John Zube's Bibliography on Monetary Freedom

John Zube, a German-Australian libertarian activist, is the one who has saved the idea of Panarchy from oblivion and has promoted it in the most continuous and consistent way. John's essays are listed here and he is also tirelessly compiling a comprehensive encyclopedia on free banking with plenty of information useful to all those who want to go beyond the tyranny of legal tender and state banking. 

My specific place in John Zube's Bibliography on Monetary Freedom is reproduced below with appreciation:


MATONIS, JON W, to M., T. in PEACE PLANS 645.

MATONIS, JON W., A Critique of Marx's "The Power of Money in Bourgois Society in the Economic and Philosophic Manuscripts of 1844". 16 Aug. 85, 8pp. in PEACE PLANS 810.

MATONIS, JON W., Anarchy and Money. Short statement only, in PEACE PLANS 645. 1984 manuscript, 20pp, with select bibliography, 48x, in PEACE PLANS 740.

MATONIS, JON W., Announcement for Articles & Outline for THE JOURNAL FOR MONETARY FREEDOM. 48x, in PEACE PLANS 740.

MATONIS, JON W., Digital Cash and Monetary Freedom. - [1995] - Digital Cash and Monetary Freedom by Jon W. Matonis. - www.isoc.org/HMP/Paper/136/html/paper.html - & on xyz other URLs. Matonis advocates a privately-managed digital cash system. The Internet is a new world and a new world demands a new currency - a new standard of value. This standard should be dictated by the market. - Roy Davies

MATONIS, JON W., Hint on a monetary penal clause in U.S. legislation. 1/2 page only, in PEACE PLANS 25.

MATONIS, JON W., INSTITUTE FOR MONETARY FREEDOM. Project notes only. in PEACE PLANS 645,

MATONIS, JON W., Issue Papers 1 & 2. 2pp, on Alternative Currencies, Issue Paper 3: Free Banking/Free Money. 6pp, 29x, in PEACE PLANS 741. No. 4: The Direction of the Free Money Movement. 12 June 88, 2pp, in PEACE PLANS 810.

MATONIS, JON W., Statement on his planned INSTITUTE FOR MONETARY FREEDOM. PEACE PLANS 645.

MATONIS, JON W., The Direction of the Free Money Movement. Issue Paper No. 4, 12 June 88, 2pp, in PEACE PLANS 810.

MATONIS, JON W., The Political Appropriation of the Monetary Unit. 1985 manuscript. - shortly mentioned in PEACE PLANS 645. Matonis tried to established an Institute for Monetary Freedom and a journal. As far as I know, nothing has come of these plans. The reason may be that there is still no directory to all who are strongly in favor of this liberty. - J.Z., 7.6.98. - The full 1985 manuscript, 50pp, 48x, in PEACE PLANS 740.

MATONIS, JON W., to SCHWENKE, SIEGRIED. 19 Aug. 86, 1p, in PEACE PLANS 740.

MATONIS, JON W., to WATNER, CARL. 2 Nov. 86, 1p., in PEACE PLANS 740.

MATONIS, JON W., to ZUBE, JOHN & from J.Z., 18 July - 8 Aug. 86. 48x, in PEACE PLANS 645,

MATONIS, JON, Directory of Journals Representing Free Banking. 1990. 20 entries, 1/2 page, in PEACE PLANS 1745-1748, March 02, p.780. - I have not yet extracted these and references from all other PEACE PLANS files for this bibliography. One person can only do so much. - J.Z., 30.6.10.

MATONIS, JON, The Land of Vespucci. Jan. 26, 1983, 3pp, in PEACE PLANS 1745-1748, March 02, p.650. - Capital goods are not a good basis for the issue of currency. Even 100% covered gold certificates still need "shop foundation" - for if you convert them into their metallic cover, you can neither eat nor drink it. - J.Z.

Venezuela to Devalue Currency Again

By Kejal Vyas and David Luhnow
The Wall Street Journal
Friday, December 31, 2010

http://online.wsj.com/article/SB10001424052748703909904576052141076137366.html

CARACAS—Venezuela will devalue its "strong bolívar" currency on New Year's Day, the government said Thursday, the second such devaluation within a year and at least the fifth major devaluation during the decade-long populist government of President Hugo Chávez.

Hugo Chávez, center, visits a homeless shelter in Caracas this month. Devaluation is likely to spur inflation, hitting the poor—a key constituency.

News of the devaluation came just after the central bank said the Venezuelan economy contracted 1.9% in 2010, the second consecutive year of declining output in the oil-rich nation after a 3.3% decline in 2009.

Both pieces of news suggest Mr. Chávez is having an increasingly difficult time balancing his populist policies with economic reality, according to economists. His government's widespread nationalizations of private industry have sapped economic growth, while public spending has sparked inflation that the government has tried to contain by measures such as price controls.

One such price control is the exchange rate. In January 2010, Mr. Chávez's government devalued the strong bolívar from its previous official rate of 2.15 per dollar to 4.3 per dollar. To help the poor, however, the government set up a stronger rate of 2.6 per dollar for imports of food, medicine and other essentials.

On Thursday, the government said it would scrap the 2.6 rate—and keep the higher 4.3 per dollar rate.

It will also keep intact another exchange rate, called the SITME, of 5.3 bolívars per dollar, which is used to provide companies with limited access to greenbacks.

The move will help "simplify transactions," Planning and Finance Minister Jorge Giordani said in a news conference broadcast on state-run television. He added that the changes will help Venezuela achieve its target of 2% economic growth for 2011.

Economists were skeptical, saying the measure will do little to tackle the country's financial constraints.

The devaluation is aimed at strengthening the economy and public finances by providing more bolívars for every dollar of Venezuelan oil exports.

Venezuela's finances have been stretched by increases in public spending, even as oil prices have weakened in the past few years.

In addition to the devaluation, Mr. Chávez is planning to push through an increase in the value-added sales tax in coming months to lift government revenues. Shoring up public finances would also improve Venezuela's capacity to repay its debts.

The devaluation, however, will add to inflation by raising the cost of imported goods. Venezuela's annual inflation rate of 26.9% is already among the highest in the world.

Barclay's Capital estimated that the latest overall devaluation of the bolívar was about 23.5% of the average weighted exchange rate. Goldman Sachs estimates about 40% of dollar sales in Venezuela have been at the stronger rate of 2.6 bolívars to the dollar.

Rising prices are likely to hit the poor hardest, making life more difficult for Mr. Chávez's key constituency. Economists had been expecting some kind of devaluation, saying Mr. Chávez would want to take a political hit well in advance of 2012 elections. The former army officer, in power since 1999, is running again.

Ordinary Venezuelans reacted to the move with a mixture of dismay and resignation. "We don't have an economy based in reality," said Francisco Holinek, a furniture salesman in Caracas, the capital.

