#35 Compound Interest

References:

Wikipedia Article on Compound Interest
Get Objects – Software Components 
Moneychimp
The Compound Interest Paradox

We have said before on this blog that compound interest was as “usury on steroids,” that it exponentially grows the eleventh marble, etc. Many have doubted that this is so. We have already based our rigorous definition of usury on E. C. Riegel's clear observation that it was impossible to pay back what was never created. We say that compounding dramatically increases the amount of uncreated money that must be paid back. We will provide some examples.

But the first thing I want everyone to understand is that, in the world we live in today, there is no fundamental agreement on how to calculate compound interest! We'd like to cut through all the explanations and apologies for why there are so many ways to represent compounding interest and state up front that these various mathematical formulae amount only to the range of deceptions used to sell people on either borrowing money with which to purchase something that the buyer cannot afford at the present time, or getting people with a lot of extra money relative to the crowd (the rich) to invest money with a promise of a return on the investment, or “yield.” They might just as well have advertised “yield” as “take,” because that's what it amounts to.

One person (or company) means something by reference to a particular interest rate and monthly payment schedule that would not apply to another situation. Thus, a confusing maze of baffling mathematics faces the average person who is usually forced to accept the expert's advice and opinion, rather than recognizing the inherent deceit expressed as clearly as not as, “how much can we (the financial community) get away with stealing from either buyers or investors?”

We shall illustrate with some concrete examples.

A = P (1 + r/n)^nt

This is a standard formula for compound interest, which we shall understand as it relates to the present economic system where:

A = the amount of money accumulated after n years, including interest
P = the principal (the initial amount borrowed (or deposited)
r = the annual rate of interest
t = the number of years the amount is borrowed (or deposited)
n = the number of times the interest is compounded per year.

This formula is routinely used to calculate the future value of A. But it is not used for computing a monthly payment on a mortgage because ... they use a different formula for that: 

A = [ Pr(1 + r)^m ] / [ (1 + r)^m - 1 ]

A = monthly payment

P = principal
m = number of months (30 years = 360)
r = interest rate divided by 12 (for monthly compounding)

Let's begin with something we're more or less familiar with, a home loan for $100,000 at 3% interest for 30 years, interest compounded monthly, so that's 360 months.

A = [ 100,000 x .0025 ( 1 + .0025)³⁶⁰ ] / [ (1 + .0025)³⁶⁰ - 1 ]
A = [ 100,000 x .0025 ( 2.4568422115) ] / 1.4568422115
A = 245684.22115 x .0025 / 1.4568422115
A = 614.210552875 / 1.4568422115
A = 421.60 rounded (421.60403372894717912283666692754)

Your monthly payment on this standard fixed rate mortgage is $421.60 and by the time you have made all payments, the total you have paid would be $421.60 x 360 = $151,776 so you have paid $51,776 in interest or 51.776% of interest on a loan of $100,000 principal in 30 years.

The standard formula would make the same loan look like this:

A = 100,000 ( 1 + .03/12 ) ^{12 x 30}

A = 100,000 ( 1.0025 ) ³⁶⁰A = 100,000 ( 2.4568422115 )
A = 245,684

Now A is the total of all the principle P and interest compounded monthly for 360 months. Note that the original loan was for $100,000 but the interest over the term of the loan expressed this way was $145,684. In absolute terms this represents 145.7% (146%) of the principal.

But as I said, for mortgages they use a different formula otherwise a 30 year fixed rate loan at 3% compounded monthly would actually be a loan with interest charges of 146% instead of 51.78% which is what you're really paying.

Whatever interest you pay is due to how long it takes you to pay it off. Those loaning the money to you demand that interest back as your rent of their money for thirty years. Your monthly payment using this standard formula is A / 360 or $682.46. But the $421.60 per month seen above is the industry correct number ... because they use a different formula.

Would people more likely go for a loan offered at 51.78% or 146% interest over 30 years or one that is billed as a 3% loan compounded over 30 years? In absolute terms, they are the same thing. Therefore we contend that the low interest rate loans as advertised for real estate, or anything else of comparable value, represents deliberately misleading advertising, as far fewer would be willing to take a higher interest loan than one they believe to be low.

Yet this: A = P (1 + r/n)^nt is exactly the same as A = P + I, where I equals all the interest, understanding that time is equal in both cases. You see how easy it is to mislead or LIE using figures? So when they say “figures don't lie,” they may in fact and usually are using figures to lie. You can use the discussion so far to determine, in absolute terms, what you are actually paying in interest on whatever real estate, etc. that you are buying under such credit terms.

Now, if the money for the real estate or whatever else, is created as the result of a typical commercial bank loan (this would be legitimate money for E. C. Riegel), then the money loaned is what the thing would have cost had you had all the money on the day of the sale. Using the example, that piece of real estate you “bought,” but are still paying for, is actually costing you more than half of the principal what it would have cost by the time you finish paying for it; by that date by the normal formula, you would have paid nearly two and a half times what that property cost when you “bought” it. (And of course in addition, in many localities, you are obliged to pay taxes on the entire assessed value of the property, not just the percentage of that property that you have actually purchased through the finance contract, often called a mortgage. But that's another matter.)

Using the standard formula, if your interest rate is 6% instead of 3%, it looks like this:

A = 100,000 ( 1 + .06/12 ) ^{12 x 30}
A = 100,000 ( 1.005 ) ³⁶⁰A = 100,000 ( 6.02257521226 )
A = 602,257.52

Your monthly payment by this method is $1,672.94. By the time this loan is retired, in 30 years, you will have paid over six times the principal on the day you “bought” whatever that money went for. We said that compound interest was like “usury on steroids” and I trust now, since figures DO lie, you can see that the higher the rate of interest, the worse the taking is. Again, do the math on your own situation and see what you discover.

Using the standard formula, the exponential growth rate of compound interest can be seen with reference to a standard loan of $100,000 for 30 years, where P = the principle, from 1% through 10% interest compounded monthly as follow:

at 1% A = 134,969 or 135% of P & I = 35% of P
at 2% A = 182,121 or 182% of P & I = 82% of P
at 3% A = 245,684 or 246% of P & I = 146% of P
at 4% A = 331,350 or 331% of P & I = 231% of P
at 5% A = 446,774 or 447% of P & I = 347% of P
at 6% A = 602,258 or 602% of P & I = 502% of P
at 7% A = 811,650 or 812% of P & I = 712% of P
at 8% A = 1,093,573 or 1,094% of P & I = 994% of P
at 9% A = 1,473,058 or 1,473% of P & I = 1,373% of P
at 10% A = 1,983,740 or 1,983% of P & I = 1,883% of P

Therefore at 1% over 30 years, you pay $34,969 on $100,000 borrowed, or 35% in interest. That money was not created by the loan and over 30 years amounts to $1,165.63 each year of money that was not created anywhere else, but that must be grubbed back from someone to repay the interest on the loan, thus shrinking the money supply that much per year. The higher the interest, as is seen graphically, the worse the money drain from the economy becomes. I want the enormity of that to sink in for a moment.

Genuine usury always involves the lending of money and nothing else and demands back more of it than was originally lent, in the process deliberately causing -as a mathematical certainty- the perpetual scarcity of money. No matter how much of this loaned money the government or corporations spend into the economy in order to keep it afloat, factors involving payment of interest, money that was never created, demand a “growth or die economy,” that will ultimately crash.

