Now,
before getting on with the topic of this post, again I would like to
lay before the public a few incontestable facts, and so a little
digression -”oh dear, not another one of those”- well, we'll
attempt to keep it short:
1.
We originally pursued the ideas of E. C. Riegel because his
observations and solution represented quite literally the only
foreseeable way forward in solving an age old problem; the
money problem. We started from his rough pencil sketch, and
developed a proposed system described throughout this blog. Our
mission from before the very beginning was to honestly help humanity
from destroying itself, or more precisely from being destroyed by a
few who are certainly and quite plainly nothing more than a bunch of
insanely rich savage babies (just look who is running for POTUS this
year). One cannot do what one wants if one is attached in any way to
such as these. The attachment to THEM is through THEIR money which
it has been on purpose claimed belongs to you and me when that is and
has always been a deliberate lie and mass deception on the part of
the people who presently operate the present machine (regime).
Regime change is meaningless without replacing the money machine and
forbidding forever the ways in which it operates and the ways in
which it has been constructed as organizations. And THEY have most
people fooled into believing that gold and silver coins would be
better. Sheesh!
2. Our contention since the beginning of this blog's inception was that what we know of as money or a monetary system is in fact nothing more than an accounting machine. We infer from this assertion, and directly from it, that the circulating tokens operate best when they are least expensive (Gresham's Law in reverse, which happens to be an actual natural law). Therefore circulating precious metals coins is out. We stick with paper tokens, as nice as we may choose to make them, as these represent the outward manifestation of OUR money. When the time comes, we may have a wide enough membership that laws are repealed and coinage can become used for our smallest denominations. Using the proposed system, a cend, cento, fen, the smallest particle of our monetary system, is worth around three cents American. Our idea here is that any coins would actually be usable weights for things of more value such as precious metals coins. It would likely be based on the decimal Troy ounce system.
3.
What do we say to “gold bugs?” Ask them why their gold doesn't
buy as much as it did in 2011? They'll have no suitable answer. Ask
them if they know for sure that a “silver certificate,” “gold
certificate,” “Gold trade note,” or whatever gaudy
pronouncements on these tokens proclaims, determines whether they are
holding a certificate to supposed “real money” (gold and or
silver usually, sometimes platinum) or whether the “backing” for
this certificate hasn't already been loaned out 9 to 1 in a process
that's been going on since antiquity known as fractional reserve
banking? He wont know and might even be baffled by the question.
Ask him how it was possible on both a gold and silver standard that
banks went bust. He might not know. Our proposal is good enough
that this simply doesn't happen, ever again. As long as
people adhere to the basic rules, no independent exchanges should
ever go down, ever. Recall though, it isn't money that has
any value in itself, it's people that have value and if some of those
people decide to maintain and be part of what it takes to operate OUR
monetary machine, then it will continue. No exchange is ever going
to be lending money to anyone. That's for individual business
members to do. Finance becomes a separate business from transaction
clearing.
4. What do we say to people who dismiss “fiat money” solutions? We council them that they have been purposely misled and this propaganda has been going on from bankers since before the launching of their first central bank, the Bank of England. The fiat to issue money DOES NOT BELONG TO GOVERNMENTS. Please read Riegel on this point. But come on people, where would the natural power to issue money ultimately come from? FROM EACH ONE OF US! Therefore, whether it was by deliberate intention (and it was in part) or by accident, the fact remains that the present order has usurped the natural fiat to issue money from each one of us! Once this bridge is crossed, and that bridge burned behind you so that you never again go back across it (we're speaking about ideas, intellect and intelligence here) then we can move forward with the solution.
Now that
wasn't so bad, was it? Let's take a look at Riegel's Private
Enterprise Money, chapter 7:
We
come now to the crux of our problem in determining the money issuing
power. Through the traditional bank credit practice, which is an
outgrowth of the ancient aristocratic attitude, our minds have become
habituated to attributing creditability to possession of material
resources. We
should be careful not to borrow mental attitudes from the autocratic
political money system which we are undertaking to renounce.
There is no psychology of grant in our system. Everything is predicated on rights and mutual interest. There is none among us who is endowed with special powers, hence there is none that can favor others. We are pursuing the ideal of a true money system because money exchange is indispensable to all of us. We are interdependent. We are interdependent because we have discovered that we can exploit ourselves fully only through others.
There is no psychology of grant in our system. Everything is predicated on rights and mutual interest. There is none among us who is endowed with special powers, hence there is none that can favor others. We are pursuing the ideal of a true money system because money exchange is indispensable to all of us. We are interdependent. We are interdependent because we have discovered that we can exploit ourselves fully only through others.
Didn't
I say just about the same thing? We are undertaking to renounce,
he says it right there, THEIR money and THEIR system. We are saying
“come out of her, my people” into a true money system, which
THEIRS is not. By the way, drive down every street in the civilized
world and you see wires strung along everywhere. One might believe
that this is the only way such things as electricity and
telecommunications can be handled or dispensed. We have the same
naive and ridiculous notions everywhere that never get confronted and
therefore are allowed to continue leading individuals, communities,
peoples, and entire nations in misleading directions. We assume much
the same about money and banking issues. Frankly, most people detest
money and the institutions connected with it. They know
instinctively that what they are dealing in is NOT theirs, but
continue believing that it is because some things have always been
the way they always are and etc. etc. The next three paragraphs
cover some issues we'll point out:
If we make all we consume, we must live a very low standard life.
