Money

Abstractly Represented Money: Introducing Metamoney

In his pocket, Joe has an old leather wallet. It contains enough banknotes to buy him a brand new wallet of a better model he saw in a magazine. This buying power is exclusive to him, who alone can use those bills to buy something. Likewise, if he transfers them to another person, then instead of him, only this other person will own their buying power.

However, although Joe’s transferring away his banknotes can always transfer along their control, it could never transfer along their whole property, which is not only his. The bills, as possibly distinct from their purchasing power, do not belong to him alone. For example, he has no right to create or destroy them: they are public. What belongs to either him or whoever else controls any such notes is rather their buying power, which hence is privately owned.

Indeed, by always just privately owning his banknotes, Joe could sell them independently of their purchasing power, which they could not represent. However, selling them in this way would prevent him at least temporarily from using the same bills to buy anything. Then, by recognizing their lost purchasing power as a monetary value, for keeping which they must remain its representations, one can conclude:

  1. All monetary value must be private.
  2. All its representations must be public, or unsellable.

Still, if not Joe, then who else can sell, buy, create, or destroy his or any equivalent banknotes? This question should be negligible if what he owns is their monetary value rather than the bills themselves. However, since the purchasing power of each bill can change once people sell, buy, create, or destroy other such bills, the same question becomes critical. Indeed, part of its answer is that now commercial banks create most of the money supply by selling it, in a process called fractional-reserve banking.

Commercial Banking

According to the Federal Reserve Bank of Chicago,[1] this is how fractional-reserve banking originated:

Then, bankers discovered that they could make loans merely by giving their promises to pay, or bank notes, to borrowers. In this way, banks began to create money.

Bankers also needed, however — and still need — to keep, at any given time, enough money to provide for expected withdrawals: “Enough metallic money had to be kept on hand, of course, to redeem whatever volume of notes was presented for payment.”

Hence the name “fractional-reserve banking”: commercial banks must hold a fraction of all deposit money as reserves — which legally (since 1971) need no longer be “metallic money” but only a public debt — to meet withdrawal expectations: “Under current regulations, the reserve requirement against most transaction accounts is 10 percent.”

In a fractional-reserve banking system, on which most of today’s international economy relies, commercial banks create money by loaning it, hence as a private debt.

Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could “spend” by writing checks, thereby “printing” their own money.

For example, once a commercial bank receives a new deposit of $10,000.00, 10% of this new deposit becomes the bank’s reserves for loaning up to $9,000.00 (the 90% in excess of reserves), with interest yet without withdrawing the loaned money from the source account. Likewise, if that maximum loan of $9,000.00 does occur and the borrower deposits it into another account, whether in the same bank or not, then again 10% of it becomes the latter bank’s reserves for loaning now up to $8,100.00 (the 90% now in excess reserves). As always, the bank charges interest on the loaned money despite not withdrawing it from the source account. This process could proceed indefinitely, adding $90,000.00 to the money supply, valuable only as their borrowers’ resulting debt: after countless loans of recursive 90% fractions from the original deposit of $10,000.00, that same deposit would have eventually become the 10% reserves for itself as a total of $100,000.00.[2]

Thus through stage after stage of expansion, “money” can grow to a total of 10 times the new reserves supplied to the banking system, as the new deposits created by loans at each stage are added to those created at all earlier stages and those supplied by the initial reserve-creating action.

Yet how can credit alone create new money? How can a debt retroactively create its owed money? Something else must be happening here, in addition to mere loans. What is it? What else happens in the whole process of commercial banking? First, there is a deposit. Then, there is a loan of up to a fraction (of 90%) of this deposit, at interest yet which the bank never withdraws from the source account. Finally, the borrower can credit that loan to another account, in the same or any other bank. Suddenly, the trillion-dollar question emerges: are these two accounts sharing the same value?

  • Regarding deposit money the answer is yes: the loan can still belong to the balance of the source account, consequently being that same deposit money.
  • Regarding account balances the answer is no: the loan can also belong to the balance of the target account, consequently being additional deposit money.

