EFTA00997764.pdf

From: "jeffrey E." <jeevacation@gmail.com> To: Joi Ito a Subject: Re: Monetary Systems Reform Date: Sat, 27 Sep 2014 15:30:45 +0000 yup On Sat, Sep 27, 2014 at 11:30 AM, Joi Ito a wrote: Ahh. All of the UN folks in town? On Sep 27, 2014, at 11:26 , jeffrey E. <jeevacation@gmail.com> wrote: > gorging , 6 am to 11 pm, every hour stuffed with characters > On Sat, Sep 27, 2014 at 11:24 AM, Joi Ito a wrote: > What's a gorginn? > - Joi > On Sep 27, 2014, at 11:22 , jeffrey E. <jeevacation@gmail.com> wrote: > > had a great gorginn on geo polotics > > On Sat, Sep 27, 2014 at 11:16 AM, Joi Ito a> wrote: »:-) » How are you? > > I'll work on the Gates thing. I might wrote a blog post about "antidisciplinary" and "one science" as part of this... > > On Sep 27, 2014, at 10:59 , jeffrey E. <jeevacation®gmail.com> wrote: > > > like the theory of good sex. . lots of words, little real life benefits. trade balance? equilibrium. all nonsense. in a multi currency world. >» > > > On Sat, Sep 27, 2014 at 9:27 AM, Joi Ito a wrote: > > > An interesting guy I'm talking to. Wonder what you think scanning this. Should I read all of these things? >» > » - Joi >» > > > Begin forwarded message: >>> >> » From: Michael Mainelli »» Subject: Monetary Systems Reform > >>> Date: Se tember 9, 2014 at 12:05:51 -0400 > > » To: " "C >>» >> » Joi, >>» > >>> On money ... I've pulled together a lot of our wider thoughts so you can see why I feel that the EFTA00997764 theoretical foundations of macro-economics need to expand to define money, let alone figure out where financial services fit into economic theory. First article you have - (hint: search for the word `element') ... >>» > >>> Building Bit — What's A Poor Government To Do About AltCoins7<image001.gif> »» Michael Mainelli and Bob McDowall »» 2014 »» Banking Technology, Informa plc (April 2014), pages 30-33. >>» > >>> For some lecture background on monies (hint: find "Pecunium" in the first lecture), gave the second lecture with Ed Nell, the third is quite fun: > > » 26 September 2013 > >» <image002.png> »» The Currency of Management: What Managing Money Teaches Us About Managing People > >» Lecture<image00 Lgif> >> » 13 June 2013 > >» <image003.png> > >» Taking Modern Money Apart > >» Lecture <image00 Lgif> >> » 07 February 2011 > >» tage002.png> > >>> Long Commerce: Transactions Across Time > >» Lecture <image00 Lgif> >>» »» Our UK Interest >>» > >>> We at Z/Yen have been proposing that some of the support for small businesses could come from their own monetary system, a UK WIR, as has been working for 80 years among 60,000 small businesses in Switzerland. I happen to think that the WIR might be a wider aid & development tool as well. >>» > >>> On what might the Swiss WIR mean for the UK, Z/Yen brought out a report on Capacity, Trade & Credit with the City of London Corporation in December 2011: >>» > >>> Summary Findings - Capacity, Trade and Credit: Emerging Architectures for Commerce and Money »» Michael Mainelli, Stephanie Rochford and Chiara von Gunten »»2011 »» City of London Corporation, 21 pages »» > >>> The full report was 200 pages and had numerous recommendations about using new currencies and exchanges to increase economic growth. Lord Sassoon participated in the launch and a number of other senior officials are exploring the implications of the report. For the City of London, this has been their most commented-upon report since the Global Financial Centre Indices — www.globalfinancialcentres.net - began in 2007. They've encouraged me to promote some more discussion, via Long Finance — www.longfinance.net, write a few editorials, convene a Forum last year, etc. All that said, perhaps the most important thought was trying to introduce a UK WIR. To the Swiss, it's a clear success comprising a quarter of Swiss firms and about £3.2 billion of trading (an average trade is half CHF and half CHW). >>» »» Capacity, Trade and Credit: Emerging Architectures for Commerce and Money »» Michael Mainelli, Stephanie Rochford and Chiara von Gunten »»2011 »» City of London Corporation, 203 pages >>» > >>> In summary though, all the Swiss did in 1934 was to push their regulator to regulate two currencies rather than one. They removed the "monopoly" on money that most nations believe fiat currency requires. From there the system does its thing or not. The national currency retains its supremacy based on the EFTA00997765 universality of tax and its monopoly on the use of force, but also in competition for credit. It bypasses the crazy and unstated assumption among far too many, that fiat tax