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Friday, April 4, 2014

ECON 101 -- The Truth Behind the Con

There was a time, not too long ago, when money increased in value for the owner when saved.  The longer he could wait to buy something with it, the more he could buy!  The fancy name for that situation is "deflationary" money.  A deflationary money system works really great for us common folks.  Prices are usually falling and people get more for less because the money increases in value!  I jest you not.  We still experience this a little with products like electronics.  The longer you can wait to buy a computer, the better and faster it is, or else it will cost less in a few months.   Wouldn't it be nice if everything got less expensive.  What if it got easier to make a decent living, take care of a family, and still easily save up enough for when we are old?  Whole civilizations have enjoyed such conditions for generations throughout all of their economy.  They didn't have electronics back then, but homes and food and transportation steadily got better and more obtainable for everyone.

Unfortunately, about 100 years ago, some bright e"con"omists got together and figured out how to co-opt the above, completely natural, monetary system which utilized deflationary currencies like gold and silver.   Their agenda was to "tighten the screws" and improve the productivity of society ... i.e. force more work out of the people doing actual work.  We call these type of e"con"omists Keynesians today.  So, in the USA for example, where once we had property owned mostly by individuals, now ownership is concentrated in the hands of bankers and those who are connected to them.   What we see today is a natural result when one group of people can generate money for free, while another group of people (we-the-borrowers) must work for a little money whose value is always decreasing.  

For a common man, the robbery is a three-fanged strike.  First, the money he holds is always losing value.  Second, efforts to use "deflationary" currencies, like gold, are met harshly with capital gains taxes.  Third, whenever hard times hit, we-the-borrowers lose ownership of assets when payments are missed.  I hope I can paint this picture for all how perfect of a trap this is for we common men -- they can cause as much inflation as they want, we either take the losses from holding their cash or we pay income taxes on imagined gains if we try to store wealth elsewhere.   It would be easy for us to get out of the banker's trap if not for the income tax.  These two together, income tax and Keynesian e"con"omics are the perfect combination that enable the central command and control over all people.  The legal agreements on loans are the final blow which ultimately give bankers unearned control of the world's assets.

If you don't believe me, answer one simple question.  If you miss a few house payments, could a banker have a say in your ability to sleep there?   

There was a time when men owned their homes fully and completely.  Why is it that we all work harder, produce more, and yet we are stressed out over keeping up our payments to our landlords?  At least if you did have to rent a space back in the day, you knew you were renting.

The Keynesians will be all too eager to point out that wild crashes and fluctuations in the business cycle are the reasons that their policies are needed.  Make no mistake, the Keynesian system is an effective system to make a productive society.  It is also incredibly effective at robbing the common man of the fruit of his labor.

So now they are setting yet another trap.  They are inciting the frustrated working classes against the moderately wealthy.   They say, "Look at these people that make so much money, they need to pay their fair share."  We all seek justice, we all are frustrated, so we take the bait and raise taxes for everyone making $250,000 or more.  Little do we know, while the bankers quietly print more free money and spend it, our money that we work for decreases in value and so we must work more to get more because prices are rising.   Then one day we realize that we are working two jobs to make $250,000 and can't afford to buy real milk because the dang income taxes are so high.

This is our future unless we learn to see through the scam.  If we want life to be fair again, it is time for the income tax system to be replaced with a fair flat tax or consumption tax.  That's really all we need.  All the hoopla about minimum wages, monopolies, and regulations mean nothing as long as we are coerced into holding money that is losing value or paying taxes with money that we should be allowed to save for our own futures.   It is our money after all.  If you work for it, it is yours; and if you were smart enough to earn it honestly, you are smart enough to decide the best way to spend it.  

The only other way I can think to explain it is this:  Collectivism is a scam that really rich people use to steal assets from the working class.  The idea that the needs of the many outweigh the needs of the individual is appealing.  But, collectivism is a thin disguise these days,  as it is more obvious than ever that the needs of the few who print the money outweigh the needs of the individual.   The flow of money to an honest worker should not be impeded or confiscated in any way.  Anyone who says otherwise is a con-artist.  If we-the-borrowers are having hard times, it is because the bankers and politicians have combined forces to rob us.  We can easily side step their grip with a renaissance of Individualism.

Sunday, March 30, 2014

How Digital Currencies May Change Everyday Life

Try to imagine how many ways you and I lose money doing "life" events.  I'm going to focus on one example:  An older couple who sells their 4-bedroom house to buy a 2 bedroom condo so they can lower their monthly housing costs and maintenance.

Here are just a few of the costs:

1.  Repairs on the old home and customization on the new
2.  Closing costs on both homes
3.  Moving costs
4.  Interest, fees, taxes, and time
5.  Loss of closeness to neighborhood friends
6.  Loss of personal features in current home

Now imagine a world running on digital currencies for a moment.  I'll do my best to describe it for you.  Here is a story about what Vern and Marge, retired seniors just trying to get by, might do in the future.

