#29 Starting At The Beginning

It is clear that people would like to use money without bothering to think about anything more than how to earn it and how to spend it. Additionally most people would rather purchase things in cash than having to borrow money or use credit, knowing that thereby they receive a lower price; therefore most people would like to be secure in knowing that the money they use is worth saving for those larger purchases. People the world over are frustrated by the same things which are traceable to problems within the present system; they are concerned chiefly with matters of price stability; inflation and deflation of prices, usually for common household products, food and energy, but also for other tangibles like the prices for homes, cars, computers, etc. They are also concerned with earning enough to support their lives, not just now, but on into the future.

We could spend more time evaluating all that is wrong with the present system. In any case, we believe that it is doomed due to its fundamental mathematical flaws and therefore cannot be saved. Compromise is irrelevant: like the Titanic, it is going down [and we are not about to be fooled by the fools gold of the recent stock market surge, the DOW over 15,000 for the first time ever, proving the incredible inflation in their share prices, selling at P/E's well over 15.] and like it or not, the best thing for everyone to do is get lifeboats together and get into them and move away from the present system as quickly as possible, so as not to get sucked into the whirlpool of chaos as the system goes down.

The proposed Value Exchange Network (VEN) does not envision the need to be more complex and difficult to understand than the present system. It was said, “build it and they will come.” In that spirit, we embark on a description of a VEN starting from the basic local organization, and a few basic concepts.

The Lifeboats

An VEN is a network made up of nodes, each called Independent Exchanges and identified by such terms as The People of this or that identified area. Each IE is established by a group of individual human beings and businesses in a local area, commonly a town, county or unincorporated area. There might even be several IE's in an area if it is big enough to support them. Each IE is supported by transaction fees which are standardized and predictable. We expect that some will be making a modest living from maintaining a local IE, however the notion that these “exchange officers” should be compensated anywhere near that expected by those operating in the present financial system will disappear. In fact none of them should be able to earn anything more than those who actually work to create products and services or grow things people want to buy. Typically a transaction fee should be no more than as E. C. Riegel suggested; one tenth of one percent of the transaction.

Membership

Every IE is strictly speaking a private association in that they are owned and run by and for the people they serve and all members who are eligible, decide to join of their own free will. No one other than they decide whether to join or not. If they don't like what they experience they are free to leave at any time. This is the summation of the freedom to contract; membership in an IE is a private matter and is engaged in of mutual consent. Of course there will be rules and processes for joining and severing membership in an IE, just as there are for any other private organization or association.

Members are individual human beings and businesses. Governments are, for the time being, disallowed as they are not private. Corporations as Limited Liability entities, are also excluded for the same reasons. Only individual human beings and Unlimited Liability businesses are allowed, because they are private. Public organizations and corporations are disallowed because they are public and therefore subject to the nuisances of public law.

Within certain general guidelines, each IE will determine the criteria for its members, but the usual sense shall be that those who are resident in a given local area and have been residing there for a good length of time according to local custom, would be acceptable. This has many ramifications for the future, including deciding who would be considered a lawful member of any IE; those who cannot prove their legal residency status would be advised to return to a country where their IE membership would be recognized without any possible dispute; foreign people who were illegally residing in places would have to return home to join their own IE's.

Individual human beings can join as A members, businesses join as B members. An A member operating in an IE other than his/her own is a B member to those IE's. Only A members are allowed to create money as an inalienable right, through overdraft accounts as will be explained. B members may acquire the shared credit of A members that are employed by B members. Where in most instances, an IE serves a locality, membership status is affected by locality as previously noted. Trade can obviously traverse localities, but those outside a locality are B members to it, while being A members in their own locality.

E. C. Riegel developed a shared credit concept that allowed those who needed Value Units to have them, while recognizing that those with assets would need to be able to trade their way into an VEN, exchanging their currencies for Value Units, eventually trading their property for Value Units. Of course Riegel called his monetary unit a Valun, short for value unit. We cannot at this time honour the man's ideas by naming the value unit a Riegel due to a potential for copyright infringement, so herein and throughout this blog, the independent monetary instrument; money, is called a Value Unit. [Right now, that might make things easier as every reference to Riegel is to the man, not his monetary unit.]

In previous essays we have made it clear that we intend to offer a Value Unit as a universal measuring stick of value that will not move; that is, even though it is initialized using a reference to an ounce of gold and its relation in price to dollars, from then on the Value Unit would have no direct influence from the price of an ounce of gold, it would never be pegged in any way to anything else. Within the market generated by the presence of new money, prices will seek their own level until their equilibrium is achieved. The Value Unit will retain its value and hence be immune from inflation.

For those who would buy into an IE, Riegel envisioned the need for a sinking fund made up of dollars. Unfortunately no IE, being private, can be in a position to hold dollars (public money) or any other public currency (which really belongs to other private entities anyway as “bad notes” based on unpayable debt). Any attachment one has to their money indicates the degree one is subject to going down with the Titanic.

Instead, the IE will only take gold and silver bullion in trade for its Value Units based on a formula that considers the trading price of these standard metals and a price for a Value Unit based on the price of gold on a specific date and at a specific price. [This was set as an experiment on 2 November, 2011, note the date for ease of recall. To date, Value Units have risen 15% over their initial value in dollars, without any of the phony scarcity inducing algorithms of bit-coin. Again, scarcity is for us an irrelevant qualification for anything used as money.  Please see here, for the latest comparisons.]

If one is buying an ounce of gold bullion, one will pay whatever the price is in dollars or their own currency and it will change from day to day, because the bullion brokers in London and elsewhere are manipulating the prices of these metals. They don't make any money when the price stays the same, only when it goes up or down as they make it do every business day. We do not want to be under their control, so we decide that a Value Unit is to be based on one thousandth of an ounce of gold ON A SPECIFIC DATE AT A SPECIFIC PRICE. If one is trading Value Units for gold, the price will tend to hover right around V1,000 = 1 ounce of gold. (As of 30 July 2012 an oz. of gold bullion buys only V939.93 and 1 oz of silver bullion would trade for V16.35).

Once one is trading completely inside the VEN, all prices for commodities and services, anything, will tend to be determined by supply and demand and the costs of production established within the market created by Value Units, regardless of the prices for these things in currencies.

The only purpose for gold (and silver) in the system is to use as an exchange fence to preserve purchasing power within the VEN and limit incursion by the old financial system and its currencies, NOT to tell people that Value Units are “backed” by gold, which would be falling back into the old fallacy that money requires any value other than what it buys to back it. Once you're only trading in Value Units, the old system can just go away.

(I'll further note that as of 30 July 2012, the manipulators who have caused the prices of gold and silver to fall, or attempt to stabilize, so they can attract and fool more gullible and greedy people into their paper market, in terms of our hypothetical standard, would have been losing value from inception. Put another way, at inception one could have bought a Value Unit, had one existed, indirectly with dollars for $2.16 which has now become $2.29 and has been as much as $2.39 and will tend in that direction as gold falls in price, which it may do.)

Meanwhile within the VEN, it is hypothetically assumed, based on the foregoing, that while at inception one would have had an ounce of gold bullion for a thousand Value Units, one might very well get one for V950 or less as of this date. There must be some “price relativity” as Riegel called it, but in the scheme of a stable Value Unit based monetary system, the differences would likely be less easy to manipulate than outside it, so anything an IE community really wanted they would be able to buy from any other IE community and after a while prices would be stable, and higher in terms of value exchanged, and therefore everything, including gold and silver would tend to be held by those who trade exclusively in Value Units.