Despite the coming devaluation, the bolívar will still be overvalued against the dollar, economists say, leading to a scarcity of dollars. The lack of dollars at official rates has led to a thriving black market, where the dollar currently fetches more than 8 bolívars.

"The government will continue to tightly ration foreign dollars to guard reserves," said Tamara Herrera, an economist with Venezuelan research group Global Source Partners.

The new devaluation will do little to address Venezuela's underlying economic problems. In the past few months, Mr. Chávez has stepped up the pace of nationalizations, further weakening the private sector.

A long recession has done little to damp the president's antics on the global stage. He recently refused to accept the credentials of the man nominated to be U.S. ambassador to Caracas, causing Washington this week to revoke the visa of Venezuela's U.S. ambassador. Analysts say the tit-for-tat isn't likely to affect Venezuelan oil exports to the U.S.

Populist policies are returning to haunt some of Mr. Chávez's allies, too. In Bolivia, President Evo Morales is facing widespread street protests after cutting back on fuel subsidies. Mr. Morales explained the move as an attempt to boost domestic fuel production, which has lagged since he effectively nationalized the energy industry in 2006.

For further reading:
"Chavez Devaluation Too 'Timid' as Bolivar Remains Overvalued, Goldman Says", Bloomberg, December 31, 2010
"Venezuela's Chavez devalues bolivar currency again", Reuters, December 30, 2010

Are the Central Banks Running a Fractional Gold System?

By Alasdair Macleod
FinanceandEconomics.org
Thursday, December 16, 2010

http://www.gata.org/node/9428

This thought is prompted by a forensic study of the Bank for International Settlements’ records and accounting procedures with respect to its dealings in gold, which was presented by Robert Lambourne to the Gold Symposium in Sydney on 9th November. The link to his report is here. Lambourne points out that the BIS was founded in 1930, when settlements between central banks routinely involved gold, and the primary function of the BIS was to facilitate these settlements without the physical transfer of bullion. This involved gold accounts being maintained at the BIS for gold owned by central banks, with other central banks at the main depository centres. Lambourne cites the example of the pre-war German Reichsbank, which held gold through the BIS in Amsterdam, Berne, Brussels, London and Paris.

Central banks were offered two different types of account at the BIS, earmarked and sight: earmarked accounts recorded gold held separately and specifically for a central bank, and sight accounts were non-specific. Earmarked gold is allocated, while sight gold is unallocated; earmarked is custodial and sight is co-mingled.

The flexibility of the system allowed a central bank to diversify its gold reserves in a number of centres through a politically neutral institution, and it made sense to allocate some of this into a fungible account to settle transactions with other central banks. But that was pre-war, and before the US, with the co-operation of the IMF and other European central banks, demonetised gold.

Today, the BIS still operates earmarked and sight accounts for central banks, but crucially, rather than have the bulk of gold in earmarked accounts with a smaller float in fungible sight accounts, the bulk of central bank gold is now held in unallocated sight form. Lambourne brings this point out in his analysis of the 2009/10 BIS Annual Report, which shows in Note 32 that the BIS holds only 212 tonnes for central banks in earmarked accounts, and 1,704 tonnes on its balance sheet in sight accounts.

Furthermore, the BIS accounts disclose that almost all of the 1,704 tonnes is held at central banks in unallocated sight form. This confirms that the central banks themselves also operate sight accounts.

So to summarise so far, out of 1,912 tonnes at the BIS, 90% of it is now unallocated and nearly all of this gold is held in unallocated accounts at other central banks. While this sight gold at central banks is technically deliverable on demand, there is no apparent requirement for them to actually have it. It is therefore entirely possible for a central bank to retain only a small portion of the total owed on sight accounts, which after all is what banks have done from time immemorial.

The temptations to use physical gold from these unallocated sight accounts to supply the market have been enormous, given the progressive demonetisation and discreditation of gold by the BIS founder members. It is easy, without proper audits, to keep these activities secret from the markets and even from other central banks not in the inner circle. It would be very interesting to know, for example, the terms under which India agreed to buy 200 tonnes of gold from the IMF. Did she actually take delivery into an earmarked account, or was it a pure paper transaction across sight accounts? If she had insisted on an earmarked account, would the deal have gone to someone less picky? Was the IMF gold itself earmarked or sight, existing or non-existent? As an outsider from the inner BIS circle the Bank of India is not in a position to suspect she may be the victim of a pyramid scheme run by her superiors; nor indeed is any other of the minor central banks with sight accounts in London, New York or Zurich.

We must hope for the sake of financial stability that such suspicions are without foundation, but this hope is untenable while the major note-issuing banks refuse to provide independent audits of their activities. If these central banks have been operating a fractional sight system, then it could explain how they have managed to supply so much bullion into the markets while appearing to maintain their official reserves.

China and Russia must be watching this with great interest. We can assume that their intelligence services are more aware of the true position than the general public, and if they also conclude that the Western central banks are running a fractional system using sight accounts, this knowledge hands them great economic power.

It is relevant to bear this in mind, because it will condition the US’s response to what is developing into a destructive gold crisis. Political and strategic considerations will have to be weighed as well as purely financial and practical ones. It would be downright stupid, for example, for the US to confiscate privately owned gold, without international agreement from Russia China and India as well as the Europeans to take similar action. And how co-operative would any nation be when they discover that the gold they thought they had at the BIS, the Fed and the Bank of England has actually vanished?

This is important because the basic problem is that government and banking debt around the world are both rapidly moving towards default, and since governments are guaranteeing the lot, the pace of monetary creation is accelerating. The consequence is that the gold suppression schemes, which have existed for the last one hundred years in one form or another, are finally coming to an end. We are trying to guess how dramatic that end will be. It will be difficult enough to stop a run by unallocated account holders on the bullion banks, without forcing a cash-payout amnesty. But if the central banks themselves cannot supply the necessary bullion to prevent this, the prospect of a total collapse of paper money will be staring us all in the face.

Modern Hawala: Do You Need to Transfer Money Privately?

By Bill Rounds, J.D.
HowToVanish.com
Thursday, September 24, 2009

http://www.howtovanish.com/2009/09/modern-hawala/

HAWALA SYSTEM FOR HAWALA TRANSACTIONS VIA A HAWALADAR

That’s hawala, not koala and there are many hawala benefits. For those unfamiliar with a hawala system, a hawala money transfer is a way to send money via a hawaladar or hawaladars, usually across long distances, at a far lower cost than sending money by wire or bank transfer. Hawala banking with hawala transactions and hawaladars have been used for thousands of years, mostly among African, Asian and Middle Eastern cultures. Although the advent of modern banking has made hawala banking less common than before, the introduction of severe restrictions to banking privacy through legislation and enforcement has made a hawala system via a hawala network is a very attractive option again for privately transferring money.