The principle of $100,000 divides over 30 years as $3,333.33 each year and does not change regardless of the interest rate. Therefore, where the term of the loan is always 30 years, and where P = the principal paid per year and I = the interest paid per year, the interest rates for such loans are as follows:

at 1% P = $3,333.33, I = $1,165.63 or 34.97% of P per year
at 2% P = $3,333.33, I = $2,737.37 or 82.12% of P per year
at 3% P = $3,333.33, I = $4,856.13 or 145.68% of P per year
at 4% P = $3,333.33, I = $7,711.67 or 231.35% of P per year
at 5% P = $3,333.33, I = $11,559.13 or 346.77% of P per year
at 6% P = $3,333.33, I = $16,741.93 or 502.26% of P per year
at 7% P = $3,333.33, I = $23,721.67 or 711.65% of P per year
at 8% P = $3,333.33, I = $33,119.10 or 993.57% of P per year
at 9% P = $3,333.33, I = $45,768.60 or 1,373.06% of P per year
at 10% P = $3,333.33, I = $62,791.33 or 1,883.74% of P per year

Now, just to be fair, we'll take the same series as expressed in monthly payments A, for a standard mortgage:

at 1% A = $321.64 x 360 = 115,790.40, I = 15,790.40 or 15.7904% of P
at 2% A = $369.62 x 360 = 133,063.20, I = 33,063.20 or 33.0632% of P
at 3% A = $421.60 x 360 = 151,776.00, I = 51,776.00 or 51.776% of P
at 4% A = $477.42 x 360 = 171,871.20, I = 71,871.20 or 71.8712% of P
at 5% A = $536.82 x 360 = 193,255.20, I = 93,255.20 or 93.2552% of P
at 6% A = $599.55 x 360 = 215,838.00, I = 115,838.00 or 115.838% of P
at 7% A = $665.30 x 360 = 239,508.00, I = 139,508.00 or 139.508% of P
at 8% A = $733.76 x 360 = 264,153.60, I = 164,153.60 or 164.1536% of P
at 9% A = $804.62 x 360 = 289,663.20, I = 189,663.20 or 189.6632% of P
at 10% A = $877.57 x 360 = 315,925.20, I = 215,925.20 or 215.9252% of P

All values given above are for the total duration of the loan. Notice that between 5% and 6% the total interest begins to crest over 100% and that above 9% interest begins to crest over 200%.

In addition to all this, someone owning a home as their prime asset that they live in, isn't necessarily wealthy, unless that home is itself a source of income, either as a place where anything having to do with earning a living is done, or wherein actual business is transacted on a regular basis. On the other hand, those who own real estate and rent it to others are wealthy by our definition, because their property use falls under the definition of wealth that will be used uniformly throughout this blog; wealth is that capable of providing income, usually measured by the month.

You should easily be able to see the daunting task of acquiring real estate under the usual methods and these days trying to turn a profit on any of it. It doesn't help that most of it, all of it, is probably overvalued as a result of the financial bubble that was allowed to grow during the recent past. It should also be quite apparent why they were so interested in loaning all that money, much of it on far less generous terms than the illustrations used here. And this also explains why the whole business represents such a colossal drain on the money supply of every country, because most mortgages the world over are settled on comparable terms.

Now, we have an alternative model under consideration and we're constantly seeking to answer people like Professor Greco's young man in Tacoma who wondered when any complementary money would ever be able to pay for things people needed like housing, food, clothing, etc. The Value Exchange Network (VEN) is the market made up of nodes each representing a geographical area, each node called an Independent Exchange (IE), but none of them will ever be a source of money to lend for real estate or anything else; they will never be in that business. The IE is only responsible for passing judgement on the loan per the rules, which are clear and make a lot of things simpler. All applications for loans to be accepted by the IE are called Credit Contracts.

The rules for credit contracts are pretty simple:

1. No more money is created than is required to make a trade
2. Compounding of interest is forbidden
3. All loans must be of money that already exists
4. All lenders are responsible for their own risk
5. We would think that loans out to 49 years (7 x 7) would make most property purchases more than sufficient, for we intend on posting a Jubilee Year for all debts 50 years out from either the inauguration of the VEN (whenever that is) or from the inception of the Value Unit (proposed as already begun on 2 November, 2011).

Credit Contracts should be simple enough that their terms can be summarized on one side of a piece of paper with the conditions that would void the contract, the “voids,” on the opposite side. One copy each goes to the buyer, the seller and the local IE that would administer the schedule of transactions.

Now of course, wherever you live, you'll perhaps have to “pay unto Caesar that which is Caesar's” in the local currency, and that probably includes insurance too. The insurance business is based on trading debt, so they don't like having to pay out unless they have to, because dealing in debt instruments, one is basing one's return on time; knowing the redemption dates of the various bonds one holds, while being subject to sudden payouts in cases of settling some policy holder's loss.

You can see how the whole financial pyramid is based on promises to pay, way too many and the basis (reserves) of loanable money consisting in mere fractions of what a banker is allowed to lend and despite interest drawing money out that was never created, what the government spends and the inevitable inflation it causes, is even worse.

In the debt instrument world there are words in common use that more people should get to know; bills, notes and bonds. In the parlance of standard debt trading, a “note” (a Value Unit exchange note included) is offered in trade by a buyer for an item or service, presenting a pledge to the seller that a comparable monetary value of whatever it is the seller might want, exists in the market, which in VEN terms could be instantly worldwide.

A Bill is a loan of money for a year or less, a Note is an intermediate term loan, usually out to 5 years, and a Bond is a loan of money for a longer period of time, 10 years or more. All debt instruments are usually sold at some discount to their face value and are redeemable when they mature at their face value on a specific date. Traders play the spreads between what they buy a debt instrument for and what it is worth when redeemed.

As we've said, no IE will ever be involved in any of this business, but those who desire to raise money for a project by use of debt instruments may do so, operating as a B member, subject to all the rules listed above. Nevertheless, IE's will be involved in the transactions involving any live debt instrument, so we can make some reasonable statements concerning debt trading and its excesses that the VEN seeks to eliminate.

All Value Unit based credit contracts in order to be valid, will have to be accepted by the administering IE and all IE's will be under the same rules. Debt instruments are among the most widely used financial vehicles in the world for deceiving people and cheating them out of their property so we want to make sure all avenues for known deceptions are eliminated. Let's take a look at a valid credit contract.

A credit contract could be a Bill payable in instalments over several months during a year or less. These would probably include the majority of capital goods or other appliance purchases. Perhaps most vendors operating under this form of extended credit wont need a credit contract to enforce payment, but they should use them because they have certain added good will features; completed credit contracts build a reputation for all concerned, both the vendor extending credit and the buyer receiving the credit as any member of the VEN is allowed a look at the number of completed credit contracts, the amount of extended credit and the rating given by sellers on the buyer's payment performance.

If credit needs to be extended out to SEVEN years (7), we'll call it a Note. These include every Value Unit Exchange Note circulating in the system. So should VEN operation commence in 2013 and notes begin appearing soon thereafter, all IE's would begin replacement in 2020 with a new set of notes. [2/23/17: Of course since this was written, the idea of a circulating community check, the V-Check, was developed because it is easier to implement right now.  V-Checks would expire in six months but would still be capable of either exchange for a new one or deposit.]  Of course if someone held old VU notes past their redemption year, their IE would replace them when turned in, with newer ones. Managing exchange note distribution and redemption is one of the responsibilities of the International Value Exchange Society (IVES) to be explained further in another post. Other valid Notes could include any purchase where payments need to extend out to seven years.