Likewise, no IE needs or wants “public” memberships, because most of these have nothing anyone wants to buy; they are illegitimate as businesses and are certainly not human beings entitled to create their own money. That a few of them have given to themselves, through whatever means, the power to create money, is beside the point. Since their money creation is illegitimate (it is not backed by product or labour freely offered in a free market) and represents a false claim on the resources, services, products and properties of others, their presumption amounts to both fraud and theft of what does not belong to them. If you belong to such an organization, we might suggest that you consider who you are working for and for what and decide to leave, walk out and away and do something else. What else? Anything practical that people will want to buy from you, the produce of your own personal and private talents and labour.

No IE will be allowed to offer membership to an organization that is not private, therefore all government registered non-profit organizations, limited liability corporations, and governments are disallowed.

What then, some will say, of artists and arts institutions? It is quite easy to recognize an individual artist, A member, or arts institution as a B member within a particular locality and may be even easier to finance since A members that work for B members are in a position to finance their employment, a particular concept that seems to have been eluded to by E, C, Riegel, but his may have derived from some precursor ideas.

It is also easy to envision how these arrangements may effect all the professions eventually.

It is time to offer some ground rules for those who would organize an IE and a VEN.

1. We see a viable VEN as consisting of a minimum of three (3) distinct geographical areas (which may be contiguous), each area supporting a population of between 40 and 50 thousand people.

2. We see a viable IE consisting of a minimum of five thousand (5,000) members, at least 100 of which are businesses.

3. Those who would most benefit the cause of establishing a local IE or a future worldwide VEN would be those who are seemingly least in need of one at the present time; those who already have sufficient means and resources to enable them to devote as much free time as they can to the effort. At this time, we are not soliciting those without a means of existence as at the moment we have nothing with which to pay you. Those with a means of existence qualify to help us, these are the real John Galts, who would volunteer to work together locally to make a network of fully functioning Independent Exchanges possible.

Our message has resolutely remained “come out of her, my people” and it was really Ayn Rand's message as well. Who better than the real John Galts, to volunteer to put something together, to free exchange from the bondage of “public” organizations as well as saving their own fortunes and themselves into the bargain? Even those on social security may qualify as they may have plenty of free time to devote to required tasks. We might add that doing things our way eventually brings an end to poverty and war worldwide. It would of course, reveal for all the world to see, the blood soaked monsters, the “savage babies” who have so long held sway and kept the human race in bondage for many hundreds of years, but in their latest version, since 1815.

We look forward to collaborating with any and all who can demonstrate proper acumen for the work of mounting ad campaigns, providing education and gaining members in their local areas. Correspondence and coordination for this effort will be through dpbmss@mail.com and of course you are all welcome to follow this blog as now the pace will be picking up.

David Burton

#28 Why This Blog Was Down For Two Months

Attention Laurence Gilbert, your time is up !

Before we disclose the details, we insert a lengthy quote from Murray Rothbard's 1962 paper entitled The Case for a 100% Gold Dollar, along with embedded commentary, to set some records straight:

To those advocates of independent paper moneys who also champion the free market, That would certainly be us. I would address this simple question: “Why don’t you advocate the unlimited freedom of each individual to manufacture dollars?” We do not advocate the unlimited freedom of each individual to manufacture money. If dollars are really and properly things-in-themselves, why not let everyone manufacture them as they manufacture wheat and baby food? They are not really and properly things in themselves. They are the means to split barter and their quantities are created and destroyed as needed to carry on trade. It is obvious that there is indeed something peculiar about such money (fiat money). For if everyone had the right to print paper dollars, everyone would print them in unlimited amounts, the costs being minuscule compared to the almost infinitely large denominations that could be printed upon the notes. Note that Rothbard is setting up a straw man, since neither we, nor anyone else who is truly advocating a responsible alternative to current monetary systems, advocates unlimited fiat money creation as policy. Clearly, the entire monetary system would break down completely. It would, and under certain regimes in the past, it did; notably Germany in the 1920's.

If paper dollars are to be the “standard” money, then almost everyone would admit that government must step in and acquire compulsory monopoly of money creation so as to check its unlimited increase. This has not worked so well, has it? We have always believed that money must originate and be destroyed in the process of trade between producers / traders / people. We offer to make certain transitional exceptions to this however, recalling that the American Republic was born with the institution of slavery yet to resolve, and ended up resolving it in favour of everyone being a slave to the state's creditors; the 14^th Amendment. Yes, we are aware of many things and they are interconnected.

There is something else wrong with everyone printing his own dollars: for then the chain from production of goods through “purchase” of money to “sale” of money for goods would be broken, and anyone could create money without having to be a producer first. He could consume without producing, and thus seize the output of the economy from the genuine producers. Ah, but this has always gone on, even during times when nothing but silver and gold were considered money. Rothbard and the rest of the “gold bugs” are liars if they claim otherwise. Those who lived off the productivity of others were called nobles, these days we call them the elites. In the vast majority of cases, the poor are poor and remain poor because they were deliberately kept out of the economy by the larger units of production or absentee property owners called limited liability corporations who used all kinds of advantages to eliminate their competitors. I'd also point out the flaw in Rothbard's analysis, that producers per se were and still remain the victims of traders who never produce a thing, but purchased the produce of real producers, like farmers or small manufacturers, for sale to others. The money the producers received, whether gold, silver or paper, was then used to split the barter for things they produced to obtain things they needed in return. In any case, whether the money was “backed” by some intervening commodity or not, whatever form it takes, the money the seller has from the sale of his goods or services to the buyer was “backed” by nothing other than his goods or services. If a gold bug tries to tell you something else, he is a liar.

Government’s compulsory monopoly of dollar-creation does not solve all these problems, however, and even makes new ones. For one thing, as E. C. Riegel said, it makes the government the chief buyer in the economy, a buyer that produces nothing and takes everything it needs by FORCE of taxation, which as far as my English speaking friends need recognize is that the words taxes and takes look very similar. This is why we do not want any government to be creating money. This is how we eventually bring an end to all war everywhere. I think that's a fairly big issue that people like Gilbert and Greco seem to care far less about than they should.

For what is there to prevent government from creating money at its own desired pace, and thereby benefiting itself and its favoured citizens? Indeed, and you can count on it doing so as that is in the nature of the organizations as presently constituted. Why should anyone believe their government can or would act more morally than they would themselves? What is the basis for this excessive trust? There is none. To believe there is, is quite honestly to join those who look back nostalgically to a time they presume was better (when it really wasn't) and that the solution to all our current problems rests with getting all of us to go back there as quickly as possible. This is an irrational position, which shall be both indefensible by nature and reason; the truth is the ultimate authority.

Once again, non-producers can create money without producing and obtain resources at the expense of the producers. Furthermore, the historical record of governments can give no one confidence that they will not do precisely that —even to the extent of hyperinflation and chaotic breakdown of the currency. Or something even worse; sending of one's sons and daughters to die in a never ending series of wars designed to profit the government's chief friends in the military industrial banking complex.

But here we shall point out, one might hope once and for all, that the first sentence, as often as it appears (and it does often in other contexts), is a deliberate misstatement of the facts and history of money's creation and instantly brands Rothbard a clever liar. If you've told one lie, why wouldn't you tell another? Specifically, non-producers DID create money without producing and obtained resources at the expense of the producers. These people were Ayn Rand's honest traders, the middlemen of trade and transport of goods and services since classical times (Greece and Rome) in the West. The same pattern held true in East Asia too. A general paper on this subject has just been added to this blog.

