"Value does not exist outside man's consciousness."
"Economics is not about mathematics, it is about the human being."
A bill of exchange has similarity to other sorts of transactions that are in place currently, such as bank drafts. For example, escrow is commonly understood by many. In an escrow documents, real estate, money, or securities are deposited with a neutral third party (the escrow agent) to be delivered upon fulfillment of certain conditions, as established in a written agreement. In a fiat world un-backed currencies are the common medium, except for settlements for billion dollar transactions internationally.
There is no reason that such funds could NOT be gold and/or silver, per agreement with the payee, except laws allowing such payments gaining acceptance in some states in the US are written for settlement at face value (Utah). That is a ridiculous option reflecting the arrogance of leadership. Hard currency payments have existed for a short period of time with companies such as eGold at valuations reflecting current trading on the LME. This could be a widespread and generally accepted payment system, other than the fact that it has been under attack by government regulators.
Bitcoins, on the other hand, probably should be under attack, since it appears to be ripe for fraud. So this is not to suggest that there should be no regulations to counteract fraud.
However, eGold is a much less risky way to engage in commerce than, for example, continuing the system of fiat currencies currently in place (implied by vonmiser), as events unfolding are making abundantly clear. As time proceeds more are going to realize the loss of buying power from depreciating currencies, euphemistically called “inflation” by the banksters in their efforts to keep in place their definition of hard currencies of gold/silver/copper as “barbarous relics”.
Now with such systems in place there is no reason that governments could not end fiat currency systems and replace them with the sort of real money that is specified in the US Constitution. In an Internet world where many transactions had formerly been done with local businesses the eGold payment system, for example, could constitute settlement.
The ONLY reason that these changes are not gaining acceptance is because it would end the ongoing robbery of populations everywhere by politicians and banksters, and that ends the discussion on their end with the help of their handmaidens in the media. The money of the US Constitution would put an end to the socialist schemes of current political leaders.
The attempt here has been to extend an explanation that is without the complications of esoteric economic terminology, which has been the objective of bankster types in order to disguise the fraud they engage in. This, by the way, appears to have been the objective of the Founders when they wrote the US Constitution, as it was quite readable by most literate people of the day. Undoubtedly the socialist objective has been to destroy literacy, as witnessed by the performance of most current high school graduates. And by destroying literacy their doubletalk is nothing but an old college “snow job”.
I comletely agree with you. That is also what Vonmiser and I concluded. If more than one currency have to compete, the threat of Copernicus' law is unleashed as long as they are fully interconvertible without taxes, penalties, and inconveniences as Vonmiser stated. This alleviates the need to obsess about currency supply and who controls it. In fact, it obviates the need to obsess about what form and shape the currency has to have and that was my point regarding Bill of Credit, which are just another IOU. If there is a hard money anchor to competing currencies, however, price and value are teathered together in an oscillating relation, elastic yet restrained at once and that is, in my opinion, the most elegant of all solution.
What we know from history is that it is quite easy for rulers to devalue currency, even gold. However, what we learn from history is that the people will hoard good money and let bad money go and that means bad money, like a boomerang, ends up back in the vault of the bank or the king where it was forged and counterfeited. The common thread of monetary history is the suspension of redemption which rings in economies' demise.
Okay, calling it a ponzi scheme may have been the wrong choice of words. What I am getting at is the output and peer accumulation.
If it were made the only legal tender: Doesn’t Bitcoins in a way rhyme with today’s fiat currencies? Without control of output and peer accumulation the digicurrency will fall into the same trap.
I would purpose to control the output and accumulation: Digicoin mining should be at a fix rate of manufacturing and expansion should tie to a rate of change (ex: population growth) rather than allowing technological advancement for seizing gains and capping it at some arbitrary number.
Aside from Bitcoins, I am still in-favor of using multiple forms of currency to legally pay for debts, goods and services. That way, it makes it difficult for any one entity to control and manipulate the markets.
Didn't advanced gold mining devalue gold over time vis-a-vis human labour, the ultimate of all value standards?
Digibots per se' devalue Bitcoins just the same, but why does that make it a Ponzi? A Ponzi is an illegit pyramid scheme which doesn't transfer net real value and is made to fool successive greater layers of buyers by paying one layer a sham return with money from the next while skimming the difference as profit.
I just read your response to Vonmiser. Just so that you are crystal clear about my take on the Real Bill Doctrine:
Antal Fekete's prime objective was to overcome the perceived shortcoming hard money poses - its inelasticity to respond to money shortage and usury, price deflation, and decay into barter - without losing hard money's safeguard against currency inflation. He solved this "dilemma" by pointing to the benefits of self-liquidating, production-based so called "Real" Bills of Exchange fully redeemable for gold when the bill unwinds after final product changes hands from producers to consumers. Benjamin Franklin would agree with this system and we know this because of this quote from "A Modest Inquiry into the Nature and Necessity of Paper Currency":
"There is a certain proportionate Quantity of Money requisite to carry on the Trade of a Country freely and currently; More than which would be of no Advantage in Trade, and Less, if much less, exceedingly detrimental to it."
2 years ago, Vonmiser and I tossed around a similar system based on production-based money in parity with unit production output AS OPPOSED TO MONEY PARITY with UNIT OF LABOUR PERFORMED which is what hard money alone preserves.
My criticism of production-based trade money/bills is that it anchors prices to output instead of unit labour. As labour becomes more productive, its production money price inflates. By contrast, the hard money price of labour remains at par, while labours output deflates in price as labour becomes more productive. Money is used more efficiently just a labour, both in commerce and in capital markets and the cost of money remains embedded in the liquidity premium, which drives capital use efficiency. So the upshot is that the shortcomings of hard money are nothing but conjured ghosts and demons. In reality a hard money system works well because productivity growth and capital efficiency alleviate the presumed threat of money shortage obviating the need for elastic currency.
A monetary system must be fool-proof and account for moral hazard and human frailties. Antal Feket's defense of the Real Bill Doctrine as having merit independent of any further requirement of its fool-proofness is the difference between the value of theory and the demands of real life.
The only way to make a monetary system fool-proof AND elastic is to build into it the threat of redemption as virtually guaranteed by the Gresham effect. Vonmiser and I arrived at this conclusion 2 years ago having scoured through money systems of the world over 3 Millenia: The best way to elminate the mal-effects of moral hazard is to factor moral hazard into your currency system but impose a free market price on it. Therefore, it is not the expiry or redux of bills, but the force of redemption of bills for that which backs them at the source of the bill emitter, which imparts merit of an institution IRRESPECTIVE OF THE BEHAVIOUR OF THOSE SET TO DESTROY IT.
My leap of faith: Someday people will get so far advanced that money and government will be a thing of the past. ;)
>>Now the politicians had a source from which to borrow all the money they wanted to borrow, and the debt created was secured against public taxes.<<