This chapter, is fully entitled, Each Issuer's Limit, with this subtitle;
Determination of Each Person's Limit of Money Issue and its Redemption and the Maintenance of Adequate Supply Without Inflation and Deflation.
We began discussing this chapter here.
We commence with Riegel giving examples explaining his two account solution for exchange B member businesses,
An example: An employer has 50 employees and their total pay per month is 5,000 valuns or a total of 15,000 valuns over three months. Besides this debit power on his payroll account, he would have 7,500 valuns debit power on his commercial account or a total of 22,500 valuns. Only his employees could draw against the payroll account. At the end of the three months his payroll debit power would be exhausted; and, to continue the power of his employees to draw against his payroll account he would have to transfer to it from his commercial account enough to provide for the next three months. Employees would have a permanent debit power equal to three months salary.
I've always read this as exactly equivalent to our stated notions of proposed Labour Contracts. It could as easily be implemented using one account per B member business. But our solution looks far more straightforward; Labour Contracts represent an offer by a possible employee to be employed for a term of time by an employer and as it was done in olden times, the employee would provide the money for his eventual pay. The transaction would begin on the first day of work with the issuance by the employee of the entire amount to be paid back to him to the employer. This would go into the employer's payroll balance in his account. As the contract ran, the employee would be paid back his Valuns that he issued and in so doing cancel his issuance with the work he accomplished. Our definition of work holds throughout.
Employers would have a debit power the first three months equivalent to 1 1/2 times the three month's payroll during the first three months, and one third of such sum permanently.
I think he was just trying to sketch it out. The proposal would have the employer getting the float from the Labour Contracts from the start of work and the employer pays all of it back to the end of the term of the employee's contract. It's simple. Schedules can be devised to meet the individual needs of any employment situation. Riegel continues,
As stated, the proposed debit limits are merely an estimate of what would provide sufficient circulation for a start. Demand for additional debit power would not be a matter of individual request, but rather the determination from the industry study of turnover, which industries required more [deeper debit limits] and how much. The determined amount would be allotted to every member within the particular industry in ratio to his sales for the previous year or six months.
This conforms to consuming what you produce and producing what you consume in the previous post. Riegel here uses the word member in an ambiguous way though, as if B members get the right to issue money when as we see it and as Riegel explains elsewhere, they do not. B members derive their Valun float from the A members that are employed by them. They have no other way to issue Valuns, since they are concerns, organizations, operations, corporations of people, but not everyman, which is an ordinary individual.
The industry study of turnover gets at finding ways of self financing businesses throughout cycles of production, etc. that perhaps do not require borrowing money from a VEN financier, who would be another B member business. Notice that our proposal very importantly separates the money lending from the transaction clearing money functions in typical banking operations.
As for employees, the debit limit for each would be automatically adjusted by the wage or salary, with the only question being, whether the three month period is adequate.
This is exactly what our proposal does, but makes a six month contract a standard, at least to start. There may be reasons however where an employer is not sure whether someone will work out. We might make a rule that if the employment arrangement is the first time for either A or B member, that the first contract might run for as short as a month.
Persons who are not on a salary basis, such as the commission salesman, the news dealer on the corner, and others who are neither employer nor employee would come under the minimum debit limit which might be, say, 100 valuns. Professional persons, such as doctors, lawyers, ministers, architects, engineers, etc., like farmers, would be classified under the industry survey with an appropriate debit allotment assigned.
We can see here that he intends for us to figure out how much each of us is to be allowed to issue through our labour commensurate with our position, responsibilities, skills, dangers to be endured, etc. All governments publish salary ranges for their various occupation categories. The comparison in Valuns is real easy to figure out. But the real limiting question remains how much extra taxes will Valun creation subject one to?
Each member, with his debit limit assigned, could then, within such limit, create fountain-pen money by the mere writing of checks. If any currency be required, he would present his check to the nearest Currency Counter dealer and receive bills and coins as desired. If he should exceed his debit or over-draft limit, his check would be returned just as it now is when he exhausts his credit balance in a bank.