Why is it that historically, the relatively free market never had to worry about people wildly setting up money factories and printing unlimited quantities? If “money” really means dollars and pounds and francs [note, these are the national fiat currencies of today, all issued as debt instruments.], then this would surely have been a problem. But the nub of the issue is this: On the pristine free market, money does not and cannot mean the names of paper tickets. Money means a certain commodity, previously useful for other purposes on the market, chosen over the years by that market as an especially useful and marketable commodity to serve as a medium for exchanges. History is told by the victors. Rothbard's assumptions of a pristine free market are also illusions and hence his demand for a full gold standard is an idealism, which as we will continue to maintain, is the basis for much evil in the world.

No one prints dollars on the purely free market because there are, in fact, no dollars; there are only commodities, such as wheat, automobiles, and gold. In barter, commodities are exchanged for each other, and then, gradually, a particularly marketable commodity is increasingly used as a medium of exchange. Finally, it achieves general use as a medium and becomes a “money.” This is not really what happened. Neither gold nor silver were ever freely chosen, else the crowned heads of Europe, etc. would not have been stamped on these coins. But as we said, Rothbard is a clever liar.

I need not go through the familiar but fascinating story of how gold and silver were selected by the market after it had discarded such commodity moneys as cows, fishhooks, and iron hoes. We might excuse his ignorance if he'd never read The Babylonian Woe and many other sources which explain quite clearly the connections between ancient international banking and finance, gold and silver brokerage and mining by slaves, and war and war making power. Before gold and silver were impressed and imposed upon the world by FORCE, there were certainly other things used to keep track of split barter in international trade terms; ships full of grain, pottery, cloth, spices, oils, wine and other produce, etc.

And I need also not dwell on the unique qualities possessed by gold and silver that caused the market to select them—those qualities lovingly [sic] enunciated by all the older textbooks on money: high marketability, durability [?], portability [?], recognizability [it can be faked but usually wasn't], and homogeneity. Like every other commodity, the “price” of gold in terms of the commodities it can buy varies in accordance with its supply and demand. Since the demand for gold and silver was high, and since their supply was low in relation to the demand, the value of each unit in terms of other goods was high—a most useful attribute of money. Actually scarcity is an irrelevant attribute of money. This scarcity, combined with great durability, -gold is not that durable- meant that the annual fluctuations of supply were necessarily small—another useful feature of a money commodity. No, it's clear Rothbard hasn't a clue and like most gold bugs, advocates an illusion based on an idealism, an ideology based on a nostalgia for a world that was just as wrong as our present one. Want a return to that kind of world? For the vast majority life back then was nasty, brutish and short. Everyone had to work longer hours too. I think we can do much better. But we'll let Rothbard ramble on a bit more.

Commodities on the market exchange by their unit weights, and gold and silver were no exceptions. When someone sold copper to buy gold and then to buy butter, he sold pounds of copper for ounces or grams of gold to buy pounds of butter. On the free market, therefore, the monetary unit—the unit of the nation’s accounts—naturally emerges as the unit of weight of the money commodity, for example, the silver ounce, or the gold gram.

In this monetary system emerging on the free market, no one can create money out of thin air to acquire resources from the producers. Money can only be obtained by purchasing it with one’s goods or services. The only exception to this rule is gold miners, who can produce new money. But they must invest resources in finding, mining, and transporting an especially scarce commodity. Furthermore, gold miners are productively adding to the world’s stock of gold for non-monetary uses as well.

This is about the way the world looked during the Middle Ages and before. Few people had any money (gold and silver coins) because they were serfs living as part of the land to be used by the owners who were in most cases not the producers, as the serfs were. These big landowners, Lords, managed to exchange what their serfs produced and obtained things they wanted to improve their own living standards, including arms to protect their property or hound their serfs. Little or no thought was given over to the livelihoods of the serfs. As we showed in our John Galt series, they only considered a serf's wages what would be enough food to keep them alive and nothing more.

Let us indeed assume that gold has been selected as the general medium of exchange by the market, and that the unit of account is the gold gram.

He's making a perfectly good schoolbook assumption into a supposition for instrumental significance without indicating its true origins; in ancient times both gold and silver were enforced on populations by military FORCE (just as a certain European power attempted to do to its former American colonies, which is why we really fought the Revolutionary War). And then, what is a grain, a gram, a pound anyway? Who decides? Indeed who decides how much of this “money” will circulate as gold and silver coins and who determines their value?

What will be the consequences of complete monetary freedom for each individual? What of the freedom of the individual to print his own money, which we have seen to be so disastrous in our age of fiat paper? Rothbard conflates the monetary freedom of individual human beings and of states, which are two quite different things. We think he did so deliberately in order to further obfuscate the issues. Nevertheless

First, let us remember that the gold gram is the monetary unit, and that such debasing names as “dollar,” “franc,” and “mark” do not exist and have never existed. This is another conceit of the gold bug, to deny the existence of what presently exists in favour of their precious metal, which has enslaved the world, not made it free (Christians, please read your Bibles!). A piece of paper with a bunch of numbers, pictures and letters on it may not exist to a Rothbard, but until they go away, they are real items and function the same as any money would. Fact is Mr. Rothbard, people have and would kill for them! If they weren't money, that would be pretty stupid, wouldn't it? Hey, gold bugs, wake the f**k up! You're being deliberately skewered on the horns of their monetary dialectic.

The problems with money are not related in any way whatsoever to what the money is made out of. Again, anyone who says otherwise is either misinformed or a liar. But understand that even the misinformed or prevaricators have their right to a fair argument ... and must accept the consequences for being shown up to be liars,  fraudsters or some other kind of clown.

Suppose that I decided to abandon the slow, difficult process of producing services for money, or of mining money, and instead decided to print my own? What would I print? I might manufacture a paper ticket, and print upon it “10 Rothbards.” I could then proclaim the ticket as “money,” and enter a store to purchase groceries with my embossed Rothbards. In the purely free market which I advocate, I or anyone else would have a perfect right to do this. And what would be the inevitable consequence? Obviously, that no one would pay attention to the Rothbards, which would be properly treated as an arrogant joke. The same would be true of any “Joneses” “Browns,” or paper tickets printed by anyone else. And it should be clear that the problem is not simply that few people have ever heard of me.

Emphasis mine. An arrogant joke, did you all get that? This is what they think of anything other than their own money game, which is really still based on gold and silver and controlled by their metals brokers in places like London and New York, as the other dimension in their dialectic, which consists of all the fiat national currencies and their paper securities markets at the other end. As far as you are concerned, they want you only to consider their either (Keynesian) / or (Austrian) solutions ... and nothing else. Rothbard concludes,

If General Motors tried to pay its workers in paper tickets entitled “50 GMs,” the tickets would gain as little response. None of these tickets would be money, and none would be considered as anything but valueless, except perhaps a few collectors of curios. And this is why total freedom for everyone to print money would be absolutely harmless in a purely free market: no one would accept these presumptuous tickets.

Our money is “presumptuous tickets” right now. His answer is gold and silver only. Who controls gold and silver? Certainly not you or I, but certain “brokers” headquartered in far away offices that have nothing to do with the everyday lives of you or I. So, just to remind you all, to them, it's either their stamped gold and silver coins, which shall circulate only among those who have them, or their “presumptuous tickets” which they back up by FORCE. They could and have in past backed up either system by FORCE, so where is the difference? To find a way out of this dialectic was part of the reason for starting this blog.