This
is the truth and the facts of life; if you want the advantages of
civilization over barbarism, and are limited to literal subsistence,
then you of course need no money and are limited to whole barter for
anything you might think you want or need.
If
we make things that others consume and others make what we consume we
raise our standard of living. This requires exchange and as we have
seen, money is merely a device for facilitating exchange and hence a
means of exploiting our own wealth producing capacity.
Another
improvement we feel absolutely necessary for all our members to get
is that all true
wealth must produce income
and that here Riegel is probably using wealth in its usual sense as
mere stuff that could possibly be sold for cash. Meanwhile the
phrase, our
own wealth producing capacity
is far closer to our understanding of innate wealth; that which comes
forth from you that produces a reward in money terms is your innate
wealth.
But
let us not be confused by the exchange process. It does not, or at
least should not, alter the rule that we
consume only what we produce and produce all we consume.
This
renders the following: consuming more than one produces is only
legitimately possible when one produces enough to cover the expense
of one's consumption. When things get really out of whack, as they
are now, whole nations can consume, while they have not produced
enough to sustain the cost of their consumption. The fault is
actually not among the peoples or cultures, but brought about by the
bad distributions and consequent poor choices that affect more and
more people adversely all traceable back to the sources of all
present money.
Though
each of us is but a very small part of the vast mechanism of
production and perhaps apply our minds and hands directly to none of
the things that we use and consume, yet all we acquire is of our own
making. Regrettably, most of us have made even more than we have
acquired because our unfair money
system has caused others to gain some of our production through the
deceptive processes of exchange.
And
here is an indirect slap at the banking and finance practices of his
day, which have not changed very much. He calls it “unfair,” but
that's probably not the sense most on the contemporary political Left
might intend it. All they'd probably like to see happen is that the
present system lend out more money to more people regardless of
whether they can make anything of the money lent or whether they may
ever pay any of it back, with interest which was never created of
course. This has been tried again and again with less than positive
results.
If
we make all we consume and consume all we make, does it not follow
that each of us is his own customer and that a
true exchange system is one that permits us to buy from ourselves
everything we produce and nothing more?
He may not have known it, but he just stated a definition of what “fair” might mean concerning a monetary system; the reason money is never unlimited to anyone is that no individual has produced unlimited production.
He may not have known it, but he just stated a definition of what “fair” might mean concerning a monetary system; the reason money is never unlimited to anyone is that no individual has produced unlimited production.
We're
defining production one way or another by the way as work.
Recall our precise definition of work? It's time
requisitioned, taken out of the rest of your life to earn money to
barter your existence. So literally the more you work
(production), under the proposal, the more Valuns there are
and therefore the more with which you can barter for your
consumption.
If
I be a shoe maker and desire an automobile, I can make that
automobile by making shoes and when I have made an adequate number of
shoes, I should come into possession of the automobile. The
transformation of the shoes into the automobile is the service that
exchange renders to me, and the transformation of the automobile into
shoes and other things is the way exchange serves the automobile
worker. The function of exchange is
to transform our production into the things we want.
He's stated the split-barter function of money here in a different way. He seems to wrap up this reciprocity idea of a fair balance of consumption and production,
He's stated the split-barter function of money here in a different way. He seems to wrap up this reciprocity idea of a fair balance of consumption and production,
If
we would be fundamental in our thinking we must conceive it not only
the right but the duty of each of us to consume all we produce, or,
putting it in exchange terms, we must buy all we sell. If we would
sell, we must buy and, therefore, the solution of the problem of
selling our services adequately is to buy them adequately, indirectly
by buying the services of others. The reciprocating movement is that
others buy their own services, indirectly by buying ours. To
permit the natural action and reaction of exchange to bring us
boundless prosperity and security, each of us must be enabled to
invoke it through our inherent money issuing power.
He grasps at it without coming to our more modern conclusions; in order for us to do all this better and more naturally, we must have our own money. More of THEIRS simply wont do. There are far too many extraneous and erroneous strings attached. We do NOT accept government sanctions for trade (you must buy this or that) as legitimate AT ALL and are evidences and instances of a tyranny everywhere they occur. Riegel continues,
All our economic ills are traceable to the folly of believing that our buying power can be vicariously exerted, i.e., that the government and those few who have bank credit can do it for us. They can no more buy for us than they can produce for us. The wealth producing power must be coordinated with the money issuing power and reside in the same places - namely, in everyman.
He grasps at it without coming to our more modern conclusions; in order for us to do all this better and more naturally, we must have our own money. More of THEIRS simply wont do. There are far too many extraneous and erroneous strings attached. We do NOT accept government sanctions for trade (you must buy this or that) as legitimate AT ALL and are evidences and instances of a tyranny everywhere they occur. Riegel continues,
All our economic ills are traceable to the folly of believing that our buying power can be vicariously exerted, i.e., that the government and those few who have bank credit can do it for us. They can no more buy for us than they can produce for us. The wealth producing power must be coordinated with the money issuing power and reside in the same places - namely, in everyman.
