of course we could be aided by as many open source technologies as we could use, which would speed up and automate any processes dealing with lots of this paper. As always, printed reports kept in the usual filing cabinet ways are absolutely necessary and these cost money too.

Is it reasonable to expect a 1/10th of 1% transaction fee as sufficient to support a local IE serving a community of perhaps as few as 40,000 people? E. C. Riegel didn't know. He suggested this as a starting point. We'll see. But in the meantime, we'd need to draw up a reasonable idea of what it would take in equipment and supplies to operate an IE denominated in a local currency. Whatever it takes, recall that every member of an independent exchange is an automatic part owner of that business! You want your own money? You'll need your friends and neighbours to want theirs too and then to organize and make it so. The best way to do it is to form a business entity where everyone with an A membership has a vote. The usual officers are chosen and elected probably to serve terms of no longer than one year.

Now then, we've already begun talking about computer record files. We're talking here about both digital and printed representations of these files. So each IE would have a Members file and a copy of that would also be located somewhere within IVES as a backup. Then each IE would have an Accounts file identifying the accounts, since it is possible for an A member to also own a business which is a B member and thus hold two accounts.

Then each IE has any number of dated Transaction files. These are snapshots of the account before and after a transaction. From these at any point in time or over a period of time, it is possible to determine the account's balances, etc. There would be provisions for editing or deleting transactions and restoring prior balances, etc.

If it is possible to effectively isolate through encryption or other methods data from internet hackers, perhaps some on line account balance and transaction history portal can be set up and we even suspect that phone apps for doing business in Valuns directly would be easy enough to set up, but one has to crawl before one gets to walk and walk before one gets to run.

We'll have more to say concerning how to properly cost account for a job or product in Valuns in a forthcoming paper.

David Burton

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