Category Archives: Money

Debt-free Money

One of the problems with our US Dollar is that the management of the currency is primarily done by the biggest commercial banks via the Fed. The Fed primarily steers the currency through setting the prime interest rate on bank reserves which regulates the expansion and contraction of the supply of credit. Recently it has increasing explored more extreme policies in times of instability like quantitative easing by actually buying securities to keep markets afloat. But all of its tools are premised on the whole system being debt and backed by debt. There’s no notion of a monetary instrument not backed by debt other than cold hard cash. This makes it difficult for monetary policy to affect the economy without causing inflation.

However, today I became aware of the International Movement for Money Reform and in particular the Ons Geld idea of a debt-free money instrument called a safe account, which separates the holder’s money from the commercial debt-based banking system and causes the banks to actually become subject to free market forces. This is the best idea I’ve seen over the many years of a way for monetary policy to have a sane way to keep a currency stable and to separate it from the vagaries of a private banking system that prioritizes profits. This is mostly being explored in Europe but applies just as much to the US

Debt-free money

When the safe account is generally accepted, the money on safe accounts can become debt-free. This means that it is no longer considered a claim on the public depository.[21] It has then become the digital embodiment of the general unit of value; digital cash.[22] Unlike physical cash, digital cash can be used as a monetary policy instrument.[23] This makes it possible to expand and control the money supply without increasing debt, and without pursuing inflation. This is the key instrument that is needed to manage the euro efficiently. Debt growth, market distortion and inflation are then no longer inherent to monetary policy. Central banks, however, cannot obtain this instrument on their own. Only the legislator can call digital cash into existence. As a debt-free intangible liquid asset digital cash requires a legal basis.[24] It is therefore a political responsibility to introduce this form of money and to determine the way it is organized. It is thus not the ESCB but the legislator who holds the key to making monetary policy effective and non-distortionary.

Beware Compound Interest

Beware the power of compound interest. Anything more than 3% is suspect and prone to abuse. Because the whole world has been forced into accepting a debt-based monetary system, it is vulnerable to the bankers’ agendas and will to shape events and outcomes. By controlling interest and lending terms, they have more influence and control than any king has ever had, and yet they are able to remain relatively unknown and hidden.

Therefore the people must become knowledgable about how interest works, and make it a central issue of public debate and public influence. Consent must be sought and practiced at all levels, lest the bankers take ownership of everything and enslave Mankind to their calculations and algorithms. Lending must be for the good of the people, not the betterment of a few.

Publicly owned banks are one way the people can respond. Even better is to set coherent and comprehensive fiscal policy over how lending may be done. This is assertive of our inherent sovereignty, and avoids one small sub group having undue influence over the rest of us.

Tutorials and learning aids that describe how compound interest works in the global money system are desperately needed at this time. The more visually stunning and dynamic the better. “The 30 Year Mortgage is a Scam” is an example of a title for a short informative online exposé. Control the soundbites and provide many. Along with the exposé, release multiple image-based memes that highlight several core soundbites and that can be shared easily. Another important focus is student loans.

Focus on the differences between compound interest & a better way. Do it like an advertisement for “A Better Way Company,” even if there isn’t anyone offering it in reality. Do the numbers and do the research for what it would take for a Better Way Bank to exist within the current banking system. If it’s impossible due to rigged rules, then show that. Show how a Better Way Bank could be sustainable and provide a more stable currency of it were the norm. Show how significantly different the world could be if finance were run in this way, paying attention to business policy, environmental policy, etc.

Towards a universal trade protocol

In this great talk by Bernard Lietaer, he talks about why the presence of complementary currencies actually INCREASE the stability of a nation’s official currency: Bernard Lietaer – Why we Need a Monetary Ecosystem, INRIA 2014

I’m 100% in agreement that we need complementary currencies to increase the sustainability of our trade networks, both alternative forms (like the e-dollar) of the main competitive debt-based national currencies, but also, and especially, other types of currencies based on different rules (such as to facilitate cooperation over competition, or to incentivize local trade over global trade, etc).