The transfer of money via a hawala banking system is extremely private and is unlikely to be reported or discovered by anyone other than the hawaladar, the transferor and the tranferee. In a world where bank privacy is increasingly hard to find, this is a welcome feature of hawala banking. In the hawala system, hawaladars are the brokers or facilitators of the transaction. This transactional privacy has made hawala banking an evil villain for enemies of personal privacy and financial privacy. False and exaggerated allegations of money laundering and terrorism funding through hawala money transfers and hawala transactions have incorrectly characterized the hawala network while hawala banking is actually the most efficient and ancient of all money transferring systems.

THE MECHANICS OF HAWALA BANKING SYSTEM WITH HAWALADARS

The most common use for a hawala system is to send hawala money transfers to another person who is at a great distance from you. For hawala transactions, the money sender contacts a local hawaladar and gives him the money he or she wants to send. The hawladar then contacts another hawaladar in the destination city for the money and arranges to have the hawaladar in the destination city turn over the money to the recipient, minus a small fee. In the hawala transactions no money actually physically travels the distance at that time but the hawaladars keep a tally of the total owed and then settle the difference at a later date. The exact methods can differ greatly from hawala network to hawala network but this is the general overview of how hawala banking works.

BENEFITS OF A HAWALA SYSTEM OR HAWALA NETWORK

The hawala system can exist outside of the traditional legal system because hawaladars generally engage in hawala transactions with other hawaladars based on a long relationship of mutual trust, often built up over generations of hawaladars. Thus with hawala banking there is no need for formal legal protection, which is expensive, and there is a very low risk of default when you transact with such well known individuals.

This hawala system is by far the most private form of transferring money. The entire hawala transaction can occur over a couple of phone calls, emails, text messages, or instant messages. Although the United States requires registration of these kinds of hawala banking services, it is very hard to enforce such a requirement because of the difficulty detecting the hawala transactions. No formal records of the individual hawala transactions are usually kept after the hawala transaction has occurred. All that exists is usually a running tally of what is owed, often encrypted or coded by the hawaladars in the hawala network. This is far different from the extensive disclosures required by banks for a similar transaction.

The hawaladars also have the benefit of being able to settle accounts in a hawala transaction with something of value other than a currency. These non-cash hawala transactions can be used to avoid currency controls, official exchange rates, import or export duties, or other undesirable tax effects through the hawala system. These legal, privacy and economic advantages allow the hawaladars to perform the service of a hawala money transfer at a much lower cost than is usually available through bank money transfers.

Read the rest of the article.

Read the follow-up articles:
Hawala Banking And Currency Controls Part I, November 17, 2009
Hawala Banking And Currency Controls Part II, November 20, 2009

Bill Rounds, J.D. is a California attorney. He holds a degree in Accounting from the University of Utah and a law degree from California Western School of Law. He practices civil litigation, domestic and foreign business entity formation and transactions, criminal defense and privacy law. He is a strong advocate of personal and financial freedom and civil liberties. This is merely one article of 75 by Bill Rounds J.D.

Could the Wikileaks Scandal Lead to New Virtual Currency?

By Keir Thomas
PCWorld
Saturday, December 11, 2010

http://www.pcworld.com/businesscenter/article/213230/could_the_wikileaks_scandal_lead_to_new_virtual_currency.html

It's not an exaggeration to say that the recent Wikileaks scandal has shaken the Internet to its core. Regardless of where you stand on the debate, various services have simply refused to handle Wikileaks' business--everything from domain-name providers to payment services--and this has led to many questioning how robust the Internet actually is.

Hackers have already stated their aim to create their own DNS system, which will bypass officialdom. This uses peer-to-peer technology to get around the problem, a favorite of hackers because it's impossible to regulate.

But how about an entire currency based on peer-to-peer technology?

That's what's on offer from Bitcoin, a decentralized virtual currency that could either be the best idea since they figured out how to slice bread, or just another hacker's daydream. As the Wikileaks debacle continues, it's being increasingly discussed in various sections of the Web as a possible solution to the PayPal online payments monopoly.

Read the rest of the article.

For further reading:
"Amazon, P2P and non-centralised infrastructure", Simon Phipps, December 10, 2010
"Gov't crackdown spurs initiatives to route around DNS", Keith Dawson, December 7, 2010
"Things Fall Apart; the Centre Cannot Hold", Glyn Moody, December 6, 2010

Observations on the Digital Currency Industry

Mark Herpel of Digital Gold Currency Magazine has published some important observations of the digital currency industry for 2011.

2011 Observations on the Digital Currency Industry

Could Gold ETF Providers Offer Bullion-Backed Currency?

By Paul Amery
IndexUniverse.eu
Tuesday, November 9, 2010

http://www.indexuniverse.eu/blog/7630-a-golden-opportunity.html

Could gold ETF providers develop their product to offer bullion-backed currency?

Gold ETFs and ETCs have been perhaps the biggest success story in the exchange-traded products market’s near 20-year history.

These bullion trackers have greatly democratised access to precious metals. They’ve offered investors exposure to gold and silver more efficiently and at a much lower cost than the traditional route of buying coins or bars. Price competition amongst issuers continues to push costs down, dealing spreads are tiny, and competing products like Bullionvault are also there to keep ETP providers on their toes.

In fact, exchange-traded precious metals have offered one of the few means for the average investor to defend his or her hard-earned savings from the currency depredations wrought by Greenspan, Bernanke, King and their fellow central bankers over the last decade. I’m one who’s been able to make use of them for this purpose – I hold both gold and silver ETCs in my personal pension plan.

But while gold and silver have performed two of the three commonly held functions of money very well – by acting as a store of value and a unit of account (try looking at the performance of equity indices in gold terms and you might reconsider your view of the strength of the share markets) – they are still hardly used, in “developed” markets at least, in their third, and historically their primary function: as a medium of exchange.

In other words, you can easily buy gold and silver in ETC/ETF format to hold in your brokerage account or savings plan, but you can’t (yet) easily do your weekly shopping in gold or receive your salary in ounces of silver.

Several variants of bullion-backed electronic currency have been launched over the last decade in an attempt to fulfil this role, as a means of everyday payment, and thereby to compete with national currencies. None has yet grown to significant size, while some have been plagued by allegations of fraud. In one well-publicised case, a digital gold currency (eGold) attracted a lawsuit from the US Department of Justice that is still being contested by the currency’s operators.

Read the rest of the article.

Imagine Your Computer As a Wallet Full of Bitcoins

By Danny O'Brien
The Irish Times
Friday, November 26, 2010

http://www.irishtimes.com/newspaper/finance/2010/1126/1224284180416.html

WIRED: A strange and notional currency is creating a provocative and disruptive new economy

Occasionally there comes along a technology idea so strange that not only can I not tell whether it’s doomed or bound to succeed, I can’t even tell what either of those futures might look like.

