new money systems

I've written frequently on ideas about money here. not too long
ago I suggested that stocks are actually becoming a kind of a
currency, and that a diversity of currencies is actually
preferrable to a uniformity.

after a lot of research, I've come across some neat new technology
that cypherpunks might be interested in.

the use of money lies at the root of social interactions. what
kind of properties does that money have? those properties are
likely to influence the social interactions that ensue.

in this country, our money supply is controlled by the federal
reserve, which is actually a private banking system. there
are some people who claim that key parts of it are being
kept secret from the public, such as the controlling interests.
there is definitely little doubt that board meetings of the fed
are held in the strictest of secrecy.

in the computer industry, all software and hardware is moving
toward open standards. could this ideal translate to our money system
as well? I suspect it can.

some very reputable people are beginning to reexamine our money
system and conclude that it is not that we are competing for
scarce resources via money, but that we are competing for scarce money
utilizing resources in the process. this involves the problem of
creating money and then charging interest on this fictitious 
entity, as opposed to charging interest on money that is actually
backed by energy and not debt.

after a lot of study I've concluded that the entire money system
functions like a massive electrical circuit. this is related to
ideas presented in a mysterious document called "silent weapons
for quiet wars" which I highly recommend to anyone on the list.
some will claim it is fraudulent, but I've decided the ideas
it presents are extremely genuine, regardless of the source or
motives behind the writing.

in an electrical circuit, you have the problem of resistence
gumming up the works. engineers spend their entire lives trying
to squeeze electrical efficiency out of their devices. yet
the largest electrical circuit of all, of the greatest importance
to the health and well-being of the entire planet, I believe
has gone largely unexamined. quite possibly the electrical circuit
that comprises our world economy has large amounts of undesirable
resistance. this manifests in a very subtle way-- not direclty as
inflation, not interest rates, but as a difficulty in obtaining money.
in a system with less resistance, money would actually be easier to obtain.

and in fact many have reason to 
believe the world economy has been intentionally designed/manipulate to have
undesirable properties, such as creating an invisible and
undetectable slavery.

imagine that I have a rat on a wheel, and I am using its power to
drive my machines. part of the energy the rat expends goes into 
moving food pellets into its box. but the remaining energy I siphon
off for my own ends. the rat does not realize that it doesn't in theory
have to expend as much energy as it is doing to live, and does not
question its existence as long as it lives. but I can use this energy
for my own agenda.

would it be possible to create such a system using money? are 
*we* the rats on the treadmill? is all our money energy going toward
feeding ourselves, or is some of it being siphoned off? others who
have written intelligently on the subject are suggesting exactly that--
that a system of invisible slavery is now in existence and actually
pervades our culture. it is involved in the way the fed creates
money and manipulates interest rates, charging interest on money
that isn't truly backed by energy.

consider these questions:

1. why is it that even as our economy becomes "more productive", we
have to work harder? families now require more than one wage earner
when before they did not?

2. there are statistics that show in earlier times, it took [x]
farmers to produce the food for the population, such that the ratio
was something like 1 to 2 or so. now the ratio is nearly 1 to 60
or greater. why does this not translate into more free time for
everyone? could it be there is a means by which some entity can
siphon off our spare energy and time?

3. if someone is siphoning off energy from *everyone* simultaneously,
could it be detected in our system? how?


==

what's the solution? some are looking toward "alternative" or "local"
currencies. there are some cases such that local communities experienced
more efficient economies when they resorted to local currencies out
of desperation. 

this has extreme relevance to the cypherpunk ideals of trying to
extricate oneself from the "powers that be" and be a sovereign 
individual, particularly using technical means. it is possible that
new kinds of digital currencies will flourish, and that will not
be tied to what appears to be a very sinister system involving
the federal reserve.

some interesting ideas in new money, including digital cash,
 can be found at www.transaction.net

also, there is a system called "LETS" (local exchange transaction
system) that is getting more exposure and acceptance.

I believe that in the future there will be more and more propaganda
relative to money systems, and I hope that those here will have
a head start in understanding the secret agendas of others.

I hope others will post on this subject in the future. as I say, I believe
it is of extreme cypherpunk relevance.

On 06:03 PM 97.06.19 -0700, Vladimir Z. Nuri wrote (and I quoted):

>in this country, our money supply is controlled by the federal
>reserve

 In _WHAT_ country ?????? Some of you, Americans, simply forget
there's OTHER countries in the world and I start to suspect that
some of you don't KNOW there's other ones except of your beloved
stars and stripes.


