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Bitcoin, Blockchain Technology, and Crypto-Currency

Beyond Money - April 25, 2016 - 10:40

There has been lots of chatter lately about bitcoin, blockchain technology, and crypto-currency. Everyone, including me, is trying to wrap their head around it all. This is what I’ve come up with so far:

  1. Bitcoin is a virtual commodity that is created by running some obscure algorithm. The people who get rewarded are the “miners” who burn up enormous amounts of computer time and electricity to create Bitcoin. That makes it akin to mining gold or silver—not a very useful pursuit, and like any commodity, people will prefer to use it as a savings medium or hedge against inflation rather than circulating it as a currency. Bitcoin is NOT the answer to the money problem.
  2. The important thing about blockchain technology is what it can do, what functions it can perform. You hear a lot about “smart contracts” and a secure trail of transactions. It seems to be something that is needed when using digital forms of contracts and transactions conducted over the internet, but provides no new functions compared to what has always been done with paper trails and records, but maybe I’m missing something.
  3. The term “crypto-currency” is ill defined and there is much confusion about the characteristics of such a currency and what it can achieve.
  4. The fundamental principles of reciprocal exchange still hold. The substance of a currency or payment medium is CREDIT. Claims still need to be authenticated and promises need to be guaranteed.

My grand, audacious vision is this:

TO ENABLE ANYONE, ANYWHERE TO USE WHAT THEY HAVE TO PAY FOR WHAT THEY WANT.

What they might have is skills, abilities, products, services and credit that is advanced by a circle of people who know them and trust that they are ready, willing, and able to deliver value on demand in the near term.

I have argued that the truly disruptive technology of exchange is a global network of small credit-clearing circles that provide “a means of payment that is locally based and controlled yet globally useful. It makes money and banks, as we’ve known them, obsolete.

My talk in Malaysia in October at the International Forum on Inclusive Wealth (http://ifiw.my/) will be on that topic and will build upon the framework that I laid out in my book chapter, https://beyondmoney.net/excerpts/chapter-17-complete-web-based-trading-platform/. –t.h.g.

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Categories: Blogs

Newsletter—Spring 2016

Beyond Money - April 18, 2016 - 10:07

Upcoming Agenda

Europe. I’ve booked my flight to Europe. I’ll be landing in Milan, Italy on 31 May, will remain there for 2 or 3 days, then travel onward to Athens, Volos, and Pelion.

As I mentioned in my January newsletter, I will be conducting a weeklong course in innovative finance, exchange, and economics from 24 June thru 1 July at the Alexandros campus of the Kaliklos Holistic Summer School. This collaborative and problem-centered course titled, Exchange and Finance for the New Economy: Principles and Practice, is intended to stimulate the development and deployment of community currencies, moneyless exchange system, and equitable finance, and is designed especially for social entrepreneurs, enthusiastic agents of change, government officials, and serious students who are ready to co-create a new sustainable and convivial economy from the bottom up. Besides learning and co-creation, courses at Kalikalos also provide participants with opportunities for community building, personal growth, and recreation.

I am excited to be returning again this year to Greece and to be working with course participants to achieve some truly revolutionary outcomes. We’d be pleased to have you join us.

Details about the course, fees, and booking are at http://www.kalikalos.org/exchange-finance. One or two bursaries may be available to qualified low income participants.

Greek participants are being offered (1) a discount of 33% on the full course, or (2) for those who are able to participate only on the weekend of 25/26 June, an invitation to do so on the basis of a free will offering.

Malaysia. I’ve accepted an invitation to speak in October at the International Forum on Inclusive Wealth (http://www.ifiw.my/) in Kuala Lumpur, Malaysia. The subject of my presentation will be a revolutionary plan for the creation of a global exchange network based on locally controlled credit clearing exchanges. This will be an elaboration of ideas I first laid out in a chapter of my 2009 book, The End of Money and the Future of Civilization.

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The Panama Papers: The secrets of dirty money

The rich and powerful have for a very long time used shell companies and secret numbered bank accounts in tax haven countries to not only avoid taxes, but to hide their gains from illegal and immoral activities. Now, thanks to yet another courageous whistleblower, the general public is getting a glimpse into this world of hidden wealth and malfeasance.

The so-called Panama Papers that have recently been disclosed by the media were first delivered by an anonymous whistleblower about a year ago. Since then additional documents have been provided and the trove of data now consists of 11.5 million documents that total 2.6 terabytes of digital files. This leak is said to be a bigger bombshell than even Edward Snowden’s revelations of U.S. government’s spying on citizens and allies.