One example was Linux. When I first saw it, I had real trouble imagining what would happen if it took off. But, at the same time, I couldn’t visualise how it could fail. How would it compete with Microsoft? How would anything compete with a perfectly usable, yet entirely free operating system?

I’m currently peering at an idea that is mystifying me in exactly that manner. It’s called Bitcoin.

Here’s the elevator pitch, as they call it: imagine a banking system, but distributed over thousands or hundreds of thousands of computers. The computers together hold a database of transactions, similar to the database clearing banks or credit card companies hold: X transferred something to Y, Y transferred the same thing to Z.

No one computer manages this database; they all run the same software, which collectively distributes the knowledge and procedures that make up this set of accounting books.

As well as this database, the computers also generate unique numbers, at a slow but adjustable rate. These unique numbers make up the only “things” that can be recorded in that transaction database. So when X is recorded as transferring a thing, it can only really transfer one of these numbers.

There aren’t many of these numbers around to begin with, because they’re so hard to create. You create them by doing the work of checking and recording the latest transactions in the database. If you do that, you get one or maybe more of the unique numbers as a byproduct.

Read the rest of the article.

QE4: A Fictional Account

The first 12 hours of a U.S. Dollar collapse...

China, Russia Quit Dollar

By Su Qiang and Li Xiaokun
China Daily
Wednesday, November 24, 2010

http://www.chinadaily.com.cn/china/2010-11/24/content_11599087.htm

St. Petersburg, Russia - China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.

Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.

"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.

The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.

The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.

"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.

Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.

The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communiqu. Details of the documents have yet to be released.

Putin said one of the pacts between the two countries is about the purchase of two nuclear reactors from Russia by China's Tianwan nuclear power plant, the most advanced nuclear power complex in China.

Putin has called for boosting sales of natural resources - Russia's main export - to China, but price has proven to be a sticking point.

Russian Deputy Prime Minister Igor Sechin, who holds sway over Russia's energy sector, said following a meeting with Chinese representatives that Moscow and Beijing are unlikely to agree on the price of Russian gas supplies to China before the middle of next year.

Russia is looking for China to pay prices similar to those Russian gas giant Gazprom charges its European customers, but Beijing wants a discount. The two sides were about $100 per 1,000 cubic meters apart, according to Chinese officials last week.

Wen's trip follows Russian President Dmitry Medvedev's three-day visit to China in September, during which he and President Hu Jintao launched a cross-border pipeline linking the world's biggest energy producer with the largest energy consumer.

Wen said at the press conference that the partnership between Beijing and Moscow has "reached an unprecedented level" and pledged the two countries will "never become each other's enemy".

Over the past year, "our strategic cooperative partnership endured strenuous tests and reached an unprecedented level," Wen said, adding the two nations are now more confident and determined to defend their mutual interests.

"China will firmly follow the path of peaceful development and support the renaissance of Russia as a great power," he said.

"The modernization of China will not affect other countries' interests, while a solid and strong Sino-Russian relationship is in line with the fundamental interests of both countries."

Wen said Beijing is willing to boost cooperation with Moscow in Northeast Asia, Central Asia and the Asia-Pacific region, as well as in major international organizations and on mechanisms in pursuit of a "fair and reasonable new order" in international politics and the economy.

Sun Zhuangzhi, a senior researcher in Central Asian studies at the Chinese Academy of Social Sciences, said the new mode of trade settlement between China and Russia follows a global trend after the financial crisis exposed the faults of a dollar-dominated world financial system.

Pang Zhongying, who specializes in international politics at Renmin University of China, said the proposal is not challenging the dollar, but aimed at avoiding the risks the dollar represents.

Wen arrived in the northern Russian city on Monday evening for a regular meeting between Chinese and Russian heads of government.

He left St. Petersburg for Moscow late on Tuesday and is set to meet with Russian President Dmitry Medvedev on Wednesday.

For further reading:
"Currency settlement benefits Sino-Russia traders", China Daily, November 25, 2010
"China-Russia currency agreement further threatens U.S. dollar", International Business Times, November 24, 2010
"Official promotes yuan in place of reserve currencies", China Daily, November 15, 2010

Virtual Currency Exchanges Moving Virtual Currency Closer To Wall Street

By Kevin Flood
Kevin's Corner
Monday, November 15, 2010

http://kevinflood.blogspot.com/2010/11/virtual-currency-exchanges-moving.html

I have been writing about virtual currency for some time and have witnessed its emergence from an obscure form of monetization and reward system in role playing games(RPG), virtual worlds(VW), airline and hotel bookings to a world class currency system challenging the valuation of the Yuan and the creation of the Facebook credit universal virtual currency. I have also suggest that regulated and sophisticated virtual currency trading is inevitable given the proliferation of virtual currency in gamified business applications and the popularity of online games using virtual goods and currency as a proxy for conventional e-commerce transactions. It is estimated that virtual goods/virtual currency revenue will reach 2.5 billion USD by 2013. This is a difficult number to ignore considering the worldwide slow down in traditional commerce. Virtual currency is international and becoming common appearing in retail stores in the form of virtual currency cards and as a bonus and award system for shopping. This is causing currency trading business(real and virtual) to take a much closer look at the viability of legitimate virtual currency exchanges.

We are now seeing Wall Street style monetary exchange trading systems specifically designed to handle virtual currency exchange. Startup companies, traditional currency traders and online game related businesses are stepping up their efforts to seriously integrate virtual currency trading into their business models. The ultimate goal is to establish valuation for virtual currency based on transaction activity and to allow for the free flow of goods and services between virtual currencies and eventually traditional virtual currencies such as the Dollar and Euro. Yes , these currencies are virtual as well because they are not backed by any physical assets and derive their valuation based on the amount of currency in play and their value relative to other economies and currencies.

The following are a few companies that have either contemplated launching virtual currency trades or are already up and running.

Hi5 -Hi5 is a social network that has moved from a generalized social network to a focused online gaming social network. Hi5 is encouraging online game operators and providers to offer their games within the Hi5 environment. Hi5 helps these game companies by promoting and advertising the game providers content to the HI5 community providing a virtual currency exchange system between Hi5 virtual currency and the game providers virtual currency. The currency valuations are calculated everyday based on the volume and amount of virtual currency in the Hi5 system. The level of sophistication of Hi5's valuation system mimics the way currency traders and governments value traditional currencies. Hi5 has an interesting model allowing a business or game property to maintain their currency(and branding) and co-exist in the Hi5 environment. This trading system could easily exist outside of HI5 on its own platform.

FirstMeta - First Meta is a relative new comer to the virtual currency trading world. It is unique because it is a distinct trading platform divorced from the business of generating virtual goods or virtual currency. This business model comes closest to a traditional independent currency trading company. It is also interesting because the co-founders are not gamers they are bankers, investors and Wall Street type traders.This is significant because the company's model does encourage the exchange trade business to take a closer look at how virtual currency can and will be traded on open exchanges.