Our Silence for 2 Months

Now, just why did we go silent in late March and what has changed since? Those who have been on this blog before will doubtless see a few changes. We will no longer be speaking of a monetary unit called a Riegel, nor shall we embrace anything called an Riegel Monetary Exchange System (RMES), because at the bottom of Laurence Gilbert's website, http://riegelexchange.com/ it says;

© 2007 - 2012 Laurence Gilbert and RiegelExchange.com - All Rights Reserved. All copy including terms, names and symbols on this website is explicitly reserved except as noted including but not limited to the following: Riegel Exchange, Riegel Exchange Center, RMES, Riegel Monetary and Exchange System, Riegel Exchange System, Riegel ( as the name of the monetary unit ), R ( as the symbol for the Riegel monetary unit). The R symbol on Laurence's site has a strikeout line through it.

After many absent and silent months, I sent Laurence an e-mail asking him to take a look at this blog and he responded, whereafter I wrote back the following, his words in blue mine in black. I'm including all of this for the sake of complete transparency, here's my e-mail of 3 March, 2013:

-----

In the manner of a conversation ...

Hi David, no time to go into this in any detail. But again, in reading your works noted, I see discrepancies in understanding and application of the Riegel as 'money', as defined by E.C. Riegel.

Pardon me, but who decides what that is? Do you? Who are you? Are you going to teach me or scold me?

In #21 for just one instance, you note that A Members will receive 200 Riegels. It does not work that way David.

Why not? Many mutual credit systems operate that way, in fact Riegel suggested it as a means of getting things started.

Riegels DO NOT exist, period, UNTIL an exchange takes place and an A-Member creates them in the act of "buying" a good or service.

[This is actually counter to what he said regarding money in accounts that had not yet been spent, but I'm really quibbling here.]

Riegels are information, that is all. Cash and coin are only representations in physical shape/form of this information that is and must be already in existence BEFORE they can enter the market arena, where both A and B members will use them in the community until such time as the originator sells the equivalent amount of Riegels he/she created back into the community and that amount of Riegels is then redeemed and taken out of circulation.

I get that, maybe actually for the first time in my life after listening to one of your talks [from] last October. The would be buyer puts up for sale or barter certain services or goods and based on this is given the right to buy into existence Riegels that did not exist which show up for the first time in the hands of the seller, but initial priming was I believe still one of Riegel's ideas.

That is why I keep telling you that you cannot "buy" Riegels into existence, for anything or any reason, no matter how benevolent one's intentions. This would crash the Riegel System quickly through fraud and/or inflation.

My reasons are both benevolent and political and they must be. You must be thinking that Riegel's system can be brought into being as some pure systematic ideal, which is why you cram away at the software when you should be applying yourself elsewhere. Keep at it and I believe you shall fail. What have you if the internet goes away, what then of your software? There are other reasons more obvious that you may have already failed. But we'll get back to this. Meanwhile,

For instance, you say:

The first 200 Riegels are free to everyone who becomes an A member. After that you pay a transaction fee

That is not correct David. People bring their OWN credit/credit worthiness to the table. NOTHING is given to them by the RE itself, least of all any 'money'/Riegels. They are given an initial limit of minimal "credit" whereby they can then create up to that much money/Riegels as A-Member Buyers.

All right. Actually the free up front Riegels may be a minor point, except that it does matter, because it involves human psychology not idealistic economics and anyway Riegel himself recommended it and it is used by many credit clearing alternatives. In your October show I noticed someone mentioned the “gimmie attitude” among the American public. I have another explanation for this attitude; they are exhibiting the natural reaction of those who were trained to accept things being stolen from them; time, value, possessions, etc. The public is jaded far more than you suspect and will grow increasingly disgusted with all money except gold and silver. Do you want that? Keep going in your obstinate direction and you will have unwittingly aided in that progression.

When even this once important point relative to monetary creation and credit are not fully understood, then the doors are opened for all kind of other misunderstandings and potentially destructive processes.

I understood some of them when I wrote what I wrote and can and will stand behind everything I said. There are ways to build into the data modelling and functions many things that would prevent these things and prevent them from happening more widely throughout the system.

Your whole section previous to the quote used under the heading of "The A member Exchange Account" is full of flawed statements. Statements put forth as RMES FACTS, which they are not.

I understood at this point that you had set yourself up as an authority. Even though I stated what I did as certainty, they were only proposals, as indeed [is] everything of this nature on [this] blog as everyone knows who has an ounce of sense that no Riegel based system exists yet. By the way, you could have refuted what I said easily enough by writing something clear and convincing and I would have posted it in sequence. But you have already made up your mind, and will allow no one else to have a peek at your glorious creation until it's done and then you expect the world to come crawling to your door when it is. [The world] will not, because you have worked out of sequence [Organizing people must come first]. All you'll have proved, if anything, is that there is some new internet toy with a Riegel brand on it that you hope to sell. That's all bit-coin is after all. That too will fail, because it is far too complicated for anyone to use.

[Bit-coin was recently hacked, it's value and reputation may now be irrevocably damaged. It had many flaws anyway, chief among them being a built in scarcity model that made a bit-coin into just another means of making a bet on the inflation going on in the national currencies, without providing a really useful trading solution, more mere making money on money. The bit-coin bubble was predicted.]

You've introduced terms and ideas such as "red inkers"; indigence / indigent; you've created both the mindset and reality of "classes" of 'money' creators, giving this a negative connotation whether you realize it or not, the very thing we DO NOT want to see happen;

This is a political reality. I want you to see something. We are at a crossroads in history, transitioning from one reality to another. There are always those in this world who seek a pure ideal solution and cannot stand the transition that's required to get people from here, where there are pensions, etc. to a time when all that will no longer exist because the Riegel market will have made it all unnecessary. We have at least two generations to transition from one set of ideas to another. Are you following me? [Apparently he was not.]

you are GIVING 'Riegels' to people to "stack up" against the future ( exactly opposite of the very basic creation principle of 'money' and it's definition as espoused by E. C. Riegel; and on and on David.).

You are an idealist Laurence. Wake the f**k up! We have millions of people to transition from here to there. Where are they going to get sufficient money to buy really big items like houses, farms, ranches, factories, capital equipment, etc? All that stuff is expensive by any terms and you're going to have to account for it some way or another. Think of it this way, if economics were physics, you understand quantum mechanics very well while you're quite shy on general relativity which I am more familiar with. [The analogy was probably poor because I am questioning the worth of general relativity far more these days.]

FACTS: without the "credit" to go into debt in an exchange, there could/would be NO money.

Agreed! So the establishment of community credit is an important policy matter, a proposal to which was made.

Money is created at the point of exchange by a Buyer who DOES NOT have any money. Since the Buyer/Creator MUST also redeem the money he/she created, the whole process mandates a process seeking equilibrium, or a "0" balance. It is the circulation of "existing" money that allows 'B' Members to utilize Riegels for some time within the community and help it to flourish. Money DOES NOT want to be "stacked up for the future".

In that case, dear boy, tell me just how does one ever find the money to buy something really expensive and useful like a car or a home?

You have put to pen some really awesome ideas and possible processes David, much of which will be very very useful. But again, you DO NOT need to be making statements as fact regarding how the Riegel System will function and be setup without discussion.

Oh no, you're quite mistaken. All you ever needed to do was respond in writing and we would have discussed it in the open as honest men would rather than clandestinely as you may have [preferred].

AGAIN, to state, while writing, that this or that MAY be such and such a way is one thing. But you should not be stating things as fact, part and parcel, as a done deal, concerning the planning, setup and functioning of the Riegel Exchange.