However, if the partial balances of both accounts must represent the same deposit money, then how can they duplicate it?

Privately Public Money

Distinguishing the letter “a” from its verbal sound would prevent this visual representation of that word. Likewise, distinguishing a banknote from its exchange value as money would prevent this concrete representation of that value.

The resulting indiscrimination between a representing entity and what it represents must happen to all representations of something dependent on them by something independent from them. Indeed, the letter “a” does not depend on its dependent word, or a banknote on its dependent trade value as money. Likewise, bank accounts do not depend on their dependent balance, nor precious metals on their dependent buying power. Anything that depends on being represented by something independent from representing it becomes indistinguishable from that representing entity.

Additionally, only by being concrete can objects remain independent from what they represent, which they always do. Hence, each alphabet letter, banknote, precious metal, bank account, or other self-independent representation, even if just imagined, must be concretely objective. While conversely, because money depends on its own representation, all its concrete representations must remain indistinguishable from their monetary value, despite this value and those representations being always respectively private and public.

So letting money concretely represent its own exchange value is inherently problematic: the resulting indistinction between this concrete money and that privately owned value must privatize its otherwise public representation of the same value. Consequently, all such purely objective representations of money will require an impossibly privatized control of their still necessarily public, unsellable selves, whether by their private owners publicly selling, buying, creating, or destroying them.

Even so, Joe still privately controls the exchange value of his always public banknotes. Indeed, people have long expressed that value concretely, with not only banknotes but also countless other objects, including precious metals and bank accounts. Yet how could they do it? How did they solve the ownership conflict inherent in any such privately public representations of money? How could each concrete representation of money be both private and public? The solution was to delegate its privatized ownership to a public monetary authority.

People had no other choice: any privatized ownership of a still necessarily public entity can only consist in the privatizing delegation of its public ownership. Then, all resulting delegates will constitute one same body administering or governing this public entity: the state or government, part of which must privately control any object that concretely represents money.

However, the private and public ownerships of one same thing are still mutually exclusive. Hence, the public authority that results from privately controlling all concrete representations of money must rather be private. Eventually, this conflict will segregate all administration of money by governments into a privatized part of their public selves: a central bank. Indeed, any privatized power could only remain public as long as just part of it became private. So the same governments will become private by delegating all their control over money to that private part of themselves, which conversely will remain public just by belonging to them.

Finally, regardless of government structure, concrete objects can only represent money by remaining privately public, hence while still privately owned by the public part of governments, even if also by their central banks. For which to be possible, any government already privatized into its own central bank must create this always privately public money by borrowing it from that bank. Then, this government not only buys the created money from its privatized inner self, as which it reciprocally sells it to its public whole, but also destroys that money by paying it back to its lender bank, if ever. While conversely, that central bank becomes the original creditor of all this privately created, publicly loaned money, of which it must create ever more to enable paying its interest. As thus, with the resulting inflation and recursive interest payments, the same bank owns an ever-increasing fraction of the exchange value of all its issued money.

Still, even in the absence of any central bank, once commercial banks create money by loaning it to people who then use that money to buy public debt, or even just pay taxes, governments already borrow their money from the banking system, despite indirectly. Then, the partial privatization of those governments only lacks a formal, institutional expression.

Central Banking

So bank accounts must be as indistinguishable from their deposited money as any such concrete representations are indistinguishable from the money they represent. Hence two deposits in different accounts being always different money, even if one is just a loan of money from the other: when depositing money borrowed from one account into another, people must duplicate that money, by mistaking it for both accounts.

Additionally, since all money created by commercial banks remains as just balance fractions borrowed from their client accounts, that money must be worth only as credit, or as the corresponding debt principal. This way, except for money neither in reserves nor loans — and possibly not even in bank accounts, thus not being excess reserves — but not from loans, bank loans are the only money supply left for paying their own interest. Consequently, such an interest-paying, self-indebted money supply must grow at least at its own interest rate less any other money also excluded from bank reserves: eventually, whether as loans or not, the total money supply must increase exponentially.