MyYearbook.com - My Year Book is the grand daddy of virtual currency exchange. They started this exchange to move players and consumers form one property to another increasing the player pool for gaming companies and to increase their membership. This is similar to the airline game with the exception that My Year Book has been more aggressive offering virtual currency exchange between online game properties and their business.Companies such as IMVU and Wee World are just a few of the companies that are in the MyYearBook system. Although the virtual currency exchange system is not currently a separate business it will not take much of an effort to move it out of My Year Book and into an open public exchange.

PlaySpan - In the true sense PlaySpan is not a virtual currency exchange platform. However, it is not far from it. . Playspan let's individuals buy and sell virtual currency for a number of different game sites. The relationships that PlaySpan has established with various virtual game and currency providers has positioned PlaySpan to launch a fairly robust virtual currency exchange with a wide array of virtual currencies.

Forex - I have to mention Forex, the traditional monetary exchange big boy on the block for traditional currency exchange. They have been considering virtual currency exchange for at least two years. Unfortunately, I can not reveal my sources. There has been reluctance to move forward because of the quasi legal opinion on virtual currency trading and the lack of real volume. With the emergence of Facebook credits as a virtual currency and billions of USD virtual currency transactions we have to believe that Forex is going to give this another look. Obviously, they are very well positioned.

The mentioned green shoots of activity in virtual currency trading are only a few of the total number of startups and conventional companies either considering or already in this space. Virtual Currency Exchanges(VCE's) are like so many previous online trends they start slow almost unnoticed by the general public and all of a sudden they become big really fast. Virtual currency trading will be no different. The early movers that stake a claim to the space will be winners and future common brand names in the financial services industry.

Kevin Flood is the CEO of Gameinlane, Inc. and writes extensively about gamification, online games and the impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Reprinted with permission.

For further reading:
"The Rise of Virtual Economies", Max Miller, November 16, 2010
"Virtual Money in Electronic Markets and Communities", Levent V. Orman, June 7, 2010
"Cosmetic Real Money Trading in World of Warcraft", Jennifer Martin, Virtual Economy Research Network, May 12, 2010
"Linden Dollar and Virtual Monetary Policy", Philip Ernstberger, January 23, 2009

The FED’s Real Monetary Problem: Bitcoin

By Thomas Luongo
LewRockwell.com
Friday, July 23, 2010

http://www.lewrockwell.com/orig6/luongo7.1.1.html

Since being "converted" to both libertarianism and, by extension, Austrian economics I have developed a passion for money. The monetary regime lies at the heart of so many symptoms of societal conflict that studying the nature of money seems axiomatic to me. In our current mixed economy of Keynesian Shamanism and Monetarist Voodoo reading through even poor synopses of the Austrian business cycle was like finding the Rosetta stone. The money promulgated by the Federal Reserve and backed the full force and aggression of the U.S. Government could easily be seen as the motive force for all manner of secondary and tertiary effects, especially after a reading of Hayek’s The Road to Serfdom. There is nothing in the FED’s arsenal of monetary tools to combat this problem; the rejection of their basis for existence.

Since those moments of awakening I’ve spent much of my time thinking about how to inject a new currency into an existing regime without using force like with the Euro. I was an adopter of The Liberty Dollar, which was an interesting idea until the raid by the FBI in 2007. It highlighted the growing concern with the US Dollar; giving people the illusion of a silver-backed currency while hedging against its own success or failure by buying their coins and storing them away.

E-Gold’s troubles with The Man were equally predictable; thieves hate competition. The Liberty Dollar was being persecuted over a broad interpretation of counterfeiting laws (irony duly noted) while E-Gold was harassed over their customer’s actions, not any actions of their own. The Federal Government is allowed to run the twin Ponzi Schemes of Social Security and Medicare but U.S. citizens are not allowed to engage in commerce with those engaging in similar activities while not actively engaging in those activities themselves.

In other news, water is wet.

E-Gold is still in business, as are others like GoldMoney. They are all solutions for overcoming one of the real problems with hard currencies; the physical movement of metal from point A to point B in a speed of light economy. Unfortunately, they are all built on the same poor foundation, which the modern banking system exploits ruthlessly; trusting a third party to manage your property from a remote, central location. For GoldMoney, this is a feature not a bug, having vaults located outside the U.S.; a hedge against potential flight-of-capital diktats issued from Mordor-on-the-Potomac.

I have been tempted by these systems, but I have not placed funds with them. I’m willing to believe that many of them are legitimate in both their intentions and business practices, but I can’t afford to take that risk.

I prefer the promise of my dogs to someone I’ve never met.

It’s funny that I have no issue with using PayPal linked to my checking account but am unwilling to fund a GoldMoney account for the same purpose. Of course, I can hear Gary North on my shoulder whispering in my ear like a fiscally savvy Iago saying, "Obviously, you have a problem with that. Gold isn’t money." He is right. Because of Gresham’s law I value it more highly than its notional value. Why would I transact in it, when people will take these stoopid federal reserve notes? Gold is insurance against the depredations of the central bank upon the dollar. It may trade on the COMEX like a currency, but a medium of exchange it is not. As this hilarious video shows, the people of Harvard Square do not even know what to do with silver being offered to them for practically nothing; no less conceive of a use for it as a monetary instrument.

This is a warning to the hard money crowd that a return to commodity money will happen organically or not at all; an outgrowth of a loss of confidence in the dollar and the institutions that circumscribe our daily reality. Without any kind of fundamental shift in mass perspective, I see no future for a commodity exchange standard that bears any resemblance to the International Gold Standard.

People are more trusting of digits than physical gold.

To that end, I came across something the other day that piqued my curiosity. It was called Bitcoin. Compared to the systems mentioned previously, to call this idea a currency would do violence to the idea of a currency. It is, as of right now (vers. 0.3.2 beta), an exercise in what a digital currency could look like that is not dependent on third-party trust or centrally issued by a monopolistic agent of force.

Quoting from the FAQ Bitcoin is:

…a peer-to-peer network based anonymous digital currency. ''… there is no central authority to issue new money or to keep track of the transactions. Instead, those tasks are managed collectively by the nodes of the network.

Yes, but what is it? In deference to Dr. North again, the answer is simply, "Digits."

But, they are digits with a twist. New bitcoins are generated via lottery within its proof-of-work system where the records of previous time-stamped transactions are hashed into a chain, which is verified by all the members of the P2P system. There is planned inflation of a known and slowing rate up to a point. After that, deflation is built into its structure. It is currently in this early phase of development. The longer the chain the more secure the system is by nature of the algorithms at work. For details, see the white paper. They are currently divisible to 8 decimal places. Transactions can be completely anonymous.

