EFTA02591466.pdf

From: Joi Ito < Sent: Saturday, September 27, 2014 1:28 PM To: Jeffrey Epstein Subject: Fwd: Monetary Systems Reform Attachments: signature.asc An =nteresting guy I'm talking to. Wonder what you think scanning this. =hould I read all of these things? - =0i Begin forwarded message: From: Michael Mainelli <michael_mainelli@zyen.com>= Subject: =/b>Monetary Systems =eform Date: =/b>September 9, 2014 at =2:05:51 -0400 To: =/b>' <=iv lang="EN-GB" link="blue" vlink="purple" style="font-family: =elvetica; font-size: 12px; font-style: normal; font-variant: normal; =ont-weight: normal; letter-spacing: normal; line-height: normal; =rphans: auto; text-align: start; text-indent: Opx; text-transform: =one; white-space: normal; widows: auto; word-spacing: Opx; =webkit-text-stroke- width: 0px;"> Joi, On money ... ='ve pulled together a lot of our wider thoughts so you can see why I =eel that the theoretical foundations of macro-economics need to expand =o define money, let alone figure out where financial services fit into =conomic theory. First article you have - (hint: search for the =ord 'element') ... Building Bit — What's A Poor Government To =0 About AltCoins? Michael Mainelli and Bob =cDowall 2014 Banking Technology, Informa plc (April 2014), pages =0-33. For some =ecture background on monies (hint: find "Pecunium" in the first =ecture), gave the second lecture with Ed Nell, the third is quite =un: 26 September 2013 The Currency of Management: What Managing Money Teaches Us About =anaging People Lecture 13 June 2013 Taking Modern Money =part Lecture 07 February 2011 EFTA_R1_01773964 EFTA02591466 Long Commerce: Transactions Across =ime Lecture Our UK =nterest We at Z/Yen =ave been proposing that some of the support for small businesses could =ome from their own monetary system, a UK WIR, as has been working for =0 years among 60,000 small businesses in Switzerland. I happen to =hink that the WIR might be a wider aid & development tool as =ell. On what might =he Swiss WIR mean for the UK, Z/Yen brought out a report on Capacity, =rade & Credit with the City of London Corporation in December =011: Summary Findings - =apacity, Trade and Credit: Emerging Architectures for Commerce and =oney Michael Mainelli, Stephanie Rochford and Chiara von =unten 2011 City of London =orporation, 21 =ages The full =eport was 200 pages and had numerous recommendations about using new =urrencies and exchanges to increase economic growth. Lord Sassoon =articipated in the launch and a number of other senior officials are =xploring the implications of the report. For the City of London, =his has been their most commented-upon report since the Global =inancial Centre Indices — www.globalfinancialcentres.net <http://www.globalfinancialcentres.net/> - began in =007. They've encouraged me to promote some more discussion, via =ong Finance — www.longfinance.net chttp://www.longfinance.nett> , write a few editorials, =onvene a Forum last year, etc. All that said, perhaps the most =mportant thought was trying to introduce a UK WIR. To the Swiss, =t's a clear success comprising a quarter of Swiss firms and about =A33.2 billion of trading (an average trade is half CHF and half =HW). Capacity, Trade and Credit: Emerging Architectures for Commerce =nd Money Michael Mainelli, =tephanie Rochford and Chiara von Gunten 2011 City of London Corporation, 203 =ages In summary =hough, all the Swiss did in 1934 was to push their regulator to =egulate two currencies rather than one. They removed the =93monopoly" on money that most nations believe fiat currency =equires. From there the system does its thing or not. The rational currency retains its supremacy based on the universality of tax =nd its monopoly on the use of force, but also in competition for =redit. It bypasses the crazy and unstated assumption among far =oo many, that fiat tax scrip plus leveraged banking will magically =qual the trust and credit of the national economy. The monopolies =o fight back. The Bundesbank