All
the underlined I'd summarize as ANY of the so called “Constitutional”
or “interest free greenback” solutions of Bill Still (whose work
I still appreciate) and others who honestly (though mistakenly)
believe that without government issuance one dispenses with civil
society. As we've said now a few times, most people are fully aware
of what SANITY is (though there may be occasional pockets of people
who are communally INSANE by their practices) and would like to live
their lives with the REASONABLE EXPECTATION of continuing peace. I
believe that Riegel intended the word everyman here, so I decided to
get a little more info on that word. Wikipedia had
Everyman - In literature and drama, the term everyman has come to mean an ordinary individual, with whom the audience or reader is supposed to be able to identify easily, and who is often placed in extraordinary circumstances.
Riegel also said and reside in the same places and here we have places where ordinary individuals are placed perhaps as in these days in extraordinary circumstances. Here we're saying that these places are to be our private exchanges and designated offices (Riegel's Valun counters).
If exchange plays no tricks on us, all of us are working for ourselves; all of us are buying from ourselves; all of us are selling to ourselves. Now what are we buying and what are we selling? We are all buying and selling the same thing. This is human energy, mental and physical. There are infinite varieties of human energy in physical form but, basically, there is but one commodity in exchange and that is human energy. It is the only value.
Everyman - In literature and drama, the term everyman has come to mean an ordinary individual, with whom the audience or reader is supposed to be able to identify easily, and who is often placed in extraordinary circumstances.
Riegel also said and reside in the same places and here we have places where ordinary individuals are placed perhaps as in these days in extraordinary circumstances. Here we're saying that these places are to be our private exchanges and designated offices (Riegel's Valun counters).
If exchange plays no tricks on us, all of us are working for ourselves; all of us are buying from ourselves; all of us are selling to ourselves. Now what are we buying and what are we selling? We are all buying and selling the same thing. This is human energy, mental and physical. There are infinite varieties of human energy in physical form but, basically, there is but one commodity in exchange and that is human energy. It is the only value.
So
again, what we have said all along is that without people, nothing
that is said to exist can possibly have any value, therefore no THING
deserves to be the basis for value other than ourselves. This is
another fundamental understanding of what we call OUR legitimate fiat
to issue money. What Riegel calls Labour we call work but they are
the same thing.
Others
have comprehended this and from this premise - that all value is
labor, and that money is based on value - have reached the
conclusion that money must be based on labor, and rightly so.
The fatal error, however, that labor money planners have made
is that they set a measure of labor, such as an hour, as a unit of
value. This destroys the entire function of exchange, which is to
evaluate labor. When exchange is not free to evaluate, it is impeded,
and when exchange is impeded, production is retarded.
There
are these days many hours based complementary monetary systems
afloat. Some have managed to stay viable longer than others. That
most are directly based on their local “public” currencies rather
than to another independent standard, is also a detriment. His
critique may explain why such systems are mere playthings tolerated
by the powers that be because they know they are mere playthings.
The proposal of this blog is entirely different. It strikes at most
of the roots of the present deformed order. Whereas the present
complementary money systems, especially those based on hours, never
really pose any serious competition to the present system, this
proposal does; we intend for OUR money to survive theirs and our
network and systems and people to survive thrive and prosper after
THEIRS is long gone. This is something we decide to do not just for
ourselves, but for our children and grandchildren.
While it is true that labor, mental and physical, is the only value – and therefore the sole commodity that passes through exchange - it does not follow that labor is uniformly valuable. To state that all value is made up of labor, is not to state that all labor is equally valuable or even that all labor is valuable. Labor may be wasted; it may be so unintelligently applied that it is worthless.
How
many instances do we see of this everywhere today? How much of this
unintelligently applied and worthless labour is actually encouraged
by the present order?
In
the many efforts to set up a labor money system, we see how logic
based on a sound premise has been frustrated by the old habit of
undertaking to establish a fixed unit of value for money. This
inability to comprehend the
abstract value unit
which our system comprehends - has been the undoing of all money
planners of the past. In truth, all money systems that have existed,
and all that can exist, are labor money systems because there is
nothing else upon which a money system can be based, since it is the
sole value. But a money system can, and all thus far have, distorted
the exchange process of evaluating labor
to the prejudice of the many and the advantage of the few.
… and
we might add that therefore and isn't it obvious? that most of those
with “more money than God” are “the few” spoken of here and
have theirs, and we do not want theirs, far more than most everyone
else in society. Theirs has been the
distorting of the exchange process
of evaluating labour whereby some people by flicking a few switches,
making a few orders, etc. can make “on paper” instant profits of
many tens of thousands of dollars, while someone with as much natural
intelligence, spends the same time scrubbing floors and cleaning
houses to earn meager pay. The general population is growing quite
disgusted by this disparity. For a few with nothing particularly
special about them, sorry, to have way more than most people for no
apparent reason but that those with the money to bestow have deemed
them worthy, is frankly a tyranny. Do you want out? Where's your
money?
We
are all laborers and therefore fountains of wealth [innate
wealth],
in that we emit human energy, but we must direct that energy the way
our fellow laborers would like it; and in the measure in which we
respond to this demand will our energy be valued - and not by the
time we have consumed in projecting it, nor by the sweat and toil
that we have sacrificed. In turn, our fellow exchange participants
must project their energies to our liking. These processes of
projecting and evaluating energy are the function of exchange and,
after evaluation has been determined, money expresses the evaluation;
but money,
if it is true, will have no influence whatever in determining the
value.
Money
is not a measure of value; it is a method of stating a value
determined by exchange.