It will take a long time to sift through all that material but a few startling revelations have recently been made. I have to wonder though, why it has taken so long for any of the contents to be reported in the mainstream media, and why the initial focus has been on Russia, Iceland, and FIFA? Why have we not heard about names of any Americans turning up in these documents? Surely we have more than our share of crooks in the USA, the greatest of all tax havens. MSNBC has something to say about that, which you might want to read. I wonder, might something in these documents have implications for the 2016 Presidential election? Hey, you journalists, let’s get cracking on that.

If you wish to dig deeper into this matter, a good place to start is on the website of Süddeutsche Zeitung, http://panamapapers.sueddeutsche.de/en/.

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Geopolitics—Why was Qaddafi murdered?

The US-NATO attacks on Libya and the overthrow of its government is by now old news, but very few people are aware of the real reasons behind the intervention. Ellen Brown, in a recent article, Exposing the Libyan Agenda: A Closer Look at Hillary’s Email, has done a good job of exposing the real agenda in Libya, and to the rest of the world for that matter. She concludes, “violent intervention was not chiefly about the security of the people. It was about the security of global banking, money and oil.” The fact is that anyone who is perceived to be a threat to the dominance of the global money and banking regime will be ridiculed, discredited, or eliminated.

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Living in Community

As I grow old(er) I’m feeling the need to be a bit more settled than I’ve been in recent years. Although I’m in pretty good health and still independent, my nomadic lifestyle is becoming more difficult. I’m seeking to connect with others of like mind to invent new ways of aging together and supporting each others’ independence and whatever good work we still hope to accomplish. To that end I recently posted an ad on the Fellowship for Intentional Communities website. Here’s what I said:

We are seeking to organize a group of independent seniors (and maybe a younger or two) who are still actively engaged and working in various ways to make a better world. We don’t like, or cannot afford retirement homes. We think a better way is to cooperate and share in a cooperative household where we can have the privacy we need while working together and providing each other with companionship and support.

The community might be located anywhere but our focus right now is on Tucson and southern Arizona which offers a delightful climate, a relatively low cost of living, and all the amenities that one might desire. Large houses in this area can be leased for quite reasonable rents.

If you have any interest, please let me know at thgreco@mindspring.com.

Spring flowers and fragrant blossoms refresh my spirit, I hope they do the same for you,

Thomas


Categories: Blogs

America’s yeoman class revolt

Beyond Money - April 9, 2016 - 10:36

Here is a comment I posted in response to an article, Donald Trump and the Ghost of Christopher Lasch: America’s yeoman class revolts, that appears in The American Conservative. –t.h.g.

Yes, there is a yeoman class revolt, but the characterization of the elite as “liberal” is in error. The elite class spans the socio-political spectrum. They have a hidden agenda which they advance by pandering to the sentiments of both social liberals (mainly by Democratic politicians) and social conservatives (mainly by Republican politicians), but both parties have been moving us inexorably toward a “new world order” that is anti-democratic and neo-feudal which concentrates ever more power and wealth in their own hands.

Their primary instrument of control is the global system of money, banking, and finance which they have constructed over a long period of time without any public debate, and with the help of politicians, academic economists, journalists, and others whom they have invited to the table to share the spoils.

Since the debt crisis of 2008, Americans of all classes and ideologies have finally begun to wake up to the facts that the game is rigged against them and that they have been manipulated and exploited by the Wall Street-Washington nexus. The next American revolution will happen when liberals and conservatives, Republicans and Democrats, Americans of all religions and races, stop being seduced by “hot-button” rhetoric and come to realize what their common interests are and are able to work in harmony toward the common good

Thomas H. Greco, Jr.

 


Categories: Blogs

What do Trump supporters and Sanders supporters have in common?

Beyond Money - April 2, 2016 - 10:33

It has been said that “all TV is entertainment.” Whether a program is labeled “news” or a “candidates’ debate,” that characterization still applies. Well, the current Presidential campaign has sure been entertaining, with Donald Trump’s bombast and Bernie Sanders’ grandfatherly populism, in contrast to Hillary Clinton’s bland appeal to feminism and her (dubious) record of achievement.

Hillary is clearly the favorite of the establishment, the darling of Goldman Sachs and big corporate business, and the standard bearer for the status quo and continuation of Obama’s policies.

On the Republican side, it seems that no establishment candidate has so far been able to derail the Trump march toward the nomination. The last best hope for them at this point seems to be Ted Cruz. While Cruz has been trying to portray himself as being against the big banks, the fact is that his wife, Heidi, is an investment banker and a longtime employee of Goldman Sachs. Furthermore, his 2012 Senate campaign was financed in part by a sizeable loan from Goldman Sachs. For the details on all of this see John Cassidy’s New Yorker article at http://www.newyorker.com/news/john-cassidy/ted-cruzs-goldman-sachs-problem.