After a lot of research, Vern bolted into the kitchen and exclaimed, "Marge, I've got it; I've figured out how we can make ends meet and not have to move!"

Marge looked up with hopeful interest.  "Did you invent something again, dear?"

"No, no, this is for real.  We can become HomeHotelCoin miners."

"HomeHotelCoin mining?"  Marge's eyes glazed over as her hopes were dashed that Vern was really on to something this time.

But Vern never lost one bit of his enthusiasm.  He continued, "You won't believe how easy this is.  It sounds absolutely too good to be true, but an old friend of mine and his wife have been doing it for a year now and it works great.  They didn't have to front any cash, they don't have to do any work, they just signed up and collect the checks."

Vern and Marge had lived in their neighborhood for most of their adult lives.  All their friends lived close, their church was close, her favorite stores were close, and Marge especially did not want to move.  So, hearing that it worked for someone else got her attention.

Vern went on to explain how it works.  "This is a commitment, it involves renovations, losing access to part of our house, and a lien against our equity for the renovations.  Are you still interested?"

Marge looked skeptical, but the thought of moving makes her heart sink and so she gave a hesitant affirmative nod.

"OK, like I say, renovations are required, and to pay for that we do have to sign a 5 year contract.  If we break the contract or sell our home before then, we'll be responsible for the balance left to pay off the renovation costs.   If we sign up, a contractor will isolate part of our house into a hotel-like room with its own bathroom and private entrance.  When the work is done, the room gets listed on the HomeHotelCoin phone app.  When anyone is traveling through town, they can book our room right on their phone.  We don't have to interact with customers at all.  They pay with HomeHotelCoin which they can buy at any digital currency exchange, like that Digital Currency Exchange of Texas I was telling you about.  Once a customer books the room and pays, they get a code to get in the door, and we just get an email that someone is coming.  We don't even have to be there to check them in."

Marge looked even more skeptical.  "Who cleans the room?"

"Ohhhh, that's where this gets so amazing.  First off, the contractor gets a cut of the coins for his work; that's his incentive.  Second, housekeeping agents do their part for a portion of the coins as well.  In fact, most anything needed to make this service work is built into the system.  We don't have to do anything.  If we wanted, we could include our pool as part of the amenities for the room, and then there are built in features to include pool maintenance as well."

Marge's mind immediately went on with all the things that could go wrong, obnoxious guests, damage to the room, psychopathic murderers trying to stay there, and on and on.

Vern continued, "They've already thought of everything, private security, built in deposits, and biding systems to allocate the right amount of coin for each job.  Everyone involved gets rated:  our room, the customers, the contractor, housekeeping, maintenance, and security.   If we say we don't want to deal with any customer who has less than 5 stars, the app doesn't even allow our room to show up for anyone with less than 5 stars.   It is the same for the housekeeping; there are default settings, but we can adjust what rating we demand from the cleaners, as well as how much coin to allocate for them.   Hah, but obviously if we demand 5 stars and only pay 1 percent, we might not get any takers on the cleaning.  Everything is on a bidding system."

Marge was getting a little hopeful again, but this did sound like just another one of Vern's crazy ideas.  She decided to play devil's advocate for a bit.  "So, what about security?  What if some crazy person is in there bothering our neighbors or playing loud music at 3am?"

"There is a handbook the explains the recommended way to handle almost any type of situation.  Obviously for some kind of emergency we might have to call 911.  For loud music, we might simply put a ding on our customer's reputation rating so that future HomeHotelCoin miners will know that person likes to play loud music at 3am.  The security team does monitor cameras outside our home for suspicious activity, and electronic security for our side of the house is included.  If a security guard does have to come out to deal with a customer, the cost for that gets charged against their deposit just the same as if they damage something in the room or steal anything.  Bob and Melony said they've never had anything like that happen though, just towels go missing once in a while.  It's funny, Bob said there is a rating spot that says something like, 'we're not saying you stole the towels, we're just saying some towels were missing after you left.' I guess the theory is that if a trend shows up, people will know."

Marge thought of some more practical reasons why Vern's idea won't work.  "What about taxes, regulations?  Do we know what we are getting ourselves into?"

"Yes, yes, I checked into that too.  The system integrates with our tax software and it is customized for our zip code.  It files the right forms for us automatically, all we have to do is sign the forms it prints out.  Bob said that they had all the needed licenses and approvals before the renovation even started.  That app even sets us up with an exchange account integration so it can automatically convert the needed amount of HomeHotelCoin into dollars to pay the taxes and fees.  Fortunately we don't have a crazy Nazi homeowners association here, that could be a problem for some, but we're lucky on that."

"Do you really think we can do this, my power-puff man?

"I do."


The above story is completely hypothetical.  I don't know if this particular example would work in the real world.  The point is to illustrate how digital currencies might be used to help people allocate resources they already have in order for them to make extra money.  The object is to standardize and automate the business processes so that we the people can concentrate on the task at hand, whether our task be sleeping, cleaning, or gun slinging.  Digital currencies can help organize human activities in new ways to help customers get what they want, and service providers to get what they need.