scrip plus leveraged banking will magically equal the trust and credit of the national economy. The monopolies do fight back. The Bundesbank produces reports from time to time asserting that German alternative currencies detract from the economy (though these reports (a) fail to cite Swiss reports on a substantial system modulating cycles and extending credit, and (b) frankly aren't that good). The Federal Reserve stamps on scrip issue (see US history of the 1930s when there were some 400+ scrips in issue). The Bank of England is more subtle, but is based too on a monopoly on the sovereign's debt and might interpret this vigorously (and erroneously in a way) if any scrip or outside credit system becomes significant. >>» > >>> There are a few more modern, though perhaps problematic, examples in the report, including a recent large international player, Ormita —www.orrnita.com; and the WIR history is not without its twists and turns (the Swiss feel no need to promote the system — pretty much maxed out recently and they don't seek non- Swiss members or international expansion — as you'll gather from their website — http://www.wir.ch/de/wir- kunden/ ). Lots to ponder in my opinion. Current UK thinking is hardly innovative and so concerned with the art of the practical (i.e. what the "in" community of UK thinkers might accept that other UK people might accept) that London is in serious danger of being sidelined. >>» »» If you're still reading this far, some related reading... >>» >> » On financial reform and chartalism: >>» »» Modern Monetary Theory and its relationship to Chartalism - http://en.wikipedia.org/wiki/Chartalism. A rich topic, intertwined with Austrian, Keynesian, Monetarist Schools etc. You might find this quick "Are You An Austrian?" quiz rather interesting - http://mises.org/quiz.aspx. I do suggest taking the long version as the explanations they send back to you are very good. Everyone who takes it learns something and few are pure "Austrian", but... >>» >>>> Charles Holt Carroll is an often overlooked but penetrating 19th century writer on the subject who provides a solid underpinning for Chartalism -http://mises.org/etexts/currency.pdf I have a few related articles, though can hardly claim to be a Chartalist: >>» > >>> Short Monetary Systems: Take A Risk, Create Money >> » Michael Mainelli »» 2012 > >>> Journal of Risk Finance, Volume 13, Number 4, Emerald Group Publishing Limited (July 2012), pages 280-284. > >» Money In A Time Of Choleric: Basel Blows The Bubbles >> » Michael Mainelli »»2011 »» Journal of Risk Finance, Volume 12, Number 4, Emerald Group Publishing (August 2011), pages 348- 350. > >» Let There Be Tax Risk: Currencies, Interest Rates and Tax Rates >> » Michael Mainelli »»2011 »» Journal of Risk Finance, Volume 12, Number 3, Emerald Group Publishing (June 2011), pages 242- 245. >>» >>>> On reform, these articles may interest: >>» > >>> Four years into a succession of crises and still no reform; Time for some Long Finance >> » Michael Mainelli »»2011 > >>> City AM (4 November 2011), page 24 EFTA00997766 »» Small Enough To Fail: A Systems Approach To Financial Systems Reform »» Michael Mainelli and Bernard Manson »»2011 »» Journal of Risk Finance, Volume 12, Number 5, Emerald Group Publishing (October 2011), pages 435- 444. [received an Emerald Literati award] > >>> Banking on Confidence: Rethinking Audits of Financial Institutions >> » Professor Michael Mainelli »»2011 »» Securities & Investment Review, Securities & Investment Institute (September 2011), pages 22-23. >>» > >>> This Economist article spends a lot of time warming up to alternative economists, but however grudging they are they got there, sort of, in the end - > > >> http://www.economist.com/node/21542174 >>» >> » I cover Silvio Gesell briefly in this lecture — http://www.zyen.com/Articles/Transactions%20Across%20Time.pdf -http://www.gresham.ac.uk/lectures-and- events/long-commerce-transactions-across-time - whose Freiwirtschaft thinking is rather penetrating about the nature of money. Gesell's Freiwirtschaft mantra was "free trade, free land, free money" — and I would add to make my own, "free information". The Worgl experiment on some of his ideas - http://en.wikipedia.org/wiki/W%C3%B6rgl — which led to the Swiss taking Freiwirtschaft seriously. Not to be too concise about his controversial ideas, but he disputes the idea that money should be a long-term store of value. There are references to online materials on him at the end of the lecture. I interestingly stumbled across this excellent Keynes quote only a couple of years ago - "I believe that the future will learn more from the spirit of Gesell then from that of Marx." - Book 6, Chapter 23, Section 6, p. 355. >>» »» Time Banks, e.g. Rushey Green, which is in turn covered in this Gresham lecture - http://www.gresham.ac.ukflectures-and-events/local-or-global-network-economics-and-the-new-economy >>» > >>> As ever in depressions, the mainstream press are trying to comprehend this - http://www.theatlantic.com/international/archive/2012/05/the-next-money-as-the-big-economies-falter-micro- currencies-rise/257216/ or http://www.spearswms.com/asset-management/36017/wir-bitcoins-brixton-pounds- does-funny-money-make-sense.thtml >>» > > » A lot was made of this recent Bank of England Q1 2014 bulletin — "Money In The Modern Economy — An Introduction". A lot was conspiracy-theory-style nonsense, but it does show that the Bank is getting its own thinking in order and explaining things more clearly - http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q101.pdf >>» > >>> I put a lot of my wider thoughts down in this 2009 paper, The Road To Long Finance: >> » <image004.jpg> > >» The Road To Long Finance: A Systems View Of The Credit Scrunch >> » Michael Mainelli and Bob Giffords > > » 2009 »» Centre for the Study of Financial Innovation, ISBN: 978-0-9561904.4-4, 62 pages. »» »» One last Long Finance approach has been insured utility banking. For a start see this - http://www.longfinance.net/lf-about/research/710-insured-utility-banking html >>» > >>> But this paper sets things out theoretically: >>» »» Michael Mainelli and Bernard Manson, "Small Enough To Fail: A Systems Approach To Financial Systems Reform", Journal of Risk Finance, Volume 12, Number 5, Emerald Group Publishing (October 2011), pages 435-444 [Highly Commended Award 2012, Emerald Literati Club]. >>» EFTA00997767 >> » With all best wishes, >>» >> » Michael >>» »» WIR Bank and the WIR multilateral exchange »» WIR is a cooperative bank facilitating multilateral trading between, and extending credit to, member SMEs. It has been operating for over 75 years and is based in Switzerland. Founded by 16 entrepreneurs in 1934, the WIR Wirtschaftsring-Genossenschaft (economic circle cooperative) was set up as a result of the adverse economic and monetary conditions resulting from the Great Depression. It was conceived as a way to stimulate trade and create purchasing power between participants, primarily SMEs, thereby enabling local economic growth and reducing unemployment. >>» > >>> Since its inception, the WIR economic circle has undergone a number of reforms and structural changes and now resembles a commercial bank driven by cooperative interests (favouring SMEs and local/national economic growth and with strong economic foundations). For example, it went from issuing interest-free credit to providing credit lines at advantageous rates compared to market rates (approximately 1.75% for members); and from charging a "demurrage" (or penalty) fee to members holding on to their WIR francs (CHW) to simply not paying interest rates on CHW deposits, thereby encouraging constant money circulation. The organisation has also expanded the range of banking services to include Swiss franc-based services rather than WIR francs alone; and has evolved from a customer base comprising primarily SMEs to opening up to the public in 2000. >>» > >>> WIR Bank performs different and complementary functions. First, it acts as a "central bank" issuing its own currency — the WIR franc (CHW), which is pegged to the Swiss franc (CHF) and released to members through loans and mortgages backed by collateral. The WIR franc comes into being on the strength of the contract with the borrower plus the willingness of a community to accept the money as a payment for goods and services, rather than through state/central bank authorisation.[1] The bank regulates the amount of WIR francs in circulation - WIR francs accounted for 0.2 % of CHF M1 in 2009[2]; it also defines the rules of participation and the usage of WIR credits - e.g. WIR credit cannot be redeemed for Swiss francs; and sanctions members for illegal behaviour through exclusion - e.g. such as discounted market trading of WIR francs for Swiss francs.[3] [4] >>>> Second, it acts as a "commercial bank" and as such has been subject to relevant banking regulations in Switzerland since 1936 when it was first given the status of a bank. In this capacity, WIR bank provides a range of banking products (including business loans and mortgages) to its clients in Swiss francs, WIR credits or a combination of both. WIR francs are used by participants to exchange goods and services within the WIR exchange. Since every WIR credit is matched by an equal and opposite debit, the system as a whole must net to zero.