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FSUTO Monetary
System
Free Market Money
There isn't on single currency for FSUTO. The following are suggestions for legitimate money that may be used within FSUTO and by its members.
Precious metals - gold, silver, platinum, jewels, etc.
Anything of value that is accepted by all economic players.
FSUTO Money - Ekwhe - §
Ekwhe - exchange of kilowatt hours of electricity
(§ is symbol for ekwhes)
The Universal Electronic Monetary System
The ekwhe system is merely a facilitator for transactions between different currencies, it functions as a measuring stick to determine a common value by which to trade currencies, however the ekwhe may be used as money itself and should develop into the universally accepted currency without exclusion of other currencies.
The value of all currencies are measured by the value of 1 kilowatt hour of
electricity, which is used as a measuring stick for all currencies. The Electricity Stock
is the real money.
The ekwhe is based on an electricity stock money market fund (which does not exist yet) of
1§ ekwhe worth the average value of one kilowatt hour
of electricity 1kx at the time when the
stock is issued divided by the average a amount of electricity ko one may buy with the original ekwhe stock (1§o) at a particular time which equals E the
value of an ekwhe.
1§=1kx/a=(1§o)ko=E
The averages will be taken from a universal electricity commodity market. Arbiters are used to even out the differences in the value of electricity in different parts of the world by establishing an average universal value of ekwhes.
In this system anyone can create real honest money based the the value of the assets, capital, goods, commodities or services of the owner and holder of the stock. To create money all one needs to do is to issue a stock for the value of something that you own, if a monetary broker accepts this stock as having resale value, then you have your own money. Normally anyone can create their own money, its called a personal IOU, the problem with this is that only people who know and trust you will accept the IOU, in order to use this a money anywhere, you would have to convince everyone in the world to trust in your IOU. The UEMS allows anyone to create their own money by simply offering valuable stock to a monetary broker; who might be an individual, a bank, a stock brokerage firm or a monetary brokerage firm. One can issue stock on anything that a broker would value; which means something of capital value; land, a factory, machinery, goods or services. If the broker purchases a claim on the stock, the broker doesn't actually buy the stock, the broker only buys a claim to back the stock with money; real money--ekwhes. But the ekwhes can be converted into anything.
Gold may be used as the object of real value to back ekwhes, though silver, gems, natural resources or anything else may be used by some as an alternative, but since gold is universally accepted as money it may through common acceptance prevail.
This example for the creation of money will be called farmcash.
This example is an impractical but possible example of how anyone with anything
of value may create their own money.
For instance; if the stock is for farm land valued at §100,000 and the broker values
the capital production of the land to be §30,000 a year for farming, then the owner of
the stock (the farmer) can draw §30,000 of money from the money market account. This
doesn't mean the farmer will be handed §30,000, it means that when the farmer sells one's
produce and earns §30,000, the farmer will receive the payment in one's own money for the
equivalent of §30,000, in this case, farmcash. The farmer will be able to draw up to
§30,000 a year in farmcash; more if the farm produces more profit. This farmcash will go
into circulation all over the world; when someone in another country is offered farmcash
and doesn't know what it is and doesn't accept it as payment, then all the holder has to
do is electronically convert the farmcash into something that the seller will accept (for
instance, gold or gold certificates), the farmcash will go to the broker who issued it
where the farmcash will be used to purchase stock in kilowatt hours of electricity, and
the electricity stock will immediately be used to purchase ekwhes, the ekwhes will then be
used to purchase stock in kilowatt hours of electricity; the electricity stock may then be
used to purchase gold, the gold certificates will then be sent to the holder and then
given to the seller as payment. This whole process will take place instantly by computer
and modem, so there will be only a slight delay in converting currencies. All currencies
issued will be backed by an insured brokerage firm, who accepts the risk if a currency
fails.
Other farmers can't devalue the farmcash by producing higher yealds from
their land, because the value of farmcash comes exclusively from the value of the land of
the farmer who issued farmcash.
For instance; if the aforementioned farmer were to have a crop failure and
not earn a profit for the year then the farmer wouldn't be able to draw on farmcash,
however if the broker had allowed the farmer to borrow from the account and had already
issued farmcash then the farmer would be responsible for paying back the broker, if the
farm were to go bankrupt and the farmer defaults on the loan, then the broker would have
to buy up all of the farmcash in circulation. By paying it off, all farmcash would be
called in and bought off of the market, thereby ridding the world of this bad money. If a
holder of farmcash were to keep some of these notes, for some reason, they would be
useless, so the holder would not be able to pass them off as legitimate currency after
they have been called in, because the money has been cancelled and would no longer be
registered with the issuing brokerage firm, so no one would be cheated by it. If the
brokerage firm were to have most of its liabilities in farmcash and because of this they
go bankrupt, then their insurance company backing the brokerage firm would be liable for
paying off their liabilities and buying up all of the farmcash. If the insurance company
is a part of a civil government, then the civil authorities might take responsibility for
it.
The protection that people have is that all money that comes from ekwhes or uses ekwhes in transactions is backed by certified brokerage firms that are fully insured. Being fully insured with collateral and reserves of something of real value; precious metals or stock in electricity or FSUTO government's bonds or capital stock or other valuables that have a constant and relatively stable value is a requirement for certification.
Even if there are many different currencies in circulation, its of no consequence, since in reality there is only one standard currency; ekwhes. There shouldn't be an overabundance of currencies anyway, because the entity that issues the currency has to pay the transaction costs to get people to use it, since no one is likely to use a currency that one has pay a fee every time its converted. That means there should only be a few different currencies in circulation; issued by civil governments and financial institutions who may pay the transaction costs to get people to use the currency.
Each civil government is responsible for printing and backing its own money.
Commodity Bundle
David Friedman presented a very workable means of creating and maintaining a
stable currency:
"The ideal commodity backing for a modern system would not be any single commodity
but rather a commodity bundle. The bank would guarantee to provide anyone bringing in
(say) a hundred thousand of its dollars with a bundle consisting of a ton of steel of a
specified grade, a hundred bushels of wheat, an ounce of gold, and a number of other
items. The goods making up the bundle would be chosen to make the value of the total
bundle correlate as closely as possible with the general price level. While a change in
production technology or non-monetary demand might alter the value of one good in the
bundle, it would have only a small effect on the value of the bundle as a whole. Since the
quantity of such goods being used for monetary purposes would be a tiny fraction of the
total quantity of steel, wheat, gold, etc., changes in monetary demand would have a
negligible influence on the value of the bundle. So the value of such a money should be
stable against both monetary and non-monetary changes.
Such a system would work, in practice, very much like an ideal fiat system in
which the monetary authority maintains a stable price level by appropriate manipulation of
the money supply. Under a commodity bundle system, if the money supply increased to the
point where the bundle was worth more than 100,000 dollars, holders of dollars would turn
them and for commodities, bringing the money supply and the price level back down. If the
money supply fell so that the commodities were worth less than the money, banks would find
that they could issue additional money without any of it being turned in for commodities,
and the money supply would rise. The system as a whole would therefore stabilize prices in
such a way as to make the price of the bundle (a crude price index) stable at its face
value."
-- The Machinery of Freedom - by David Friedman; (The Market for Money) page 223-224