Fine, then I suggest we get started THERE (the planning, setup and functioning of the Riegel Exchange) rather than on some silly software project that will have to be worked out differently anyway. You're putting the cart before the horse. [Of course, I have received no reply and he continues on with his demo, as if it ever comes up it will really win anyone's approval, including mine. I was also quite concerned that he might have entered into some partnership agreement with the software company that he may have been working with. He seems to be pleading for the public to underwrite his internet time so he can launch. Perhaps he's met his Waterloo. Well, no matter. I believe the message has been properly delivered. Caveat emptor!]

The Riegel System is mine David, not yours or anybody else's.

If it is yours, and I intend to prove otherwise, than we are doomed since you will fail. Everyone I showed your stuff to agreed with me. [Fortunately some of us may come up with something else that will find wider acceptance than this cheap toy.]

This stated in the sense that I am the Founder of this and the controller of it's launching until such time as ALL of the kinks and processes of it have been worked out to my satisfaction that it has not been subverted in any way in it's creation from the absolute first-line-of-defense-basics of a proper monetary/exchange system as E. C. Riegel lays forth, at which time the Governing Board, or such, will MAINTAIN it thereafter.

So to borrow a phrase from a movie, “it's like your wiener.” A Governing Board? So you want us to walk out of one system run by a Governing Board into another one run by another Governing Board? You know what? Because you are being secretive, you likely didn't even see the obvious. [Riegel mentioned a governing board too, but at the time he was writing he made no effective criticisms of corporations or corporate governance, etc. He simply assumed without further research that the banking model would work, when in fact it is part of the problem. This blog is not a memorial to E. C. Riegel, it is looking for a solution that's larger than Riegel imagined, and in any case much time has passed since, during which much relevant information has risen to the light of day.]

Once all of it's critical By-Laws are written in stone beyond any possible negative manipulations being introduced by anyone, I step out of the picture. Not until. This is my brainchild, and it WILL come forward that way, or not at all, not as a 'Riegel Exchange' system anyway.

I see. Well, who are you, Mr. Founder? You, who can take someone else's ideas, from a guy who died when I was 3 years old, and then claim they are yours to implement on your own as you see fit and then they will be released to the world? You are either very sick or a dreamer or both. If you were more humble, you'd be willing to get interested parties together and hammer out a standard for a system that could be implemented widely and suit the needs of diverse people. But no, you have to be some Ayn Randish kind of super artist who feel themselves uniquely called to bring about ... Come on back down to earth and start accepting the fact that you are a nobody just like me.

If I must remind you, it has been copyrighted since early 2007. I truly want to work WITH you David, but nothing should be put out as there as a RMES FACT when it has not even been discussed with me.

Again, I was unaware that you were devising a machine for sale. If that's all it is. I assure you there will be few if any takers.

If you wish to bring forward your own 'monetary system' then please feel free to do so. But it will not be a 'Riegel' Exchange System, or any variation thereof as documented by copyright since January 2007.

A competing machine? Gilbert's Riegels vs. Davemarks? No, I wont compete. [No, but perhaps you out there will, and I will be among you, participating in your markets where and if they benefit me, same as in any market. When I took up these ideas, I believed -apparently quite wrongly to some involved in this business of trying to come up with a reliable alternative to the present monetary system- that E. C. Riegel's ideas were to be discussed widely, and ideas for putting something together to represent them would be reasonable and possible. One does put forth one's ideas as if they are convinced of their soundness, otherwise why put them forth at all? The battleground of ideas permits any to stand forward and challenge anything written or stated. These are position papers, not legal documents. But then Laurence said ...]

You know that you do not come into any business as an employee say, then start going around to potential clients stating that the company is going to do this or that, or making your own deals, without clearing it with the company. THAT is exactly what you are doing David, and as much as I like you and value you, I am not a happy camper.

Again, I did not know that you were my employer or that I was in any way an employee or trespassing. Here's what I have to say about all that, Mr. Founder. You want me to hang that fiction around your neck as a token of derision far and wide, do you Mr. Founder? I can, but wont if my terms are met, and yeah I'm dealing with this exactly as a General would, because you and I both know the stakes are quite high, or I suppose you'd prefer us crashing back into a medieval system dominated by gold and silver coins, where most of us are dead and those who aren't are slaves? :

1. I have put my blog to sleep, though I shall be adding to it in the meantime. Based on some of the things I have learned from your last October radio presentation, I will change things, especially concerning credit clearing and gold and silver trading, which I know you instinctively despise, and for good reason, but as I said, I am not an idealist and you shouldn't be either. Why? Because idealism is evil. My blog will go live again in sixty days, by which time we will either be friends and brothers to move forward as mutual champions or ... I will make sure that you are so discredited in the liberty and truth movements that well, it's your choice, best friend or worst nightmare. You can start by being nicer to me, by not talking down to me or anyone and not losing patience when you are not adequately understood.

2. I showed your webpage, and your email to some close to me who have been following the progress of my blog for months if not years. Some had even suggested that you were some kind of loser and that I was best ditching you. There was much laughter at your expense too. Here was one response, echoed widely. “He's the Founder of a cult seeking funds for building something based on someone else's ideas that are probably bogus.” Get that? You aren't helping popularize E. C. Riegel's ideas, just the opposite. “What he intends on building is his based on this assertion: © 2007 - 2012 Laurence Gilbert and RiegelExchange.com - All Rights Reserved. All copy including terms, names and symbols on this website is explicitly reserved except as noted including but not limited to the following: Riegel Exchange, Riegel Exchange Center, RMES, Riegel Monetary and Exchange System, Riegel Exchange System, Riegel ( as the name of the monetary unit ), R ( as the symbol for the Riegel monetary unit ). Let him prove it. He has thirty days from the date he is told to produce evidence to any who ask.”

That was from an attorney friend of mine who regards intellectual property law as worse than garbage, its claims as property are increasingly suspect. Intellectual property law, which is a curse from the French Revolution, allowed middlemen to control the sale and distribution of the ideas of others. But after all, if you sell someone something, who are you to tell them how they can or should use it? It's their property since they bought it. They can even try and reproduce it if they think they can, that's competition. A copyright goes against all of this and is on the wrong side of history; you look dumb for using one!. [It's actually worse than that, as was pointed out to me by my associates. What Gilbert has done by copyrighting his material is indirectly placing a dollar value on it in THEIR dollar based marketplace; Gilbert is a traitor to all honest attempts to reform the monetary system and he could of course now be bought out in dollars, tomorrow. Thus friends, this man has already sacrificed E. C. Riegel's name as used for a unit of monetary exchange and Riegel's name for association with a monetary reform purpose, moving forward. Returning to my e-mail ]

But hell Laurence, I'm not even going to bother asking you for proof of copyright, as these days intellectual property rights stand squarely in the line of fire of the liberty and truth movements, who would be among your earliest subscribers. Want to really piss them off? Want me to point out the obvious, so more people notice?

So my second term is that you abandon copyrights to all you have claimed; remove the notice from your website and everything else. You might as well stop begging for dollars on the same screen as you advocate something to replace them too; looks really tacky. [He did actually remove this.] And the colour combo on your site really sucks too, looks really unprofessional. Take care of all of this as appearance is important, especially if you are selling a product that you are claiming is yours.

3. Clean up your act before daring to talk to me or anyone else in your tone of voice. Who are you anyway? You have to be persuasive, rational and most of all, kind. I know you think I've been difficult to see the simplicity of the credit clearing of accounts, I've now seen that, and you have my thanks, but now that we can deal with cats and dogs, we need something that captures oxen and elephants. You will simply have to consider what I am suggesting or something better. How does one refinance a house, buy a farm, do anything that requires a lot of money? If that's not exactly the core of the Riegel system, then it requires appropriate extension or it will not compete in the real world. Understood? [Apparently not.]