[5] >>» »» Third, WIR bank acts as a "trade facilitator" by providing the WIR platform or system through which WIR members can exchange goods and services with each other using the WIR franc as a partial or full means of payment. In this context, WIR bank also provides a range of marketing and communication services (e.g. web listings, WIR fairs) and advisory services (e.g. workshop, advice on the set-up of a WIR budget) to members to enable them to trade within the system. The WIR system is also supported by independent local members' groups (e.g. Groupement WIR Suisse Romande) that act as local networking and discussion forums throughout Switzerland. >>» >>>> Today, circa one in five SMEs in Switzerland is a WIR member[6], resulting in over 60,000 SMEs trading with each other within the WIR system, of which one third are from the construction industry. The value of WIR franc-based transactions amounted to CHW 1.627 billion[7] in 2010, representing circa 0.3% of Swiss GDP for the same year[8]. Prices are denominated in Swiss francs and can be paid using WIR credits, Swiss francs or a combination of both. While some participants accept WIR francs as 100% of the payment for their goods and services, the minimum rate of WIR francs for every transaction is 30% up to a value of 3,000 CHF; and subject to agreement between the parties beyond that threshold. The average rate of acceptance is usually between 30% and 40% of the total amount.[9] Through partial acceptance, participants EFTA00997768 meet costs and liabilities that cannot be met through WIR credits such as salaries, tax and social contributions. As a result, trading within the WIR system results not only in an increase in turnover in WIR credits but also in Swiss francs. [10] [11] >>» > >>> The WIR multilateral exchange is underpinned by a strong feeling of community and trust. An obvious advantage lies in the mutual benefits arising from trading with someone that is part of the system rather than an outsider. Moreover, given its history, it is often seen as a trading mechanism sustaining local economic development and SME growth, especially as SMEs account for 98% of all companies in Switzerland.[12] >>» »» Researchers have analysed the counter-cyclical nature of the CHW. Using 56 years of WIR data on participants, CHW in circulation, turnover and credit, Stodder (2009) demonstrates the counter-cyclical nature of WIR credit, showing that WIR credits are most likely to be accepted when ordinary money is in short supply and suggesting that the purchasing power created through WIR could become an instrument of effective macroeconomic stabilisation.[13] Recent media pieces[14] have explored the relevance of WIR exchange in the recent crisis and highlighted how participants' turnover in CHW in a variety of sectors has remained stable or increased relative to their turnover in CHF (which decreased as a result of the financial crisis). >>» > > »<image005.jpg> »» Registered Company Number 2965552 England >>» >> » <image006.jpg> <image007.jpg> <image008.jpg> >>» >> » Professor Michael Mainelli's other interests: >> » <image009.jpg> >>» www.longfinance.net >>» > >>> Gresham College - all Michael's Gresham Lectures >> » Thames Sailing Barge Lady Daphne > >>> United Kingdom Accreditation Service >> » Wishbone Gold plc >> » Christ's Hospital - Charitable Boarding School > >» City of London Corporation > > » Alderman Broad Street Ward & Club »» <image010.jpg>The Price Of Fish: A New Approach To Wicked Economics & Better Decisions, Nicholas Brealey Publishing, 2011 - www.priceoffish.info - winner of the 2012 Independent Publisher Book Awards Finance, Investment & Economics Gold Prize - Kindle >>>> <image0ll.jpg>Clean Business Cuisine: Now and Z/Yen, Michael Mainelli and Ian Harris, Milet Publishing, 2000 -http://www.zyen.corn/publications/books.html?id=551 - Kindle >>» »» All articles: http://www.z er rdpublications/professional-articles.html?Authors=mainelli >> » Personal blog: mainelli.org >>» >>» >>» >>» »» [1] W. Wiithrich, "Cooperative Principles and Complementary Currency," Current Issues (Zeit-Fragen), article 1: topical questions # 30, August 9, 2004, 1, translated by Philip Beard (Sonoma State University). >>>> [2] In 2009, CHW 876.3 million were in circulation (WIR Bank, 2010). For the same year, the Swiss Central Bank reported MI amounting to CHF 377,199 million in 2009. >>>> [3] WIR Bank, "Benefice