Bonds are credit contracts where instalment payments extend out to FORTY-NINE (49) years from the year of the VEN's official launch, as we expect to exempt the fiftieth year as a Jubilee Year, where all outstanding debts are settled. We will no longer be willingly subject to any system of perpetual debt.

Now here is a decent question, who owns these credit contacts? They are objects in and of themselves, but what are they? They are promises to pay a valid debt for a real good or service provided in the exchange; the buyer got the use of whatever it was he bought, the seller gets the contract as his property, until paid off in exchange notes, which the seller trades for other goods or services of value to him. Credit contracts are literally extending the terms of a sale out long enough for the measuring of value, accomplished by money, to work measuring whatever it is, so that the buyer can have his “time preference” ahead of actually being able to afford whatever it is he is buying.

But again, to who do debt instruments belong? They belong to the seller in exchange for the good or service sold to the buyer. Hence the seller could sell his contract to someone else, after all it is his property. He can do this regardless of the buyer's continuing payment obligations. These debt instruments are the property of those who possess them.

Let's examine one class of debt instruments, mortgages, more closely. We have a loan of a specific amount of money with a schedule of payments for paying it back and upon completion, the mortgage is paid off and the official title to the property passes to the buyer. However, let's say that the original seller, who owns the mortgage, for whatever reasons wants to unload the responsibilities for taking in the monthly payments, etc. and would be willing to take less than the potential value of the mortgage from anyone willing to take over the receipt of mortgage payments, delivery of title upon completion, etc. Potentially a debt instrument is worth more when it is young than when it is close to maturity; a mortgage for $100K at a rate of 6% for 30 years would net someone in excess of 115.838% as we've just seen. You can see immediately I hope, just how the bankers got the idea of making more money up front by trading in these debt instruments. The real estate buyer however sees, or maybe he doesn't, that his monthly payments no longer go to ABC Bank but instead to XYZ Bank.

Clearly we need some reform here, but we aren't going to get it from the powers that be, because they already play games with “intellectual property” that suit themselves at the expense of everyone else; they insist that all who use “their” money are then subject to being told what, how, and with whom they may do business, while they insist they have the right to sell one package of securitized debt to many people at the same time! These are clearly folks who have lost their reason for any trust.

I hope that everyone so far also sees the connection between the lure of returns, “yield” based on compounding of interest, and selling debt instruments, especially those made into securities to be traded on the paper market. There wont be anything like that allowed within the VEN and I might say that anyone caught will be thrown out of the VEN and probably kept out for at least 5 years, as we will not suffer the same frauds perpetuated on us in the present system to continue on in the VEN. So we make the following stipulations as normative:

1. Debt instruments may be sold ONLY to other accredited members of the VEN.

Some have suggested to us that certain kinds of debt instruments, mortgages, not be allowed sold to any member outside a local IE and that will suit many just fine, except that by enacting such a rule they might be cutting themselves off from other needful sources of credit.

2. No debt instrument may be sold while retaining it's repayment stream. If you sell it, all future payments go to the new owner.

In the bond world, you have bonds with coupons attached that were normally plucked off the main bond and turned in for various kinds of payments, dividends, etc. that were specified as terms of the bond. Well obviously you have the bond itself, which has a face value payable on a certain date, and then you have the coupons that pay off on their own schedule. It was and still is common to clip off all the coupons and sell the bond, retaining the coupon payments while relinquishing the final payout at bond maturity..

A mortgage is like a bond in reverse that “dies” upon completion. It's ONLY source of value is in its repayment stream. Therefore it cannot be disassociated from its payment stream as otherwise it has no value. Of course if the mortgage falls delinquent, the lender has recourse to foreclosure and what gives him this right is the title to the property. This brings us to our third point,

3. No mortgage within the VEN may be sold to another without surrendering the title to the property as well.

Conveyance of ownership over credit contracts shall be accompanied by a transfer of ownership attached to the original contract and filed at the IE for further contract fulfilment responsibilities. The seller's account changes and all new payments on the contract now go to the new account. The buyer is informed of the change including the name, address and contact information for the new owner of the credit contract. A statement is also made and verified by the new owner of the contract, copy to all parties concerned, to the effect that the title to the property under the contract has changed hands.

Now comes the hard part, determining what the market for finance capital will bear, meeting the challenge of the normal trade in property, capital goods, etc. without recourse to compounding of interest which as we have demonstrated causes interest to grow exponentially rather than as a linear function. And again, in order for all transactions to be honest, all must know exactly what they are paying based on how long it takes to pay off their purchases and besides no money can be added or subtracted from that purchase by the terms of the contract.

Briefly stated, a property today selling for $100,000 is worth that sum to one who has all the money to buy it on or near the date the property is offered for sale. But how much is that property worth in seven years or in forty-nine years? There is no way of telling. It may still be worth $100,000 so that isn't the real question. Is the question rather what is the cost of borrowing the money to buy the $100,000 property if one hasn't the money? But that's not exactly the right question either, because right away one assumes that available money is a commodity with a current market value, which it is, but one that is made of value measurement rather than substance so therefore, and please pay attention, comparing amounts of available money and any other commodity is comparing apples to oranges, like comparing a ruler to what it measures.

We get closer when we recall the story about the man buying a refrigerator for $700 when had he had all the money at the date of the sale he would have had it for $400. In any case the value of the same exact refrigerator holds whatever value the buyer paid for it. He may have a $700 refrigerator only because he lacked the $400 on the day of the sale and had to resort to credit to complete the sale. Who owned the refrigerator until it was paid off? The seller did, who could if he chose get the refrigerator back from the buyer for failing to repay his debt to the seller in full. Notice that filing a valid credit contract, a Bill in the case of the refrigerator, with one's local IE, removes a large part of the uncertainty in such deals because the IE automatically takes care of the transfers for both buyer and seller based on the schedule agreed to by the parties to the contract.

Now what if you liked a house for sale for $100,000 and really wanted it but you don't have the cash to buy it today, what could you do? You could get someone else to buy it for you who would sell it back to you at a higher price with terms allowing you to pay it off over a longer period of time. Now we aren't considering what the money costs to borrow at all, we are placing all the value in the trade where it belongs, in the property itself. The question is thus how much is the same property worth to the man who can't afford it, but could if he had seven years, ten years, out to forty-nine years under the proposed VEN rules, to pay for it?

Here's a little hint. It is customary to regard certain periods of time as appropriate for repayment of certain kinds of debts. Under VEN rules of parlance, a note pays off in seven years or less, a bill in less than a year. Meanwhile what is the replacement cost to a seller of what he sells? What will he have to pay to buy something to sell to someone else and what will his reasonable mark-up have to be to make it worth his while, the time before getting his money back, etc.?

Most do not know the first thing about these matters and they should. For instance the larger the operation is, the less profit it has to make in order to survive. The smaller any operation is, the more profit is required in order for it to survive. There are theoretical points on either side where a business is unlikely to survive, so there is a survival range for a business, just like a temperature range for life, where the percentage of sales that must be realized as profit determines the chances of a business's survival.  At the lower end are those who require a huge profit in order to make the financing worthwhile at all, while at the upper end there are those who might consider financing a property sale and can afford to take less profit on each sale because they have many times the value of this particular property as assets already so they can afford to take less profit on each.

