Adonis Diaries

Posts Tagged ‘currency

So many essential reforms to be done in Lebanon. Where to start?
Hanane Kai posted on FB Yesterday at 7:32pm · 

I can’t wait for the new generation of artists, performers, directors to start producing work that tackle our current problems and challenges in this country.

I understand that civil war is something one cannot just forget (after 33 years), it’s traumatic, it’s loosing your loved ones, and having to kill to save them. It’s living in fear, and it’s being alive today by pure chance.

That said, we’re facing different problems and challenges today. Here’s a list of what I feel we should talk about, instead of war:

The garbage crisis to start with. (Never solved or resolved and becoming a calamity)

The fact that the whole country is becoming a city. Antelias was actually a village not long ago. My village, which is pretty far from Beirut, is now a city (and I still call it my village

How much kids are spoiled these days. How little time parents spend with their children, thanks to the underpaid domestic migrant workers.

Domestic migrant workers, oh… that’s a whole world of problems and challenges. (Suicide, assassinating family members, fleeing to bordellos…)

Political corruption. Homophobia. Patriarchy, where in our most progressive societies, women are still expected to prepare dinner to their husbands although they both have day jobs.

Christians and Muslims still referring to each other as us and them.

Syrian being still looked down upon: we have banners in some villages announcing the illegality of migrant workers to walk on the streets after 7pm.

Public transport. Sexual harassment in public transport.

Unprofessional behaviors. Mediocrity (this one should be on top of the list for me). And mendicant little kids

Homelessness, something we almost didn’t see in Beirut a couple of years back.

Overpopulation. Traffic. Pollution. The lack of urban planing.

The stigma of divorce. The stigma of mental sickness. Backwardness.

The normalization of plastic looking women. The pathetic standard of local series…

There you go. My list of subjects, other than war, that I would like to see addressed in a play, dance performance, movie, exhibition, book.

And that’s not even an exhaustive list.

Other people commented

Lebanese women not being able to travel alone with their children without the father’s permission.

Lebanese women not able to pass on their nationality to their children.

Lebanese women not getting custody for their children after divorce.

Personal status laws for different sects instead of one civil law that gives us all the same rights.

You forgot the new set of taxes that still adopt Stamps (Mireh), high level of indirect taxes, our currency linked to the $ and hampering our economy, the sustained increase of our sovereign debt in order to make banks richer at our expense by transacting T-Bills, tradition of finding someone in the village to pay allegiance to and be servile in our behaviors…
The financial banks in Lebanon want the 2 million Syrian refugees to stay for as long as it is possible: the foreign financial aids keep the currency “stable”.
This linkage to the $ is costing us an arm and a leg and hampering our economy.
Note: All our militia leaders during the civil war are in power and in charge of our “destiny”, and they claim there were no Victors.

Color of your money; (Dec. 25, 2009)

Consider a settled community. Suppose that in the beginning each extended family has its own water source, its lot to grow food, its chicken, a goat or cow for milk. For a time, this extended family is sufficient; it might not occasionally eat its fill but it does not suffer of famine or existential danger. Due to calamities in weather, disease, or family problems then productivity for survival is at risk. The slack periods of labor, during winter season for example, has encouraged the extended family to becoming proficient in specific economic practices.

One group of families opts for artisanal productions (such as clothing, pottery, woodworking, metal tools, stonework…) and it trained a few of the members to that kind of non perishable products. Another group of families goes into raising cattle; a third group goes for agriculture of grain based or fruit products. Question: which group of families has potentially the upper hand economically within the community?  Maybe the cattle raisers can existentially survive better and exchange or barter better their products with other kinds of merchandizes. Most probably, goat, cows, or sheep might become the basic common “currency” for exchanges during community market days, events, marriages, and daily routines. The cattle families grow richer in worth especially that they are producing existential needs.

Calamities strike the community and raising cattle is no longer profitable. Suppose that artisans supplant other extended families in economical exchanges and cloth, tools for productions, or other artworks become the basic currency for bartering. It stands to reason that an artisanal product cannot be counterfeited easily because it requires years of training. Communities aid families in time of distress for a short time but customs require that help be returned, for example in labor work.