However, who does then create all needed new money? Before central banks, governments would have done it. Later, each new central bank has created ever-increasing amounts of that money on behalf of its government. Indeed, since the source account of any bank loan could have been the target account of other such loans, from which it would be then indistinguishable, banks can always replace that source account by debt instruments, including some representing a public debt. So by becoming central banks, they can create new account money in exchange for promises from their governments of paying it back with interest, essentially the same way they replicate part of that money in exchange for promises from their commercial clients of paying it back with interest. However, paying the additional interest on this new money, now created as a public debt will demand still more money. Then, the same banks will — as they always did — create ever more money from new public debt for paying interest on both private and old public such self-indebted money. This way, all new money created as a private or public, interest-paying debt must recursively amplify any lack of itself initially solved by central banks creating still more of it.

The result is an exponential growth both of the money supply and the debt it represents, then a proportional, ever larger transfer of exchange value to the banks through inflation and interest payments, respectively, which must collide with social-resource limits. Constructively delaying this collision depends on a corresponding increase in the social production of wealth, which must rather collide with natural-resource limits.

Are there any alternatives to such an unsustainable economic system?

Abstractly Represented Money

Unlike the symbol for a verbal sound, its audible self cannot become indistinguishable from what it means. For example, the sound of the word “everything” cannot already be everything and still mean it. Unlike its visual representation, that sound is not recognizable independently of meaning something else, from which it hence must always be distinguishable.

Still, verbal sounds are not the only meaningful entities always necessarily distinguishable from their meaning. There are also public representations of a privately known entity. For example, the number three could represent a single, just possible number to every person while representing the actual number five only to Joe.

Then, people could publicize a number (like five) as referencing another, private one (like three) without ever publicizing this private (the five-like) number as conversely referencing that public (the three-like) one. Public-key cryptography does precisely that: it uses two numbers or keys of which, although either number means the other, only the private key can reveal its corresponding public key. This way:

  1. Any content encrypted using the public key can only be decrypted by someone who also knows the private key.
  2. Any content signed using the private key can still be authenticated by someone who only knows the public key.

Using public-key cryptography, people can finally avoid privatizing their public representations of money, by representing any exchange value as a private key then representing this private key, or metarepresenting its represented value as the corresponding public key. For example, the Bitcoin decentralized network uses public-key cryptography to build signature chains, each link of which represents a balance transfer, or transaction. In Bitcoin, transferring the balance of one public key to another consists in combining the target key with the transfer that resulted in that balance, then signing this combination with the source private key. After which, any holder of the source public key can authenticate this new transfer as originating from whoever could sign it — necessarily by holding the source private key.

Then, money becomes a privately-signed yet public transaction chain despite never becoming itself public. For the first time in history, representing an exchange value (as a private key) does not require privatizing its publicly representing object (the corresponding public key). With such a metarepresented money, or metamoney, a public abstraction (a public key) can represent an exchange value (that of a private key) without ever becoming itself private — which makes its privatized control by any public authority not only unnecessary, but also impossible.

Indeed, publicly expropriating money, whether by selling, buying, creating, or destroying it, requires privately controlling its publicly representing object, which then must be concrete. On the contrary, abstractly representing that money prevents all privately public authorities from having any control of its representing object, then from necessarily expropriating an increasing fraction of its exchange value. While conversely, to avoid this privately public, hence increasingly expropriating control, each object representing money must be abstract — like a public key.

Finally, to be centralized — in a government or central bank — a public monetary authority must privately control what represents money, which then must be a concrete object. While conversely, to control an abstract representation of that money, this public authority must become decentralized — in a metamonetary system, like Bitcoin.

  1. Dorothy M. Nichols. Modern Money Mechanics. 1994. Written in 1961. Revised in 1968, 1975 and 1992.
  2. After twelve recursive loans of 0.9 excess in reserves each, a $10,000.00 deposit would have already become $10,000.00 × (1 − 0.912) ÷ (1 − 0.9) = $71,757.0463519.