Seriously, Tom, digits? These are intriguing digits, though.

It’s obvious to see (after translating the geek-speak) that the system was designed to be a digital analogue to gold and silver mining. The rate of generation is normalized to a set rate regardless of the number of people (CPU’s) working on it. The cost to generate digits is the electricity used by the CPU and the opportunity cost of using your computer for something else. Increasing the network size increases the rate at which independent verification of the transactions is performed.

How resistant to attack this is has yet to be seen. There is one underway right now. How successful can this be? I have no earthly idea and could care less. For me watching the rate at which new ideas are spawned when people are motivated to produce solutions to ancient problems is what is important.

So, yes, digits, which I said I believe to be the future of money, sadly. But, these are digits whose movements are verified by hundreds of incentivized auditors 24/7/365. Hell, the FED won’t submit to a one-time audit by those for whom they supposedly work! Yet we are loath to stop using their product.

I see Bitcoin as a metaphor for the Web itself. It is what happens when people of common tastes are able to find each other over vast distance to find their niche in the division of labor. Synthesizing cryptography, programming and monetary theory into a unique offering could not have happened without the Web; itself that which subverts attempts at control as a natural consequence of its own structure. Any success Bitcoin enjoys exists as a means to an end (improving how humans interact via mutual exchange), not the end itself (adoption in the marketplace). All knowledge is fractal; each new exploration implying a completely new host of questions that need answers... and right now we need answers.

I know that the current system is not only immoral but also failing. I’m fond of saying that the two most abundant things in the universe are hydrogen and the human capacity for self-delusion. Hyperinflation always occurs after a mass awakening from the delusion about the issuer’s ability to protect a currency’s value. We are flying into the monetary equivalent of "coffin corner" and will eventually stall. If, as Gary North has been saying for years that gold is not money, digits are, then digits that are designed to be "as good as gold" may be one way to disabuse us of our delusions.

And, if the empire does strike back at us for doing so, so what? Someone is working on that problem as well. It’ll be in version 2.0.

Thomas Luongo is a professional chemist, amateur economist and obstreperous recovering Yankee residing in North Florida. Reprinted with permission.

For further reading:
"Bitcoin And The Electronic Frontier Foundation", Bitcoin Blogger, November 13, 2010

Jekyll Island: 100 Years Later

By Michael T. Snyder
The Economic Collapse Blog
Wednesday, November 3, 2010

http://theeconomiccollapseblog.com/archives/the-federal-reserve-is-holding-a-conference-on-jekyll-island-to-celebrate-100-years-of-dominating-america-a-return-to-jekyll-island-the-origins-history-and-future-of-the-federal-reserve

The Federal Reserve is going back to Jekyll Island to celebrate the 100 year anniversary of the infamous 1910 Jekyll Island meeting that spawned the draft legislation that would ultimately create the U.S. Federal Reserve. The title of this conference is "A Return to Jekyll Island: The Origins, History, and Future of the Federal Reserve", and it will be held on November 5th and 6th in the exact same building where the original 1910 meeting occurred. In November 1910, the original gathering at Jekyll Island included U.S. Senator Nelson W. Aldrich, Assistant Secretary of the Treasury Department A.P. Andrews and many representatives from the upper crust of the U.S. banking establishment. That meeting was held in an environment of absolute and total secrecy. 100 years later, Federal Reserve bureaucrats will return to Jekyll Island once again to "celebrate" the history and the future of the Federal Reserve.

Sadly, most Americans have no idea how the Federal Reserve came into being. Forbes magazine founder Bertie Charles Forbes was perhaps the first writer to describe the secretive nature of the original gathering on Jekyll Island in a national publication....

"Picture a party of the nation's greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding hundred of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written... The utmost secrecy was enjoined upon all. The public must not glean a hint of what was to be done. Senator Aldrich notified each one to go quietly into a private car of which the railroad had received orders to draw up on an unfrequented platform. Off the party set. New York's ubiquitous reporters had been foiled... Nelson (Aldrich) had confided to Henry, Frank, Paul and Piatt that he was to keep them locked up at Jekyll Island, out of the rest of the world, until they had evolved and compiled a scientific currency system for the United States, the real birth of the present Federal Reserve System, the plan done on Jekyll Island in the conference with Paul, Frank and Henry... Warburg is the link that binds the Aldrich system and the present system together. He more than any one man has made the system possible as a working reality."

It was a system that was designed by the bankers and for the bankers. Now, the bureaucrats running the system are returning to Jekyll Island to congratulate themselves. Those attending the conference on November 5th and 6th include Federal Reserve Chairman Ben Bernanke, former Fed Chairman Alan Greenspan, Goldman Sachs managing director E. Gerald Corrigan and the heads of the various regional Federal Reserve banks. You can view the entire agenda of the conference right here. It looks like that there will be plenty of hors d'oeuvres to go around, but should the Federal Reserve really be celebrating their accomplishments at a time when the U.S. economy is literally falling to pieces?

Today, 63 percent of Americans do not think that they will be able to maintain their current standard of living. 1.47 million Americans have been unemployed for more than 99 weeks. We are facing a complete and total economic disaster.

Read the rest of the article.

For further reading:
"Has the Fed Been a Failure?", George A. Selgin, William D. Lastrapes and Lawrence H. White, Cato Working Paper, November 9, 2010
"Beware the Fed Tide", John Browne, November 5, 2010
"Bernanke's Squeeze Friday", The Daily Bell, November 05, 2010

Gold Will Outlive Dollar Once Slaughter Comes

By John Hathaway

Bloomberg Opinion
Thursday, October 28, 2010

http://www.bloomberg.com/news/2010-10-29/gold-will-outlive-dollar-once-slaughter-comes-commentary-by-john-hathaway.html

The world’s monetary system is in the process of melting down. We have entered the endgame for the dollar as the dominant reserve currency, but most investors and policy makers are unaware of the implications.

The only questions are how long the denouement of the dollar reserve system will last, and how much more damage will be inflicted by new rounds of quantitative easing or more radical monetary measures to prop up the system.

Whether prolonged or sudden, the transition to a stable monetary system will become possible only when the shortcomings of the status quo become unbearable. Such a transition is, by definition, nonlinear. So central-bank soothsaying based on the extrapolation of historical data and the repetition of conventional wisdom offers no guidance on what lies ahead.

It’s amazing that there is no intelligent discourse among policy leaders on the subject of monetary rot and its implications for the future economic and political landscape. Until there is fundamental monetary reform on an international scale, most economic forecasts aren’t worth the paper on which they are written.

Telltale signs of future trouble aren’t hard to spot. Only a few months ago, Federal Reserve Chairman Ben Bernanke and a chorus of other high-ranking Fed officials were talking about exit strategies from the U.S. central bank’s bloated balance sheet and the financial system’s unprecedented excess liquidity. Now, those same officials are talking about pumping more money into the system to stimulate growth.

