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Author Topic: Lawful 100% Commodity-backed Local Currencies  (Read 26981 times)
Steven Douglas
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Re: Lawful 100% Commodity-backed Local Currencies
« Reply #60 on: December 30, 2012, 02:04:45 pm »

Seems like you have a really solid plan Steven. I'd buy into it.

I've forwarded this thread to my brother in law who's a fellow libertarian and Austrian economist nerd with a love for the idea of alternative currencies. I'd like to see his opinion. I feel like you've thought thus through very thoroughly and have given fantastic explanations and rebuttals to peoples' concerns here. :-)

Thank you, I really appreciate that, and would love any input he had to offer.  

A lot of people that I talk to about this are of the more well-healed 'investment' mindset.  They are not concerned about a dying federal currency, artificial barriers to private, inflation-immune capital formation, or protection of local economies, labor-based savings or anything else.  Even the PM stackers among most of them aren't really interested in sound currency, so much as a return on their 'investment'.  That makes them future currency holders, for sure, but for their own self-interested reasons (and no problem with that), which are incidental to the core reasons behind the currency being established in the first place, and its primary purposes.

When I tell them that profits and investment returns for the investment minded are incidental to me, and that my number one concern is protection of transient wealth of people like waitresses, those living on fixed incomes, and others who live hand to mouth, check to check, and who don't have surplus wages to invest or savings to put at risk, it's blank stare time! Does not compute. That gets followed by a lot of astoundingly clueless talk about how poor people could "get ahead" if they would think just like them (armchair investment experts that they all are, doncha know); how they could also invest in bonds, start 401k's and other mindless investment-oriented portfolio development and "risk management" talk.  But, that's only because that's the world they live in, and the only [pseudo]reality they know.  And these are also people who take the CPI-U (piss in everyone's face relabeled as warm spring rain) as if it was canonized scripture, and the finest statistical science known to man. They don't get that the effects of price inflation due to monetary inflation doesn't hit everyone equally, and that not everyone has the ability to arrange their financial affairs in a way that takes them off of the currency-dependency debasement treadmill, let alone by pooling RISK through exponentially expanding debt instruments. Thus, they don't get why the currency I am designing will have nothing to do with "getting ahead of it" (read=feed or perpetuate it).

There is only one private currency experiment that I have seen that does anything close to what mine is intended to do, and that was Dr. Ralph Borsodi's "Constants" issued out of Exeter, NH.  That entire enterprise was lawful even by today's legislative and regulatory standards, and when he discontinued it, the entire thing was solvent every step of the way. When it dissolved it did so in an orderly way, with everyone paid, and small profits (or gains in nominal USD, if you want to refer to all of that as profits) realized by all participants.  That could NEVER happen in the banking system even in the best of times.  And even there, I learned a tremendous amount about the Constants experiment, and the weaknesses of what Borsodi managed in the '70's, despite its successes and accomplishments as proof of concept, in the absence of technology like we have today.  



Borsodi's Constants (which included metal COINS called Constants, intended for use as local current money, with no objections from the Treasury) were issued on the basis of a fixed basket of commodities, which is the only way Borsodi could have a standard UNIT OF ACCOUNT (i.e., 1 CONSTANT = n% of this, that and the other fixed quantity of a thing).  That and a lot of other things I would never do, like physically managing and incurring costs of physically managing the sheer volume of transactions that I will have mostly automated. Borsodi also bought commodities as futures contracts and used what were essentially PROMISES (to deliver physical, as an option) to back the currency. I understand why he did that, but for me that would be a cardinal rule violation of bylaws established in the trust agreement.  NOTHING BASED ON PROMISES.  No "In ____ We Trust" in anything at all--not We, God, or some distant entity making a promise of delivery at some future date. No trust would be involved other than that which relates to treatment and management of physical tangibles that are NEVER put at risk. Not for a single moment, not for any reason.  

Borsodi did want to eventually have commodities that were stored locally (i.e., taking physical delivery on contracts), but since he was essentially buying futures first, then issuing a fixed quantity of futures into arbitrarily divided shares afterward, he felt he needed more funding to accomplish that.  My currency won't operate by those same dynamics. It will require some seeding, of course, and I will secure that funding, but it will set up so that it can bootstrap itself without a big initial seed requirement.  And whatever funding I do secure will be repaid to benefactors (without interest, and possibly in the local currency), because once the Foundation is running, it will be self-seeding, and self-sustaining.

What I like most about this is that it's designed, for all intents and purposes, to be politically and economically "antifragile" (to borrow a term from Nassim Nicholas Taleb).  This currency can have major appeal to left, right, green, libertarian, and average people of any economic background or ideological stripe. The fact that it would have appeal to (L)libertarians, or non-monetarist, non-statist Austrians, or Miseans, Rothbardians, Hayekians, etc., is certainly a plus, but one that I will treat as wholly incidental -- and for good reasons, since I don't want this currency associated in any way with any kind of political movement (sure-fire recipe ingredient for psychological resistance, low acceptance, and making sure that it leaves a bad taste in the mouth many who won't even taste it, on "principle", despite its advantages).  It won't be an attack on Keynes or anything Keynesian-spawned, nor will it be a political movement, or an attack on the Fed, the Treasury, Congress or anyone else that may have NOTHING to do with the local, individual interests of ordinary people of all backgrounds that it will serve.  