de la banque WIR en hausse a 11,9 millions," Wir Bank press release, March 11, 2011, accessed August 18, 2011, > >>> http://www.wir.ch/index.cfm?CBD9201A3DBBI1D6B9950001020761E5 »» [4] Wilthrich, "Cooperative Principles and Complementary Currency", I. EFTA00997769 »» [5] James Stodder, "Complementary credit networks and macroeconomic stability: Switzerland's Wirtschaftsring," Journal of Economic Behavior & Organization 72 (2009): 82. > >>> [6] Based on 60,000 SME WIR members (WIR Bank, 2011) out of 297,692 SMEs censored in 2005 in Switzerland (OFS, 2005). >>>> [7] WIR Bank, "Benefice de la banque WIR en hausse a 11,9 millions," Wir Bank press release, March 11, 2011, accessed August 18, 2011, >>>> http://www.wir.ch/index.cfm?CBD9201A3DBBI1D6B9950001020761E5 > >>> [8] In 2010, Swiss GDP amounted to CHF 546.619 billion according to OECD statistics, accessed August 19, 2011, http://stats.oecd.org/index.aspx?queryid=350 »» [9] Wilthrich, "Cooperative Principles and Complementary Currency." »» [10] WIR Bank, "Benefice de la banque WIR en hausse a 11,9 millions." »» [11] Stodder, "Complementary credit networks and macroeconomic stability: Switzerland's Wirtschaftsring," 82. >>>> [12] Swiss Federal Office of Statistics (OFS), "Recensement federal des enterprises," accessed August 18, 2011, »» http:/Avww.bfs.admin.ch/bfs/portal/fr/index/dienstleistungen/geostat/datenbeschreibungrnetriebszaehlung05.ht ml »» [13] Stodder, "Complementary credit networks and macroeconomic stability: Switzerland's Wirtschaftsring," 82. »» [14] RAI TV documentary, "WIR Bank," broadcast May 30, 2010, accessed August 18, 2011, http://www.rai.tv/d1fRaiTV/programmi/media/Contenthem-03025790-2188-4a6f-a8c5-eacIf2078004.html >>» > >» The Z/Yen Group of Companies »» 90 Basinghall Street > > >> London >> » EC2V SAY > >» United Kingdom >>» »»Tel >> » Fax >> » Web: www.zyen.com >>» »» Z/Yen Group Limited Registered office above address, Company Number 2965552 England >>» »» This e-mail is intended only for the addressee. This e-mail and any files transmitted with it may contain confidential or privileged information. If you are not the named addressee or the person responsible for delivering the message to the named addressee, please contact >>» > >>> Please consider the environment before printing this email. >» >» >» >» >»-- >» please note > > > The information contained in this communication is >> > confidential, may be attorney-client privileged, may > > > constitute inside information, and is intended only for > » the use of the addressee. It is the property of >»JEE > > > Unauthorized use, disclosure or copying of this > > > communication or any part thereof is strictly prohibited > > > and may be unlawful. If you have received this EFTA00997770  >> > communication in error, please notify us immediately by > > > return e-mail or by e-mail to jeevacation@gmail.com, and > > > destroy this communication and all copies thereof, > > > including all attachments. copyright -all rights reserved »-- > please note >> The information contained in this communication is >> confidential, may be attorney-client privileged, may >> constitute inside information, and is intended only for > > the use of the addressee. It is the property of >> JEE > > Unauthorized use, disclosure or copying of this > > communication or any part thereof is strictly prohibited >> and may be unlawful. If you have received this >> communication in error, please notify us immediately by >> return e-mail or by e-mail to jeevacation@gmail.com, and > > destroy this communication and all copies thereof, >> including all attachments. copyright -all rights reserved please note > The information contained in this communication is > confidential, may be attorney-client privileged, may > constitute inside information, and is intended only for > the use of the addressee. It is the property of > JEE > Unauthorized use, disclosure or copying of this > communication or any part thereof is strictly prohibited > and may be unlawful. If you have received this > communication in error, please notify us immediately by > return e-mail or by e-mail to jeevacation@gmail.com, and > destroy this communication and all copies thereof, > including all attachments. copyright -all rights reserved please note The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of JEE Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this EFTA00997771 communication in error, please notify us immediately by return e-mail or by e-mail to jeevacation@gmail.com, and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved EFTA00997772