This works up to the point called diminished profits to scale where the more business that is taken on, reduces the profit of the entire enterprise so that no further business is desired. We anticipate that the numbers of businesses engaged in financing property will probably increase under the VEN rules, but in order to survive may require a higher profit margin than those currently engaged in financing these sales.

What could we expect? If it's customary to see a return of one's money on a loan within seven years, then a return of 200% in seven years represents replacement cost; 100% of the principal, plus a doubling of one's money over the seven years. This would mean that someone might be willing to buy the property for $100,000 and sell it back to a buyer for $200,000 if the buyer can pay for it in 7 years; 84 months. But one's monthly payment would then have to be $2,380.95 and one would sort of get the point that the real estate was perhaps too expensive to buy unless of course one had other sources of income whereby a monthly payment this high would be within the realm of possibility for the buyer.

Throughout this post we have used dollars. A Value Unit can never go below $2.16 in fair trade value, so $100,000 is 46,296.30 Value Units and that monthly payment is 1,102.29 Value Units. These figures would be less due to the death throes of the present system; their ruinous and futile attacks on the prices of precious metals and their continued deficit spending as well as spending money on their beloved paper markets which give their “bodies” these figments called corporations whatever life they may presume to possess. Either way, they are doomed.

We further say that since only simple interest is acceptable for drawing comparisons, because we do not accept as either logically valid or moral that idle money deserves a reward, or that value measurement can be made on the premise that value measurement in and of itself represents value, we conclude that the safest way to proceed is that in all transactions of whatever size value must be traded for value, not the measurement of value itself used to acquire more measurement of value. It is one thing to accept the notion that a Note represents a string of Bills or a Bond a string of Notes, and it is quite another that money acquired above a dealer's cost itself may acquire additional money with each successive debt instrument payoff. We say that such money does not in fact deserve this favour, as it is already figured into the value of what is being bought, and that compounding will hence not be permitted under any circumstances within the VEN. This means in fact that the only basis for making a sizable trade of this kind is where the seller actually owns the property outright (has and retains title) and sells it to the buyer on mutually acceptable terms such that the buyer knows ahead of time the entire cost of what he is buying and how and when he can expect to receive the title.

But how about the circumstance where one lives in a property and wants to refinance it into the VEN? It's really simply a matter of clearing off the old mortgage, paying it off completely and securing the title (and in all cases we shall insist on Allodial title to all property in any of these contracts so if you don't know what that means look it up). Then the new owner within the VEN sells it to the buyer under terms described in an accepted credit contract.

We've touched on a wide range of subjects here, but will probably refine them in future posts as we get more feedback. Assuredly, getting rid of notions like the time value of money, which is an erroneous idea since no one can possibly know what one is relinquishing by making a financial decision in the present, or that interest paid deserves to earn more interest with every successive turn of a payment schedule, when that money earned is more of just the same, money that was never created that must be paid back so someone can have a rich life by providing nothing but money as a means of making more of it, would provide better for more people worldwide.

David Burton
dpbmss@mail.com

#34 Labour is Value

[Before the main focus of this post, some explanation about this picture. It's by David Dees, who has come up with some amazing political art over the last few years. This scene is of people running over a precipice from a crumbling dollar world to one of gold and silver coins that they hope will be safer. Between the two worlds, the crocodiles are ready to get them. Well, the truth of it is, and Dees probably doesn't know this yet, but let's hope that he will, the crocodiles are those behind both the dollar system and the gold and silver coin system. However, and perhaps Dees would consider doing this as he finds out more about our proposal, he may expand his picture to represent Valun exchange notes beyond the gold and silver coins, oh yes leaving those gold and silver coins in the picture. This picture graphically illustrates the position people are in these days, just trying to keep from being devoured by the crocodiles. It is the position of this blog to offer a means to transition away from them and to build something else that will survive and thrive.]

We've often heard the expression “time is money.” This no doubt got some people to thinking that one could, would or should build a monetary system based on time as a unit of value, an hour for $10 as the usual preferred choice. But what happens when inflation makes that $10 worth only $5 in purchasing power? Your measuring stick just got shorter by half. What happened to your $10 hour had nothing to do with you, it had to do with some government, somewhere far away, spending money. The inevitable result is that your $10 hour has just been reduced in value to a $5 hour that had nothing to do with anything different you were doing at your job earning what you thought was going to be a $10 hour. Even though the present usual forms of complementary community currency do have the object of creating more conduits for exchange of value, their basis on the dollar, or euro, yen, yuan, etc. (it would make no difference) makes these complementary currencies just as prone to price inflation, even though their basis as credit clearing monetary instruments is sound.

The solution must be an independent international standard Value Unit, just as E. C. Riegel realized. He tried to suggest one based on the 1939 dollar, then later on a 1946 dollar, all the while hoping to outrun inflation. These would have been the Figure 1 starting positions for these Value Units and one can imagine how low prices would be in them now with 2013 dollars out there. For a Figure 1 this time, by popular demand, instead of dollars, or any other public currency, we chose gold (and silver).

We have suggested a Value Unit based on the chosen closing price of gold on the 2^nd of November, 2011. That's 2 11 2011. It's easy to remember. At inception a chosen bid limit for actual possession of gold bullion was at or near $2,160 and that number was also chosen because that number too is unique as it represents the supposed number of years in an historical age. So that's easy to remember too. We chose the option of a stack of 1,000 Value Units = 1 oz. of gold. Therefore, 1 Value Unit = 1/1000 (0.001) of 1 oz of gold at inception: 1 Value Unit = $2.16 at inception.

When the dollar etc. price of gold or silver falls, the current prices of troy ounces in bullion is lower than it was at the Value Unit's inception. You may be able to buy more gold at lower prices in dollars, but to trade openly for Value Units, you would have to pay more dollars because their value has not been changed by the lower price of gold (or silver), it remained right where it was back at 2 November, 2011. There have been times since inception, occasional, but they have occurred, when the price of gold was higher than at inception, during which times Value Units would have traded at a discount to dollars. The deepest discount days saw 1 Value Unit = $2.08. But this little problem is met by a decision of the independent exchanges to accept a new inception price that must always be higher than the previous one, never lower. This promotes “hardness” of the monetary unit over time.

At inception (2 11, 2011), the initial bid limit for silver was $33.79, or 19.55 Value Units. There were times when the dollar price of silver was above inception, placing the Value Unit at a discount to dollars. In fact the most an oz of silver would have bought was 20.49 Value Units shortly after inception. But since then and for the most part, silver has been below its inception price in dollars. An oz of silver would trade for only 13.14 Value Units today [7-June-13]. You see, the Value Unit didn't change, dollars and precious metals did.

It was observed of course that another reason to choose precious metals prices for our Figure 1 was that these trades are standard in all the relevant currencies on earth, therefore it is possible to represent comparable tables of computation (a simple spreadsheet will do) for any currency you please. You could have chosen British Pounds Sterling or Euros or Yen or Yuan and you'd still come up with comparable equivalent fair trade exchanges for any day the markets are open, from the Value Unit's inception to the present time.

This was a round about way of saying that it makes far more sense to settle on the basis for payment for all labour based on a yardstick of money value that does not change, that is not a commodity, that only uses commodities to satisfy exchanges between itself and all other public money since, let's face it folks, E. C. Riegel himself considered only commercial bank loan money as legitimate and government spending above taxation as illegitimate, the “watering down” of a currency. Riegel said that nobody could tell the difference between these two streams of money as they were all dollars, pounds, euros, etc.