--
greetz... Arunas Norvaisa - little guy, The Masses Inc.
<mailto:arunas@post1.com> with subject: 'send key' to get PGP key
PGP for idiots page <http://www.a-vip.com/an>
  and a mirror site <http://www.post1.com/~arunas>
Long computations that yield zero are probably all for naught.

On Thu, 19 Jun 1997, Vladimir Z. Nuri wrote:

Money is different than "wealth"

Start with "Money Mischief" by Milton Freidman for an interesting look at
the role of money.

Money has three functions:

1. as a medium of exchange (as opposed to barter)
2. as a store of wealth
3. as a measure of value (1 cow = $X, 1 sheep = $Y, 1 pig = $Z, instead of
   1 cow = 3.6 sheep).

> 1. why is it that even as our economy becomes "more productive", we
> have to work harder? families now require more than one wage earner
> when before they did not?

> 2. there are statistics that show in earlier times, it took [x]
> farmers to produce the food for the population, such that the ratio
> was something like 1 to 2 or so. now the ratio is nearly 1 to 60
> or greater. why does this not translate into more free time for
> everyone? could it be there is a means by which some entity can
> siphon off our spare energy and time?

If anyone was to adopt a 1920's lifestyle (few cars, no telephone or
electricity, no indoor plumbing in many places) they would have plenty
left over.  As long as consumption is the goal, you can keep working
longer to satisfy more marginal wants.  If I can convince a couple that
they "need" two luxury cars, they will work the longer hours.  If they are
satisfied with something less, they may get by with only one earner. 

However, you are correct in the sense that only half of today's income
goes to actually satisfying our wants, the other half goes to satisfy the
government.  In the 1950 you had a 1% taxation rate, and few regulations
(cars without air bags, computers, and catalytic converters are cheaper).
If you want to go back to 1950, and make your own decisions instead of
letting the government do so, you would have these things restored.

We work "harder" and have less free time only in the sense that we prefer
working longer hours and having expensive things and less free time to
working shorter hours and having more free time.

> 3. if someone is siphoning off energy from *everyone* simultaneously,
> could it be detected in our system? how?

It is called economic inefficiency (the electrical analogy might be
resistance).  If tarriffs are imposed on an import, I end up paying the
domestic producers a little more.  If some regulation forces an employer
to spend $100,000 printing manuals or something, he is spending that to
satisfy the government and not me.  And then there is the obvious "tax",
which you pay regardless of who sends the actual amount to the government
(e.g. the "employer's" half of FICA).

> what's the solution? some are looking toward "alternative" or "local"
> currencies. there are some cases such that local communities experienced
> more efficient economies when they resorted to local currencies out
> of desperation. 

The problem is one of exchange.  A local currency (banks used to issue
their own notes) is only good in that locality.  How do I buy a California
pistachio with Michigan Money?  Or with British Pounds for that matter. 
In all cases you get an exchange rate.  There will be a varying ratio
between any two given fiat currencies, and even two currencies based on
(i.e. redeemable in) different commodities.  A coupon for "one free
hamburger" is a type of currency.  You will sell it at a discount (less
than face value - the price of the hamburger) to someone who wants a
hamburger if you prefer a salad.  In that sense each fast-food place could
issue their own currency (or Shell with their prepaid gasoline cards), but
they would all be discounted from the cash value - why should I pay $1 for
a $1 coupon good only at McDonalds?  If I eat there often, I may pay $9
for 10 $1 coupons.  Another place where they already exist are "barter
clubs" as barter points.

But all the above won't fix any of your above points.  You will work
harder and be taxed on barter points, hamburger coupons, or anything else
based on their (hopefully discounted) value in dollars.  I will still have
to spend more of whatever to get a car with an airbag which I don't want.

The only reason we have national currencies is because nations have
different ideas about how large their inflation rates and defecits should
be and about trade.  That way they can control the supply of that currency
and require changing into that currency to do trade.

The archetypical digital monitary note would be exchangable for a fixed
amount of gold (only because that is considered by most people as "money" 
in a true form, but you could theoretically use any nonperishable
commodity).  As long as they were honored, it would be the same as having
a bullion coin of that amount.  (it could also be exchanged for another
equal note for those schemes that need to track "spent"  digital chunks). 

Having 1000 other currencies would mean that each currency would have a
fluctuating value relative to each other (great if you are an
arbitrageur), and to gold, so why would I want to say I have 5000
eco-greenstamp units instead of 2 grams gold when everyone would recognize
the value of the latter, but only locals the value of the former?

note: one respondent on this subject claimed that my references
to the money system only applied to the US. in fact I believe
they apply to any country that is paying interest on government
bonds!!