Risky Targets

And they’re not alone: Six months ago, the chief economist of the International Monetary Fund, Olivier Blanchard, suggested that raising inflation targets to 4 percent from 2 percent wouldn’t be too risky.

This sort of talk must grate on the nerves of our trading partners, China, India, Russia and others, who have accumulated pyramids of non-yielding Treasury debt. No haven there. Return- free risk may be a better way to put it. And bickering among central bankers over currency manipulation and rising trade tensions doesn’t exactly reinforce one’s confidence in a scenario of sustained economic growth and a return to prosperity.

The prospects for an orderly unwinding of the extreme posture of global monetary policy are zero. Bernanke, Jean- Claude Trichet and Mervyn King, his counterparts in Europe and the U.K. respectively, are huddling en masse upon the most precarious perch in the history of monetary affairs. These alleged guardians of monetary stability, in their attempts to shore up the system, have simply created the incinerator for paper money. We are past the point of no return. Quantitative easing may well become a way of life.

No Freak Occurrence

The consensus investment view seems to be that the credit crisis of 2008 was a freak occurrence, unlikely to repeat. That is wishful thinking. Monetary policy has painted itself into a corner. Based on our present course, there will be more bubbles and more meltdowns.

Financial markets and institutions sense trouble, as reflected in the flight to supposedly safe assets such as Treasuries and corporate-debt instruments with paltry yields, as well as the reluctance to lend by commercial banks. We are stuck in an epic liquidity trap. The irony is, if global central banks succeed in creating inflation, the value of these safe assets will be destroyed. It is a slaughter waiting to happen.

In the pedantic mentality of central bankers, their playbook creates just the right amount of inflation. As inflation accelerates, consumers will spend to get rid of their dollars of diminishing value and spur the economy. Once consumers start spending, it will be time to raise interest rates because a solid foundation for prosperity will have been established, they say.

Slender Thread

But whatever the playbook promises, the capacity of financial markets to overshoot can’t be overestimated. The belief among policy makers and financial markets in the possibility of this sort of fine-tuning is preposterous, but it is the slender thread on which remaining investment and business confidence rests.

The breakdown of the monetary system will be chaotic. When inflation commences, it will be highly disruptive. The damage to fixed-income assets will seem instantaneous. Foreign-exchange markets will become dysfunctional. The economy will become even more fragile and unpredictable.

Gold is an imperfect, but comparatively reliable, market gauge for the extent of current and future monetary destruction. The recent acceleration in the dollar price of the metal to $1,381, a record high in nominal terms, coincided with talk of a new round of quantitative easing and highly visible discord among major nations on trade and currency-valuation issues.

Naysayers’ Bubble

Naysayers point to gold’s price and see a bubble, without understanding that the only acceleration that is taking place is in the rate of decline of paper currency. The Fed is organizing an attack on the dollar’s value, believing that this is the most expedient way to defuse deflationary market forces. The man in the street is unaware, a perfect setup. Inflation can only be successful when the public doesn’t see it coming.

The sudden torrent of commentary on gold isn’t the sign of a bubble. Anti-gold pundits provide a great service to those who grasp this historical moment: They facilitate the advantageous positioning of the one asset most likely to be left standing when the dust settles.

John Hathaway is a managing director of Tocqueville Asset Management LP in New York. The opinions expressed are his own.

For further reading:
"US dollar: Prepare for a prolonged devaluation", Scott Boyd, October 28, 2010
"Is there a way out of the currency war?", Laurence Copeland, October 27, 2010
"The Debate Over Money Manipulations: A Short History", Christopher Westley, October 25, 2010

A Cross of Gold

Dr. Edwin Vieira, Jr., constitutional lawyer, historian, scholar, GATA consultant, and author of the magisterial history of the monetary system of the United States, Pieces of Eight, presented his justification for a gold-based monetary system at the October dinner meeting of the Committee for Monetary Research and Education in New York.

Vieira's address was drawn from his paper, "A Cross of Gold", and you can find it at GATA's Internet site here:

http://www.gata.org/files/Vieira-ACrossOfGold-10-21-2010.pdf

Vieira elegantly states:

"The present domestic and international monetary and banking systems have slipped into the initial stages of terminal dissolution. In their present forms, they cannot long survive."

"The weaknesses of this system became apparent only forty-three (43) years after the initiation of the scheme, when the great panic of 1907 proved that the National Banking System needed a major overhaul. The fundamental flaws pointed out at the time were that the system provided no single 'lender of last resort' to pump up the pyramid of currency and credit in times of crisis, and set up no central regulator to discipline the bankers in order, if possible, to forefend crises altogether. To overcome these deficiencies, the locus of economic power needed to be translated to a still higher level."

"So full national cartelization and central regulation of the banks was set up in the Federal Reserve System through the Federal Reserve Act of 1913. Indeed, the Federal Reserve System went beyond mere national cartelization to national Ponzification. The Federal Reserve regional banks promised their depositors to redeem Federal Reserve Notes on demand, which promises were 'guaranteed' by the United States Treasury’s ability to extract payments from taxpayers. So, just as in a classical Ponzi scheme present payments to the first tier of 'investors' are 'guaranteed' by revenues to be derived from subsequent tiers of duped 'investors', under the Federal Reserve System promises of present redemption of Federal Reserve Notes were 'guaranteed' by anticipated tax revenues—except that, far better than the classical Ponzi scheme, these revenues could be coerced from unwilling 'investors'."

The Case Against the Fed

The Case Against the Fed by Murray Rothbard is brilliantly presented in this 24-part audio format by LibertyInOurTime.

Introduction:



Proceed to Part 1 of 24.

Rothbard on Fractional Reserve Banking: A Critique

By Michael S. Rozeff
The Independent Review, Volume 14, Number 4
Spring 2010

http://www.independent.org/publications/tir/article.asp?a=775

From the Abstract: Murray Rothbard, in The Case for a 100 Percent Gold Dollar (1974), maintains that fractional-reserve banking is fraudulent and inherently destabilizing of the economy. However, by considering how a regime of laissez faire in money and banking might operate, we may reach a judgment quite different from Rothbard’s.

Rozeff writes:

"Murray Rothbard, in The Case for a 100 Percent Gold Dollar (1974), maintains that fractional-reserve banking is fraudulent. Viewing it as coercive and unlawful, he argues that banks ought to be allowed to serve only as warehouses for money. He insists that all deposits become bailments, not debts or credits. Money would always be an asset, never a liability. A proper bank would, in his view and by law, hold all deposits intact and become a 100 percent reserve-storage or safety-deposit bank, although to call such a business a bank under these conditions is something of a misnomer because such a so-called bank makes no loans.