« Last Edit: December 30, 2012, 05:37:52 pm by Steven Douglas » Logged

Thank you, Murray and Friedrich, I'll take it from here and we'll put it all to a test.
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Re: Lawful 100% Commodity-backed Local Currencies
« Reply #61 on: December 30, 2012, 02:12:21 pm »

In before people get arrested for unregulated & unregistered securities trading.
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Steven Douglas
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Re: Lawful 100% Commodity-backed Local Currencies
« Reply #62 on: December 30, 2012, 02:37:15 pm »

In before people get arrested for unregulated & unregistered securities trading.

There's a laundry list of reasons why these could not, and would not be considered securities (under the jurisdiction of SEC or any other regulatory body). For one, it operates locally (regionally, intrastate) only, and is not 'publicly traded', let alone on any exchange (see "intrastate offering exemption" of the 1933 Securities Act). Aside from ordinary business conducted by the Foundation, or in acquiring, trading and securing assets for a given trust, neither the Foundation nor the instruments of any trust it administers would be offered, nor would they be of any force or effect, outside the State of New Hampshire. That takes it firmly outside federal jurisdiction, and not subject to regulations (that's not the only reason, as some local-only concerns are still subject to regulation, but we wouldn't be engaged in activities that would make us subject to the same).  

For all intents and purposes, I treat New Hampshire as a country, not a state.  If what I am doing is not locally sustainable, and wholly within the bounds of the State, it is not worth doing.

Also, the Foundation itself is not for profit, and the beneficial owners ("the currency holders") of any trust established would have no directorial or managerial control, no voting power or rights (which would make currency holders "stockholders", in a whole different ballgame). There would not be more than one class of beneficial ownership, and there would be absolutely no power on the part of currency holders to vary the underlying assets or investments of the trust (all VERY important to the legal, tax and reporting requirements and status of both the Foundation and the currency). The Foundation is established for benevolent and educational purposes (and religious could be argued on the grounds that usury is forbidden), and not for pecuniary profit of the issuing entity, or anyone therein. No part of its net earnings inures to the benefit of any person or other individual, and there are no private stockholders (currency holders are not regarded as such), and therefore no dividends paid.  There would also be no "maturity", let alone maturity dates, because NOTHING about this currency is based on debt, usury, or promises of gain to anyone at all.  

So, even in the extremely unlikely (even bizarre) event that they were labeled or declared to be securities, it would make no difference whatsoever.  Just the non-profit status of the Foundation alone, and the fact that it is acting as a not-for-profit monetary authority (over its own currency only, just like the Fed and IMF, which are also "not for profit", and the monetary authorities over theirs), and not a "business", makes the Foundation itself (and not necessarily the beneficial owners) exempt from taxation, and not subject to regulation.  The "intrastate offering" exemption from the 1933 Securities Act, which is rooted in the US Constitution, and required for the Securities Act to even stand up Constitutionally, is NOT going away, and makes it all pretty much a slam dunk. Cut and dry, no gray area to consider.

The primary reasons why Peter Schiff could not offer a gold/silver-backed debit card to US Citizens were that a) he wanted to offer them to everyone in the country (welcome to the nasty, expensive tangled web of interstate commerce laws and regulations, Peter), and b) he couldn't get out of the investment and "for profit" (of the issuing entity) mindset. What he now offers, to anyone BUT US Citizens, would have been treated as securities, and heavily and expensively regulated, had he offered them in the US, to US Citizens (funny, foreigners can come in and use their gold/silver-backed debit cards here in the US with impunity, but we can't get one of those bad boys for ourselves). So his simple debit cards, with their simple aim, would have been subject to all the mountains of expensive filing and reporting requirements and all the bureaucratic red tape involved, and mostly because the primary purpose was profit for him personally, and to his "investors".  Nothing wrong with that, of course, but if he couldn't do it in that form, he wasn't interested.  I won't have any of the problems he faced, because my entire structure, not to mention motives and objectives, is entirely different, with some very well-worn paths already paved--legally, lawfully, and even politically--for what I am doing.