>Start with "Money Mischief" by Milton Freidman for an interesting look at
>the role of money.

an interesting book, I think this is one of his I browsed. MF is correct
in some ways but I believe he is off the mark in others. gold has a  key 
advantage over money printed by a government in that it can't be
counterfeited even by that government.  

it is clear to me at this point that any government that pays interest
on its bonds without loaning out that money is actually counterfeiting
its own currency. this interest paid on bonds is the direct 
cause of inflation.

>Money has three functions:

of course all three are interchangeable in a complete economy.

>If anyone was to adopt a 1920's lifestyle (few cars, no telephone or
>electricity, no indoor plumbing in many places) they would have plenty
>left over.  As long as consumption is the goal, you can keep working
>longer to satisfy more marginal wants.  If I can convince a couple that
>they "need" two luxury cars, they will work the longer hours.  If they are
>satisfied with something less, they may get by with only one earner. 

no, actually I think that this is not entirely true-- even measured for this
factor, our money has lost force. consider some job that has not 
changed in nature since then, say plumbing or farming. I believe on
average that today's plumber or farmer must work harder than the 20's
farmer to achieve the same lifestyle. in fact this can be proven 
mathematically in a post I'm working on.

>
>We work "harder" and have less free time only in the sense that we prefer
>working longer hours and having expensive things and less free time to
>working shorter hours and having more free time.

a reasonable hypothesis, and partly correct imho.

>It is called economic inefficiency (the electrical analogy might be
>resistance).  If tarriffs are imposed on an import, I end up paying the
>domestic producers a little more.  If some regulation forces an employer
>to spend $100,000 printing manuals or something, he is spending that to
>satisfy the government and not me.  And then there is the obvious "tax",
>which you pay regardless of who sends the actual amount to the government
>(e.g. the "employer's" half of FICA).

what I am trying to imply in the post is that there is actually a hidden
resistance on our money that is not reflected in the fees that various
entities charge.  this is inflation, and it it can be totally controlled,
despite whatever lies the Fed tells the public.

>The problem is one of exchange.  A local currency (banks used to issue
>their own notes) is only good in that locality.  How do I buy a California
>pistachio with Michigan Money?  Or with British Pounds for that matter. 
>In all cases you get an exchange rate.  There will be a varying ratio
>between any two given fiat currencies, and even two currencies based on
>(i.e. redeemable in) different commodities.

so what? I understand this obvious and trivial point.

>But all the above won't fix any of your above points.  You will work
>harder and be taxed on barter points, hamburger coupons, or anything else
>based on their (hopefully discounted) value in dollars.  I will still have
>to spend more of whatever to get a car with an airbag which I don't want.

a local economy can have a currency, and ask the question, "why is 
value being extracted from our local economy when it is a self-sustaining
unit"? the idea behind a local currency actually encourages local
autonomy/sovereignty/independence.

>The only reason we have national currencies is because nations have
>different ideas about how large their inflation rates and defecits should
>be and about trade.  That way they can control the supply of that currency
>and require changing into that currency to do trade.

the reason is that, imho, a set of greedy people have realized they
can enslave the population of an entire country by manipulating the
currency supply.

>Having 1000 other currencies would mean that each currency would have a
>fluctuating value relative to each other (great if you are an
>arbitrageur), 

no, this is not a problem, but a solution. as our world markets show,
it is trivial to convert between currencies and each one acts as a
check and a balance on the other. if a currency declines in value to
another in the market, I will bet you the country whose currency
declined is "counterfeiting its own money" via interest rates paid
on bonds.

> Tue, 24 Jun 1997, Vladimir Z. Nuri wrote: 

> an interesting book, I think this is one of his I browsed. MF is correct
> in some ways but I believe he is off the mark in others. gold has a  key 
> advantage over money printed by a government in that it can't be
> counterfeited even by that government.  

Gold (content) can be counterfeited, which is why it needs to be assayed
and there are assay marks on gold bars. 

> what I am trying to imply in the post is that there is actually a hidden
> resistance on our money that is not reflected in the fees that various
> entities charge.  this is inflation, and it it can be totally controlled,
> despite whatever lies the Fed tells the public.

If there is inflation, or even the hint, people will shift from dollars
(or pounds, or yen) to something that is not inflating.  It would be
easier to control if they didn't tax you on the inflation (which they call
capital gains).