Yes, well we may be able to come up with a few more off the shelf, open source ways of making this kind of data available, so you would know how many Valuns were in your 3 balances; your Valun issuance permits, your regular balance and your escrow account balance. These are just three fields on a date stamped record in a computer database. Riegel knew nothing of any of this, but he notably would have understood the importance of printed reports and each exchange will need to produce and keep enough of them to recover quickly from any interruptions.
There would be no payroll problem for either employer or employee. The Exchange would automatically credit the prescribed pay to each employee's account each pay day and the employee would enter his pay in his check book. Of course, any check received by any member would have to be mailed by him to the Exchange for credit to his account and debit to the account of the check writer.
Yes, this would all be handled according to the stipulations on the Labour Contract. We explained a regular work type and an artisan/craftsman work type Labour Contract. Self-financing of labour removes the cost of labour from the back of business and places it directly on the employees themselves. It would create a brand new work ethic, as everyone would have to understand just where the money was coming from to sustain their job. They would literally be working for their own money, and that would include everyone from the top on down.
This however affects accounting on the Valun side, such that the Valuns paid cannot exceed the revenue in Valuns expected by the business. If you do that, you go broke. Since the Labour Contract begins with a credit to a B member's business account (paid without interest – as a loan without interest), that the business must still pay back, all of that still falls under the expenses of the business.
The balance between the cost of Labour and the costs of materials, etc. must still be evaluated to come up with a reliable and acceptable return from revenue from sales. Then this must be reduced by cost of goods sold to obtain the margin of profit. This could be retired into the retained earnings balance on the business account on some regular time basis. Any distributions to members of the business might come from here, but more likely this would serve as a business sinking fund to expand or improve the business.
Under this plan of employee money creating power, employment is given a stimulus; because each employee brings to his employer his own debit power, and the employer has a three months deferment of wage payments. This is a vital contribution toward the sale of labor services because it makes the payroll less forbidding. Each employee becomes a capitalist who brings not only his services but his own financing. Each employee in effect buys his own services. This puts money power at the most vital point. It also cushions unemployment; because an employee laid off need not stop buying unless he has exhausted his debit limit.
Well, of course, everyone was sold on the idea that capitalism, an ism with capital, was a good thing, whereas we have pointed out that all of that was propaganda by the capitalists to allow them to make money on money without work, as the capitalists never had to relinquish very much or any of the time out of the rest of their lives to barter for their existence. Their money places them above all this. Therefore we regard a capitalist as a rich person by definition; no poor person can or would ever be a capitalist. The lie at the heart of the system was selling people on the idea that if they just stuck with “the system” that they too could one day become capitalists. The catch always was that the money was always someone else's not yours.
Stated differently, each employee becomes a source of income (through their innate wealth) who brings not only his services but his own financing. Each employee in effect buys his own employment and the VEN Labour Contract is the vehicle used to accomplish this.
Once we have established the principle of debit power for employees, we have released a power for stability that is not possible when this power is confined to employers or sellers of goods. How far we may go in this direction can not be forecast but it is plain to be seen that debit power at this point can positively prevent depression because sustained purchasing power means sustained employment demand.
We have brought up various parallels to plumbing and electrical flow that illustrate better what money is and where it goes. The money issuance power is the force of the money equivalent to voltage or water pressure. The current or flow is determined by the standard on which the money is based, so that everyone using it knows what it's expected to measure so that a method of stating a value determined by exchange is possible worldwide. The resistance to money occurs when prices for things are too high for them to sell; goods or services.
Now hear what Riegel says about the cost of labour, which was the reason he determined on a complementary or alternative monetary system as a solution,
When goods show a tendency to accumulate in warehouses, it indicates that employees have not been paid wages high enough to buy the goods they have produced. Reduced production then ensues; which means reduced employment, and this in turn implies reduced purchasing - thus accentuating the unbalance between goods supply and money supply. Perfect competition should preclude this unbalance between goods supply and money supply because it would compel adequate wages. But can we hope for perfect competition? While the political money system is the greatest disturber of competition, there are other disturbing influences, also attributable to political intervention.