Despite the evident philosophical differences between Republicans and Democrats and the outdated characterization of political sentiments as being either right or left, conservative or liberal, the phenomenon of massive popular support for the two apparent anti-establishment candidates, Donald Trump and Bernie Sander, reflects a deeper concern that is shared amongst their supporters.

They are sick and tired of politics as usual and the course this country has been on for the past three decades.

They are sick and tired of:

  • Politicians who promise one thing but deliver another.
  • “Political correctness” that interferes with our ability to debate the deeper issues and concerns.
  • The rich getting richer and ever more powerful while the middle class is being destroyed.
  • Big banks that are “too big to fail” yet refuse to provide adequate financing to small local businesses.
  • Legislation that favors big corporations over small and medium-sized enterprises.
  • Fiscal policies that reduce taxes on corporations and the rich while forcing states and municipal governments to assume ever greater burdens.
  • Trade agreements that cede power from sovereign governments to transnational corporations thus undermining democratic government, the rights of labor, and environmental protections.
  • A disastrous foreign policy of interference in countries around the world that kills thousands of innocent people and stirs up hornet’s nests of resentment that manifest as massive displacements of people and acts of terror against the U.S. and its European NATO allies.

Can either Trump or Sanders, or anyone else for that matter, remedy any of those concerns from the White House? Given the present political structures and dynamics of power based on the control of money, that seems very unlikely. Reversing the destructive anti-democratic trends will take a massive popular movement, one that makes clear to people what their common interests are, and is able to get them to work in harmony toward common goals.

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Categories: Blogs

Resolving the paradox of monetary discourse.

Matslats - March 30, 2016 - 08:51

Students of economics are taught that money has three main functions, a unit of account, a store of value and a medium of exchange. On closer examination we find that these three sit uneasily together. For example, a store of value should increase in value over time, while a medium of exchange works best when the value is decreasing. All the while the unit of account should stay the same value!

In history we find many examples of these function being performed by separate instruments. For example the medieval bankers Ecu de Marc was purely a unit of account. Precious metals, land, shares can all be used to store value, while wampum beads, LETS, self-issued credit, and stamp scrip worked well as systems of exchange. With such a rich history to draw on, it is bizarre that anybody could think one instrument should do it all.

In the discourse around money we see different interests claiming that money is different things.

Gold is money

Money is and always has been, a creature of the state

Money should be a medium of exchange and nothing else

it has become apparent to me after some time was that these contrary positions do not result from different people's impartial analyses reaching different conclusions. Views on money are very tied to our world view.

For rich people, money is the very thing that distinguishes them from paupers. Having money means not having to work because the money works for them 24/7 through its store of value / investment functions. Most of the money they have is never intended to be exchanged for anything.
But for poor people, money is what they use to buy bread. They struggle to exchange work for essentials, usually because the medium of exchange is scarce. The store of value function holds no interest for them because they have no value to store.

It is not that one view of money is 'right'. But that different views serve different interests. I notice these two main monetary discourses map onto class interests.

The monied classes prefer to view money as a commodity because as they desire commodities which can easily be put to work, and money is mobile, liquid and has special protection in law. The working classes are more concerned with money that circulates, because they depend on its good circulation for employment and for the essentials of life.

These rules will manifest themselves in different policies in different contexts. For example in Britain at the moment the Labour leader Jeremy Corbyn advocates People's Quantitive easing, a policy to increase the amount of money in circulation; the Conservative party prefers austerity, which makes money scarce to the point of deflation - deflation of course increases the purchasing power of money.

But in the late 19th Century USA, the same dichotomy can be seen but within a metals paradigm. William Jennings Bryan was leading the charge to monetise silver in addition to gold, thus increasing the depressed money supply in the interests of the farmers. Meanwhile McKinley won the election on the basis of keeping to the gold standard which restricts the amount of money which can be created.

There is absolutely no need for these two class interests to be opposed, at least not monetarily speaking. There is no reason that the quantity of medium of exchange should be identical to the quantity of bank lending.

Categories: Blogs

Transcendence instead of reform: taking a fresh look at money and its function

Beyond Money - March 29, 2016 - 15:03

Here is  my comment on a recent article titled Krugman’s Craziness that appeared in the New York Sun. –t.h.g.

Very few people today, including prize-winning economists, possess a deep knowledge of the fundamental principles of reciprocal exchange, and most of those who do are committed to maintaining the global interest-based, debt-money regime that enables an elite few to control economies and governments worldwide.