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Finance

Facts to Know About Financial Planning Software

If you are in working in an organization or a company there are lots of things and aspects that you need to consider in order for you to maintain your performance in your current company where you belong. However it would be really difficult for you to update your current performance especially if you have tons of deadlines to meet. You need to have a program or software that can easily update and monitor the operations as well as the administrative transactions that are happening in your company. In this way, it would be an easier for you to monitor the current issues of your company. It will also help you in finding ways on how you can improve your performance for the betterment of the group where you belong.

One of the best things to get for your company is to have your own financial planning software. Financial planning software is an example of software that serves as a guide that covers specific subjects such as the organizational structure of the company. It also allows you to review the business financial tips and advices on how to improve the low results and ratings of the company.

This kind of software is designed to give you ease when it comes to the different areas of your company. It does not require you to change your current business processes since this software has almost the same features to those familiar and intuitive Microsoft interfaces. Its functionality is advanced since all your business analysis materials and tools are already provided and installed in your computer. It covers almost all of the processes and transactions that are happening in a typical company or production which makes it a very versatile type of software.

If you think that these programs are not user-friendly, you are wrong with that. Once you purchased and installed this system to your company, along with it is a technical support your problems will be immediately solved. You just need to provide some individuals that will spend time in learning the technicalities and troubleshoots of the software. It would not be a burden for you since the software is already provided with complete and thorough services and processes needed that will fit the business process in your company.

Designing your own financial planning software is not that easy at all. There are lots of aspects and business processes that you need to consider especially when you are the one assigned to create such tasks. You always have to make sure that all the data inputs will coincide with the business processes of your company. This is to ensure appropriate and accurate results needed for the dissemination of information and even in decision-making for the company.

Financial planning software will also help you build a good relationship with your customers through rendering excellent performance and accurate results for them. It serves as your deepest secret and industrial strategy to keep your company on top in terms of meeting your financial goals. It is also considered as unique, sophisticated and client-oriented software that will surely satisfy the needs of your company and your clients as well.

Payday loan

Payday Loans – Second Chance Payday Loans

Mistakes are a common factor of life. Without mistakes we wouldn’t be able to improve ourselves. Many believe that great success derives from a previous mistake. Isn’t it important that you and your family receive the second chance you deserve?

Many Payday Loan providers believe that you deserve a second chance at a short-term loan. A chance to prove to yourself, and others, that you can make the right financial decisions and improve your quality of living. A chance to persevere and efficiently manage your finances from home. Second Chance Payday Loans were designed with you mind!

What is a Payday Loan?
A Payday Loan is a fiscal sum awarded to you by a respected lender between paychecks. They are typically cashed in sums ranging from $100 to $1500. Be sure to remember that Payday Loans are of a short-term nature. With that in mind, they are to be repaid upon the receipt of your next paycheck.

Unexpected expenses and emergency situations are harsh realities that thousands of hard-working adults must deal with each day. If you have bad credit or no credit a long-term loan may be out of the question. That being said, if you need short-term financial aid a Payday Loan is on your side. The fiscal sum provided to you will not only reduce financial stress now, but in the future as well.

Is it possible to get a Second Chance on a Payday Loan?
A Payday Loan is a fiscal sum awarded to you between paychecks. Remember, providers are looking to provide you with a second chance at successful financial management. With a Payday Loan you also reduce the stress and hassle of filing several documents! It’s important to remember that most companies do not take credit checks, so applying to multiple companies will not negatively affect your credit score! For a great list of no credit check payday loans, visit a payday loan review website.

Where can I apply for a loan?
You can now find hundreds of Second Chance providers online! That’s right, you don’t have to leave the convenience of your own home to take out your short-term loan. With a few clicks of the mouse, you could be filling out your online application. Said application should take no more than ten to fifteen minutes if you are prepared. Be sure to equip yourself with your Social Security Number, Driver’s License and employment background before beginning your application.