If there be no recourse other than to introduce a compensatory force to balance the inequities of imperfect competition, the valun system will be found ideally suited therefore by reason of the simple measure of continuing debit power even with a discharged employee. This would prevent the depression spiral from forming, and would nip a threatened depression in the bud.
This is one very good reason why we may insist on the monthly income standard for determining eligibility to issue Valuns. Each member will have V200 they can issue to start. Then if they already have jobs, whether their employer is a member or not, the number of Valuns they may issue is determined largely on their ability to pay taxes on the extra Valuns they earned. Should they fall into unemployment, their debit limit is established, based on where they are living and they may have recourse to that in order to subsist between jobs.
A depression means shortage of employers and surplus of employees; but is it not made less menacing when money creating power resides on the employee side of the employment line? Would it not induce some employees to step across the line and become employers (since employment does not mean an immediate drain upon available funds) thus tending to restore the balance between employers and employees?
The aim of the valun system is to establish a true money system, and to rely on competition to keep the economy on a steady keel. It is not inspired by the aim to establish a compensatory system for inequalities that may exist in exchange; but we point out that, if a compensatory program must be pursued, the valun system supplies the need effectively.
… and our implementation of it will too; we dubbed it “natural socialism” or the community taking care of its own. I'd like each of you to pause and consider for one moment an incontestable fact; the present system places value on stuff, the Valun system places it on everyman. People are more valuable than things and until we get over our brainwashing to the contrary, expect very little to change.
Indeed for the most part, most of people's problems stem from the belief that human life is so abundant that it is almost worthless, or just another resource to be used by the oligarchy as it sees fit; cannon fodder, slave trafficking, drug addiction, etc. Since people do not have the money power, it matters little to nothing whether they can say what they please, write as they please, publish what they please, congregate with whomever they please or believe what they please. Without power over the issuance of money, none of the other freedoms are frankly worth very much at all.
Now Riegel delves into a subject he calls constant demand,
Since constant employment, with resultant constant production and constant consumption, is the ideal of an economy, may we not resolve to make it actually so by regarding the employer-employee relationship as existing between the whole body of employers and the whole body of employees rather than between individual employers and individual employees?
If we take this attitude it is simple to provide - in the Valun Exchange - a central employment bureau where employee-members are registered with full information of their qualifications. Should any be laid off, they could continue to draw on their account to the extent of 1/2 or 3/4 of their recent salary until some other employer or their former employer reengaged them.
This policy can be justified on the ground that there would be no disemployment unless employees had been underpaid - thus making it impossible for them to buy the goods they had produced - and the disemployment compensation is to correct this previous inequality.
We intend this too and have from the beginning. Our independent exchanges or IE's would be far more than what most people assume. They will not be banks in the traditional sense as none of them will ever be in the business of loaning money. Their principle job is to manage the transaction clearing functions which includes making sure that all labour and credit contracts are satisfied on schedule.
BUT we intend to be a center for local awareness of each other's innate wealth. Each member will probably fill out a brief questionnaire that describes what their capabilities are. The businesses would list what they are too. Employers would post positions when available with acceptable bids for labour expressed in Valuns right on each ad. Members could walk into any IE and search these ads that would not be available to the general non member public. You cannot have your own money without work although we will offer less of it for those who are still poor or disabled among us, but we fully intend to make our money worth working for and saving, etc. Now then, Riegel said this at the end of the second paragraph above,
Should any be laid off, they could continue to draw on their account to the extent of 1/2 or 3/4 of their recent salary until some other employer or their former employer reengaged them.
The default is there; the unemployed member can fall back into subsistence. But that's not why people work and what they do with what they work for is usually to build up something that is theirs above and beyond their current monthly expenses. There are other forms of savings, usually involving purchases of larger ticket items. We therefore might issue a rider on all labour contracts allowing a kind of limited issuance from one's innate wealth, but these allowances would not be allowed but for a few months. After that one drops back into issuance for subsistence. See, we really do want to encourage people to work, though at this point we cannot do anything about income taxes, which must still be paid in their money, not ours. So, even payment for employment by contract in Valuns, needs supplementation in whatever the local currency is that will cover the income taxes on the whole, both dollars and Valuns. I see no way around this under the present regime. You simply must or they will FORCE you to pay your taxes to them in their money.
