White Paper on Money Finance

Here is an (initial) Draft of a “White Paper” on Second Republic’s Pillar No. 2, focusing on a Sovereign Currency. We hold that as soon as a people recover their political Liberty, Independence and Sovereignty (i.e., Second Republic’s Pillar no. 1 – “Restoring a Sovereign Nation-State”), the very next thing they need to ensure is to have a Sovereign, Sound and Balanced Monetary and Financial System that works FOR the People and not for the Private Banking Elites.
A crucial and difficult issue refers to whether or not a truly Sovereign Currency be backed by gold. We say that the correct answer is… Yes!!
It’s not a contradiction, rather, we hold that “Yes” is the correct answer for two successive stages:
• First Stage – As we transition away from the present usury-based system centered on private banking interests and towards a productive-based system centered on the Common Good, Trust in that new Currency will be of utmost importance. Therefore, initially that Currency should be Gold-backed, until such time as people’s Trust grows sufficiently. This will depend on how good or how bad government policies and action are. This will in all likelihood take not years but decades. At least a full generation (25 years).
• Second Stage – Once Trust in the currency is in place, proper government actions are promoted by a legal and political system which will ensure government officers do their duty, and public opinion has become sufficiently enlightened on these matters, then Gold-backing can be gradually eased and phased away so that, in the long run, the currency is not tied to arbitrary gold supply (or any other commodity for that matter). Actually, as Trust grows, less and less people will claim their gold options and this will, in itself, spontaneously reduce the relative importance of having gold back the Sovereign Currency. Linking the money-supply to an arbitrary commodity as gold (or US Dollars as happened in Argentina) divorces Finance from the needs of the Real Economy. The existential question would be: “so, if the gold supply were to become exhausted, should we then stop all economic growth?”
Here, we draw on the practical experience we lived through in Argentina in the last twenty years. When former finance minister Domingo Cavallo (under president Carlos Menem) introduced “Convertibility” in 1992, by law the Government could only issue Pesos if there were Hard US Dollar Bank Notes in the Central Bank backing them. That had the same effect on the local public’s Trust in our currency as going on a Gold Standard would have had. In practical psychological terms, under “Convertibility” Argentina’s Trust in the US Dollar = Trust in Gold.
That was a heaven-sent for a traumatized people who had just gone through decades of chronic inflation (under president Raúl Alfonsín) which peaked into hyperinflation in 1989/90. Domingo Cavallo became a “hero” of sorts…
But the years went by, the trauma faded, people Trusted the monetary policies and the economy went well (for some, anyway..), until….
Until new economic realities caught up with Argentina, some international rules of the game changed, and we needed to grow our failing economy fast. That’s when we discovered that “there was no money”, for the simple reason that Dollars were not coming into Argentina fast enough and, in compliance with the “Convertibility” Law, the Government (again Cavallo, this time under president Fernando de la Rúa), just would not issue the proper amount of currency.
The End-Result: total financial, banking, monetary and economic collapse in 2001/2. Cavallo then became Public Enemy No. 1…

The lessons from Argentina’s experience are that when Trust has been reinstated amongst the Public, and proper laws are in place, the amount of gold (or dollars in the central bank) should not set any limitation to economic growth, because the Real Economy does not bear any true relationship with virtual Financial Instruments as paper Dollars, Euros, SDR’s, or even with gold, but rather with work, creativity and production…

One final word of warning:
Part of the trap of why currencies become grossly debased (whether US Dollars, Argentine Pesos, old German Marks, or whatever) is because THE PUBLIC IS IGNORANT ABOUT THE VITAL IMPORTANCE OF PROPER MONETARY POLICIES. And that’s the way the Global Power Elite wants to keep us all… Ignorant!
Therefore, a stable currency is firmly linked to correct public awareness and understanding. No one better than “We, The People…” to ensure that folks at the Finance Ministry, Central Bank, Controller of the Currency, Congress and the Executive perform their duties efficiently, diligently and with the Public Interest in mind…
Sound Monetary Policy and Practice should all be taught at school – Elementary, High adnCollege.
The population should learn that understanding how key monetary parameters affect their lives and future is much more important than gawking at the Dow Jones, or latest rates of exchange, or the price of commodities, or country risk factors.
In fact, we should have a Monetary “Weather Channel”, telling people 24/7 how money is flowing throughout the system: locally, regionally, nationally and (in countries like the US, at least), internationally.
Where is the money supply getting “cold” (so help is sent on the way)? Where is it getting too “hot” (so that the monetary “fire brigade” should be ready to act), Where are financial “tornados” being built up? Imagine if there had been very high profile public “tornado and hurricane warnings” in the years, months and weeks prior to the implosion of Enron? Or WorldCom and Global Crossing? Or AIG? Or Bear Stearns, Lehman, Merrill??? And just as any meteorologist on the Weather Channel purposely omitting, distorting or hiding information from Floridians on an impending hurricane about to make landfall, or playing down a blizzard coming into Chicago, or saying the heavy rain and hail about to fall is no big deal should be chastised for being unprofessional (if they are proven to be ignorant) or jailed (if proven to be criminal), so those responsible for giving us wrong information on companies, banks, bonds, should be held accountable: Rating Agencies, the so-called “specialized media”, the mainstream media commentators reaching hundreds of millions of people, Wall Street “analysts” and the lot…
An aware populace should be asking every morning “What’s the “weather” like on Quantitative Easing I and II?”, “Are major storms building over Goldman Sachs; what’s that Cumulus Nimbus sitting over CitiCorp or JPMorganChase …???”
Because Good Government of the People, for the People and by the People is just that: PEOPLE BUSINESS!

DOWNLOAD SRP Pillar 2 – White Paper on Money Finance – Feb11