Monday, September 26, 2011

Open Source Exchange

I did not get very far writing articles for the Utah Monetary Summit.

A twitter conversation reminded me about how much I dislike the University of Utah and I lost my appetite for writing.

Readers of this blog might remember a few years back I wrote about stock market reform. I suggest the best way to start a general discussion of market reform would be to launch an open source project to create a new exchange.

I called the project the Open Source Real Time Exchange.

Even if the exchange never became a reality, the act of creating a model would help spawn a discussion about market reform.

The second proposal I had for the Utah Monetary Summit was to launch an Open Source project to create an exchange for gold and silver.

Specifically I was interest in creating a project that developed an open source exchange for trading shares of precious metals stored in Nature's Vault.

Such a project would intrique young idealistic minds.

Imagine the excitement of working on a project that combined open source development, the protection of natural resources along with financial reform!!!!!

People would love the idea.

I've been treated like dirt by Utahans for so long, I simply cannot imagine any scenario in which I could communicate a very simple yet compelling idea.

The meeting starts in a few hours and I am sitting here unable to sleep and feeling like I am about to get sick.

Saturday, September 24, 2011

Nature's Vault

You may not know this, but I just happen to be an "eco-jabbering meadow muffin."

Give me a chance to jabber about ecology and I will jabber all day.

My primary objection to reviving the gold standard is that I really dislike the environmental damage done by cyanide-leeching gold mines.

If you could make a gold-backed currency without having to dig it up, I would go for the gold standard.

The fact that my local store is willing to accept Federal Reserve Notes which are backed by nothing less than promises of an independent central bank suggests that people are happy to trade in abstract monetary units.

IMHO a bank note that referenced physical gold in the ground would be a step above a currency note backed by a promise.

My first proposal for the Utah Monetary Summit is a thing I call "Nature's Vault." In this program, one would issue currency backed by mineral resources in an environmentally sensitive area.

The program would buy up the mineral rights for an area, then issue currency based on the estimates of the mineral resources of the area.

I believe that such a currency would be valued by environmentally minded investors seeking a way to hedge their investments ... without the environmental damage done by mining.

How Motivation Affects the Process

I will be going to the Utah Monetary Conference on Monday. If I get any time this weekend, I will write up some proposals on how to make the monetary conference successful.

I don't know the people running this conference. All I know is that there is interest in Utah in minting precious metal backed currency.

The end form of the program will be determined by the motivations of the people engaged in this effort.

If it is a bunch of Machiavellian wanks seeking a way to leverage off the investments of others. Then they will create another ugly, captured exchange like Bernie Madoff's NASDAQ.

If it is people sincerely looking to provide a sound money. Then the conference could lead to great good.

Much of American banking law and practices were created by powerful insiders seeking a way to leverage off the American people. The whole concept of financial leverage is one in which a central group leverages off the people at large.

Fractional reserve lending is a game of leveraging. When a bank can lend multiple dollars for each dollar saved, then the rich bankers can leverage off the people at large.

This has two negative effects. First it devalues the money of the people who actually produce in a society. Second, the process of fractional lending multiplies the debt of a people and eventually reduces an entire society into a state of default.

So, the biggest question I have going into this conference is: Are the people running the conference sincerely looking to create a sound alternative to the leveraged systems, or are they just a bunch of power players trying to find ways to use the anger in the nation to leverage their way onto the playground?

Anyway, I will place my proposals for a real sound money on the site I will post a discussion of each of the proposals on this blog.

The proposals will be written for an audience that is sincerely looking for a sound currency alternative to the Federal Reserve and the captured central exchanges that dominate the American financial market.

Thursday, September 22, 2011

Hammering Silver

Silver was hammered today ... falling some ten percent into the $36/troy-ounce range.

The spot price of silver is determined on centralized exchanges where the price is manipulated by future contracts and margin requirements ... and only loosely related to real world demand.

The hope that people can escape the ravages of currency manipulation by buying gold and silver falls to the wayside when one realizes that the price of the precious metals is held captive to the same corrupt centralized financial structure as the rest of the economy.

Precious metals simply have on degree of separation from the rest of the insanity.

Monday, September 19, 2011

On The Gold Standard

Several months ago, I was asked one twitter if I favored a return to the gold standard.

The answer is "No!"

The great flaw of the gold standard is that the standard leads governments and political rogues to manipulate the price of gold and other precious metals.

One need only follow the spot price of gold and silver for a few months to realize that the central exchanges setting the spot price are highly manipulate.

The Coinage Act of 1792 turned out to be greatly flawed. This attempted to set the ratio of silver to gold at 15 to 1. This ratio fluctuates. It is currently something like 44 to 1, though no-one knows why.

I favor a sound monetary policy. I prefer the price of the common unit or currency to be set to a basket of goods.

I would favor a program that accepted trade in silver and gold as legal currency.

Apparently, Americans were trading old silver pieces-of-eight as legal tender into the 1850s when such trade became illegal.

My ideal system would be a sound money system with a common currency based on a basket of goods that allowed people to trade in physical precious metal coins at the precious metal value. (The basket of goods might include precious metals and fuel).

Accounting, taxes and such would be done in the common currency. One simply has an option to use precious metal coins as legal tender.

I favor this because I think it would create a more dynamic market.

There would not be an obligation to accept coins just as there is not an obligation for businesses to accept checks or credit cards.

For that matter, I would expect that most mainstream businesses would avoid trading coins. Allowing people to use coins as legal tender is more likely to help sole proprietorships and companies operating on the fringe.

Having multiple types of legal tender on the market would make for a savvier consumer. People who carry both precious metal coins and dollars would develop a better understanding of the way that prices fluctuate.

Attempts to revive the gold standard would restore the paradigm in which governments tried to regulate precious metals. Simply allowing people to trade precious metal coins at spot price would make for a more robust economy.

BTW: While I was at LPAC, I used one of my two silver dollars to buy books. I am now down to just one silver dollar. I bought a number of silver quarters on eBay.

Utah Monetary Summit

I registered to attend the Utah Monetary Summit. This summit will discuss the possibility of using gold and silver as legal tender.

The summit is next Monday, so I will spend the week working on gold related projects.

I have several really cool gold related ideas in the works. I hope to get some interesting posts and programs online this week.