Then we have the recent issuance of public laws in support of government's creditors, giving them incredible powers, get this folks, rights over their dollars as their property in your businesses! Not your money, their money, as we have been saying all along. It's all related to intellectual property rights too, that curse from the French revolution. Copyrights, as it turns out, do not require explicit registration (that's mostly only for those who buy the copyright), but are valid from date and as posted. Therefore the words “Federal Reserve Note” or any reference to any Bank on any note, indicates who really owns that note. Therefore we do not even want to be holding any of their money. Despite the fact that they also own the gold and silver markets and probably hold more bullion than anyone else, we'd rather be holding silver and gold as a means of exchange with their money than to be holding any more of their money than is absolutely required to “pay unto Caesar that which is Caesar's.”

Besides, as we should all be knowing by now, all their money is illegitimate, since it is issued by states, therefore usurping the inalienable rights of every human being on earth. But no government anywhere is really doing anything by well reasoned intention as they are merely by great ignorance sustained by tradition and the lusts for power of those government naturally attracts ... and of course others who may be even worse behind the curtains. That's what's wrong with the whole effort to eliminate the central bank, while retaining issuance of money by the state, “in the public interest,” for which they cannot possibly be responsible. We aren't the slightest bit interested in any reprisals for all that was stolen from us, from our parents, grandparents, etc. as well as all the millions who were cajoled into committing fratricide in two gigantic 20^th century wars and a score of smaller wars before and since, all for someone else's tremendous profit, while countless millions died.

No. Our message is consistent, “come out of her, my people” and the solution, which does not belong to me, or to anyone, as it is offered here copyright free and for nothing (unlike those of others parading themselves as experts), is the acceptance of a new basis for value upon which all trade will naturally gravitate as the utility of a fixed frame of reference for all values is recognized as an international standard for such measurement.

Money is that which measures value as a clock measures time. The value of time, hitting the clock, is determined by the requirements of the tasks involved and is determined by those buying that time from someone; their labour, usually paid by the hour, or stated in equivalents by the week, month or year. Riegel's mathematics of value determines what the remuneration will be.

When you look around you, in any civilized part of the world, or unless you are out in some natural wilderness, you will notice that everything you see around you was the result of human labour, or the lack thereof, to make better use of certain situations. At the bottom of it all is the ground, the property of the earth, someone's property. Where that ground is able to provide the means to trade for a living, it is put to use. Ground that is put to use to provide a return on the labour involved in whatever it took to produce or grow whatever it was that could be the end product, was the earliest basis for wealth. Wealth is that capable of providing an income. This explains why chunks of precious metals are not wealth, because they do not produce anything that could be said to be income. Precious metals have been used from ancient times to provide the basis for the fractional reserve banking fraud, and as the heads of state that appear on these coins indicate, gold and silver were imposed on people to use for payment of taxes. Thus have the chains of slavery been woven.

Labour contracts under the rules of the VEN are so simple that they can typically be summarized on a single piece of paper. Identity of the employer and employee, both members of the VEN, the first day of work, the length of time for the contract, usually in months, less likely in days, weeks or years, whether the contract is renewable upon completion, the day chosen ahead of schedule for renewal of the contract, remuneration in Value Units payable to the employee with all pay dates stated, the total value of the contract in terms of Value Units changing hands and the signatures of both parties, is about all that would be required. Notice we said nothing about assigned duties or the nature of the work involved as that's none of the IE's business. This is a private organization relying on the mutual respect and trust of its members and privacy is recognized as a natural right. There are three copies of every accepted contract, one for each the employer and employee and one for the local IE that will be carrying out the transactions.

The Value of the Contract is the total amount of Value Units that will be paid over to the employee by the employer over the term of the contract. All contracts begin on the first day of work, and why that's important is that on that day, the Value Units for the entire contract are placed at the disposal of the employer, who has the float on them, but who will be paying them down and back to the employee on each pay day until all of it is paid back by the end of the contract. Contracts are void by any number of circumstances that can be enumerated on the reverse side of each standard contract page. All contracts that would fall void on or before a pay day would cause all transactions that would have occurred to cease and whatever is left of the contract is returned by the next pay day on the contract. There are only a few statistics that are kept around for other VEN members to see. They get to see an A member's number of completed and voided contracts, they get to see the past remunerations for each contract (the Social Security administrations in all major countries get to see that much already), they get to see a satisfaction ranking given by past employers and that's about it.

These labour contracts may begin alongside other remunerations in public money; each employee receiving each month both dollars and Value Units. He might get a check for dollars from his employer, he'll get his Value Units on pay day added to his exchange account.

There is essentially three kinds of work that every IE will do for its members

1. Clearing ordinary transactions
2. Satisfying the terms of Labour Contracts
3. Satisfying the terms of Credit Contracts

In the subject under discussion, the terms of labour contracts involve money transfers between the A member (employee) and the A or B member (employer) accounts. The first transaction on the first official day of work is to transfer the total value of the contract into the employer's account to be used by the employer until it is required to be paid to the employee. The employee is literally buying himself a job, in agreement with the employer's buying himself the employee's time and effort, settled in Value Units. The employer gets the float on the up front Value Units into the bargain.

The day chosen ahead of schedule for renewal of the contract is important in that it provides any employee with his “two weeks' notice” automatically. This date would normally fall two weeks prior to the last pay day on the contract. This date also trips a flag in other IE applications that lets the VEN world know of the availability of this member for employment by another member (A member) or member business (B member). There would be no wavering or delay about it; a contract that is not renewed on that date comes to an end normally in two weeks' time and frees the employee to seek opportunities elsewhere.

In all probability, most labour contracts will be initially established for six months and probably not longer than eighteen months. We want to build some experience into our operations before we take on much longer contracts. There is also the benefit that one is building into his own viewable reputation among his peers in the VEN, something other than money; what some have called good will. Good will is established by every completed contract, which includes a satisfaction ranking given by the employer. Eventually as time passes and more and more contracts are completed, a satisfaction ranking record is built; one's reputation is made among one's peers.

This labour contract coverage is part of the essential work of each and every independent exchange (IE). Fulfillment and completion of each of these contracts constitutes the building blocks of the world of the future for any who would grasp it, and behind it lies the hope of freedom and usefulness (which go hand in hand) to literally billions of human beings who are making the transition from the crumbling world of the Bilderbergs and others, likewise the world controlled by gold and silver brokers in far off cities, to a world of their own making. We offer the only genuine means to that end.

David Burton

dpbmss@mail.com

#33 Complementary Money ... for now

E. C. Riegel wants us to think of dollars as made up of two kinds of money. First there is all that money that people borrowed in bank loans and credit which they will have to pay back, and then some, the interest, which per usual was never created, but matters less because the total value in any of this money must rest in what it bought. The other kind of money is that which the government spends into the economy (Bill Still and his followers, please take note), and in many economies these days government spending amounts to a significant portion of economic transactions. One would say that the health of any economy is measured in inverse proportion to the percentage of economic transactions represented by government spending. If you didn't get that, I said that in a country where the government spends more than anyone else in the country, that country will tend to be economically stagnant or even worse. Each of you who read this can evaluate the state of your own country by this simple measurement.

Likewise a comparable concept is different kinds of money circulating within the same economy. In E. C. Riegel's sense of it, the two kinds of money are represented alike as dollars. Elsewhere they would be whatever the local currency might be. You can't tell the difference between a money instrument that was created through private bank loan or credit (including or especially business loans) and those created through government spending. Riegel called government spending the source of “watering down” of the money supply; inflation, its ONLY cause, by the way.