During the disemployment period consumption would be continued while production would be retarded, thus tending to restore the balance between production and consumption. The employee in effect would buy himself back into employment; because his consumption would induce demand for production, just as his previously stinted consumption had brought about his disemployment.
Serious update on Riegel here: the balance between consumption and production has been purposely perverted by special interests down through time. Until most things people want and need are once again produced relatively locally, these imbalances will occur and recur and those with more money than they need to live on will stay with the globalist scheme to render each country a specialty producer at the lowest possible labour price so that “the problem of production is solved,” and since no one but a special few ever have jobs, everyone else gets everything by someone else deciding the terms of barter for everyone's very existence; yes, we're talking about government determining that those who have already shall get more since it is theirs, beginning with the money they used to buy it all, and what's left will be doled out to the rest of us under their terms of equality, liberty and fraternity. Understood? You will need your own money, not theirs.
Would this issuance of new money during non-employment be inflation? No, it would not. Inflation is the issuance of money against a non-value. Here we have the issuance of money against values previously produced and priced abnormally high, so high in fact, that there was not sufficient money supply in the hands of employees to purchase them. In other words, the condition of unemployment was produced by an inflation of goods supply - causing prices to decline - and the action proposed is a deflationary influence upon goods, causing prices to return to their norm.
Update here as well: Riegel's economic reasoning is perfectly logical. But we live in a financial world that runs in defiance of any of this. There are two phrases to get to know well; one is “mark to market” - denoting or relating to a system of valuing assets by the most recent market price - means that the prices of anything are determined by the market for them, whether that market be an “open” one or a closed one open only to members, such as the one we propose. The alternative is “mark to model” - “the practice of pricing a position or portfolio [or anything else] at prices determined by financial models, in contrast to allowing the market to determine the price. Often the use of models is necessary where a market for the financial product is not available, such as with complex financial instruments.”
We say this: if you will not sell for the prices determined by the market (mark to market), whatever or however imperfect that market might be, if your prices are too high (mark to model), then as we say of all things, “the seller isn't really interested in selling.” Such practices indicate precisely the nature of the scheming and scamming that has replaced honest finance. They also of course represent a resistance in the monetary system; we called this resistance to money; the seller is asking too much for whatever is “said” to be for sale. These practices are frank admissions that what they want to sell dear is not worth the money they say it is.
If, however, we must choose between a higher price level, with continuing employment, and a lowered price level with unemployment, the choice would be unanimously for the former.
Riegel would rather that more people were employed and prices remain high than fewer employed with prices low, and no one has enough money to sustain even those prices. Recall folks, money itself, contrary to all the kooks, weirdos and other predators that people the halls of economic power, has now value in itself. What did Riegel say it was used for? He said that money was a method of stating a value determined by exchange. The problem has been that in the present system the distribution of money has never been fair, not even in their economic terms; certain people have always managed to get their hands on more, or force their subject populations to rely on money that was based on a scarcity. Once this is done, those who have the scarcity rule those without it and there are some assholes out there that intend on FORCING society back into this slavery! They dare call it liberty and freedom too, the LIARS!
We can resolve the membership of the valun system into a community within the general community - an inner community where the evils of the political money system are barred; and where other evils, that may be inescapable, are compensated for, and the economy thus kept on an even keel.
Right. And before continuing, look what Riegel has explicitly stated as a pencil sketch model; an inner community, a private membership, which nevertheless might be quite large and whose spread is designed to be universal.
It is not the purpose of this study to outline arbitrarily a debit policy. Debit policy is the vitals of the whole system and if the principle of the democracy of the money power is respected, all else is a matter of judgment and preference as willed by the members through their elected servants.
We remind some of our friends that what Riegel meant by “democracy” had everything to do with the promotion of the importance of everyman when it comes to the issuance of money, not the agendas the word has since received which are all corruptions of this essential democracy.
