Tom
is an A member of his local exchange. He runs a lawn mowing and leaf
removal service for customers in his neighborhood. He usually
charges $15 an hour for his services. There are many A members in
his neighborhood and Tom has made a long term commitment to engage
more business in the local network of Valun exchange, so he decides
he can offer his service for fewer dollars and some Valuns for these
customers. He decides he can go $3 instead of $15 if he is also paid
V6. How did he arrive at this valuation for his time in Valuns?
What is his upward limit? Remember, we have the notion of
self financing under our labor contracts, so the money arises from
each laborer rather than each employer, but there is a natural upward
limit. We'll describe how that is usually arrived at throughout this
paper.
We'll
get to those questions, but first some diagrams to show Tom's account
information. When his account opens, it has three balance fields
and looks like this:
V
200.00
|
V
0.00
|
V
0.00
|
First notice three balances in every A member account. From left to right, Tom has a positive balance of V200 (two hundred Valuns) in his Issuance balance. These are where the Valuns Tom gets to issue by his own will (fiat) under the rules of the exchange, are accounted for.
The
middle balance is Tom's Incoming Balance. This accounts for
all the Valuns Tom receives from his activities, from Labor Contracts
and sales. Most of Tom's buying and selling and any savings are
tabulated in this balance. References to an accounts' balance are to
this column.
The
third balance is Tom's Escrow balance and covers any repeating
payments that are part of any Credit Contract Tom is party to. This
feature allows Tom a measure of budgeting that is a technical feature
of our proposal. We build this feature in from the beginning so we
can determine all kinds of credit worthiness conditions among our
members as our economy (co-money) gets underway.
Issuance
Balance
|
Incoming
Balance
|
Escrow
Balance
|
Now Tom does some advertising by posting ads at the exchange and elsewhere around his service area – sometimes small door to door leaflets work amazingly well. If the exchange has an internet presence, ads would be the most likely data to be displayed on its website. He arranges through the identification of his ad with the exchange to get some Labor Contracts to do work. These are by the hour and the number of hours is not always known so each pay period is going to have different hours. Tom's service runs May through October, so all his contracts will be six months long. So that tells us when Tom begins his ad campaign, usually within the first months of the year, ahead of the beginning of his service period.
Payment is expected to be billed to each customer by
specified due dates. There are going to be six due days on each
contract and they are likely to be the last Friday in each month
plus 30 business days (excluding Saturdays and Sundays unless
otherwise specified). After that, a late payment on the contract
affects the customer's credit rating within the Valun exchange
network (VEN). It becomes a matter of trust that people / members /
OWNERS of our own monetary system pay our bills on time and build
credit for doing it. Because the billable hours will differ per
recording period, they will be delivered to the exchange for
processing possibly by each prior Tuesday to the following Friday due
date.
Let's revisit Tom's per hour price point. He wants to earn $15 an hour but the members of his Valun exchange can certainly afford $3 per hour easier than $15. Tom intends to more than make up the difference in Valuns. But why did he limit it to V6 per hour? Why not V10 or even V100? After all aren't Labor Contracts self financing? Why yes they are, but there are facts of life which limit such excesses, chief among them being income taxes.
Let's revisit Tom's per hour price point. He wants to earn $15 an hour but the members of his Valun exchange can certainly afford $3 per hour easier than $15. Tom intends to more than make up the difference in Valuns. But why did he limit it to V6 per hour? Why not V10 or even V100? After all aren't Labor Contracts self financing? Why yes they are, but there are facts of life which limit such excesses, chief among them being income taxes.
Remember
folks, at no time has anything in this proposal ever been intended as
an excuse to evade taxes. The “public” money Tom collects from
his Valun subscribers is purposely stashed somewhere to pay those
taxes. Tom will get a 1099 at the end of the year informing him of
his taxable income. That has to be paid in THEIR money, not Valuns,
which are our PRIVATE enterprise money. V5 per hour is usually above
$13 and sometimes $14 and V6 per hour is a further $2.81 or nearly
$16 per hour. Tom decides V5 an hour is more attractive to more
customers so now each of Tom's billable hours will be $3 + V5 for all
his fellow OWNERS of their local exchange. Here's how well Tom
does:
May: 80 hours x V 5 = V 400
V
200.00
|
|
June: 160 hours x V 5 = V 800
V
200.00
|
V
400.00
|
|
July: 120 hours x V 5 = V 600
V
200.00
|
V
1,200.00
|
|
August: 160 hours x V 5 = V 800
V
200.00
|
V
1,800.00
|
|
September: 120 hours x V 5 = V 600
V
200.00
|
V
2,600.00
|
|
October: 120 hours x V 5 = V 600
V
200.00
|
V
3,200.00
|
|
November: 0 hours
V
200.00
|
V
3,800.00
|
|
The Valuns Tom receives show up in his Incoming Balance. Tom decides at this time not to touch the money in his Issuance Balance.
Notice please that whereas in most literature addressing Riegel's proposal, the amount of money one gets to issue is described as an overdraft or a negative balance. We decided it would look and work better doing it this way; issuance is always represented as a positive balance.