You might enjoy a very short paper that summarizes these ideas that I wrote for an economics class in 2008: Complementary Currencies Increase Economic Sustainability (PDF)

One recurring question I have is: to what degree would having a universal protocol for trading different currencies facilitate there being more of them commonly and easily used and exchanged?

One reason I’m enamoured with Ripple’s and Stellar’s designs is that they facilitate trade between currencies (which can be virtual currencies or proxies for other things). One potential problem is that they enforce the use of their own monopoly currency in order to transact these other currencies. This is why I’m curious as to the potential of a plain ‘bare bones’ trade protocol based on the federated consensus protocol (FCP) that is free from any direct linkage with an underlying transaction currency. This might be useful for facilitating trading information flow between disparate actors completely free of any single central currency or network. The primary driving question for this is whether it would be intrinsically useful and valuable enough in its own right to motivate use and validation without the incentive of the built-in transaction fees that are provided by XRP/STR currencies. This is similar to how the internet itself operates. ISPs and internet backbones are incentivized to provide data flow based on out-of-band financial agreements. The beauty of ripple/stellar/ethereum is that they build the validation incentive right into the system. But they are precomposed of several layers of protocols into one system. My question is what value is there in refactoring the trade protocol layer into its own standalone protocol.

Ethereum takes the transaction currency (the Ether) a huge leap further by enabling logic to be validated with it. In some ways this is orthogonal to the idea above of the benefit of a bare-bones implementation of an FCP-based trading protocol. Ethereum has its own consensus protocol and makes it possible to define a Ripple-like trading network directly on the Ethereum block chain. The potential problem is that it again creates a dependence on the Ethereum central (monopoly?) currency in order to transact.

My curiosity remains as to whether there’s some benefit to there being a pure definition of an FCP-based trading protocol, one that’s completely free of any one underlying monopoly currency system. In some ways it would be a pure protocol in the sense that it would exist primarily as a white paper or protocol description document. It would exist materially first as a reference implementation that runs based purely on intrinsic motivation, and later by various implementations on top of any or all specific information exchange systems, block-chain or otherwise. Perhaps it would just be what Ripple and Stellar already are, but without the XRP/STR layers.

The potential benefit from having this sort of generic FCP trading protocol is akin to having a universal DSL (domain specific language) for currency trading. My sense is that this would foster greater ability for intrinsically motivated parties to get up and running with trading a new currency. Cyclos provides a great product for getting up and running quickly with a new currency, but it does so solely through creating a new walled and isolated garden. A universal protocol for trading currencies would facilitate more communication between different and disparate currency systems.

US Notes and Reforming the Money System

This post is a response to a friend who suggested that JFK fought the Fed by printing US Notes:

My understanding is that US Notes were in circulation from 1862 until they were retired in 1971. There was a printing in 1963, but also in 1953 and 1928, in order to maintain the quantity already in circulation. There’s no evidence I’ve found that JFK directly attempted to increase the amount in circulation. (

As I understand it, and I have looked at the balance sheet of the Fed to verify it (, any interest that the Fed gets from the bonds backing the FRNs above its operating costs is returned to the Treasury. The main source of the compounding US Government debt is not from the Fed printing the notes, or even holding the bonds backing them. Rather it’s that the US Government is printing interest-bearing bonds to cover its operating costs and selling them on the open market to foreign and global banks, foreign central banks, used for reserves, etc. The responsibility lies with the US Government; it’s not a Fed problem. There is however the complicating factor that the Fed sets the interest rates.

In my opinion, just getting rid of the Fed doesn’t address the core problem, which is that the US Gov is using bonds to pay for its budget, and requiring interest bearing notes as banking reserves. The most intelligent reform I’ve seen is which suggests and offers a bill that uses a basket of interest-free US Notes and some gold/silver as the backbone of the economy. It would also change lending laws to remove compound interest from loans, only allowing fees to cover the actual costs of lending. This would basically change the banking and finance system into a highly regulated public utility, which I think it should be.  This is “our” money system after all.