This is really boiler-plate for the foregoing. But note the summary: he would prefer us NOT to confuse two ideas, the money as measure of value idea with the METHOD of stating a value determined in exchange idea. We prefer considering money as a value yardstick with “whatever it takes” in units of measure to “state a value determined by exchange” as long as that yardstick needs to be to purchase or procure whatever it is that is the value measured.
He means to say this in order to get out of our minds, remove from contemporary thinking, any ideas associated with “the intrinsic value of money” baloney. Exchange is always barter. Money merely splits that barter so that each participant can “buy from himself” what he/she needs. It's either barter or it's split barter.
This is really boiler-plate for the foregoing. But note the summary: he would prefer us NOT to confuse two ideas, the money as measure of value idea with the METHOD of stating a value determined in exchange idea. We prefer considering money as a value yardstick with “whatever it takes” in units of measure to “state a value determined by exchange” as long as that yardstick needs to be to purchase or procure whatever it is that is the value measured.
He means to say this in order to get out of our minds, remove from contemporary thinking, any ideas associated with “the intrinsic value of money” baloney. Exchange is always barter. Money merely splits that barter so that each participant can “buy from himself” what he/she needs. It's either barter or it's split barter.
If I use gold or silver it's barter and who determines the current trading capacity of a troy ounce of gold bullion or any of its subdivisions? Is it you or me? No. So this “solution” is again a FALSE and a misleading idiosyncratic mental contrivance from our ancient past which should be resoundingly discarded.
Likewise,
and I want this heard for exactly what I say, ANY so called
“securities investment,” especially when thought of as something
to have when there is “blood in the streets” is ridiculous. I
don't care whether one man made millions doing this, it doesn't mean
whole herds of people (sorry, but that is appropriate too) will ever
become rich by doing so. There might not be any securities exchanges
in the future whereby to trade for whatever passes for money when
that time comes. So what is it? It's a typical con by the “market
makers” for various securities offerings to find dupes who will pay
money for them, simple as that. Sell with fear and greed and collect
whether up or down. Wonderful, isn't it? Some make their livings
-barter for this innate wealth of theirs- to do these kinds of
things. Is it productive? Is it anything needful? Does it
accomplish anything? It does actually. It creates more economic
black holes that are worth (on paper) far more than any income they
are capable of producing.
The
United States has many centers we call cities, but three of them, New
York, Los Angeles and Washington are chiefly given over to
trafficking in “produce” of questionable value. A fourth Boston,
also peddles something increasingly not worth what most pay for it.
We could similarly consider the various centers around the world as
similar to these.
What
did the centers used to look like? They were productive. They made
things, and some still do, places in Germany and China for instance.
Within any one city there were redundancies, there were competing
products, there was nothing built that couldn't be readily sold, so
economies of scale were preserved.
One of the big problems with the present system is that it is NOT natural. Since the money did NOT originate from someone actually doing something, there is misallocation all over the place. This causes nothing but bubbles; fake economies generated by injections of counterfeit money (all government issued or bank issued money is counterfeit according to Riegel and accordingly to us). Our solution is natural. I merged the two following paragraphs:
One of the big problems with the present system is that it is NOT natural. Since the money did NOT originate from someone actually doing something, there is misallocation all over the place. This causes nothing but bubbles; fake economies generated by injections of counterfeit money (all government issued or bank issued money is counterfeit according to Riegel and accordingly to us). Our solution is natural. I merged the two following paragraphs:
The
ideal we are striving for, therefore, is to
keep money neutral in the exchange process;
and to do this we must make it available to anyone who wishes to
utilize it within certain bounds. These bounds are not easy to
determine. The principle can, however, be simply stated thus: Every
person or corporation is entitled to create as much money – by
buying, as he or it is able to redeem - by selling.
We
accept this but make the following observations and changes:
A
corporation or “body” may be “private” or “public.”
Private corporations have owners, have partners, have general
partners and limited partners. Public corporations sell shares to
the public to raise money and are hence “owned” by absentee
stockholders who have no stake in the business other than its
revenues and profit margins. They have the freedom to pull out of
said bodies whenever they feel like it by selling their shares. We
believe that private corporations are suitable as candidates for B
members with the following absolute requirements; all owners,
partners, including all limited partners must be A members of the
same exchange. The B member business will get an account and each of
the A members will have accounts. Public corporations we regard as
dangerous and illegitimate and therefore they are forbidden
membership; its like saying that some design is of such a nature that
it would disrupt and corrupt our attempt at a better system. They
are literally economic dinosaurs fitted ultimately for extinction.
As we have pointed out, each of us is basically his own supplier and his own customer. The exchange process is in fact a shuttle movement. The shuttle goes from us laden with our energy and returns it to us transformed into the energy of others. Or it comes to us first and we return it. The movement is initiated by money power; and whoever lacks money power is unable to start the shuttle. An economy that restricts its shuttle starters, limits its productivity. The power to start the shuttle is really the power to buy from one's self, i.e., the power to create demand for one's own services. A true money system must make this power available to all.
Therefore
as individual human beings, if you are able to abide by our simple
requirements, you are eligible for A membership. Your labor
contracts, wherein you simultaneously work for Valuns as you earn
dollars, euros, pounds, yen, rubles, etc. is going to be with the
exchange community instead of your corporation or state authority.