Rothbard’s firm belief that fractional-reserve banking constitutes fraud rules out fractional-reserve free banking even in a free market. This position, I argue, goes against basic ideas of liberty and the free market, both of which Rothbard champions. When he regards fractional-reserve banking as fraudulent and proposes its illegality, he introduces his own ethical judgment based on his own assessment of the merits of any and all exchange transactions that may occur between banker and depositor. He introduces his own idea of the appropriate property rights in a bank deposit, his own idea of what appropriate money must be, and his own idea of libertarian law. Although he is entitled to his opinions, the market participants in a condition of liberty in free markets decide all these matters for themselves, and their reasoning and valuations may differ from Rothbard’s. They may not regard fractional-reserve banking as fraudulent, and they may want to transact via fractional-reserve banking arrangements. They may wish to circulate media of exchange that are someone else’s liabilities.

Rothbard’s position has since been espoused in books by both Jesus Huerta de Soto (2001) and Jorg Guido Hulsmann (2008) as well as in articles, such as one by Hans-Hermann Hoppe, Hulsmann, and Walter Block (1998) that argues against fiduciary media. These latter-day adherents to Rothbard’s position show no diminution in the strength of their convictions, despite the criticisms presented by George Selgin and Lawrence H. White (1996), who have argued against Rothbard’s position and supported free banking. For example, Hulsmann writes in his book, “There is no tenable economic, legal, moral, or spiritual rationale that could be adduced in justification of paper money and fractional-reserve banking” (2008, 238). This extraordinary statement boldly restates Rothbard’s beliefs. If a community willingly and freely uses paper money, shall Hulsmann maintain that they have no rationale? Moreover, it is not difficult to locate scholarship that provides viable economic reasons for paper money and fractional-reserve banking. It is quite easy to find numerous real-world instances in which paper money, tokens, scrip, and credits arose spontaneously (see Timberlake 1987). I argue here that the Rothbardians have not proven, either on grounds of morality or on grounds of economics, that paper money or fractional reserve banking evinces criminal behavior.

Monetary Freedom - Instead of arguing, as Rothbard does, that monetary freedom necessarily requires 100-percent-reserve banking, let us ask what monetary freedom might look like. The institutions and practices that arise under freedom are impossible to know in advance. We can imagine many possibilities. People themselves decide what kinds of property rights they want and find acceptable in bank accounts. They hammer out what is fraudulent and what is not. Banks and their customers decide the details of their own exchanges. People decide what value standards (units of account) to use to establish prices and what media they want to use as money, whether commodity, paper, electronic, or something else. People may demand bank audits as they see fit, and they may become part of the market structure. Banks may issue their own banknotes. Perhaps banks arrange central clearing houses that issue notes. Retail establishments may become involved in issuing various clearing certificates. Local clearing systems may arise that use credit clearing. People trade and use banknotes as money if they wish. They depreciate those currencies that they believe are losing value, and they flock to the media that they think may appreciate or hold their value. If media are convertible, people decide on the appropriate media of redemption."

A Rally in Bitcoin

By Jon Matonis

Bitcoin has had about a 64% rally recently which is not surprising given that more and more people are learning about its existence and circulation as a new P2P anonymous digital currency. The massive viral effect of a P2P digital currency have now kicked in and it seems as though a new merchant or a new exchanger emerges daily. As of October 19th, 2010, total Bitcoin in existence equalled 4,315,250 with 86,305 Bitcoin blocks generated (source: Bitcoin Exchange).

One such exchanger, Mt. Gox, does an excellent job of tracking and charting the USD:BTC exchange rate on a daily basis:


Trading volume at Mt. Gox set new records during early October 2010 and you can still follow some of the action and comments here.

Bitcoin is an unbacked currency in a traditional commodity-reserve sense but limited in its issuance by CPU cycles and electricity. As their web site states, only 21 million coins will be brought into circulation, but I suspect that may need to be adjusted when unsustainable deflation appears.

Issuing statistics and some of the leading exchangers can be followed at Bitcoin Watch. A relatively new exchanger on the Bitcoin scene is Canadian Nanaimo Gold with a nice user interface. The exchanger Bitcoin 4 Cash bills itself as "the premier Bitcoin dealer that respects anonymity" and the BitCoin/MetalCoin Exchange will trade Bitcoin for gold and silver coins. BitcoinFX provides two-way exchange for Bitcoin into Liberty Reserve. In Alabama, Bitcoin2cash will provide Bitcoin for cash sent in the regular mail and vice versa, which is financial privacy in its rawest form (the bid/ask spread is wide at 25/200, but I respect these guys!). And finally, another interesting exchanger to follow is the Finland-based Bitcoin Exchange, which has an excellent statistics section. Needless to say, Bitcoin deserves serious consideration as we move into The Monetary Future.

If you enjoyed this article, please donate Bitcoin to: 13N81mY1B2Y3KugUQ8dcidhvZKDrhrZmZn

For further reading:
"A Short Introduction to Bitcoin - A Peer to Peer Cryptocurrency", Bluish Coder, October 10, 2010
"Bitcoin Electronic Currency: The Future of Money", Elliott Prechter, Elliott Wave International, September 30, 2010
"Difficulty vs Time Graph", Bitcoin Blogger, September 19, 2010
"Intriguing: Disruptive Technology To Upend All Banks", Bitcoin Blogger, August 8, 2010
"What are Bitcoins?", Quezi, July 22, 2010
"Is It Time For Digital-Only Dollars?", Phil Maymin, Hartford Advocate, July 8, 2010
"BitCoin and the 'Wild West'", Niklas Blanchard, Modeled Behavior, June 30, 2010

This article was also published in Digital Gold Currency Magazine (November 2010).

North vs. Brown

By Gary North
Specific Answers
Friday, October 15, 2010

http://www.garynorth.com/public/department141.cfm

Ellen Brown's Web of Debt Is an Anti-Gold Currency, Pro-Fiat Money, Greenback, Keynesian Tract. Here, I Take It Apart, Error by Error.

Ellen Brown's 2006 book, The Web of Debt, has become a best-seller within the Patriot movement. This indicates the extraordinary intellectual vulnerability of the Patriot movement. Its members cannot distinguish conservatism from radical leftism. This book promotes the following:

The Populist economics of America's far Left

A vast expansion of Federal government welfare

Pure fiat money: printing press money

Total Federal government control over money: "Obama dollars"

Legal tender laws that force people to accept Obama dollars

The American Civil War as a great engine of economic growth

Franklin Roosevelt's New Deal as a great economic program

The gold coin standard as a terrible evil that restrains the state

Ellen Brown is the latest in a long line of pro-fiat money, anti-gold currency, monetary statists who have infiltrated the conservative movement.

They have accomplished this for over 50 years by the tactic of wrapping themselves in a flag of opposition to the Federal Reserve System. I call them false-flag infiltrators. I have written about them here:

Read the rest of the article.