How and when do I repay my Payday Loan?
Although you are not required to post collateral, you are required to repay your loan on time. By taking out a Second Chance Payday Loan you are agreeing to repay your short-term loan upon the receipt of your next paycheck. It is important to borrow responsibly; don’t borrow more than you can afford to return on payday.

Upon completing your online application you will be presented with a number of repayment options. Be sure to carefully consider each option and make a selection that is right for you. You should look to select a quick and simple repayment option, you don’t want to get bogged down with complex details.

Don’t you deserve a second chance? Are you ready to take responsibility for your family’s financial management? Isn’t it time you make a change? Stop wasting time and do something that could change the rest of your life.

You’ve taken the first step, you have the knowledge and wisdom you need. Now it’s time you take action and put your first foot forward. Do what’s right for you and your family, make the intelligent move and obtain your Payday Loan today!

“By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and third by experience, which is the bitterest.”
~ Confucius

Money

4 Immutable Laws of Money Control

A wild goat was blind in one eye because of an accident sustained as a kid. Since he was vulnerable if a predator approached on his blind side, he made a habit of grazing on a high cliff facing the sea. He kept his good eye in the direction of the land watching out for enemies and his blind eye towards the ocean.

One day, a boat filled with sailors rowed past the cliff. A sailor spotted the goat, grabbed a bow and shot at him. As the goat lay dying he gasped “I thought my enemies would come by land. I never thought to look out to the sea”

Wealth is only guaranteed when your personal money making machine is made up of effective money generation and money retention system. A defect in either of these systems makes you vulnerable to poverty and financial failure. Unfortunately most people intending to make money often concentrate all their efforts on generating money with little or no attention on controlling money. This is like trying to save the life of an automobile accident victim by doing everything to get him to the hospital without stopping blood flow from his body. The truth is: he is likely going to die faster due to loss of blood than due to the injury sustained. You will remain poor more as a result of lack of money control skills than due to lack of money generation skills. This is true for individuals as well as for organizations.

Think about it this way, every time you save $100, you are automatically $100 richer. But every time you need to make $100 you will need to spend some money in other to make it, sometimes as much as $ 80. Therefore preventing yourself from losing $100 might be equivalent to making $500 or more. The first and most important skill of enduring prosperity therefore is money retention skills.

6 Key Symptoms of Chronic Lack of Money Control

If you ask most people if they are good at controlling money, their answers will be a resounding yes. But this approach will give the kind of result you will get if you ask children if taking ice-cream is good for their health. The best way to know if you have money control problem is to answer the five questions below as sincerely as you can with a yes or a no. No one else needs to know what your answers are, but being sincere with yourself will put you on the path of enduring prosperity.

  1. Do you regularly find yourself in short-term and long-term non-business debt? E.g. You always have to borrow money or apply for IOU before the end of the month
  2. Do you find yourself borrowing money from people who earn less income than yourself? E.g. Sub-ordinates or non-working parents
  3. Do you find yourself usually involved in regret expenses? These are expenses you incurred and wished you had delayed for more important expenses
  4. Do you find yourself usually involved in emotional purchases or expenses? Buying things or spending money not because you need to but because of what people will say
  5. Do you find yourself regularly unable to meet expected and predictable bulk expenses such as: Children school fees, Maternity bills, House rents, Major car repairs
  6. Do you find yourself regularly dreaming of jackpot or sudden financial breakthrough and therefore frequently participating in different types of lottery or lucky dips

If your answer to only 2 of the questions above is yes, you have money control problems. If your answer to 3 or more is yes, your money control problem needs urgent and immediate attention. But don’t panic. You only have to be aware of some money control laws and begin to obey them.

Laws of Money Control

Law #1 – Law of Financial Entropy

Your money and financial life will continue to be in a state of disorder unless you apply conscious force or influence to put it in a state of order and sustain it there.