You would be responsible to collect dollars and pay all taxes,
including those associated with your Valuns. We expect by far more
Valuns will enter the system this way than any other way, but more
would be done if paid in Valuns and enough dollars, euros, pounds,
yen, rubles, etc. to pay taxes. You "pay unto Caesar what is Caesar's"
with THEIR money, including all debt in their money, and spend your
Valuns on the rest, from sources that will spring up to take those
Valuns which are designed to preserve their purchasing power from the
outset. Riegel continues,
While
the power to buy induces demand to sell, it does not follow that this
reciprocal invariably reacts on a particular buyer, for he may not
have the particular value for which a demand has been created.
You
may be the best at a particular skill which has limited or no use
because it has been superseded by newer (not necessarily better)
technology, or application.
Therefore,
we cannot solve the economic problem by merely providing money power
and multiplying shuttle-starters. If the problem were as simple as
this, we could establish the money creating power for everyone
without limit on the assumption that selling would automatically
balance buying in each case. Buying does create demand that reacts on
some seller, but not necessarily on the one who created the demand.
There is, however, no way of determining in advance whether a
particular buyer may create demand for his own wares or services.
Since this is so, it is obvious that exchange can operate only
on a trial and error basis. The problem we must solve is how large a
margin of possible error shall be alloted to each member of the Valun
Exchange.
We
sort of solved this issue by considering that the various states
already decide what a minimum wage job is and therefore there are
differences based entirely on location. It is usually more expensive
to live in California, New York, Massachusetts, etc. than it is to
live in Mississippi or Texas. We saw no reason why not to accept
these as comparable minimums for the amount of Valuns we allow the
poor to issue. We reason as follows:
1)
The poor must spend everything therefore their money goes to the most
productive.
2) Having too many people spending without enough
people producing produces imbalances such as are occurring everywhere
in the known world. If you have a few “black holes” which have
solved the production problem such that they can afford to park
unsold vehicles in parking lots that go on for several square miles
in countries such as the UK and USA, then what's the problem? Too
much was produced and anything over produced was and is a waste of
time, effort and resources. Not enough people have what it takes to
afford one of these vehicles so therefore they are kept -why aren't
they destroyed? Because that too is an unpaid for expense- from the
market and only released when and if shortages of parts, assemblies
or whole vehicles are required, usually through insurance claims
against accidents, etc. Some critics have held that too much fiat money entering a market at once causes instant inflation, but NOT ALL MONEY PARTICIPATES IN EVERY SALE so therefore this explanation does not represent the entire story. We said, and Riegel had an example, that prices for anything in Valuns were initially really only what they are when applying the dollar (or whatever local “public” currency) to Valun conversion:
For
V1 = $2.65
1
lb ground beef (regular) = $3.73 = V1.41
1
gallon gasoline (regular) = $2.36 = V .89 (89 cend) or between V½
and V1
1
lb beef steak (most regular cuts) = $5.73 = V2.161 lb bacon = $5.37 = V2.03
1 dozen large eggs = $1.50 = V .57 (57 cend) or half a Valun.
Similar
data can be obtained from the usual public sources and of course
prices will vary form place to place.
The
best that we can do is to set up a policy subject to amendment as
experience may dictate. While there is possibility of error this
should not intimidate us, because greater harm can follow from erring
on the conservative side. Exchange must not be impeded even though
some exchanges
fail to realize their ideal. It is better to allot too much money
power than too little - because it is impossible for successful
exchange operators to willfully abuse this power; while it is
possible to starve potentially successful operators.
Therefore, as long as anyone meets the criteria they are in as A members and allowed this minimal money issue for their subsistence or “natural socialism” for as long as needed, but as more Valuns appear and are traded, some of these poor among us may end up actually working their way out of poverty. We know of no other system capable of offering as much opportunity as this.
Therefore, as long as anyone meets the criteria they are in as A members and allowed this minimal money issue for their subsistence or “natural socialism” for as long as needed, but as more Valuns appear and are traded, some of these poor among us may end up actually working their way out of poverty. We know of no other system capable of offering as much opportunity as this.
With
any other system, one is faced with dealing with special interests,
special people, special instances where someone's monopoly special
interest must be considered, etc. because there are loans outstanding
that might be threatened if business were slackened, etc. There is
always more milking of the poor by the rich in these schemes and they
all pretty much suck. Riegel continues,
To
illustrate: Suppose a member has a debit power of 10,000 valuns,
i.e., has the power to overdraw his account to the extent of 10,000
valuns. Assume that he has drawn down for his buying to the extent of
5,000 valuns when returns began coming in from sales; and these
current income credits on his account then equaled or exceeded his
current expenditures. It would be impossible for him to create more
valuns, because they could be created only by diminishment of his
income - since the income would cancel valuns as fast or faster than
he could create them. Money income
destroys money creating power, as money can spring only from a debit
balance. Only the moneyless can
create money.
Riegel
is pointing out a few things here. We'll start from the top. He
refers to a poor A member with a debit power of
10,000 valuns. We would approximate
this by saying that a poor A member had been allowed to issue
V10,000, probably by the month too, so this would amount to V833.33
per month. This member spends down to V5,000 before his sales (see
he has something going) are equal to or exceed his expenditures.
Let's
say he has now an additional V1,000 from sales. That's not enough.