> >The problem is one of exchange.  A local currency (banks used to issue
> >their own notes) is only good in that locality.  How do I buy a California
> >pistachio with Michigan Money?  Or with British Pounds for that matter. 
> >In all cases you get an exchange rate.  There will be a varying ratio
> >between any two given fiat currencies, and even two currencies based on
> >(i.e. redeemable in) different commodities.
> 
> so what? I understand this obvious and trivial point.

Try spending british pounds at a US fast food restaraunt (at least one
that is not adjacent to a UK diplomatic building).  Then you will have to
go to someone to do the exchange and they will charge a fee.  And then if
you go to the UK and have to change back, there will be another fee.

Although there is an "exchange rate", it is discounted so that the
organization doing the exchange makes money each way.  Canadian
restaraunts just over the border will take american money, but give me 10%
less than the bank exchange rate.

Thus it is not trivial in practice.  If your money was only good for a 50
mile radius, and you lost 3% in each exchange, going on vacation would get
very expensive and you would then call for a universal currency, or
convert into something like it (accepted by every locality very near par)
before going on vacation.  But if you convert it into a universal
currency, why not just leave it as that?

Considering the internet is international, exchange is a big problem and
will get worse as more transactions require foreign exchange. 

> a local economy can have a currency, and ask the question, "why is On
> value being extracted from our local economy when it is a self-sustaining
> unit"? the idea behind a local currency actually encourages local
> autonomy/sovereignty/independence.

I agree with the concept.  If Michigan doesn't want to inflate its
currency and New Jersey does, they can then do so without interfereing
with each other (or BC and Quebec, for that matter).

But as Ricardo has shown, trade advantages all parties, so autonomy is
actually less efficient.  Nebraska is better suited to wheat, Maine to
cranberries, Michigan to Cherries, and Florida and California to Oranges.
To be "autonomous and independent" in Minnesota makes for very expensive
oranges.

So although I consider autonomy a virtue, I consider trade a greater
virtue, so local currencies are good only to the extent they promote both,
and with the problems of currency exchange, I don't see how trade is
enhanced by local currencies, but am interested on your thoughts on this
point since you are more familiar with the narrow topic.

> >Having 1000 other currencies would mean that each currency would have a
> >fluctuating value relative to each other (great if you are an
> >arbitrageur), 
> 
> no, this is not a problem, but a solution. as our world markets show,
> it is trivial to convert between currencies and each one acts as a
> check and a balance on the other. if a currency declines in value to
> another in the market, I will bet you the country whose currency
> declined is "counterfeiting its own money" via interest rates paid
> on bonds.

Yes, but each currency would then have to be exchanged (at a discount!) 
and that almost every time any transaction occured.  Unless you are
willing to exchange any amount of currency without making any profit on
it, not even to cover expenses or fluctuations in value, this won't work -
it is trivial to convert currency, but it is not without cost.

You can have state and local tyrants who want to manipulate the money
supply.  Power corrupts at whatever level (look for a big municipal bond
crash that dwarfs the S&L crisis - this is one thing the locals can
manipulate to some extent). 

In sum, I have a set of questions:  1. Why would local currencies be any
less subject to manipulation than national currencies which suffer from
inflation and devalutation when the consequences are the same and the
national level can't resist?  2. If they aren't going to set the value
themselves, they will have to fix the value "permanently", since if they
can change the peg, they can manipulate it, but if they fix the value to
X, why won't real X be prefered to the note denominated in X.  3. As
long as they have to pick X, if several localities pick gold as X, then
their currencies then become the same, although having different numbers
(e.g. 31 & change gram notes v.s. 1 troy ounce notes) - why have a dozen
currencies which are merely different numbers representing the same amount
of a commodity (except to manipulate later)?

>
>Gold (content) can be counterfeited, which is why it needs to be assayed
>and there are assay marks on gold bars. 

but the sheer beauty of this is that everyone can independently verify
that gold is real by doing independent assays on it. anyone in an
entire population can do so. however when a government controls the money
supply, you are relying on them to govern the scarcity of it, and not
to steal from the population using inflation. gold does not have this problem.
in fact it doesn't have to be gold, it can be *anything*-- platinum, etc.

the key thing is that as people get more of this material, like from mining
or whatever, that the economic cost of this is not low compared to the
existing supply. and, that new additions of this money going into the
system are negligible compared to the total volume. in fact anyone who
asserts "there isn't enough gold in the world to use for money" is 
marvelously ignorant of economic principles, in which it isn't the
volume but the scarcity (lack of ability to create new volume) that matters.

you see, the government can easily create new money. the government is
right now doing this every time it pays money on a bond. the greed of
the population fails to allow people to realize they are losing money
in the long run. it's guaranteed to crash periodically.

