All currencies have pluses and minuses. There is no holy grail of a perfect currency.
So the answer is to allow efficient translation between currencies. This requires a standard language to create that efficiency.
It allows the individual to hold all their wealth in any form (eg. gold, land, wheat, rice, USD, Yen, Euro, Bitcoin, etc.), and have it "translated" electronically when conducting a transaction.
I term this "wealth translation".
Example:
A Visa card that debits your Bitcoin when you purchase something at the grocery store. The grocery store receives currency of their choice, Visa debits your Bitcoin. A "wealth translator" takes a small fee on the transaction.
See below for the working prototype. An exchange software that works for any transaction (grocery store to central bank).
Monday, June 30, 2014
Sunday, June 29, 2014
Since I am currently physically in Thailand...
I will talk from the Thai baht perspective.
There are 3 forms of baht: gold, digital, and physical. Each has a different value.
Once upon a time, the physical correlated to physical gold. That is no longer the case, largely due to the digital abundance. Fractional-reserve.
Can the physical currency return to physical gold valuation? Baht to baht? Yes, I think it is possible, however, it would require a wind down of digital currency mostly in financial instruments. This is simply moving money from one form to another. Existing wealth remains while pulling society out of poverty. It also allows opportunities to build wealth.
There are 3 forms of baht: gold, digital, and physical. Each has a different value.
Once upon a time, the physical correlated to physical gold. That is no longer the case, largely due to the digital abundance. Fractional-reserve.
Can the physical currency return to physical gold valuation? Baht to baht? Yes, I think it is possible, however, it would require a wind down of digital currency mostly in financial instruments. This is simply moving money from one form to another. Existing wealth remains while pulling society out of poverty. It also allows opportunities to build wealth.
Saturday, June 21, 2014
The Federal Reserve and Fiscal Responsibility
When the Fed creates money to purchase bonds, the Treasury spends it. Where does that newly created money get spent? Government contracts.
Since the Fed is legally responsible for managing the economy and it is officially considered part of government, fixing that journal entry is possible: an accounting rule or legislation to ensure the Fed cannot create money to lend to the Treasury.
The above would not immediately balance the budget, but would place the Fed on the side of fiscal responsibility.
Since the Fed is legally responsible for managing the economy and it is officially considered part of government, fixing that journal entry is possible: an accounting rule or legislation to ensure the Fed cannot create money to lend to the Treasury.
The above would not immediately balance the budget, but would place the Fed on the side of fiscal responsibility.
Monday, June 16, 2014
Fractional-reserve credit vs Bond purchases
It should be stated: fractional-reserve credit is not the problem. Bond purchasing with created money is the problem. That is illegal lending by the Fed to the Treasury.
Friday, May 30, 2014
Currency creation and economic growth
Most central banks today create currency at the time of bond purchase. Since bonds have interest attached, that means every unit of currency has a debt repayment obligation. To simply use a unit of currency contains an interest fee. That is what I term the "perpetual fee".
Historically, most central banks created currency to represent gold or silver. That limits economic growth some describe as the "cross of gold" and is one of the reasons for its discontinuance.
The solution is to decouple bond purchase from currency creation. Fractional reserve is the interest-based creation of currency that is responsive to economic growth. It is not a perpetual fee because the loan is paid back to the commercial lending institution that issued the loan. While, in theory, bonds are also paid back, this is not usually the case due to political issues. It forces the central bank into a difficult position. The central bank cannot force repayment to remove that perpetual fee.
So, if currency creation cannot be tied to either gold or bonds, what can it be tied to? It is my recommendation to look at the productive output of the country and peg the amount of currency to that number. If recalculated monthly, the economy has room to grow with adequate currency supply. Fractional-reserve lending can handle the minor fluctuations intra-month.
A common language of monetary transactions removes the friction and clarifies issues such as described above. The efficiency allows what I term "wealth translation" to perform the money supply contraction/expansion without the need for direct manipulation. The system described below is also a common interface that will work with any payment system on earth.
Historically, most central banks created currency to represent gold or silver. That limits economic growth some describe as the "cross of gold" and is one of the reasons for its discontinuance.
The solution is to decouple bond purchase from currency creation. Fractional reserve is the interest-based creation of currency that is responsive to economic growth. It is not a perpetual fee because the loan is paid back to the commercial lending institution that issued the loan. While, in theory, bonds are also paid back, this is not usually the case due to political issues. It forces the central bank into a difficult position. The central bank cannot force repayment to remove that perpetual fee.
So, if currency creation cannot be tied to either gold or bonds, what can it be tied to? It is my recommendation to look at the productive output of the country and peg the amount of currency to that number. If recalculated monthly, the economy has room to grow with adequate currency supply. Fractional-reserve lending can handle the minor fluctuations intra-month.
A common language of monetary transactions removes the friction and clarifies issues such as described above. The efficiency allows what I term "wealth translation" to perform the money supply contraction/expansion without the need for direct manipulation. The system described below is also a common interface that will work with any payment system on earth.
The problem with money today
Money is not necessarily currency.
Money is a promise to deliver value, although it might have value unto itself.
The description of value is not money.
Two major problems with today's monetary systems:
1. language differences create misinterpretations of value. Also, sometimes a value transfer has cultural implications that are not explicitly described. Language differences exist between countries and between vocations. Accountants, finance, legal, bankers, computer, and business people might use the same words, but none really understand the unintentional mis-communications.
2. language and cultural differences allow a few to deliberately create ambiguity to leverage a theft that is difficult to detect.
A common language to describe transactions eliminates the mis-communications, whether deliberate or not.
Money is a promise to deliver value, although it might have value unto itself.
The description of value is not money.
Two major problems with today's monetary systems:
1. language differences create misinterpretations of value. Also, sometimes a value transfer has cultural implications that are not explicitly described. Language differences exist between countries and between vocations. Accountants, finance, legal, bankers, computer, and business people might use the same words, but none really understand the unintentional mis-communications.
2. language and cultural differences allow a few to deliberately create ambiguity to leverage a theft that is difficult to detect.
A common language to describe transactions eliminates the mis-communications, whether deliberate or not.
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