produces reports from time to time =sserting that German alternative currencies detract from the economy =though these reports (a) fail to cite Swiss reports on a substantial =ystem modulating cycles and extending credit, and (b) frankly aren't =hat good). The Federal Reserve stamps on scrip issue (see US =istory of the 1930s when there were some 400+ scrips in issue). =he Bank of England is more subtle, but is based too on a monopoly on =he sovereign's debt and might interpret this vigorously (and =rroneously in a way) if any scrip or outside credit system becomes =ignificant. There are a =ew more modern, though perhaps problematic, examples in the report, =ncluding a recent large international player, Ormita —www.ormita.com; and the WIR history is not without its 'twists and turns (the Swiss feel no need to promote the system — =retty much maxed out recently and they don't seek non-Swiss members =r international expansion — as you'll gather from their website =96 http://www.wir.ch/de/wir-kunden/ ). Lots to =onder in my opinion. Current UK thinking is hardly innovative and =o concerned with the art of the practical (i.e. what the "in" =ommunity of UK thinkers might accept that other UK people might accept) =hat London is in serious danger of being =idelined. If you're =till reading this far, some related =eading... 2 EFTA_R1_01773965 EFTA02591467  On financial reform and =hartalism: Modern =onetary Theory and its relationship to Chartalism - http://en.wikipedia.org/wiki/Chartalism. A =ich topic, intertwined with Austrian, Keynesian, Monetarist Schools =tc. You might find this quick "Are You An Austrian?" quiz =ather interesting - http://mises.org/quiz.aspx. I do =uggest taking the long version as the explanations they send back to =ou are very good. Everyone who takes it learns something and =ew are pure "Austrian", but... Charles Holt =arroll is an =ften overlooked but penetrating 19th century writer on the =ubject who provides a solid underpinning for Chartalism -http://mises.org/etexts/currency.pdf I have a few =elated articles, though can hardly claim to be a =hartalist: Short Monetary =ystems: Take A Risk, Create =oney Michael =ainelli 2012 Journal of =isk Finance, Volume 13, Number 4, Emerald Group Publishing Limited =July 2012), pages 280-284. Money In A Time Of =holeric: Basel Blows The =ubbles Michael Mainelli 2011 Journal of Risk Finance, Volume 12, Number 4, Emerald =roup Publishing (August 2011), pages =48-350. Let There Be Tax =isk: Currencies, Interest Rates and Tax =ates Michael Mainelli 2011 Journal of Risk Finance, Volume 12, Number 3, Emerald =roup Publishing (June 2011), pages =42-245. On reform, =hese articles may interest: Four years into a succession of crises and still no reform; Time =or some Long Finance Michael =ainelli 2011 City AM (4 November 2011), page =4 Small Enough To Fail: A Systems Approach To Financial Systems =eform Michael Mainelli and Bernard =anson 2011 Journal of Risk Finance, Volume 12, Number 5, Emerald =roup Publishing (October 2011), pages 435.444. [received an Emerald =iterati award] Banking on =onfidence: Rethinking Audits of Financial =nstitutions Professor Michael =ainelli 2011 Securities & Investment Review, Securities & =nvestment Institute (September 2011), pages =2-23. This =conomist article spends a lot of time warming up to alternative =conomists, but however grudging they are they got there, sort of, in =he end - http://www.economist.com/node/215421744=iv> I cover Silvio Gesell briefly in this lecture — http://www.zyen.com/Articles/Transactions%20Across%20Time.pdf<=a> -http://www.gresham.ac.uk/lectures-and- events/long-commerce-trarsactions-across-time - whose Freiwirtschaft =hinking is rather penetrating about the nature of money. Gesell's=Freiwirtschaft mantra was "free trade, free land, free money" — =nd I would add to make my own, "free information". The WOrgl =xperiment on some of his ideas - http://en.wikipedia.org/wiki/W%C3%B6rgl — which led to the Swiss =aking Freiwirtschaft seriously. Not to be too concise about his =ontroversial ideas, but he disputes the idea that money should be a =ong-term store of value. There are references to online materials =n him at the end of the lecture. I interestingly stumbled across =his excellent Keynes quote only a couple of years ago - "I =elieve that the future will learn more from the spirit of Gesell then from that of Marx." - Book 6, =hapter 23, Section 6, p. 355. 