I asked you once before to do certain things with your article on gold/silver relations. Your changes were not nearly sufficient and you continue to espouse that whole process as part of the RMES in your discussions. If you wish to be a part of all of this going forward, and I really do want you as such, then you will REMOVE all of that and and all other wording in any other articles related as RMES/Riegel Exchange.

That's your demand? Mine is to answer the needs of the questions posed. Frankly, if your ideal of the Riegel system can't answer them, then what are we doing all this for? Are you conceiving of something that is fit for the management of candy stores, but of little else? I'll tell you something Laurence. If that's all it is, then fine, you just go right back to wasting your time on your software demo and I'll leave you alone and we can pretend that all this is just some weird hobby for those with too much time on their hands, instead of about something important.

Facts not previously discussed with me and approved by me, from ALL of your articles. I want all such disinformation concerning the Riegel System removed, and quickly.

Well fine, I just shut it all off for now. But now do I bow down and kiss your feet oh Pope of Riegeldom? I want you to think hard about what you say and the way you say it. I'm not your enemy, and do not want to be, but don't make me into one, because if you do, I assure you my disappointment and disgust will spread. [It already has. Those who read my words believed I was being way too kind.]

The time to begin to take this all forward is now finally here David. But it will be done by and through me with my explicit approval.

Talk soon,

Laurence

All hail, Laurence! There was much laughter at your expense around the room. Here was my original reply with a few additions:

All right, Lawrence. I had no idea that you owned these concepts or thought of them that way.

[Pathetic! And oh, by the way, I think Spencer Heath MacCallum, whose life and work I truly admire and without whom none would even know of E. C. Riegel, would be quite interested in what has transpired.]

All I was attempting to do was create a forum, which I guess you did not want to participate in, to suggest what you thought, and maybe you couldn't or whatever.

[Because you set yourself up as the creator and developer of a pure system based on someone else's ideas. Rather than trying to include anyone else in your august deliberations, you arrogated to yourself the awesome responsibility of determining what a pure Riegel system should be. Tell me, Mr. Founder, what will you do when there is a resounding silence following the announcement of your demo because 1) it is yours so that's like begging to use Gilbert's Riegels 2) it probably doesn't work, 3) it has too many set in stone features that make it useless.]

I put a lot of work into [this] blog, but it almost doesn't matter now even though I have received [more than] 3,000 hits to date from many places around the world. I certainly could be mistaken about a lot of things, like whether you or [Professor] Greco have an ounce of integrity, God help us!

[Here's the skinny on Greco, he's a coward!!! He's a professor, he's part of the establishment. I've now read a few of his dull books which skirt the basic issues of how to support an entire economy. I recall how he answered a frantic questioner in Tacoma about the prospects for alternative money paying for rent, food and utilities. Greco basically said he couldn't help him. Now I'll let it get closer to home. The other day my 25 year old daughter, who lives with me, discussed her “mid life crisis” of feeling that life the way it was going was getting increasingly pointless and that few people saw any great future and everything seemed headed downhill and maybe life under such circumstances wasn't really all that worth living, certainly not worth bringing more children into. No, she's not suicidal, but a push or shove and many more vulnerable people might be. You doubt this is important to me?]

I guess you have always had your own agenda.

[Maybe I want to know what Laurence's agenda is, it deserves a critical view, if not mine, then why should I entertain his criticisms of my work? It has to be mutual, man to man, as I'm nobody's fool.] [At the time this is being posted I no longer care very much what his agenda may have been.]

Maybe we can work together, I still hope so.

I still hope so. [I did when I wrote this. I waited, hoping for some reply, which never came.]

But I think the best thing for me to do is to make the blog invisible within the next few days. One way or another, it will be back up in sixty days, make that the first week of May. I'll go back into the woodwork and pretend that I don't exist. For sixty days.

I'll take a look at your demo when it comes up, if it ever does. [There was a registration page showing two levels, a “broker” and a “full member” requesting way too much information for a demo. Beware!]

[I believe that when something takes a really long time -this has taken him years-, maybe you're going about it the wrong way. This is certainly the case here. You have to get definitions and functions and organization all down first, have people on the ground in various locales able to contribute to the basic ideas and plans, before you can be sure anything will be accepted and even then.]

You have been pretty exclusive about such matters as a governing body for such an organization.

[Maybe others of us out here are finished with anything like a central authority about anything, OK? Sorry, that and much else really pissed me off.]

Best

And I really do hope for the best for you anyway, hope we can work these things out. I'm giving you time, but not forever.

-----

Well, time has come and gone and some people, doing whatever they seemed pre-programmed to do, continue doing whatever it is they are doing, discrediting the name and ideas of a truly remarkable autodidact economist, whose ideas might still save the world. It falls to some, and believe me I've known quite a few, computer programmers and IT techies, who assume that a computer program they have in their head without any written documentation, will run fine the first time and solve all the world's problems (and provide them with steady employment; ah yes, we know full well all the games IT techies and computer programmers play). A big well known computer company makes the same claim in their slogan, “let's build a smarter planet.” Hey stupid, the planet is a lot smarter than you are. There was a demo up there, Riegel-Mart. At the bottom of the page it said,

Welcome to the RiegelMart™ Demo. The RiegelMart Demo site is the online educational version of the soon coming RiegelMart™ online exchange site. The money unit of RiegelMart is the Riegel™.

We invite you to join us above on the right [sic] by simply registering with us. [Providing your personal information for nothing.] You will be emailed your login information shortly thereafter. Join us today and begin to experience the truth about 'money' [!?!] and how you can experience real financial freedom [!?!] just by doing simulated personal exchanges here on our Demo site. The real thing is coming soon. [Play a game first, then the real thing comes along and it's still a game, a patented trademarked game, how tacky!]

RiegelMart is a subsidiary of the Riegel Exchange System™, a new alternative monetary system which places the power to issue and control money back into the hands of the people, where it belongs. The RES™ is the first alternative currency system that truly is "Of, For and By the People.” [Seriously, is any sane person going to fall for this baloney? How can something that personally belongs only to Mr. Founder ... who has and will founder some more ... possibly be "Of, For and By the People?” Seriously, does Mr. Founder realize that the vaunted Constitution of the United States, by whatever assertion made by its defenders, was created in secret by a select group of men? How then could such a thing be “of, for and by the people?” Are we jaundiced yet? I'm sorry to say that much I surmised about this fellow certainly must be true and possibly a whole lot more, but it does us no good belabouring this. Water seeks it's own level; if you can't fly with eagles you do whatever with turkeys, etc.]

For more information about the RES, visit our main information site at:

RiegelExchange.com

So this is the answer, the solution, etc.? Well, go take a look, if it ever appears again, but don't divulge more about yourself than you absolutely feel you can. Hell, since it's only a game, why not stick it with phony information just to have a look. Meanwhile, what a cheap disgrace to the fame and reputation of E. C. Riegel!

Adjustment of Terms

The trademark issues being what they are, all references to Riegels as money are now Value Units (the Symbol might be a V with a superimposed U) and the RMES will now be called the Value Exchange Network or VEN for short. We will use E. C. Riegel's ideas for membership in local exchanges which shall be called Independent Exchanges or IE's. Each IE will encompass a geographical area that will begin when three accredited individuals step forth to assume the responsibilities of an IE. These will be spelled out. But of course if anyone has anything contrary to say, they may do so.  These names are all subject to change as more people put their heads together to decide what they shall be called.