He has to equal or exceed what he has spent, V5,000, so therefore he
needs sales of at least V5,000 to clear his issue. So this A member
is going to have to reach V20,000 (V10,000 from revenue and V10,000
from his own money issue) before he is profitable and can have his
right to issue more “free” Valuns curtailed. This follows the
replacement rule in merchandising inventory; your sales price must
cover the replacement cost of inventory. The larger the item, the
less margin. This is just to indicate what it takes to be “on
one's feet” financially. We aren't concerned or interested really
in anything THEIR systems may offer or FORCE people to accept. We
must devise a monetary system that is fair, just, and correct so that
human action thereafter determines the course of events.
Now
the following will be instructive,
It
would be impossible for him [the poor A
member] to create more valuns, because
they could be created only by diminishment of his income - since the
income would cancel valuns as fast or faster than he could create
them. Money income destroys money
creating power, as money can spring only from a debit balance.
Only the moneyless can create money.
Haven't
we said all along that ALL money is a representation of debt?
Haven't we also said that everything is still barter?
Haven't we also said that no barter transaction is settled until it
is settled in goods and services, NOT money? Haven't we also pretty
much said that economics is bunk but accounting essential? We're
about to let another cat loose.
Thus,
the Valuns created by an indigent A member are what would normally be
considered an overdraft of an account or a negative balance; a
debt. It is however a different question to ask how many Valuns
an indigent A member gets to create vs. how many Valuns does it take
the indigent A member to earn enough to cancel his right of issue.
It could be a 1 for 1 consideration, but we don't want that, and this
is why: we know that the poor are often those who have not worked for
a while or maybe ever and may require getting back into earning
Valuns (or any money) slowly. We are prepared to advocate therefore
a “sliding scale” of our own devising which shall make getting
out of poverty easier.
The
money issuance allowed all A members is based on whether they have
money from elsewhere covering their subsistence. If I ask someone
how much per month do they get in any currency, I can then usually
come up with a comparable figure in Valuns. If I take the hourly pay
scale of minimum wages for each state and determine what that is in
Valuns per month, and the figure the A member gives me is higher, I
just deduct the minimum for what he tells me he's earning and if
higher, he has no need to issue more Valuns than he is earning by
working. Here's an example:
Let's
say V1 = $2.65. An A member, Tom, tells me he's getting $16/hr and
he lives in New York. Tom's rough pay is $32,000, or for our
purposes, $2,666.67 a month. Maybe as much as a third of that Tom
never sees, as they go to paying taxes. So for New York, let's say
the minimum wage is $9 which gives a yearly income of $18,000 and a
per month income of $1,500. That would be at or near indigence for
any A member living in New York. So Tom is clearly over the limit
and doesn't get to issue Valuns for being poor.
But
since Tom is already earning Valuns along with his regular pay in
dollars, he's decided he can afford the extra taxes for V5,000 or
$13,250 per year and even though Tom's employer is not a B member, he
can still do this, he earns V416.67 a month. Tom spends his Valuns
on what he needs from other members of his local exchange and pays
his dollars for all those things needing payment in dollars. He also
saves more dollars to pay the extra taxes he anticipates on his
Valuns.
Tom
has figured out a way to give himself a $13,250 raise without asking
a dime more from his employer. Listen up, people! The reason things
don't get done and economies don't move is due to lack of money paid
for work done. Riegel was writing in the late 1940's and early
1950's and he saw even back then that labour was universally
underpaid. Tom has found a way to increase his yearly income from
$32,000 to $48,000 and it cost society little or nothing and in so
doing Tom actually contributes to spurring on his local economy, so
everyone lives better, as does Tom.
Oh,
and one more thing before continuing, Riegel says, money
income destroys money creating power.
We certainly don't want his usage misunderstood. We think destroys
a little extreme, we prefer cancels or nullifies instead. It's
simple accounting; if your money issuing power is based on a
community determined (through contract of course) overdraft, then you
are in negative territory until such time as you can buy yourself a
job or find another way to earn Valuns. Wealth is still that which
produces income and any and all income from legitimate and productive
goods and services sources is good and positive and leads to positive
balances and better living conditions.
The
normal experience of business is that income and outgo keep
approximately abreast of each other; and our purpose is merely to
provide a margin of discrepancy. In some industries this is larger
than others, due to the length of their turnovers. Some industries,
particularly the farming industry, must expend for a long period
before returns come in. Others - for instance, the retail grocery
business - have a lag of only one to two weeks between outgo and
income.
Where
this paragraph has particular significance to us relates to our
credit contract intentions.
Credit
contracts are of course the basis for our finance structures and they
rely on various ways to prevent uncreated money being asked back on
borrowed money as well as forbidding anyone to lend money they do not
have. Mostly if you would borrow money, there would be a schedule
appropriate to your business as Riegel describes AND you would be
required to pay the cost of borrowing any Valuns up front. Let's
give a quick example:
It's
February. Jack is a farmer A member in Texas. He has only V250 on
his personal account and the same for all the other accounts but has
V650 in his farm account. His farm is a B member, as Jack, his wife
and four sons work the farm with him, so his farm has an account.
They are all A members with their own accounts too. He operates from
mid April through mid October and requires financing to handle
expenses through the season before he reaps the harvest in October
and gets paid for his crop. Let's say his crop is expected to gross
$75,000 but he needs $30,000 up front to get it going and another
$10,000 by mid season. Has Jack any dollars? Well yes, he has maybe
$40,000. So let's turn this into Valuns and see what's what:
Again
at V1 = $2.65, Jack's crop is potentially worth V28,301.89. His up
front requirement, V11,320.75 and he needs an additional V3,773.58.