We want here to go to some lengths to prove that allowing each individual human being the inalienable right to create money to buy without selling back into the market is NOT the equivalent of allowing a government to spend money into the economy, far beyond that which it would otherwise need to take back by FORCE of taxation. Briefly stated, we make the following statements as incontestable:

1. All governments under the central banking / public issue of money model, are the debtors of the central banks and those who control them. 

All their money instruments are private notes that belong to them and are lent into existence with interest payable to the central banks. (Bill Still makes the point that all coinage is not in this category and recommended paying off the national debts with sacks of non interest bearing coins.) The circulating notes represent the principle borrowed, the interest was never created but still payable, the core issue of issues, and therefore this extra (the 11^th marble) must be grubbed from any and all.

This results directly in a relentless pursuit of economic growth to cover the added value required by the debt which can never be repaid. Riegel's ultimate solution and ours, government must ultimately live within its means; spending must sooner or later equal taxes, resulting in a demand for a balanced budget for all governments everywhere. We wouldn't frankly even mind governments being forced to operate in fiscal surplus, to hold something like an endowment to be used for REAL national emergencies.

2. When the government is the biggest buyer in any economy, it buys what it wants, not what the people want. 

We do not really care what rationalizations or other misrepresentations of the truth people attempt to use to argue that governments buy things in the public interest. They buy what they want to buy, or rather what they are told to buy, by as it turns out the same phalanx of economic factors of which Eisenhower and others warned us. Governments buy into wars, surveillance, and a lot of pomp and other nonsense none of us with our own money would ever want to buy. There is no way of guaranteeing anything concerning that which even a representative government can spend, that it will be for what the people want it to be spent on.

Then there is the taxing power, the taking back by FORCE that which the government spends. What a lot of wasted effort and frustration! All for the good of what? Centralization? For what? WHY? For whose benefit exactly? Certainly not ours. Oh yes, those folks behind the curtains who everyone owes forever. You know what? Instead of governments spending money into circulation, why don't we create our own money and spend that into circulation for things we really want, where it counts, in our own communities? It would be a lot cheaper.

3. People at or near subsistence, the poor generally, buy the basic values; governments do not.

The poor want and buy first what everyone else in society buys first and most; food, shelter, clothes, cleanliness, basic healthcare, etc. rather than new and exotic methods of taking out political opponents, or perhaps even entire populations, which make the people on the other sides of those contracts very rich, which results in a trickle down economics where the rich tend to buy things that nobody wants or needs; bling of all sorts ... and no, we aren't jealous or impressed. We have better taste. Any extra money generated by the poor percolates up rather than trickles down into an economy, thus rewarding those who produce the most useful products AND there is a direct relationship between the extra money created by the poor (since they generally cannot take back the money they put into the economy), and the cash requirements of operating businesses.

Just as Riegel saw, there being no perceptible difference between a dollar and a dollar, though they are quite different, we suggest that economies can, do and should operate using many simultaneously circulating means of splitting barter. Were one paid in public money, while simultaneously receiving private money (all public money is private too, so who is kidding who?), one would very soon distinguish between those things that only public money would pay for and those things private money would buy; pay unto Caesar that which is Caesar's. Of course nowadays, most people use swipe cards. You have some swipe cards that can't be used everywhere. So you would have public and private money swipe cards. The point is that for each hour worked you would be receiving additional value that could be exchanged in a free and relatively black market (our definition) for things that can be bought with other than public money.

But swipe cards, internet transacting of business etc. are not necessarily ever expanding categories of trade for average people. Who knows? There may come a time when no one would even be able to read this because there isn't an internet any longer. Perhaps paper brochures will carry my words after the internet is down forever. Who knows? People are barely used to swipe cards and they have their reasonable drawbacks; they can be made inoperable by a simple chance magnetic contact, are subject to a variety of environmental problems, etc.

Yes, I am suggesting that when the proverbial worldwide financial catastrophe happens and the regular familiar public money is either no longer acceptable or simply no longer available, and especially when or if the internet fails, that people are going to gravitate toward the use of something similar to the proposed Value Unit Exchange Notes and coins, as these are familiar objects for making an exchange. Likewise, checkbooks and checks are known vehicles for trade; people know how to use these things.

Of course, cash in Value Units, as it would be in notes and coins, can circulate and trade anonymously among people who aren't even members of the VEN. We hope they do, as any trade where Value Units are used will tend to substantiate their reputation as the international standard for measuring anything in monetary terms.

There will for a long time be a natural association between money and precious metals, despite the clear fact that precious metals are commodities standing for values in other commodities including time, labour, etc. Simply put, basing a money on something pegged to the prices of precious metals, is like measuring something with a ruler that changes every day ... except for Saturdays, when the brokers in distant cities take the day off. Yes, Riegel made a clever statement about gold and silver; we know its price but aren't sure what it's really worth.

Instead, we want a monetary yardstick that doesn't change; that remains a reliable scale of measurement for generations. The only thing that could serve would be something that otherwise has no intrinsic value; that people would be willing to surrender in trade for values including time and labour. People use swipe cards these days, so what of intrinsic value does any of this money possess? Right, that's an unimportant question except to “gold bugs,” because as the buyer clearly knows, with each purchase, that the money is paid in whatever way and the goods or services become theirs in the trade. Money has done its business of splitting the barter for those things the buyer wanted in trade for that which the buyer already provided the economy, usually in terms of time and labour.

I'm bringing all these things up because basing ANY replacement for the current system on either swipe cards or the internet is kind of like suggesting that only those moving along in trucks or cars can trade. What about those on bicycles or those who can only walk? The basis of trade is going to be need and the ability to pay for it in money that works in ways familiar to most people who are walking in any economy.

As for precious metals, we may see a return to seeing scales in stores, as they were commonly seen in shops several hundred years ago, for measuring precious metals coins and in that case we see a use for casting Value Unit coinage as real percentages of troy ounces to be used in such scales, that's right, to measure against claimed gold or silver coins. We really think that open trade in precious metals coins will account for a fraction of all trade, not its basis. It is in the nature of any commodity, for those holding it to perceive its value in holding it more than its possible value in trade for anything else; people who naturally like to hold gold and silver shall want to continue to hold onto it rather than allowing it to circulate in trade.

Of course there will be a means of entry into the Value Unit economy through gold and silver bullion that will be determined by whatever the brokers of these metals feel like pricing it; the lower the prices go from their prices at the Value Unit's inception, the more each Value Unit will cost in dollars to buy. Should the prices of precious metals rise above their inception levels, these initial Figure 1 positions can be revised upward BUT NEVER DOWNWARD. This would tend to provide a “harder” money over time, in fact there would be no reason why the value in relative purchasing power of the Value Unit would ever fall below $2.16..

But notice carefully that our money is NOT a receipt for something that an IE holds that is yours; whatever gold or silver coins you may use to buy Value Units. Oh no, we are not going back to the false basis of the present system for any solution. The dollar price for a Value Unit in honest trade would change based on the prices of gold and silver, but within the Value Unit economy, prices for things would tend to change far less. Today, 5 June, 2013 you might buy a hypothetical Value Unit for $2.58.