We discussed among ourselves whether we should AGAIN offer Laurence Gilbert the opportunity to respond and participate in this forum. One fellow made this comment and insisted I make it part of this post:

“At the very least, anyone resorting to a copyright for something like this has made a huge tactical blunder, unless his original intent was to profit from an invention that rightly belongs to someone else. For all I know, Riegel may be public domain, in which case Gibert's assertion of copyright might not even exist or is bogus. If that's all true, then the man is clearly a liar. In any case, he has no comprehension of the seriousness of what he has done or of our present situation, of the financial positions most people are in these days. There is no way he would ever win my vote of confidence to lead anything of importance. He's clearly demonstrated to me that he's a loser who is not playing with a full deck.”

So my associates regard Gilbert as a traitor, whereas right now I only regard him as a clown. Their disgust with him easily exceeded mine and on a motion to allow Laurence a floor on this forum, every vote but mine went against him. It was however agreed that we could not reasonably exclude him from joining and trading through one of our IE's if one opens in his local area, after all, we do not discriminate on that basis; even fools deserve a life.

However all that may be, we do extend the opportunity to participate in this forum to anyone else. All they need do is submit their remarks to me at venlead2013@aol.com and after careful review, since Laurence insists, this is MY blog, not his, I will post them where they appropriately fit in with the idea of putting together what hopefully shall continue to amount to some equivalents to the Federalist and Anti-Federalist Papers, not as apparently The Founder would prefer that, once all of it's critical By-Laws are written in stone beyond any possible negative manipulations being introduced by anyone, as if that were even enforceable, unless clearly understood by people on the ground, not on the internet, I step out of the picture. Not until. This is my brainchild, and it WILL come forward that way, or not at all, not as a 'Riegel Exchange' system anyway. So people, we are perforce required now to discuss our ideas ... using different terms.

Notice of this blog post shall be conveyed to many fine and conscientious members of the Liberty and Preparedness communities worldwide, etc.

David Burton

FINIS

#27 Markets; Red, Black and Grey

Black Markets are always the Real Markets

E. C. Riegel made mention of “black markets, so called.” Why did he qualify it? What did Riegel recognize that we all need to understand? Whether some good or service is proscribed by a government or religion (are they not something alike?), it cannot be denied that where there is a demand there will be a supply, perhaps not at prices allowing many people to buy, but that somewhere at a given price, anything may be had that is demanded, whether illegal, immoral, expensive or fattening. We habitually describe a black market as where anything can be traded, even that which is obscene.

What characterizes black markets, other than that they can be anywhere? First and foremost, they run in the black (are without debt), to the advantage of both buyer and seller; there are no guarantees of anything once the transaction has been completed. One is never guaranteed of quality, quantity, workmanship, dependability, or soundness, because a black market always runs in the black; all deals are final, there are no returns, there are no credit terms, all trades are settled and final: black markets all run in the black.

Besides the caveat of “buyer beware,” what else happens in black markets? Certain operators and certain locations get reputations. Those with better reputations for fair dealing see their wares sell out far faster than those who are newcomers yet to prove their “good faith” or those who have established poor reputations for quality.

All markets are places for the exchange of goods or services. At one time these were organized to operate in open spaces, open fields, places where sellers could move in their goods or services for sale and where buyers could come and shop and buy. Originally they were set up as whole barter affairs, until money allowed split-barter. Sometimes the money was exchanged by market organizers for goods offered for sale by sellers and so that these sellers could then become buyers of whatever anyone else had for sale. At the end of such markets, usually operating over a matter of a few days, all the money was exchanged back to the market organizers for goods that would be removed to the abodes of buyers and sellers. Trading for furs using wampum during pow wows was common in the early 19^th century when certain animal pelts were fashionable materials for hats and garments in other parts of the world. Trade in slaves, rum and gunpowder was organized as whole barter and later split barter at the various places this trade took place, for yet other goods or for money.

States have often been dragooned into supporting the claims of one set of merchants over others; the busting up of competing markets, so that monopolies or other advantages would result. Regulation is such a form of state FORCE. These efforts usually ultimately backfire, but for those whose morality lacks any philosophical backing (pragmatists), who view winning the moment as superior to any probable future, such tactics are as acceptable as those of common school yard bullies. A wiser consumer might make of certain of these practices as more lurid, preventing their hoped for effects.

Red and Grey Markets

Anything other than a completely free market, a black market, where anything imaginable can be traded, is a controlled market, where only “approved” products are offered for sale and which allows for other mechanisms than paid in full, settled transactions. These, the markets that control a large share of all trade, are the red markets. Since they allow credit in exchange for goods or services, they employ the means to extend the payments out to some determined point in time, where the buyer is receiving value, while the seller agrees to wait to be paid in full, eventually receiving a higher than market price, because the buyer didn't have all that was required for settled payment at the time of the sale.

Any markets where a state or government is involved also imply a degree of redness, because the market is operating as a tax agent and hence all prices are affected by the imposition of additional value required in any trade to cover taxes.

A “grey market” is a term used to describe a situation where you know you might be buying shoddy goods but are willing to accept this risk if the price is low enough to justify it. Some will take delivery of sub standard appliances, tools, etc. if they think that the lower price justifies the exchange, or if they believe that they can take inexpensive actions to more than make up for whatever deficiencies these goods may have possessed. There are all kinds of reasons for selling “seconds” and there is a market for them, though it probably will not be “legitimate” or regulated.

It has often been asked, to what degree is market regulation helpful or even necessary. We maintain that few buyers ever know what they are really buying nor know the ramifications of what they buy, even in regulated markets, so we encourage all buyers to beware of whatever they are doing since, by casting their vote with their money, they are determining what will and will not be acceptable business practices; over time shoddy merchandisers (and manufacturers) should acquire a reputation for producing poor quality products, while those who make better should likewise acquire a reputation for quality and hence higher market prices. There's actually little mystery in this.

The Role of Money

E. C. Riegel said that exchange created money, but it is also true that money creates exchange. Right now we have situations where local entrepreneurs (and their local customers) are strapped for cash in the ordinary political monetary system sense of dollars, euros, yen, etc. To them, a local currency, represented as extensions of or "complementary" to political currencies, allows some to begin to “make money” or “become profitable.” At present, there are essentially two forms of this complementary money; the local monetary unit, often at this time represented as a "man hour" at a fixed price in the political currency, or as a discount on trade for those who use the complementary currency. The Ithica hours is an example of the former, Berkshares, is an example of the latter.  Both are convertible into dollars; one may purchase them and redeem them for dollars.

We're going to make a few statements regarding the importance of these complementary currencies in the direction of trade and other matters moving forward:

1) All complementary currencies (complementary money), regardless of whether they offer discounts for users (Berkshares model) or not, must be tied directly to the purchasing power of a political currency, in all US cases, to the US dollar.

2) All complementary currencies are intended to help generate or promote local businesses and are generally not recognized outside their communities.

3) Complementary currencies arise by actions of groups of local merchants or others who already operate going concerns, rather than allowing ordinary people the natural right of issue.

4) Complementary currencies form no basis for legitimate financing of needful large expenditures, for things like cars, trucks, capital goods, homes or farms.