He decides he can spare $5,000 but still needs the $25,000
(V9,433.96) to begin. Meanwhile Jack has listed the things he needs
and the Valuns required at his local exchange or on line where other
exchange members can see his requests.
Jack
gets fulfillments of V5,000 and must pay up front the cost of a 7
month contract or bill
(others call debt obligations of this kind a note even if it is less
than a year, but we wont). Let's say it's 10% or V500. V500 =
$1,325. Wyatt, the financier A member, contacted Jack and Jack whips
out the dollars and gives them to the financier. Wyatt says, “no
Jack, I need Valuns.” Jack goes to the exchange and whips out his
$1,325 and hands it to the cashier and he gives Jack 10 V50 V-Checks.
The $1,325 goes to buy gold or silver at whatever THEY say it is
worth and that goes into the IE's vault. IE cashiers will normally
throw all that “public” money into canvas sacks and deliver it to
the precious metals dealer (also a B member) right after closing on
each business day. So Wyatt has his Valuns and writes a check or
calls a cashier or texts him over an app, it could be done a number
of ways, to debit his business account V5,000 and credit Jack's B
member farm account V5,000. Full payment is expected by November
1st.
Now
it's mid season and Jack needs another V3,775. Wyatt is willing to
lend this amount to him as long as he pays the rental fee up front
(V378) and Jack agrees to pay the rest also on November 1st.
Jack has the Valuns this time and writes Wyatt a check on his B
member account for V378.
At
the end of the season Jack's crop gets harvested and sold for $68,000
or V25,660.38. Jack pays back his bill with Wyatt of V8,775 (earns
points on his membership status for completing a contract) and
retains V16,885.38 = $44,746.26. Now does Jack owe taxes that have
to come out of this? Probably. He's decided nevertheless to slowly
build the balances in his Valun accounts as these are his family
lifeboats. Jack has plans for his sons and wants to help them
get established and has learned that “the only way to save money is
to save money” and has taken to saving as much as he can.
Meanwhile he pays off all that is required in dollars and spends his
Valuns on local food and entertainment as well as other things his
wife and sons are interested in. When your exchange membership is
high enough, there's bound to be quite a few that are ready and
willing to accept your Valuns as they will be earning theirs as well.
Now
continuing with Riegel,
A
study of the turnover of various industries should be made as a guide
for variations from a general rule. As a general rule for the
initiating of trading on the Valun Exchange, we propose the
following.
Each
employer would list with the Exchange the names of employees who are
members of the Exchange - together with the amount of salary payable
to each over a three months period, including officers and owners.
Under
the proposal, A members may work for B members (encouraged) or they
may work for other businesses or state authorities that cannot be
members. Where B members are the employer, their A member employees
are self-financing; they issue/pay forward their pay in Valuns to the
B member. We would at present start with six month contracts rather
than 3 month ones. All of these contracts could be extended, changed
or terminated. These are what we call Labour Contracts and they are
one of the ways Valuns are issued. When you buy a job, the Valuns
were issued and paid to your employer and paid back to you on
successive pay days for work you did. Since the money you issued
bought your time and paid for it, those Valuns represent a closed
monetary circle and cannot contribute to inflation; the time you
worked backed the Valuns you issued. This is the only way one can
say that one is paid in their own money; they were never bought. The
decision to accept your employment offer on the terms desired was
also determined by the employer based on his cost basis for eventual
products for sale to the public or to members of our private
exchanges.
The
amounts, so stated, to constitute the debit limit of each such
employee.
Stated
again, this debt limit or limit to the amount of Valuns created is
covered in the proposed Labor Contracts.
Each
such employee-member to be authorized to write checks up to the limit
stated. The amount of the stipulated salary to be credited to the
Exchange account of the employee as earned and simultaneously debited
to the employer's Exchange payroll account.
It
is this B member's exchange payroll account that is credited with the
entire sum of the Valuns on the employee's contract, thence to be
paid back as stipulated on the contract. The employee's debit is
accounted for on the contract rather than on the employee's exchange
account. As the terms of the contract are fulfilled, the debit is
canceled.
Checks
written by employees to be debited to their accounts. No further
payroll process would be necessary. Thus the money creating would
begin by employees writing checks for their needs. If employee A had
a salary of 100 valuns a month, his debit power would be 300 valuns.
In other words, he could overdraw his account up to 300 valuns.
In
our proposal, as part of the self-financing of labour, we have
granted the interest free float to the B members. The A member gets
what his/her contract says they get paid in Valuns every stipulated
pay period until the contract expires. New contracts may be for
longer periods and probably more Valuns too. Riegel goes on to say,
The
employer would have two accounts, a payroll account and a commercial
account. His payroll account to have a debit limit equal to his total
payroll for three months. His commercial account to have a debit
limit of 1/2 this amount or as much more as the class of his industry
entitles him to as determined by the industry study of turnover.
In
general we like the idea of two accounts per B member, a
labour/payroll account and a regular commercial account. But his
were rough pencil strokes. We'd say that all Labour Contracts within
the VEN would involve accounting between an employee's A member
account and his/her employer's B member payroll account. The payroll
account would get the float from the employee's first day of work
stipulated on the contract for the full amount on that contract. It
could be used by the employer up until he has to pay his employee
from that same account. It's up to each B member business to
determine if that's feasible. Increasingly it will be resorted to.