Cash is for SAPS

Status, Access, Power, Stuff

It’s what customers really want, in that order. And this list is also prioritized by “most sticky” and “cheapest to fulfill”.

via Cash is for SAPS | Gamification Blog.

When I read the above, I had a nebulus queezy feeling arise in my stomach.  “Does it really boil down to that?”  Can our collective Id be defined by SAPS?  The article is explaining that in marketing a product to a customer, one needs to realize that those should be the priorities, rather than focusing too much on some kind of cash or “stuff”-based incentive.  I thought to my self that the SAPS model is to “stuff” what my intuition is telling me that my deeper, more universal priorities are to “status”.  Well, if that’s true, I asked my self, then what would I label my top driving motivations in life?  Off the top of my head I came up with: Beauty, Esteem, Excellence, Empathy, Enlightenment, or BEEEE…  That list could probably be shortened to Beauty and Empathy (BE.)

Ha, sounds kinda like hoky new agey spiritual BS, doesn’t it? It does even a bit to me, and yet those are the first labels that came to my mind for my top drivers.  Now, to clarify, the article is talking about priorities in the context of customers in relationship with a commercial marketer, whereas I’m talking about self in relation to Self.  There’s a big difference between these paradigms…. or is there?

In one sense the commercial context is rooted in an existing economic paradigm based on competition within a field of scarcity.  As we humans are creatures of Nature, we will vie with each other for scarce resources in order to survive and be as successful as possible, Naturally (*).  When there is excessive competition, the priorities of SAPS most definitely become uppermost.

As a contrast, people who live within indigenous cultures that have existed on this earth sustainably for countless ages have a very different set of drivers.  It’s difficult for me to define, being that I’m a member of modern society.  But based on a combination of my own intuition and reading about their world view, it seems to me that their drivers are more about caring for each other, having a sense of belonging to the tribe and the landl, having freedom to be as one needs to, and being surrounded with an abundant and nourishing environment that offers everything one needs to live.

On the face of it, the indigenous culture agenda seems like a very different set of priorities than the SAPS model, but ironically each of the 4 descriptions of that view can be interpreted fairly directly by one of status, access, power, and stuff.  However, there’s still a huge difference.  What is it?

To be continued …

* For some, this might not be a given, at least when worded like that, such as to people who view serving others and one’s community as being as much if not more important than serving one’s self.  Well, it can be easily argued that serving others is in fact better for one’s self, when it is collectively reciprocated in the form of the universal Golden Rule.

towards a stable global economy

On 5/2/11, at 11:22 PM, Thomas H. Greco wrote:> One can conceive of many “disasters” looming for the global economy– world peace, a cure for cancer, etc.

Thomas, I think your reference to the global economy is more the global compounding debt money banking pyramid scheme …

I think global economy and trade will of course continue and will be improved with more sound, equitable, and sustainable global currencies. In this realm, Ellen Brown’s recent posts about the role that national banks play has been really enlightening to me. If you look at the national debt more simply as the debit side of a mutual credit system, then Japan’s and the US’s huge debts owed to their central banks at or near zero interest are actually GOOD in terms of enabling a plentitude of circulating currency, assuming those debts remain interest-free. In thinking about national currency in this manner, I’ve been realizing that the “reform” of the money system is a lot closer and more attainable than I’d previously thought possible. The solution is more a matter of how the existing systems are managed, than any kind of a systemic overhaul. Japan seems to have it pretty well figured out. It’s strange though that the private credit rating system that is threatening to lower the US’s credit rating is actually the most at odds with this, because it treats the soveriegn credit issuer as a borrower, rather than as the source of the promise of value at the heart of the national mutual credit system. A stable global money system is so close at hand, and yet seemingly so far due mostly to ignorance or confusion about how the system could work so effectively …

Cheney was right about one thing: deficits don’t matter

Ellen Browne has written another fantastic article about public debt:


I really cannot emphasize enough how important this point is about how our US gov debt operates as the foundation of our economy.  Therefore, it needs to stay BIG.  However, what does need to change in order for it to be more sustainable is that it needs to be interest free, like Japan’s.  The US needs to be in debt to its self.  Yes that’s right.  Read the article to understand why.