Within the Value Unit world, an ounce of gold bullion might require close to 1,000 Value Units to buy and there's another wrinkle to all of this; just as there are two kinds of dollars, and of every other kind of public money, there are two kinds of Value Units; those that represent closed transactions (where the money was created and destroyed; a completed monetary circle) and those that were created without a corresponding closing transaction.

A kind of fraud that is possible is for people to create as many “free” Value Units as their community will allow and then using them to buy gold and silver bullion from one of the dealers that will be associated with the VEN, use them to trade back in for more of the public money. Figure it out, they will have gotten something for nothing. And just why is it that something; public money, is valuable at all? Why is it that US dollars have these words on them, “this note is legal tender for all debts public and private?” It was even suggested to me that we need to say something similar on VU notes, something to the effect that VU notes belong to their bearer etc. No. What's involved here in these words is deception pure and simple, backed of course by government FORCE. Without this FORCE, which does effect the markets, people would tend to gravitate toward a means to split barter that does not suffer the same disadvantages that plague other means to trade. As we say, trade is life itself and like life itself, trade will find a way.

We solve this problem by providing safeguards for all affiliated precious metals dealers for those willing to take Value Units in trade for their specie. Within each A member account, there will be fields that indicate how many Value Units in the account were created by that A member and how many Value Units were taken back in trade by that A member. An A member becomes a “black operator” when they are literally running in the black, with a surplus of Value Units they have taken in trade for goods or services they sold back into the economy. Anyone selling gold or silver bullion for Value Units will want to know whether the A member buyer is a “red inker” or a “black operator,” because by the rules, anyone has a right to create enough Value Units to provide for their subsistence based on the rules, but only a genuine “black operator” is exchanging value for value.

Laurence Gilbert and others may demure, but there are realistic reasons why one would need to “pay unto Caesar that which is Caesar's” and there are likewise provisions that need to be taken to eliminate opportunities for fraud. Like it or not, I have more than answered Gilbert's objections, whatever they may have been.

When some of our designs for notes were shown around, we received responses like, “what is this backed by,” etc. Expressed more clearly by their tone of voice was something like, “if only enough people would trust these pieces of paper as much as they routinely trust other pieces of paper with appeals to local nationalism, etc.” People would actually like to have access to buy, sell and build capital in something other than national currencies and they are even growing suspicious of silver and gold too, as they recognize that these are commodities whose prices are determined by people in far away places. Lately some have found it difficult even to acquire specie. Money, real money, is nothing other than that which measures value. Specie's scarcity, contrary to all false arguments to the contrary, diminishes its usefulness as money.

Eventually, when the regular channels for trade are all exposed for what they are; frauds, opportunities for the elites to lie, cheat and steal their way to continued prosperity and rule over we, “the masses,” etc. who they have today and forever treated as nothing but “human resources” a euphemism for cattle, the international standard Value Unit and its network of independent exchanges will be there to take over the basis for trade. Up to that point, people may be paid in Value Units even if there is no means to spend them. We would expect that over time, sufficient “pools of capital” will enable financing and trade to continue. We suggest that the best people to invest with these pools of capital are normal ordinary people whom the system has used and misused; specifically military and law enforcement veterans and even those who currently labour “under the badge,” because when the time comes for the inevitable political crisis precipitated by the inevitable economic collapse, we want these people behind us not against us. It is as simple as that. Too bad people like Laurence Gilbert don't get it.

Over the next few months then, it is our intention to put together a slide show presentation, design and circulate for comment a brochure or two and then go out and meet personally with as many veteran organizations as we possibly can. Perhaps we'll even find members of our Steering Committee among them. We only need 3 IE's to form a VEN. After that, let the vines spread and the flowers grow.

For any further comments, please contact me at dpbmss@mail.com

David Burton

#32 Matters of Respect and Trust

We are all familiar with the plain aspects of social discretion when we are out and about in public; we refrain from pushing and shoving, from cutting someone off in traffic, from taking undue advantage of others based on matters of proximity or some other natural advantage, anything apparently except knowing something more than someone else, in which case taking advantage has become almost expected. But in most social instances, we plead for an atmosphere of mutual respect, lest there be excessive and needless violence leading to bloodshed. We recognize that all physical violence and bloodshed among human beings is senseless and to be avoided at all costs as ultimately accomplishing nothing of any positive importance.

We all know what this looks like and feels like in any civilized place on the planet. We do not of necessity require a government to nanny us about in these regards, as for the most part we can and do settle our own disputes. Common discernment regarding things as basic as what it is actually like to live and thrive in a particular place, including who we would be interacting with, forms the foundation of all our civilizations; we recognize what it is, looks like and feels like to be sane and civilized and to act in a sane and civilized manner, we understand the consequences of invading another's personal space, their property or themselves, etc. Thus, it is said that respect is more basic than love. We presume that social respect exists and that it is perceptible in all civilized societies and that it functions naturally and automatically without the help or interference of a state.

We have tended to regard states as arbiters or deciders of disputes which we cannot resolve among ourselves. We have likewise foisted upon states some really magical and extraordinary; impossible responsibilities, which upon more careful reflection, we realize could and should have better been observed and handled among ourselves privately and locally. But the accretion of state responsibility has been allowed to grow, and there have been those who were part of the problem from the very earliest times, who profited from wars and their preparation and sustenance, who were also in control of the political machinery and the propaganda media machinery and behind it all the money machinery, all now run according to some foreign agenda; foreign to every single sovereign country on earth and foreign to its people, whomever they may be. (Their latest push is to get control of the food machinery through GMO's. Again, their agenda is foreign to all localities.)

Many critics have jumped to the conclusion that the problems of this world begin and end with the actions of states. But individual people work for states, therefore it is they who become the beginning and end of all state problems. Were they to leave or resign en masse, there would be no state problems. Yes, the state has its share of blame for present problems, but we have insisted that ultimately much that is wrong in the present order of this world is directly related to the means of exchange, to the money and with the banking model and to all current practices involving conveyance of value in particular.

E. C. Riegel's analysis claimed that government never has any intention of splitting barter with anyone else in a trading situation because it has nothing to sell that anyone would willingly buy. Governments take by FORCE instead of selling back into the economy that which they bought with their spending. All their money, that is created as soon as it is accepted in terms of trade, is unbacked, except by the taxing power, or their power to take by FORCE by use of legal coercion, in order to balance; destroy, the money they create in the process of their spending.

Those claiming that “public” government “legal tender” money would be better if either backed by precious metals or balanced by taxation are oblivious to the fact that it wouldn't matter if either were the case, as government is not desired to participate in the market for goods and services anyone would willingly buy. For government to do so would complete the process toward communism, which of course as proved does not work. All our problems begin and end with government issued money whether by so called fiat or not. To us, all government issued money is by fiat and unbacked, whether it claims to have any gold backing or not. [2/20/17: of course since I wrote this, I have acknowledged that THEIR (globalist, central banker, elites) STOLEN fiat, THEY have actually STOLEN our will from each of us: the fiat to issue money belongs to each one of us and has been stolen from us.]  Meanwhile, to the man or woman out there using money to buy groceries, etc. it neither matters to them or not [nobody cares about money being "backed" as long as it works].. All they see is rising prices and that their money doesn't measure things as large as it used to, like having a shrinking ruler where every inch or centimeter gets shorter and shorter all the time.