It is possible not only to assure continuity of prosperity of all employed members of the Exchange, but also to even absorb gradually the unemployed from among the non-members. The cycle of production and consumption need not begin with production; it can begin with consumption. An unemployed person may actually buy himself into a job by consuming existing goods, thus inducing demand for labor. Since a person having valun debit power can spend his valuns only with suppliers who are members of the Valun Exchange, his demand can be directed only within the system; and thus all reaction remains within the valun community.
This will gradually happen as what Riegel is describing here is in the same category as the force of gravity when it comes to natural law. The more who join and tend to buy within the community the more stable prices become.
We shall not have fully comprehended human rights until we recognize the right of every man to proffer his services to society by the practical means of requisitioning the services of others through his power to issue money. In an exchange society man's only means of employing himself is to employ others and thus induce the reaction of demand for his own services. In sheer justice, therefore, we cannot deny to any man the right to issue a draft upon his own energy, even though, at the time of such issue, he is unemployed.
Indeed! And this too is in accordance with natural law and what we have dubbed “natural socialism” which arises among ourselves and is certainly not subject to the dictats of states or the schemes of capitalists whether they be bankers or other speculators. Notice we didn't really make much of a distinction based on policies of recent times.
The fear of moral delinquency, as a hazard to debit power exerted by individuals without discrimination, can be dismissed because of the unity of the accounting system. A Valun Exchange would be a St. Peter's ledger on earth which could condemn a faithless man to economic perdition.
Again, this is a “fair” system. It offers a practical end to poverty, but it will also show the differences between those who work and those that don't with the latter remaining poor. Our intention is to solve the inflation issue so that prices remain stable over very long periods of time so if you are poor at least you can survive.
Under the political money system, every bank is an individual issuer of credit and there is no central ledger; and one may default repeatedly and still remain in the economic community.
Let's stop here and consider just what Riegel has said. In the present system, lending is leveraged (risked) against reserves in deliberate violation of natural law for the sole purpose of enriching the lenders. At present this arrangement makes it impossible for anyone to get anything done without going into debt. Money is always kept artificially scarce and no matter how much of it is ever created by the present methods there can never be enough of it. This perpetuates debt. We know all this, but Riegel is pointing out is that
1) Each lending institution is operating under its own ledger, and
2) This practice allows repeat defaulters of credit contracts to continue in the economy.
It's a strongly moral statement he's making here. I'm mindful of a discourse by Stefan Molyneux on just how effective private organizations can be in enforcing contracts.
We wonder openly that if most social matters can best be handled by private organizations, just who's interests does the current regime of governments as fronts for banks and the public corporations that have sprung up to absorb more wealth than they can possibly represent, etc. benefit? What are the characteristics of these people? We're taking about people with criminal intent, to steal under various covers from others, to have without paying for it in kind. We know all that. But it used to be possible for one person to work and the rest would be provided for. That too is a cultural thing that the present commercial order has pulverized with its purposely inflationary money and criminal corruption of governments.
Our mission is to build an honest monetary system that would run in parallel with theirs with the full intention of renouncing theirs when it fails, and not accepting any more of their illegitimate money when it does fail!
We reassert that money is fundamentally the token representation of an accounting machine. The central ledger is the book where all transactions are recorded in that machine. The machine consisted purely of pen/pencil and paper until electronic media came about. Now we have electronic media. We will still require printed reports. We can have a system using open source, “off the shelf” electronic media for very minimal cost.
We mentioned yearly dues in the “public” currency of the countries where we set up equal to V1 (1 Valun) per year. Right now that's $2.65. Most people spend more then that for a meal these days.
Since membership makes a market, we need lots of members before we can bring about anything. A drive to sign up 100,000 A members (We'd need at least 400 B members and hopefully as many more as possible) would give the organization that conducts the drive the ability to raise $250,000 very easily. It's important where this money goes and how it's accounted for because every one of those contributing dues paying members is an OWNER of the organization that sponsors this drive. It is also very important to understand what Riegel took for granted in his day; that every A membership in this organization is PRIVATE and nobody's business. This is a PRIVATE solution not a public one. Anyone signing up with us understands that all personal identification will be respected and protected. We even kicked around the idea of making even personal checks basically demands to move Valuns from one account to another and the numbers for the accounts are the only identifications on these checks.
