Welcome to the official site United Future World Currency
  
Michael J. Martinoff, B.A., M.B.A.
Mark Leclerc's well-known quotations [July 18, 2009] from Rothschild, Keynes and Jefferson [reproduced below] are eternal; they will always be as descriptive of human action in the future as in the past.

If we want to establish a world currency for the future, it is necessary to understand why the international gold standard that prevailed from the close of the Napoleonic Wars until WW I failed.
Here are three reasons:

1. Fractional-reserve banking created credit bubbles, which inevitably eventually burst, creating cycles of boom and depression. Unfortunately, instead of prohibiting fractional-reserve banking, in 1913 the US federal government created its third central bank, the Federal Reserve Board. (Thomas Jefferson and Andrew Jackson abolished the first two.) Under the Federal Reserve Board, the ratio of paper (credit) to gold (money) in the USA rose from 3:1 in 1913 to 15:1 in 1929, creating the worst ever credit bubble, which burst. The Hoover and Roosevelt administrations turned the resulting recession into a prolonged depression, by doing everything that they could to try, for political reasons, to prevent wages and prices from adjusting to the supply of real money, gold, after the credit bubble burst. Overall, in less than a century, since 1913, the US dollar has lost more than 95% of its purchasing power. While ordinary people suffer through inflation and recession, well-informed insiders, making well-timed trades, can become very rich at the expense of the rest of society. (Remember what Rothschild and Jefferson said.)

Financial institutions provide various services, including money depository (bank), financial intermediary (savings & loan), insurance and stockbrokerage. For regulatory purposes it is essential that those businesses remain distinct. While a financial intermediary properly borrows money for fixed terms from the public and lends it to borrowers at a similar structure of terms, a money depository receives deposits of real money, gold coin, from the public, which coin it promises to return on demand, either to the depositor or to a person specified by the depositor. While it is profitable for a money depository to lend a fraction of those demand deposits at interest, expecting that the depositors will not demand return of their deposits all at once, that fractional-reserve banking, which is inherently fraudulent, is at the root of credit expansion and collapse, booms and busts. The remedy is prohibition of fractional-reserve banking.

A financial intermediary properly makes its money on the spread between the interest rates on the securities it sells and the interest rates on the securities it buys (loans it makes). A money depository properly makes its money through service charges. In our modern economy, banks charge fees to maintain a chequing account, fees to deposit or withdraw cash, fees to write cheques and fees (from merchants) for electronic debit card transactions. In a modern economy, much more business would be done by electronic debit card than by gold coin, though money depositories could be expected to demand settlement of their accounts with each other in gold, either in coin or, by mutual agreement, by transfer of balances held at an acceptable clearing-house.

2. If the notion is accepted that a money is something other than a fixed quantity of a commodity, such as gold, then it is open to a government to "devalue" the money, by cheating people who accepted the government's paper in return for that government's promise to repay on demand the amount originally specified. Unfortunately, Article I, section 8 of the US Constitution authorizes the Congress "To coin money, regulate the value thereof ...". While that would seem to exclude paper money, it would seem to include the power to vary the gold content of the national coin. There is simply no need to authorize a government to coin money; the result has been terrible. Better that money be coined by competing private mints, the proprietors of which would be civilly and criminally liable for fraud should the gold content of their coins not be as specified.

Therefore it is undesirable that the monetary unit of account have a name other than a specification of quantity of a specific commodity. The money should be not a "Dollar" or a "Guinea" but rather a "Troy Ounce of Silver .999 Fine" or a "Gram of Gold .999 Fine". Gold and silver could function as parallel currencies, for people who prefer one or the other, with the exchange rate between them fluctuating with supply and demand, but history and economics show that it would be silly for anyone to try to fix a ratio of exchange between gold and silver. During the nineteenth century most people preferred to use gold and, I expect, would prefer gold again.

The problem with making the Troy ounce the unit of account is that a "cent" would be worth US$9 when the ounce is worth US$900. I see that 1 Troy ounce = 31.1035 grams. If the gram were the unit of account, then the gram would be worth US$900/31.1035 = US$28.94 and the "cent" US$0.29, approximating the purchasing power of the US$ several decades ago. A 25-gram coin would be a little smaller than a Krugerrand. In a modern economy most payments would be made electronically, with debit cards, against gold on deposit in a bank (money depository), but 25-gram and 10-gram coins would be convenient for people who want to hold real money.


3. Politicians in power always have a powerful incentive to try to buy popularity by spending more money than they receive in taxes. The remedy is a constitutional provision prohibiting deficit financing, declaring that there is no such thing as lawful national debt and further declaring that anyone who participates in a scheme to purport to create national debt is himself jointly and severally personally liable for that debt, while that debt is not a lawful debt of the nation. National debt is like a cancer, which tends to kill a national currency by providing politicians with a powerful incentive to inflate away the debt. (Remember what Keynes said.) In a nation that already has national debt, a constitutional amendment prohibiting national debt would necessarily include a provision for mandatory retirement of existing national debt.

While we cannot realistically expect reform in the USA, because people who profit by present arrangements have the power to prevent reform, there may be hope in China and Russia. While American saving and investment stagnate, and American politicians intend to further penalize saving and investment, by raising marginal tax rates, in China people are apparently encouraged to save and invest 40% of their incomes, creating dramatic growth in the productivity of labour. Chinese leaders appear to have a good comprehension of economics and understandably are unenthusiastic about financing the huge American national debt created as self-serving American career politicians attempt to buy popularity through deficit financing. In America the Constitution of the founders has decayed into a political system in which "the worst get on top". I am certainly no expert on the politics of China and Russia, but while the American system nourishes self-centered corrupt career politicians, present leaders in China and Russia, building on the ruins of economic central planning, at least seem to render better service to their people than American politicians do.

Suppose that the government of China were to adopt as its unit of account for collecting taxes and spending money the "Gram of Gold .999 Fine", let coins be minted by competing private mints (subject to the usual laws prohibiting fraud) and constitutionally prohibit fractional-reserve banking, national debt and "legal-tender" laws. Suppose that the government of Russia were to do likewise. Surely investors worldwide would see the advantage to banking in China or Russia, in real money, gold, compared to banking in paper money elsewhere. As people dumped their American dollars and other fiat currencies, governments around the world would find it very difficult to stop their citizens from seeing the "Gram of Gold .999 Fine" as the world currency and acting accordingly.

To paraphrase Rothschild, "Subject to the usual prohibition of fraud, I care not who coins the gold."

Michael J. Martinoff, B.A., M.B.A.
International Trademark - Copyright 2009 - United Future World Currency - info@futureworldcurrency.com