Taking up each of these concerns one at a time; there may or may not be statutes prohibiting issuance of any currencies that would not be directly negotiable into political monetary units; dollars, euros, yen, etc. These laws are, from our standpoint, illegitimate restrictions on trade and to the extent they are applied represent infringements of inalienable rights. They fit into exactly the same categories as mentioned by Riegel and others who deny the right of ANY government to determine the value of money. We further contend that all government issued money is illegitimate, precisely because it is not backed by anything the government has to sell to us in return. The only legitimate money is that which is backed by a value, especially human labour, but that could in fact include anything put up for sale in any kind of market, whether that be black, red or grey. We prefer black markets to all others, but recognize the positive role of finance to allow greater opportunities of acquisition of real capital goods to more people

To many who want to regress back to partial whole barter using precious metals, where perhaps most of the value in the trade is in the metals proffered, they view laws restrictive of types and kinds of money used for exchange as an unbearable limitation on their freedom, and so do we. What are the differences between someone coming to market with more cash, whether that be in some political monetary units or commodities, be they gold, silver or anthracite coal compared with those who have less than the prices demanded by the sellers? The former usually get a lower price, while the latter may be lucky to be able to buy at all. That represents freedom. Those without must find a way to earn what they need, while those having already more than enough get the chance to purchase whatever, usually at a lower price. In order for this to be so, they must have freedom to sell their labour, which they usually cannot do these days because there are other laws prohibiting free sale of labour in the form of restrictions, licencing and bond requirements, etc.

The second issue, local flow of commerce aided by exchange of a locally generated complementary currency, can benefit small enterprise and even promote it, but after all, much of what we really need, does come from places far from our local communities. What may be fine for keeping a small business afloat locally, has limited power to promote trade for real commodities and finished goods that are produced better and cheaper elsewhere.

The questions that are never asked relate to how big such enterprises must get -what are the real restrictions on size- and what are the consequences directly related to size of operation in terms of real efficiency to scale and responsibility to size. For example, what is the real cost to a community of having many or most of its jobs lost to larger factors of production displacing smaller? Nobody bothers to put such figures, were they available, into any business plan, because they are not considered  directly responsible for these matters, or so it is supposed.

You may read or hear elsewhere (i. e. Rothbard, that great liar) that limited liability corporations are the greatest innovation in business and have brought about such great things for more people than would have been the case had factors of production remained smaller and more competition was involved, etc. We flatly disagree and have the Gulf of Mexico disaster and the Fukushima disaster as proof of our contentions. The bigger they are, the less likely they are to care about local impacts on real people and of course they wouldn't dream of cleaning up their own messes. After all, if sheer size is capable of making markets, and they can and do all the time, then an organization that faces little or no responsibility for anything harmful that they bring about can grow to become “too big to fail” and their operators “too big to jail.”

It is precisely that organizations like WalMart were and are irresponsible for displacing the downtown business districts of virtually every small town or city where they operate, that we maintain our universal call for an end to limited liability corporations, and an end to absentee ownership of all forms of production and commerce. We will simply not allow them in our VEN.

Would this result in rising prices as they always claim? Ask yourself if prices have not already risen during your lifetime on everything and then give the heave ho shove to all comers who promote lower prices for consumers as the bargain for allowing so called “public” corporations into your communities. The basis of all value is human labour and where that value is restricted in terms of free trade, then one has oppression, usually of the lesser for the benefit of the greater.

Among ourselves arose a discussion of whether any IE would like to hold any of these complementary currencies as well as silver and gold bullion and produced some interesting questions. Some wondered whether the first step was to encourage the start up of either an hours based (Ithica) or discount based (Berkshires) complementary currency in as many places as possible and then encourage the exchange of these currencies to promote trade between localities, as a first step toward eventually adopting a fully independent currency as E. C. Riegel proposed. We cannot know what for example Summit County, Colorado, with an hours based system, might wish to trade with Ithica, New York, who has a similar system. Knowledge as well as a means of trade (money) makes markets, so this may be a place where others who have more time or interest might pursue the issues further. But simply put, there is something every community has that it can profitably trade with other communities. This is always ultimately the case. What prevents us from seeing all these possibilities is the framework we inherited from our childhood and those who were running the institutions that gave us our education, perceptions and basic assumptions, none of which may really be as relevant or inflexible as we have come to believe.

Some others in the alternative money interest arena have blithely passed over the real issues involved with savings and finance and to the degree this has been the case, they are insensitive of the importance of wealth formation; all real wealth produces income, and of the formation of capital required so that people such as Professor Greco's young man in Tacoma, who asked when and how complementary currencies would ever buy things people really needed, like shelter, utilities, etc. could be given real answers. In order for that to be possible, there would have to be sufficient interest by those with stacks of the money, of whatever kind, to invest in properties to rent to those who in turn have been able to secure payment for their labour in the same money. In order for that cycle to happen, money hasn't also to circulate, it must be stackable, saveable, useful for the purchase of larger units of value, priced accordingly. This is a matter that will be covered in a future article.

Meanwhile other attempts at an alternative standard are attempted. The model for bit-coin was based on scarcity as a basis for value and therefore very predictably many used it to take bets on the likely inflation of political currencies. Once one does that, the vehicle is no longer legitimate money in E. C. Riegel's sense, but merely just another commodity that could be used in trade, but which could be held as long as it was rising in relative value and sold when it started to lose relative value. Any real alternative would tend to preserve its purchasing power, not just for a decade or two but over many generations; it would hence be worth saving but would not fluctuate in price as dramatically as any commodity.

The core of our concept of money, having to do with preventing inflation, is the community credit clearing function of real money being created at the point of purchase and destroyed when the same buyer takes back the same amount of money created in trade for some good or service he provides. That's a monetary circle.  What if a buyer always buys in this way, but never sells? If it were the government, in order to reduce or eliminate inflation, they would have to tax back every dime they spent. That's not likely or even feasible, so let's accept Riegel's analysis as correct; the government has no business issuing money. But in an E. C. Riegel based VEN, what happens when someone buys, but cannot sell; they have subsistence needs but probably will never be able to earn what they spend? They are what Riegel identified as “red inkers,” but they create what they cannot destroy, the extra money floating around in any VEN will originate with them and become available for all the legitimate profit and finance required by legitimate responsible business.

While it may be true that in a community credit clearing system, all accounts will tend to zero balances, it is a legitimate concern of every kind of legitimate business to have cash stacked up on hand in case of emergencies, in order to keep the business open and functioning. Without the ability to earn profits above expenses and hold the reserves at the ready in case of need, few businesses would be willing or able to stay in business or for that matter adopt a complementary or alternative money. It is this crucial association between the “have nots” creating money and mature businesses requiring surplus pools of liquidity that most commentators on these issues do not bother to discuss. But this connection is real, basic and legitimate. If the have nots are prevented, the businesses that seek to sell to them, and to everyone else, will eventually fail, unless they get hand outs from some government, which we all know is not a legitimate action and for our purposes will lie outside the capabilities of the VEN.

We'd also like to say here that any money withdrawn from a market does not participate in that market; you are not “preserving wealth” by buying precious metals, since all wealth is that which actively produces income. All you are doing is taking your purchasing power out of the market, except of course for the market for precious metals. As we have witnessed over the last few years, one can stack up as much money as one pleases in banks and other corporations, but none of it will be effective of promoting trade because it was not placed into the hands of those who actually need it, but rather was placed into the hands of those who already had too much of it and who would have used that increase to continue their usury based lending practices (rigorously defined here) or their even worse derivatives speculations.

What is really required is for stores of liquidity to be capable of storage, savings, to stack up in local communities where they can go to work buying what local enterprisers want to buy to further their own businesses. If one were operating within the VEN, ones' saved Value Units would not be affected but by what their market would allow; free trade for anything, especially labour, especially locally.

We'll no doubt have far more to say on these subjects in the next few weeks and months.

David Burton

FINIS