Now each time a transaction changes the balances, attach a time stamp and some id and you have an Account Balance record. Any adjustments to this record are in records that record the transactions and identify some other account; journals against the ledger of Account Balance records. Each transaction is possibly identified by a concatenation of account ids and a time stamp.
Printed reports are produced every day as part of exchange procedures to ensure backup. Journal records that pertain to some other exchange are gathered together and sent to (or taken directly to) the identified exchange for processing there. Then these distant exchanges apply the journal entries to their piece of the same ledger of Account Balance records. When a transaction is successfully completed a response journal record is returned back to the initiator of the transaction.
We understand that electronic means are the present, but much of the world is not yet on wi fi and the internet may not be forever. In fact we probably need to build everything on a series of laptops and thumb drives using open source operating system and other software that NEVER see access directly to the internet.
How does Tom's offer to his customers look to them? Let's say Tom has two customers, one Susan pays him $3 + V5 Valuns per hour and signs up for six months' yard care, cleanup, etc. and another Ron, pays him $15 for each first hour and V5 for each additional hour. Let's say they are both large properties, each taking half a day's work. Tom can service these each month and have plenty of time to serve smaller customers, one or two hours each month. Let's examine Tom's income stream further:
May: 80 hours x V 5 = V 400 : @ 40 hr/wk = 2 work weeks (ww)
June: 160 hours x V 5 = V 800 : @ 40 hr/wk = 4 ww
July: 120 hours x V 5 = V 600 : @ 40 hr/wk = 3 ww
August: 160 hours x V 5 = V 800 : @ 40 hr/wk = 4 ww
September: 120 hours x V 5 = V 600 : @ 40 hr/wk = 3 ww
October: 120 hours x V 5 = V 600 : @ 40 hr/wk = 3 ww
This all represents Tom working all by himself either with his own tools or with theirs, he decides to charge everyone the same hourly rate. Here's how Susan's account looked:
May: 5 hours x V 5 = V 25
V
200.00
|
V
630.50
|
V
25.00
|
June: 6 hours x V 5 = V 30
V
200.00
|
V
660.00
|
V
30.00
|
July: 6 hours x V 5 = V 30
V
200.00
|
V
628.50
|
V
30.00
|
August:
6 hours x V 5 = V 30
V
200.00
|
V
605.50
|
V
30.00
|
September:
5 hours x V 5 = V 25
V
200.00
|
V
635.50
|
V
25.00
|
October:
6 hours x V 5 = V 30
V
200.00
|
V
650.50
|
V
30.00
|
November:
0 hours
V
200.00
|
V
665.50
|
|
Tom has a contract with Susan to provide a service at a particular price determined in Valuns. What does it mean for Susan financially? We just showed you Susan's account for the same period. Her contract with Tom began in May and concluded in October, but she has through November to make her payment back to Tom. Since she literally didn't pay Tom, all Tom's payments show up in Susan's Escrow balance and are paid out a month later according to the contract. How was that done? It's involved with the self financing of all labor in this system as THE principal means of generating / issuing money. Tom loans Susan the money to pay him at 0% interest. Those payments show up in Susan's Escrow balance which may include other payments. Susan CAN use that money before it needs to be paid out, but she probably wont.
But what was the limiting factor? Why couldn't Tom under these circumstances charge Susuan far more? We already mentioned income taxes, but here's the other shoe that drops: Perhaps Susan has some other contracts. Assuredly she does. You see the running balances in her Incoming balance. They are V 630.50; V 660.00; V 628.50; V 605.50; V 635.50; and V 650.50 respectively. The average over the exact term of the contract is V 635.08 and we throw away the fen making it V 635.
Now at no time is Tom's payment + any other payments Susan has going out on contract equal to 80% of her average Incoming balance. Whenever this happens, there's a red flag issued – in this case to Susan, suggesting that she either pay as she goes in loose Valuns or figure out something else she could contract with her other member / OWNERS of her local exchange.
This will be known as the 80% rule: we will not allow someone to take on more debt than they can afford and THIS all by itself will take care of any possibility of outlandish prices being paid for everything, including labor. Now, does this mean that the person earning more Valuns can and will have more people working for them probably at more Valuns per hour? Up to a point, yes. What is that point? It's the natural law defined as the Diminishing Returns to Scale rule. Most businesses fail because they grow too big and try to serve far too many people. Economic redundancy and much smaller scales are far more optimum and these days are far more likely to provide better products for more people.
So at any time, a person acquiring contracts may have up to 80% of their monthly average income, usually in the form of labor but perhaps also for goods produced or made, in exchange and not have to pay for any of it themselves. This produces an entirely different social fabric based on the willingness to serve, as well as the willingness to be served. If one would issue one's own money and be paid in one's own money, one must be willing to provide services, work, time out of the rest of one's life, in barter for goods and services provided by others. It will be whether Susan is a nice person to be doing the service for and Susan will be concerned whether the service is real or a bother and that too will be noted because satisfaction or goodwill is also something that counts and needs to be recognized.