>If there is inflation, or even the hint, people will shift from dollars
>(or pounds, or yen) to something that is not inflating.  It would be
>easier to control if they didn't tax you on the inflation (which they call
>capital gains).

it's a horrible problem that virtually all government currencies are 
being inflated by design by the central banks & the governments involved.
this is done whenever they pay money for bonds, more going out than went
in.

>Try spending british pounds at a US fast food restaraunt (at least one
>that is not adjacent to a UK diplomatic building).  Then you will have to
>go to someone to do the exchange and they will charge a fee.  And then if
>you go to the UK and have to change back, there will be another fee.

fees to convert currency are currently quite negligible. and the fee is
in line with the service to do so. multiple currencies act as checks
and balances on each other, in the same way state independence does, or
should, in the US. do you want one mass amalgamation of everything?
so do various people in the UN working for "nwo".. and unifying the
currency is the key means to do so.

>Thus it is not trivial in practice.  If your money was only good for a 50
>mile radius, and you lost 3% in each exchange, going on vacation would get
>very expensive and you would then call for a universal currency, or
>convert into something like it (accepted by every locality very near par)
>before going on vacation.  But if you convert it into a universal
>currency, why not just leave it as that?

in fact you pay a small percent for every transaction you make on a credit
card that is not likely to be much larger than that involved in currency
trader fees.

>Considering the internet is international, exchange is a big problem and
>will get worse as more transactions require foreign exchange. 

exchange problem is merely one of electrons in wires. it's not a problem,
and it doesn't need to be solved. it's already been solved. only those
who wish greater control assert it is a problem, and that it needs to
be solved. they offer a false solution to a false problem. but their
propaganda is working quite well across the world.

>So although I consider autonomy a virtue, I consider trade a greater
>virtue, so local currencies are good only to the extent they promote both,
>and with the problems of currency exchange, I don't see how trade is
>enhanced by local currencies, but am interested on your thoughts on this
>point since you are more familiar with the narrow topic.

the world requires a mixture of independence and dependence. a local
currency is working toward the former, a global currency toward the 
latter. it's not either/or but a mixture situation.

>Yes, but each currency would then have to be exchanged (at a discount!) 
>and that almost every time any transaction occured.  Unless you are
>willing to exchange any amount of currency without making any profit on
>it, not even to cover expenses or fluctuations in value, this won't work -
>it is trivial to convert currency, but it is not without cost.

why should one expect to make a profit merely by exchanging currency?
there will be very low friction rates involved in the transfer. but
in fact what you get with a global currency is the sum of all these
local friction rates, in an invisible format that you can't measure.
which would you prefer? to know how much it really costs you, or to
have the fees hidden so that you have no way of knowing why what you
want costs more than it seems like it ought to?

>You can have state and local tyrants who want to manipulate the money
>supply.  

or worldwide ones. which is more dangerous? furthermore, as I have been
trying to reveal, it is possible to use a money form that is impossible
to manipulate. that is the advantage of gold that world bankers do not
wish the public to know, because it makes them free and soveriegn and
uncontrollable. hence my interest in this and my interest in promoting
it as a key cypherpunk topic.

good questions:

>In sum, I have a set of questions:  1. Why would local currencies be any
>less subject to manipulation than national currencies which suffer from
>inflation and devalutation when the consequences are the same and the
>national level can't resist? 

I am advocating a currency that is "open" in which it is public knowledge
what everyone owns in that currency. everyone can verify how much of the
currency is in circulation. people cannot use it unless they agree to
the "open" requirement. note that this is only the local currency-- a person
could have many assets not measured in it. that is, I could own far more
than is revealed on these public boards.

> 2. If they aren't going to set the value
>themselves, they will have to fix the value "permanently", since if they
>can change the peg, they can manipulate it, but if they fix the value to
>X, why won't real X be prefered to the note denominated in X.

consider a company that releases "iou [x] service" or "iou [x] product".
if there is knowledge about how many ious are out there, people can
judge for themselve the ability of the individual to repay. an individual
who has 1000 "iou" hours is more inflated than an individual with 
"100 iou hours" in circulation.

  3. As
>long as they have to pick X, if several localities pick gold as X, then
>their currencies then become the same, although having different numbers
>(e.g. 31 & change gram notes v.s. 1 troy ounce notes) - why have a dozen
>currencies which are merely different numbers representing the same amount
>of a commodity (except to manipulate later)?

local independence.  a community that is self-sustaining shouldn't be
taxed by a community that isn't, imho. this is the real message of the 
revolution of 1776 and man's century-long desire to escape slavery and tyranny.