To
include all members in debit power, thus providing for those who are
on no payroll, a minimum of, say 100 valuns might be provided for every
member.
We
raised this to V200 and that's where it's likely to remain. But we
want to say something here about two other classes of people, those
who work for a non-member concern and those who are homeless.
If
you work for someone other than a B member, you can still earn Valuns
by resorting to a Labour Contract with your community through your
local IE. Here's how it works: you bring in your pay stub to the IE
and the clerk makes out a quick Labour Contract for six months to
begin with, which pays you Valuns on the same day you are paid in
whatever of THEIR money you are paid in. What you've done is used
your regular pay to give yourself a raise. You may not want to earn
the same number of Valuns as you are paid in THEIR money because of
the potential tax implications; that would be doubling your income.
So let's say you earn $25,000/yr. If V1 = $2.65 that's V9,433.96 and
maybe that's too much of a raise, so your contract stipulates say
V6,000 = $15,900 or an additional V500 per month. You've increased
your income to $40,900 without having to bother anyone who would be
bothered. The more people who do this, the better.
Now
the homeless have a problem, where do they live? They live where
they are. Are they willing to settle anywhere? Can they fulfill
other requirements outside of our organizations that would pose no
problem for us? We do not want to include undocumented aliens for
instance among our members. If they have home countries, the same
system we advocate would work there but produce results based on
where they are, certain economic advantages associated with places
and climates, etc. and what they decide to do for themselves. But
regardless, most homeless who are not obviously INSANE and are
otherwise living with a REASONABLE EXPECTATION of continuing peace,
could probably arrange to join us. They'd most likely start at
subsistence because most of these people have no money of any kind.
I believe what's reasonable above all else is for any and all to show
a willingness to work at something for pay, because Valuns are worth
working for. The more that use them the better too. That's how
money obtains its currency.
These
debit limits would not be loans, no instruments would be executed for
them and the actual debit would be the amount of overdrafts on the
account.
Updating:
of course no loans are in force. When your monthly income falls
below subsistence you can issue Valuns from what Riegel considers
your overdraft. But having Labour contracts in place achieves
something Riegel perhaps didn't consider, after all it's kind of an
added feature. If we adopt the self financing of labour and
contracts that go with it, there is something often called goodwill
that is built up; someone with more completed contracts may get to do
more, borrow more, etc. than someone who hasn't. Also we have a
slightly different idea concerning how the accounting records would
be set up so as to distinguish between money that each member creates
from out of themselves vs. any money that they might receive as
income. These distinctions matter, certainly as regards taxes. Just
as borrowed money cannot be taxed, so too is any means of exchange
that does not fall into an income category not taxed.
There
would be no term to them [debit limits];
and they might be maintained indefinitely. The reason for this is
that they constitute the money supply and are necessary to exchange,
and there is no reason for making them rotating. Debit balances on
some accounts of course imply credit balances on others.
Of
course, but again, we pretty much allow the state and public law
sectors to determine what constitutes indigence in terms of THEIR
money and begin by paralleling it in ours.
Therefore
it would be impossible for all members to have debit balances at the
same time. Some might start their check writing against a credit
balance and never have a debit balance and some might remain
chronically on the debit side.
...as
they are poor, indigent, disabled, attempting not to be homeless,
etc. But here's the cat out of the bag that's different from just
considering one account balance as fit for the examples.
We
would advocate on each A member's account three account
balances as follows: 1) a positive balance representing the
Valuns an A member is permitted to issue, 2) a regular balance
representing all income to the account and 3) an escrow account to
handle all recurring credit contract payments. This accomplishes
separating the Valuns which are income from those which are not.
We
said that there would be a limit to the number of Valuns an A member
gets to issue and this would be related to their income from
contracts. It would be determined month by month. That's one reason
we need contracts, the other reasons are that more people need to
gain awareness of how fulfilling contracts improves one's reputation
in a community. There would be a point system for each fulfilled
contract. We'd say that contractual agreements between people
strengthen communities and improve the character of individual people
too.
Under
the above proposal, exchange would begin by consumers purchasing at
retail, and by employers purchasing at wholesale. At the end of the
initial 3 months period, the employer would find himself with a debit
to his payroll account equal to the total earnings of his employees
during that period. This would be the limit of the payroll account.
For his employees to continue their drafts, he would have to draw on
his commercial account - in which would have been deposited all his
receipts, and in which he would have a debit power of 1/2 his three
months payroll.
This
was all right as a first draft proposal, but we would prefer that
once the first six month Labour Contracts run, that they are
either renewed or replaced or that perhaps the employee finds by then
something else and can select another opportunity that he/she can
again pay in advance for; literally buying their own employment. One
very big change is that under the proposal, labour costs are no
longer part of the employer's financial consideration; no one need
ever again to borrow money to pay somebody to do something, they
will simply set a price for the labour and if accepted, the money
will be credited to the employer's payroll account until it is paid
back to the employee. In fact the B member account would also have 3
balances, the first would be a positive balance reflecting the
company's retained earnings, the second would be a regular commercial
balance and the third an escrow account that would be the payroll
balance. If we do some things right we may be able to eliminate
numbers of accounts.
This
is a lengthy chapter, to be continued.
David
Burton