Not so in the valun system. There is only one ledger of debits and credits. Nothing is expected of any one who issues valuns through his debit power other than that he will accept valuns when tendered for goods or services at the current market price. If he fails in this, it will soon show up on his account. If he has been willing to deliver his wares or work at competitive prices and has found no takers, the fault is not moral. If he willfully refuses to accept employment or patronage, he automatically brings upon himself ostracism from the entire valun community.
He's basically talking about a member who spends his Valuns but has no interest in earning them or taking them in trade for goods or services.
This self-imposed injury is much greater than any harm to the remaining reputable membership - which will go on functioning without noticing his departure.
He's right, there really is only one ledger, but it will be held and administered locally not centrally – although the proposed organization that will serve all the independent exchanges throughout the proposed Valun exchange network, not a directorate but a servant, will probably also be the repository for what Riegel would regard as the one ledger. It will greatly matter that each A member can only be an A member of one exchange, though they can change exchanges and their A membership moves with them. Under the proposal, only A members have the right to issue money. B members do not, but they can establish as many accounts in many exchanges. Again, businesses that lend money will lie outside the exchanges as B members and they will operate through credit contracts.
Each A or B member will get a rating within the entire VEN and will be affected by it within the VEN. It is not only worthwhile to have your own money, but also to maintain and improve one's reputation in one's local community. If you get into trouble in one community, merely moving somewhere else and taking your A membership with you may not help you as your reputation follows you. You want an honest and fair system? That's what it takes.
We can promise you this though: the existing system claims it has ways of getting you out of debt and keeping you out of debt yet it is based on usury the taking back of that which was never created and compound interest which is usury on steroids. They never even compute their interest rates in a fair, CONSISTENT, open or honest manner. They have so concocted things that it is getting harder all the time to be able to go into any business without assuming a lot of debt in their money. Debt is a form of slavery. Want your own money yet?
There will be honest failures - since men will continue to be fallible - and the system should provide some way of reestablishing the debit power of such persons; but this is one of the matters that may be left to the common sense of the members to decide.
It will be. Among members, when it comes to money, people will deal fairly and honestly or others will soon find out. It IS about money, but it is also about eliminating the things that make the present order “unfair” and crooked.
The question as to what becomes of unsatisfied debits that result from failures, is not one that is peculiar to the valun system. Losses in business are absorbed in the price of goods and this is one of the influences that tend to raise prices. There are, however, other influences that tend to reduce prices - notably the loss of currency, which in turn is countered by the presence of counterfeits. These factors are not serious and may for the purposes of this study be ignored.
Business losses are sometimes written down against taxes. The risk to money lenders must be their own and the only basis they will have is completed labour and credit contracts. Per usual,
We may assume that every issuer of valuns will redeem with goods or services all the valuns he issues; and the failure, for whatever reason, to do so can not be as harmful to the economy as is a pessimistic policy which would hamper exchange. It is far better that money be issued beyond its actual redemption than that it be issued below its possible redemption - since the latter course hampers exchange, and this in turn retards the production of wealth. Idle man hours are a more serious loss than unredeemed money and the former must never be hazarded by pinching the latter. Interrupted production is the only loss that is a net loss.
We want to state here what is certainly NOT obvious to most people who really fail to grasp a monetary system as a whole, a totality; those who fear inflation from money that circulates around that is not redeemed – money was paid by someone who didn't accept any back because maybe they were poor and couldn't – don't understand that under present circumstances most money that governments or central banks issue is spent by states in ways in which that money DIES AND NEVER RETURNS. They never think about that. It's called depreciation and it is the result of governments spending HUGE SUMS OF ILLEGITIMATE MONEY on things which none of us would even want. Why did Riegel's prediction of inflation take 70 years? Depreciation, simple as that. Money has a source and it dies. Therefore it must be replenished from a source. It should be well understood by now that any ideas that honest real legitimate money can ever be considered a fixed quantity of anything are doo doo!
Deprogramming takes a long time.