Incidentally:  I am designing this with my own eventual death in mind. NOTHING about the Foundation can be dependent upon me as director or leader, or my good will, altruism or benevolent intentions, once the Foundation is established and moves forward.  The team I gather will have the same basic motives and objectives, just with different talents toward the same end. But the actual powers and bylaws of the Foundation will be like a Constitution, with very little weight given, in terms of powers granted to any trustee, comptroller, director, manager, etc., to any benevolence, good will or altruism on anyone's part, present or future.  The bylaws of the Foundation itself, and the powers of whatever trusts, bailments or other contracts or agreements are established, whether in equity or law, MUST be designed to effectively hamstring the Foundation and any trustees (STARTING WITH ME) in their ability to go beyond the focused, very limited scope of already considerable powers necessary only to carry out the very limited purposes of the Foundation as commonly and originally understood by the local public; not the Founders, not the future or distant public, and not the general law.  That would include explicit required mechanisms for full transparency to the public, as well as mechanisms for recourse to beneficial owners in the event of any violations, to prevent (insofar as possible) the illicit or unethical gaming or other exploitation of the system by any enemies, foreign or domestic (individual, local, state or federal).

 
« Last Edit: December 30, 2012, 07:30:15 pm by Steven Douglas » Logged

Thank you, Murray and Friedrich, I'll take it from here and we'll put it all to a test.
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Re: Lawful 100% Commodity-backed Local Currencies
« Reply #63 on: December 31, 2012, 01:50:08 am »

Even under NH statutes?
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Steven Douglas
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Re: Lawful 100% Commodity-backed Local Currencies
« Reply #64 on: December 31, 2012, 02:32:29 am »

Even under NH statutes?

Especially under NH statutes. (assuming what we were issuing was even deemed to be securities)

421-B:17 Exemptions.
    I. The following securities are exempted from RSA 421-B:11, and RSA 421-B:18, I:

(j) Any interest in a common trust fund or similar fund maintained by a state bank or trust company organized and operating under the laws of New Hampshire, or a national bank wherever located, for the collective investment and reinvestment of funds contributed to such common trust fund or similar fund by the bank or trust company in its capacity as trustee, executor, administrator, or guardian;

(m) Any security issued by any person organized and operated not for private profit but exclusively for religious, educational, benevolent, charitable, fraternal, social, athletic, or reformatory purposes, or as a chamber of commerce or trade or professional association;

The NH State exemptions are even broader than the exemptions listed in the 1933 Securities Act.
« Last Edit: December 31, 2012, 06:41:18 am by Steven Douglas » Logged

Thank you, Murray and Friedrich, I'll take it from here and we'll put it all to a test.
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Re: Lawful 100% Commodity-backed Local Currencies
« Reply #65 on: December 31, 2012, 09:42:19 pm »

So the trust company would be under the State SOS and AG?
And the 501c status would be IRS?

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Steven Douglas
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Re: Lawful 100% Commodity-backed Local Currencies
« Reply #66 on: December 31, 2012, 09:54:48 pm »

So the trust company would be under the State SOS and AG?
And the 501c status would be IRS?

Not necessarily. It may not even be structured as a trust. I was only pointing out one of at least a dozen ways it could be structured (as proof of concept), and none of that has been decided or cast in granite yet.  There is no need at this point. It's going to take whatever form is deemed safest and optimal (from many angles, not just legal or lawful), and most fitting with the overall mission and objective at the time it's established. That won't happen without thorough research, good legal counsel, and in depth consultations, counsel and advice from SOS, AG, IRS and anyone else, public or private, that might have concerns or could potentially get involved. I'm no legal expert, so I'll only be one input to that process, as part of a team.  


« Last Edit: December 31, 2012, 09:59:10 pm by Steven Douglas » Logged

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Re: Lawful 100% Commodity-backed Local Currencies
« Reply #67 on: January 02, 2013, 07:34:20 pm »

The RSA lists trust company or State bank; so I'm not sure how to get around that.
While non-profit can take many formats...
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Steven Douglas
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Re: Lawful 100% Commodity-backed Local Currencies
« Reply #68 on: January 02, 2013, 08:32:27 pm »

The RSA lists trust company or State bank; so I'm not sure how to get around that.
While non-profit can take many formats...

There's nothing to get around if you are a trust company, the securities of which (if the currency is even determined to be such) are exempt from RSA 421-B:11, and RSA 421-B:18:

 (j) Any interest in a common trust fund or similar fund maintained by a state bank or trust company organized and operating under the laws of New Hampshire, or a national bank wherever located, for the collective investment and reinvestment of funds contributed to such common trust fund or similar fund by the bank or trust company in its capacity as trustee, executor, administrator, or guardian; and any interest in a collective investment fund or similar fund maintained by the bank or trust company, or in a separate account maintained by an insurance company, for the collective investment and reinvestment of funds contributed to such collective investment fund or similar fund by the bank, trust company or insurance company in its capacity as trustee or agent, which interest is issued in connection with an employee's savings, pension, profit sharing, or similar benefit plan, or a self-employed person's retirement plan;

But, like I said, I don't know enough about it for a final decision to be made, and actual experts who do know will be intimately involved.  

« Last Edit: January 06, 2013, 12:13:11 pm by Steven Douglas » Logged

Thank you, Murray and Friedrich, I'll take it from here and we'll put it all to a test.
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