Now, I've started with this simple example, because it is on exactly such simple principles that whole understandings are built between people: the servant self finances, but only up to the capacities of his clients. If at any time the Escrow balance is above the Incoming balance, the member is clearly bankrupt. It doesn't matter that the money is on account from someone else. As it stands in any member's account, an upward limit of 80% of monthly income would be considered a ceiling to determining the extent of a member's permissible credit contracts. Tom's few Valuns over this period may be competing with other contracts for other things Susan is buying. Let's say that May through July, Susan is actually paying down a bill for some furniture. Let's say it's V 300 each month. That's nearly $900 for each month so maybe she's buying a lot of furniture or perhaps other things too. Let's say that from September on Susan pays V 100 for firewood. Again, that's a lot of firewood.
Here's what we really know about all these transactions:
May:
V
200.00
|
V
330.50
|
V
325.00
|
June:
V
200.00
|
V
360.00
|
V
330.00
|
July:
V
200.00
|
V
328.50
|
V
330.00
|
August:
V
200.00
|
V
605.50
|
V
30.00
|
September:
V
200.00
|
V
535.50
|
V
125.00
|
October:
V
200.00
|
V
550.50
|
V
130.00
|
November:
V
200.00
|
V
565.50
|
V
100.00
|
Now there's a lot that we're not assuming here. We're not assuming Susan's regular recurring expenses or that she might actually be saving more of her Valuns through the months. We're assuming she spends everything else and has regular paydays which may correspond with various dates selected by her in contracts with others. Then her account information would look like this.
Would the income Susan receives from whatever contracted source show up on her employer's Escrow balance? Assuredly. This is how the contracts will be linked together.
One may move funds from either Incoming or Escrow balances and out of but not into the Issuance balance. In all B member business accounts, the Issuance balance is replaced with a Retained Earnings balance. No businesses may issue money, they must be able to justify the expenses of their payroll by having at no time all the contracts represented in their Escrow balance being more than 80% of their monthly Incoming balance. Again, if your debt exceeds your income, you are technically bankrupt. These things do happen but will be cause for loss of goodwill. One wants a monetary system that rewards you for earning an honest profit and prevents you and the whole system from growing excessively fat with unpayable debt or blowing more economic bubbles which are just another way of seeing racketeering rather than offering to do honest business. Where an honest needs exists, that's where we want to be first and foremost.
David Burton
dpbmss@mail.com
{12/7/16:
Q: I'm trying to get my head around the idea of
approaching someone for work knowing that the money to pay me is
never an issue. Could you say more about how you see jobs being
negotiated in the proposed system? Josef in Minnesota
A:
Well, it's not never an issue, it's just that technically your
employer doesn't have to have the money to pay you, it's more like
whether they can take your money to pay you, based on the 80% rule.
If you offered say V20 an hour for Tom's work – that's a lot of
purchasing power, at $2.85 per Valun today (12/6/16), that's $57 vs.
Tom's bid of V5 or $14.25. So if you were in Susan or Ron's
position, you'd have to evaluate your current and expected
obligations and use the 80% of obligations to income (and that's
being VERY liberal in comparison to any other known debt allowance
models) to determine what your upward limit for acceptance of any
price offered to do any work can be. As an employer, you must retain
solvency throughout. THAT is one of the principal goals of this
proposal, to help people get themselves organized financially, to
take on some of the burden of the financial scribes back upon
ourselves, so that we ourselves verify everything, because from the
ground up we are all OWNERS of the proposed system and it is to be
OURS. This system does not take care of us, we take care of it
and it builds our wealth (all of which must provide income).
Q:
Do you see more people making deals to work for
far fewer dollars and a few Valuns and where would these jobs first
show up? Lew in Ohio
A: Dollars are becoming rare as THEY attempt to strangle cash so THEIR attempts to strangle THEIR own economy allows us the chance to do jobs that are important but that usually don't get the attention they deserve. We should be seeking more opportunities to deal in our money, especially as THEIRS inevitably loses purchasing power against ours. I remind everyone that to gain respect for one's money, one asks what it's worth TO US not to THEM. There are no matters of internal speculation regarding Valuns. There will be “customs” whereby people pay a certain amount for a certain service, product or thing. Prices in Valuns will directly affect actual supply and demand but only as more products are available for sale in Valuns. That goes for jobs as well as products.]
A: Dollars are becoming rare as THEY attempt to strangle cash so THEIR attempts to strangle THEIR own economy allows us the chance to do jobs that are important but that usually don't get the attention they deserve. We should be seeking more opportunities to deal in our money, especially as THEIRS inevitably loses purchasing power against ours. I remind everyone that to gain respect for one's money, one asks what it's worth TO US not to THEM. There are no matters of internal speculation regarding Valuns. There will be “customs” whereby people pay a certain amount for a certain service, product or thing. Prices in Valuns will directly affect actual supply and demand but only as more products are available for sale in Valuns. That goes for jobs as well as products.]
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