Thus under present conditions, continual price inflation is inevitable, certain incredible bubbles are encouraged in the economy, and certain factors are privileged at the expense of others due to size; “too big to fail.” Economic stagnation due to other agenda objectives, also encouraged by the same elites, promises such structural unemployment worldwide as cannot even be imagined. The so called “masters of capital,” those who have managed to convince themselves and the rest of us that value rests in chunks of inert precious metals, who also have much of these tokens themselves, while at the same time they have built up a pyramid of paper, imagine that they are gods floating above the rest of benighted humanity and that their imposed agenda of sustainable development cannot be seriously contested and their unelected “experts” are beyond reproof.

The paper pyramids: At the end of most money transactions, we'd like to be able to find either a tangible good or service, rather than a credit gimmick promising more money at the end of a particular time period, etc. Many with money to retire on bought such “high yield” financial instruments over the last few years, only to see their capital (not wealth) devoured by market losses on these assets when their true risk was better known. What happened when the prices for these paper things crashed would have been predicted anyway.  

There is the taking advantage of the public through various deceits which are widely practiced; offering a return on idle money (savings) which is actually instead used as a temporary basis by a “fiduciary” for loaning many times the “reserves” by the institution in which one places one's money for savings. The logic is that the interest charged on loans is more than what the saver is paid and the institution claims the difference. What no one tells you is that the money to cover the interest must be gathered from others who are all in the same position of having to cover something extra that wasn't created. Money as presently conceived is an artificial scarcity and nobody is aware of this, except for a few bankers. It is a major deception played on a largely innocent public who are not aware of having done anything right or wrong and are at present being forced to accept “austerity” for whose benefit?

If you've been following along, you will recall that we have steadfastly referred to the information contained in The Babylonian Woe, by David Astle as core material for the understanding of our present situation; for most of the last 2,000 years, international trade has been in the hands of the same people who ran the brokerages for gold and silver, they owned the mines for the same metals manned by slaves, these same people prodded opposing forces into war with each other, sold them armaments that all remarkably seemed the same, as if the Romans, Carthaginians, Greeks, Persians, etc. etc. were all outfitted by the same people, because they were, and all this was offered to various warring regimes ON CREDIT with terms deciding payment based on the outcome of the war; the winner paid the debts of the loser as well as his own debts and the people of the losing nation became slaves, many sent off to be worked to death in the gold and silver mines owned by the brokers. This is why we say that nearly all the gold and a large part of the silver has human blood on it. This historical process has been going on now for … thousands of years. Why would anyone not suppose, once they became aware of it, that this pattern isn't perfectly alive and well up to this very moment?

The stone cold brazen facts include that all war making power and war making ability is a huge drain on everything else an economy accomplishes; the elites are literally placing the means of destroying value at the disposal of the homicidal maniacs the system naturally attracts and selling it to them all on credit! You all know who pays for it and how; taxes and inflation. As many who are really aware have been discovering, as they again take a good look at the money they hold in their wallets, literally holding and dealing in ANY of these national “public” fiat currencies, NONE of which is backed by any products or services we would wish to buy back from our governments, is supporting the war machine. One very good reason to be supporting ANY alternative to these so called “public” currencies, is as a matter of conscience; that one no longer wants to support such a system and regards FORCE to support it as adequate demonstration of a state's decent, decline and deterioration into tyranny.

This is a historical process that was underway long before any of us were born. There is honestly nothing any one of us can do to stop it, though we could admonish as many law enforcement and military people as possible to look into their own wallets and decide who they'd prefer to have as their friends; homicidal maniacs or we the people.

Through all of this, E. C. Riegel's insights concerning the government issue of money being illegitimate, makes a fresh evaluation of the money we are holding instructive. These are private debt instruments issued against government bonds. Many people hold these bonds, quite a few of them foreign nations. They are called sovereign debt and there is an organized market for their trade. In the case of the United States, it was recently stated that 50% of its current budget was for military operations. Behind those hundreds of billions of dollars lie contracts where the government buys things from private industry, specifically from companies affiliated with the biggest banks.

This is an age old alliance; get the king (a potentate is much easier to deal with than a democratically elected person, which helps explain much about current streamlining of enabling statutes) to agree to go into debt to them to get into a war with some other client of the same people over there. Other people's sons (and now daughters) die while these people become rich. I don't have to go into much further detail to underscore the essentially low character of those engaged in these businesses. No sane person would want anything to do with them; they would be shunned from participation in a free and open society.

But again, knowing full well how angry many out there have become, we nevertheless caution against retaliation, which is exactly what they are looking for to move forward the next phase of their plans, which ultimately intend worldwide genocide. Our message is “come out of her, my people;” to leave from serving the monster and leave it to its inevitable collapse. The admonishment is to “come out of her” lest you be associated with its crimes.

Since the entire system has become (indeed was nothing other than) a corrupt mess that neither you nor I can do anything about, it was E. C. Riegel's position and it is ours as well, that while political activism seems to inspire many and while we continue to watch it, we regard political activism as worse than useless. The leopard is unable to change its spots; a government that has the right to issue money by going into debt, or by any other means (sorry Bill Still and others who support “greenbackism”), is going to buy what it wants, not what the governed want, since one way or another what government buys is no longer their decision. Elections mean nothing. A redress of grievances likewise means absolutely nothing, since we are dealing with beasts (institutions) and the people who inhabit them, who are unaware, oblivious or otherwise incapable of even seeing their true situation in life.

Far above our heads, those with the most claims on resources (their money) behave as “savage babies” regardless of their chronological age; many are quite aged. We contend that success in life does not consist in attaining the position to be in attendance to any of these “savage babies” nor accepting anything about their criminal (posing as normal, official and lawful) system as sane, normal or civilized.

Our message has remained consistent, “come out of her, my people.” Instead of worrying so much about what they, the “savage babies” behind the curtains; Bilderbergs, etc. want you to worry about, start doing your own thing and get as many people around you to start thinking and doing the same. In order to make a new economy, start trading among yourselves using anything other than their money.

In order to be of further help, instead of a money issued as a debt to a private central bank, and having a different price scale for each currency, we offer the sensible alternative of a true independent international standard for measuring value, exactly as the metric system has largely streamlined other measurements worldwide. This Value Unit standard, once accepted by independent exchanges (IE's), becomes the new metric for exchange of value within a value exchange network (VEN).

Of course, none of this exists yet. Everything begins with identity. A hypothetical Value Unit has been proposed to become a true independent international standard for measuring value. It does not change with the price of anything it measures. It does not exist as an imposed scarcity tied to a scarce commodity. It is only as abundant as it needs to be to carry on trade. It acknowledges what it measures as part of a split barter where exchange of real assets, either goods or services, is exchanged. It functions best in black markets (our definition). It is capable of holding its value, proved against both gold and silver since 2011, therefore of being saved for larger purchases (begin thinking of money as a measuring rod rather than as itself holding value, therefore the more of it one has, the larger the value one is capable of measuring and securing in a trade for one's money).

As a bonus, the proposed international standard for measuring value comes with it the rules for its issuance and an organization model that would inevitably bring both poverty and war to an end.

We are now looking for those interested in getting the value exchange network (VEN) off the ground. At a bare minimum, we would need participation of enough people to form three independent exchanges (IE's), with a combined membership of 15,000 people and 900 businesses in three distinct geographical locations. It's pretty easy to understand that those with independent means are the most likely to have the time to devote to initial development efforts, determining certain operating aspects in open discussion, hammering out the details, working on the brochures and other promotional materials, participating in the local ad campaigns, etc.

To continue this discussion off line, please contact me at dpbmss@mail.com

David Burton