3 EFTA_R1_01773966 EFTA02591468  Time Banks, e.g. Rushey Green, which is in turn covered in =his Gresham lecture - http://www.gresham.ac.uk/lec-tures-and-events/local-or-global-n=twork-economics-and-the-new-economy As ever in =epressions, the mainstream press are trying to comprehend this - http://www.theatlantic.com/international/archive/2012/05/the-n=xt-money-as-the-big-economies-falter-micro- currencies-rise/257216/ or http://www.spearswms.com/asset-management/36017/wir-bitcoins-b=ixton-pounds-does- funny-money-make-sense.thtml A lot was =ade of this recent Bank of England Q12014 bulletin — "Money In The =odern Economy — An Introduction". A lot was =onspiracy-theory-style nonsense, but it does show that the Bank is =etting its own thinking in order and explaining things more clearly - http://www.bankofengland.co.uk/publications/Documents/quarterl=bulletin/2014/qb14q101.pdf I put a lot =f my wider thoughts down in this 2009 paper, The Road To Long =inance: The Road To Long Finance: A =ystems View Of The Credit Scrunch Michael Mainelli and Bob =iffords 2009 Centre for the Study of Financial Innovation, ISBN: =78-0-9561904-4-4, 62 =ages. One last Long =inance approach has been insured utility banking. For a start see =his - http://www.longfinance.net/lf-about/research/710-insured-utili=y-banking.html But this =aper sets things out theoretically: Michael =ainelli and Bernard Manson, "Small Enough To Fail: A Systems Approach To Financial =ystems Reform", Journal of Risk Finance, Volume 12, =umber 5, Emerald Group Publishing (October 2011), pages 435-444 [Highly =ommended Award 2012, Emerald Literati =lub). With all best =ishes, Michael WIR Bank and the WIR multilateral =xchange =/b> WIR is a cooperative bank =acilitating multilateral trading between, and extending credit to, =ember SMEs. It has been operating for over 75 years and is based =n Switzerland. Founded by 16 entrepreneurs in 1934, the WIR Wirtschaftsring-Genossensc=aft (economic =ircle cooperative) was set up as a result of the adverse economic and =onetary conditions resulting from the Great Depression. It was =onceived as a way to stimulate trade and create purchasing power =etween participants, primarily SMEs, thereby enabling local economic =rowth and reducing unemployment. Since its inception, the WIR =conomic circle has undergone a number of reforms and structural changes =nd now resembles a commercial bank driven by cooperative =nterests (favouring SMEs and local/national economic growth and with =trong economic foundations). For example, it went from issuing =nterest-free credit to providing credit lines at advantageous rates =ompared to market rates (approximately 1.75% for members); and from =harging a "demurrage" (or penalty) fee to members holding on to =heir WIR francs (CHW) to simply not paying interest rates on CHW =eposits, thereby encouraging constant money circulation. The =rganisation has also expanded the range of banking services to include =wiss franc-based services rather than WIR francs alone; and has evolved =rom a customer base comprising primarily SMEs to opening up to the =ublic in 2000. WIR Bank performs different and complementary =unctions. First, it acts as a "central bank" issuing =ts own currency — the WIR franc (CHW), which is pegged to the Swiss =ranc (CHF) and released to members through loans and mortgages backed =y collateral. The WIR franc comes into being on the strength of =he contract with the borrower plus 4 EFTA_R1_01773967 EFTA02591469 the willingness of a community to =ccept the money as a payment for goods and services, rather than =hrough state/central bank authorisation.