That means, money cannot just accumulate in your bank account without you applying the discipline of savings. It also means that you will never suddenly discover that you have any money left in your hands at the end of the month unless you make conscious effort to keep some, irrespective of how much you earn. You see, the force that tries to take money away from your hands has to be stopped by the force of your will and desire to be prosperous. Financial prosperity or poverty is like a physical building, when completed it looks big and intimidating; but it usually starts with invisible foundations, sand, concretes, blocks, and cements. Just like a building will never be complete by accident, your financial success will not happen by accidents. It will only be established and sustained by the awareness and application relevant financial laws, actions and habits.

Law #2 – Law of Financial Goals

You cannot achieve and sustain a money goal you never set for yourself.

You cannot arrive at a financial bus station you never intended or decided to go to. Nobody wakes up in the morning; take a public transport, and instructs the driver to take him to a popular bus station called “No Where”. But that is what people try to do when they wish to have money without having specific and definite money goal. If you aim at nothing, you will surely and certainly hit nothing. If you do not have a clearly defined and well documented money goal for given period of time, you should be happy not to have any money, because that is what you wanted.

Research results in Achievement Psychology reveals that less than 3% of average population of people have clearly written down goals and 100% of successful leaders anywhere in the world have clearly written down goals that are often carried around with them on a regular basis. Ask yourself these questions: Exactly how much do you want to earn in 2 years, 5 years, and 10 years time? What kinds of information, skills, expertise, experience, do I need to have in order to earn this kind of money? Who are the people currently earning this kind of money legally, and how can I have access to the information, skills, expertise, experience, and strategies they have? Providing written, detailed, and sincere answers to these questions will produce effective money goals and clear road map to your financial destiny.

Law #3 – Law of Potential

The financial value of a habitual expense is not as important as its potential financial consequence.

You can also state this law like this: “the size of a car in not as important as the speed at which it is moving”. Many people habitually spend their money on seemingly small and inconsequential expenses and take for granted that the amount of money involved in such expenses can’t negatively impact their financial prosperity. Well, when you focus on the impact of just one transaction that may be true, but when you factor in the frequency of such expense and the exponential effect of its addictive influence on your long-term financial goals, you may discover it is enormous. Try out this experiment on your expenses and see the kind of impact we are talking about. Take a sheet of paper and list out how much you spend on weekly basis on things like: non-alcoholic drinks, beer, pepper soup, fast foods, entertainment CDs/VCDs, and none business telephone calls etc. Total the amount in Naira and multiply by 52 (weeks in a year) and see how much you have.

For a person who spends as little as $20 on non-business calls, $ 40 on fast food, and $20 on non-alcoholic or alcoholic drinks daily for 5 days a week and 52 weeks of the year the cumulative expense comes to about $20, 880.00. But that is not even the real consequence we are talking about. Imagine that instead of spending that money, you consistently set it aside every year and put that $ 20, 800.00 into a business or investment that yields 15% per annum. In 10 years the money would have become $423,941.65 and in 20 years it would have grown to become $ 1,797,288.74. Talk about potential!. Again, the moral lesson here is not to completely avoid these expenses, but to become aware of careless indulgences and the potential we have to put our hard earned money to productive use.

Law #4 – Parkinson’s Law

Expenses expand to meet the money available

The more you earn, the more you want to spend. The higher your income, the higher the living standard you want to adjust yourself to. Have you ever noticed that when your income increases you often become irritated by the things you used to enjoy? For instance if you used to enjoy viewing you’re your 14″ television screen when your monthly income is just $5000.00. When you take a promotion or new Job that pay $25,000.00 you will suddenly become interested in a flat screen 28″ television, along with high range cable network, and exotic sound accessories. In fact, you will suddenly discover you need to change both the quality of your furniture and the location of your accommodation. You will keep adjusting to your new level of income until you realize that the money is really not enough after all.

The truth is, savings and investment will never happen just because you earn more money. Your financial behavior is determined by your subconscious financial blue print. If the dominant thought pattern in your financial operating system is consumption, all your financial behaviors will be consumption oriented irrespective of how much money you earn. If don’t have savings with an income of $ 1000.00 per month, you will not have savings with an income of $ 50,000.00 per month. Increase in income without a change in financial habits is like trying to have a different picture by enlarging the negative of the same photograph