Life is not that predictable; after trying dominance of one group of families over other extended families then alliances emerge among families. A chief is selected from the allied families; the chief main worry is to establishing stability and good working relationships in the community. A trading and unifying “currency”, agreeable to the alliance, is accepted by the community. Most probably major warehouses for various products are instituted by the chief and his powerful alliance of families. The chiefs learn to consider a currency that is more effective and easier to handle than actual bartering. Soon, metal coins are manufactured: they are not easily counterfeited because they require skills and much training. By the by, rare metals are considered and monopoly for the rare metals is concentrated in the hand of the chief’s entourage. Gradually, political systems learn that a currency has to enjoy properties such as being small to handle, having intrinsic value, rare, and difficult to counterfeit. Families not designated to manufacture the currencies will have to invest large capitals for acquiring the raw material and the skills. Police force is established to guard the warehouses and to apprehend counterfeiters and then hang them. The effigy of the chief is stamped on the coins.

A new class of families emerges (the bankers) that specifically manufacture the coins and distribute them to “oil” the economy.      Conflicts of economic supremacy among groups of “professionals” are frequent and these conflicts turn political by mechanism of alliance of interests. When the political system changes, then the rules of the game change by exercising “preferential” treatments to the alliance. The victor will inherit the warehouses and a new currency is coined to the advantage of the alliance. Other community chiefs might counterfeit the “enemy’s” currency with lower quantity of gold or silver for profit and for discrediting the enemy chief. In general, pride along with the dissemination of perception that the enemy is expanding economically on territory forces the counterfeiting chief to “recall” the counterfeited currency.

The colonies in the US before independence experienced economic expansions while England was having hard times. Benjamin Franklin, Ambassador to France after the US independence, let out the secret: Economic expansion was related to the colonies enjoying the right to “printing” currency when the economy needed this “oiling” mechanism. England then convinced the U, after its independence, to have the monopoly of issuing money; the Rothschild family endeavored to ruin the US economic expansion by refraining from distributing needed currencies. The dollar received a higher value than being simply an oiling mechanism: the dollar was overvalued and the economy shrank. After the civil war of secession two powers got in conflict: the bullion gold group and the “Green buck” who rightly considered the bullion currency as undemocratic and favoring the northern States who horded most of the gold.

This concept of money as simply lubricating mechanism continued to be adopted by economists since Adam Smith: economists set the money aside as an economic factor of interest and analyzed the economy as a barter exchange of good that was no longer valid.  Money is an entire social fact; it is a language and an institution (a set of rules, regulations guaranteed by political power that should be accepted as legitimate); money reflects the tag of war among classes in times of financial crisis: money has not the same value and meaning for the poor and the rich. The rich classes have the connections and political cloud to efficiently utilize and fructify their worth in money. Money is indeed unequally distributed and has become a cultural capital that divides communities.

What happens when a currency with intrinsic value is substituted with paper money or banknotes? What kind of confidence the community members enjoy to resume exchanging good products with just papers or fiduciary banknotes?  What happens when citizens are forbidden to exchange this fiduciary paper with gold put in reserves to guarantee their worth?

Question: “how this currency is guaranteed to be accepted by the entire community for smooth exchange of merchandizes?” There are three levels of confidence required for times of financial crisis. First with have the “methodical confidence”; a check worth $100 from one national bank should be exchanged with $100 at another national bank; the institution of “independent” National Banks guarantee this kind of confidence when one bank goes bankrupt. The second kind of confidence is “hierarchical confidence”. In times of financial crisis there are hierarchical structures to quick “arbitration mechanisms” among financial institutions based on rules, laws, and regulations. The third kind of confidence is the “ethical confidence”. The political power in charge of supervising money distribution makes decisions that are never neutral economically and socially. If legitimacy of the authority is lacking due to ethnic or religious conflicts with a State, then ethical confidence is perturbed. It is the conformity to a system of values that is the last barrier against monetary crisis. This is what happened in Argentina, especially when Argentina tied its currency to the overvalued US dollar and thus Argentina lost its independence of issuing money relative to the internal trading expansion.

It is inevitable that globalization will institute two kinds of currencies; one currency meant for the little people and “derivatives” for the big players. The traditional monetary system for the little people will adopt an international banknote based on a basket of rare metals, critical industrial raw material metals, and other existential products. This currency would actually function as a redistribution mechanism of accumulated currency reserves from States to other needy States in currency. The little people currency would be transferred as fiscal exchange among federated states.

The “derivative” currency (future, forward, and option) will be established after international institutions guarantee the three kinds of confidence for derivative exchanges and stop being a competition among enemies.