[1] <x-msg://5/#_ftnl> The bank regulates the =mount of WIR francs in circulation - WIR francs accounted for 0.2 % of =HF M1in 2009[2] <x-msg://5/#_ftn2> ; it also defines the rules =f participation and the usage of WIR credits - e.g. WIR credit cannot =e redeemed for Swiss francs; and sanctions members for illegal =ehaviour through exclusion - e.g. such as discounted market trading of =IR francs for Swiss francs.[3] <x- msg://5/#_ftn3> [4] <x-msg://5/#_ftn4> Second, it acts as a "commercial bank" and as such =as been subject to relevant banking regulations in Switzerland since =936 when it was first given the status of a bank. In this =apacity, WIR bank provides a range of banking products (including =usiness loans and mortgages) to its clients in Swiss francs, WIR =redits or a combination of both. WIR francs are used by =articipants to exchange goods and services within the WIR =xchange. Since every WIR credit is matched by an equal and =pposite debit, the system as a whole must net to zero.[5] Third, WIR bank acts as a "trade facilitator" by =roviding the WIR platform or system through which WIR members can =xchange goods and services with each other using the WIR franc as a =artial or full means of payment. In this context, WIR bank also =rovides a range of marketing and communication services (e.g. web =istings, WIR fairs) and advisory services (e.g. workshop, advice on the =et-up of a WIR budget) to members to enable them to trade within the =ystem. The WIR system is also supported by independent local =embers' groups (e.g. Groupement WIR Suisse Romande) that act as local =etworking and discussion forums throughout =witzerland. Today, circa one in five SMEs in =witzerland is a WIR member[6] <x-msg://5/tutn6> , =esulting in over 60,000 SMEs trading with each other within the WIR =ystem, of which one third are from the construction industry. The =alue of WIR franc-based transactions amounted to CHW 1.627 billion[7] in 2010, representing circa =.3% of Swiss GDP for the same year[8] <x-msg://5/#_ftn8> . Prices =re denominated in Swiss francs and can be paid using WIR credits, Swiss =rancs or a combination of both. While some participants accept =IR francs as 100% of the payment for their goods and services, the =inimum rate of WIR francs for every transaction is 30% up to a value of =,000 CHF; and subject to agreement between the parties beyond that =hreshold. The average rate of acceptance is usually between 30% =nd 40% of the total amount.[9] <x-msg://5/#_ftn9> Through partial acceptance, =articipants meet costs and liabilities that cannot be met through WIR =redits such as salaries, tax and social contributions. As a =esult, trading within the WIR system results not only in an increase in =urnover in WIR credits but also in Swiss francs. [10] <x-msg://5/#_ftn10> [11] <x-msg://5/#_ftn11> The WIR multilateral exchange is underpinned by a strong =eeling of community and trust. An obvious advantage lies in the =utual benefits arising from trading with someone that is part of the =ystem rather than an outsider. Moreover, given its history, it is =ften seen as a trading mechanism sustaining local economic development =nd SME growth, especially as SMEs account for 98% of all companies in =witzerland.[12] <x-msg://5/#_ftn12> Researchers have analysed the counter-cyclical nature of the =HW. Using 56 years of WIR data on participants, CHW in =irculation, turnover and credit, Stodder (2009) =emonstrates the counter-cyclical nature of WIR credit, showing =hat WIR credits are most likely to be accepted when ordinary money is =n short supply and suggesting that the purchasing power created through =IR could become an instrument of effective macroeconomic =tabilisation.113] <x- msg://5/#_ftnB> Recent media pieces(141 have explored the relevance =f WIR exchange in the recent crisis and highlighted how participants' =urnover in CHW in a variety of sectors has remained stable or increased =elative to their turnover in CHF (which decreased as a result of the =inancial crisis). Registered Company Number 2965552 =ngland &=bsp; &=bsp; Professor Michael Mainelli's =ther interests: 5 EFTA_R1_01773968 EFTA02591470  www.longfinance.net Gresham College - all Michael's Gresham =ectures Thames Sailing Barge Lady =aphne United Kingdom Accreditation =ervice Wishbone Gold =lc Christ's Hospital - Charitable Boarding =chool City of London =orporation Alderman Broad Street =ard & Club =span lang="EN-US" style="font-size: l0pt;">The Price Of Fish: A New =pproach To Wicked Economics & Better Decisions, Nicholas Brealey Publishing, =011 - www.priceoffish.info - winner of the 2012 Independent Publisher Book Awards =inance, Investment & Economics Gold Prize - Kindle Clean Business Cuisine: Now =nd Z/Yen, Michael Mainelli and Ian Harris, Milet Publishing, 2000 - http://www.zyen.com/publications/books.html?id=551 - Kindle All articles: http://www.zyen.com/publications/professional-articles.html?Au=hors=mainelli Personal blog: mainelli.org [1] <x-msg://5/#_ftnrefl> W. Wiithrich, "Cooperative Principles and =omplementary Currency," Current Issues (Zeit-Fragen), =rticle 1: topical questions # 30, August 9, 2004, 1, translated by =hilip Beard (Sonoma State University). [2] <x-msg://5/#_ftnref2> In 2009, CHW =76.3 million were in circulation (WIR Bank, 2010). For the same =ear, the Swiss Central Bank reported M1amounting to CHF 377,199 =illion in 2009. [3] <x-msg://5/#_ftnref3> WIR Bank, "Benefice de la banque =IR en hausse a 11,9 millions," Wir Bank press release, March 11, =011, accessed August 18, 2011, http://www.wir.ch/index.cfm?CBD9201A3DBB11D6B9950001020761E5</=pan> (4] W6thrich, "Cooperative Principles and Complementary =urrency", 1. (5] <x-msg://5/#_ftnref5> James Stodder, =93Complementary credit networks and macroeconomic stability: =witzerland's Wirtschaftsring," Journal of Economic =ehavior & Organization 72 (2009): =2. [6] <x-msg://5/#_ftnref6> Based on 60,000 SME WIR =embers (WIR Bank, 2011) out of 297,692 SMEs censored in 2005 in =witzerland (OFS, 2005). [7] <x-msg://5/#_ftnref7> WIR Bank, "Benefice de la banque WIR en =ausse a 11,9 millions," Wir Bank press release, March 11, 2011, =ccessed August 18, 2011, http://www.wir.ch/index.cfm?CBD9201A3DBB11D6B9950001020761E5</=pan> [8] <x-msg://5/#_ftnref8> In 2010, Swiss GDP amounted =o CHF 546.619 billion according to OECD statistics, accessed August 19, =011,http://stats.oecd.org/index.aspx?queryid=350. [9] <x-msg://5/#_ftnref9> W0thrich, "Cooperative Principles and Complementary =urrency." (101 WIR Bank, "Benefice =e la banque WIR en hausse a 11,9 millions." [11] <x-msg://5/#_ftnref11> Stodder, "Complementary =redit networks and macroeconomic stability: Switzerland's =irtschaftsring," 82. 6 EFTA_R1_01773969 EFTA02591471  (121 Swiss Federal Office of =tatistics (OFS), "Recensement federal des enterprises," =ccessed August 18, 2011, http://www.bfs.admin.ch/bfs/portal/fr/index/dienstleistungen/g=ostat/datenbeschreibung/betriebszaehlung05 .html (131 <x-msg://5/Ititnref13> Stodder, "Complementary =redit networks and macroeconomic stability: Switzerland's =irtschaftsring," 82. (141 <x-msg://5/ft_ftnref14> RAI TV documentary, "WIR =ank," broadcast May 30, 2010, accessed August 18, 2011, http://www.rai.tv/dI/RaiTV/programmi/media/Contentltem-0302579=-2188-4a61-a8c5-eaclf2078004.html The Z/Yen Group of Companies 90 Basinghall =treet London EC2V SAY United Kingdom Tel: +44 (020) =562-9562 Fax: +44 (020) 7628-5751 Web: www.zyen.com Z/Yen Group Limited Registered =ffice above address, Company Number 2965552 England This e-mail =s intended only for the addressee. This e-mail and any files =ransmitted with it may contain confidential or privileged information. =f you are not the named addressee or the person responsible for =elivering the message to the named addressee, please contact hub@zyen.com Please consider the environment =efore printing this =mail. 7 EFTA_R1_01773970 EFTA02591472