For regaining confidence in Capitalism: What is “Gold-paper currencies”?

For a sustainable growth: Gold-paper currencies? (October 28, 2008)

I have this gut feeling that, if one major superpower does not adopt for a period gold currency, then confidence in paper money or investment gimmicks is not going to fly.

 In these uncertain financial crisis and economical deflation, I suggest a psychological incentive for people to recover some sense of value to their currencies.  My idea is to issue hard currencies that are an alloy containing the quantity of gold commensurate to the large denominations.  This currency would be almost as thin as paper money and could not be forged, unless the amount of gold is the same as the officially issued currencies.

This project should be feasible: Gold can be made as thin as needed, and if we find a cheap metal or plastic that can add resistance and flexibility to the currency to be folded, and handled as paper money then everybody would be satisfied.

At first, the gold paper-like money could be distributed at a rate of say 1% higher over its real value to recover the upfront expenses, in addition to the increase in market value of gold, averaged once a week. These extra expenses would not discourage the use of paper money for those who could not afford the extra cost of gold currencies.

The higher denomination currencies would be larger to keep the same thinness as the other smaller denominations.  As the value of gold would certainly keep increasing, the government would, at interval, retrieve the older currencies from the market and replace them with smaller size currencies containing the market value of the amount of gold in the alloy.  This idea is logical because the gold-paper currencies would require less gold as its value increases.

Travelers could then exchange their State own gold-paper money abroad and register them at any bank for Interpol investigations in case of thefts and get exactly the same money value of the respective States. Obviously, all governments that signed in to this system would have to submit to international control when issuing gold-paper money for credibility and quality reasons.

I believe that with real gold-paper money then the businesses of currency speculations and rate of exchanges should wane and quickly disappear.  What might remain is currency trade or the accumulation of gold in rich sovereign funds.

The governments would quickly learn to issue enough gold-paper currency to satisfy internal commerce. The superpowers and regional powers would exercise political and military “incentives” on weaker and unstable States to issue more gold-paper currency than needed for inner commerce but then they would have to deliver real gold and good value products to retrieve the surpluses.

The US Administrations do not have real value money or real value economy to hoard gold and will not be able to do so for many decades to come; only China, India and the rich oil-producing States with small populations would be the major players in currency trade of gold-paper money.

There are several policies that governments would revisit to manage this new system.  Governments might issues a composite weight of the amount of gold-paper and regular paper money that should satisfy internal commerce.  Either the gold-paper money would concentrate in the hands of the rich and thus reducing commerce to regular money with industries specialized in high quality and luxury products for the rich and industries focusing on lower quality and basic products for the masses; or the little people would not desist from the gold-paper and use them as personal saving account in their homes and thus deflation would hit the economy due to the lack of currency circulation.

Consequently, governments would have choices to either limit the amount of gold-paper in circulation to encourage circulation of money or eliminate regular paper currencies to force the masses into liberating their hoarded gold-paper.

The same pitfalls and recurrences of the present monetary system would be exhibited but the remedies would be more straightforward to comprehend by the common people. Furthermore, an interesting phenomenon will emerge: cultures where mostly little people horde the gold-papers and cultures where gold-papers are concentrated in the class of the rich.  Well, if there is civilization clashes then this division between the two types of cultures would set the foundations for a new sociology science where the manipulation of hard money is the first principle.

This system would require many fine tuning but the advantages must far exceed the disadvantages for smaller and weaker States.  Countries with real value-added economies would not be affected by any mischievous financial embezzlement schemes in destabilizing their financial status because the middle classes would have re-learned the value of hard money and desist from speculative schemes for some times.

This re-learning process of the value of real hard money is the fundamental benefit of the new system so that financial history would repeat its cycle of development for the century.  In any case a genuine International Monetary Control and Management Fund would be instituted to focus on the circulation of money within and among States and help in the synchronization of real commerce.

The crux of this gold-paper currency system is to stabilize growth to a sustainable level for human kind.  Since gold is limited on Earth and its production has reached a limit, wild GNP rate of increases would slow down; redundant and irrelevant consumer products would make room for basic products essentials for the survival of mankind.  The new economical strategies would focus on cutting cost, cutting waste, re-cycling and vigorously researching for substitute renewable energies for the benefit of all States.

 


adonis49

adonis49

adonis49

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