In the wake of the 2008 financial meltdown and the ongoing economic crisis, more and more people are waking up to the fact that there is something seriously wrong with our systems of money, banking, and finance, but remain mystified by it and have no idea what to do about it.

Many are calling for reform of the system via the political process, and most reformers want a return to the gold standard and favor a government monopoly over the issuance of money. Clearly, new legislation is needed to reverse the trend toward ever greater centralization of power and concentration of wealth, but such measures have no hope of passing into law so long as the “money power” is able to buy politicians wholesale. Further, since money is a human contrivance that is supposed to facilitate the exchange of value (like goods, services, and various financial claims), people should be free to use whatever payment media they find mutually agreeable. Rather than monopoly of money, either bank-controlled or government-controlled, we need competition in currency. Let us have more freedom, not less.

There are solid precedents that prove the effectiveness of private and community currencies, as well as direct clearing of credits among buyers and sellers, a process that has the potential to make money as we’ve known it obsolete. Private initiative is presently bringing to market new and creative mechanisms of exchange and finance that have the power to bring about economic and financial stability, social harmony and a dignified life for all.

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Categories: Blogs

Curbing the Influence of Big Banks: 3 Reforms proposed by Sanders

Beyond Money - March 26, 2016 - 19:12

Bernie has it right in trying to curb the enormous power of the banking establishment. As I’ve said many times, “Whoever controls the creation of money and the allocation of credit controls everything.” Bernie doesn’t go quite far enough but what he proposes is a good start. A recent article, Curbing the Influence of Big Banks: 3 Reforms proposed by Sanders, by Deena Zaidi outlines the Sanders plan:

  1. Break up the big banks so that no bank is “too big to fail.”
  2. Reinstating the Glass-Steagall Act which for decades prevented “investment banks” from combining with “commercial banks.”
  3. Reducing conflicts of interest at the Fed.

Read the full article here.


Categories: Blogs

The scale of credit

Matslats - March 18, 2016 - 02:00

My understanding of money came initially through LETS and the beautiful, simple mechanism of mutual credit. Working from the principle of balance, mutual credit accounting begins and ends with no debts and no money. Money is just an imaginary intermediary that keeps account between all the members of society, enabling them to 'split the barter', giving and receiving with different people at different times, but always in balance.

It is tempting to view all money in those terms. From a mutual credit perspective, issuance is defined as an account going below zero, spending more than it earns. In the case of a backed currency, the negative balance is offset by a commodity in a vault. In the case of a fiat currency, there is no intention to return to zero. Both variations test the rules and intentions of a system, taking it away from a pure exchange function. In this and other ways, mutual credit gives us a lense to help us understand money systems, especially with social justice in mind.

But in reality the money system is fundamentally not about reciprocation, or just keeping account, and the LETS lense has blinded me to this all this time. I thought that money had been mistakenly commodified and bastardised by interest to become something very far from its true essence as a medium of exchange, but my recent reading has revealed otherwise.

I've got two books to thanks for this new learning, the very accessible Money, The Unauthorised biography, by Felix Martin, and the intense The End of Finance by Massimo Amato and Luca Fantacci

It seems to me now that credit creation takes place on a scale. At one end is the short term, low risk, small quantity and often local credit. At the other end is the long term, higher risk, and higher quantity credit, perhaps needed for international trade. Along the scale are different kinds of contracts and instruments, such as the LETS, the IOU, the overdraft, the mortgage, shares, and bonds. It is the credit at the big end of the scale that has always shaped and moved the economy. These 'harder' credit arrangements carry with them political power, the promises of riches through investment and often interest. The people engaging in these activities are not interested in exchange but in gain. In the days when the Rothschild bank lend money to the king, the object was Rothschild's commercial gain and the king's military triumph, no money creation took place. It was the original Bank of England which doubled up such loans, such that the king's IOU entered circulation for use as money, often never to return. The king nor anybody was the slightest bit concerned about the total quantity of money in circulation. At that time there were many other private bank notes and bills of exchange and other private instruments, not to mention hyper-local currencies for the tradesfolk. At that time, a recession was when all the silver had left the country and the nobles couldn't pay for luxury goods.

Now we don't have all those options, we have what Bernard Lietaer calls a monoculture of legal tender money. The quantity is determined as ever it by the big ticket credit items outstanding. Its not about how much the government borrows because all of our borrowing is legal tender through the banking system. Today's money supply depends not on monetary policy, but on how much banks feel like lending.

Now when there is a shortage money the tradesfolk are starving because they know no alternatives to legal tender. But history shows that they could utilise credit at the small end of the spectrum to create perfectly adequate exchange media which keeps the wheels turning even if it is hard to get rich from.

In the Irish bank crisis the country survived several months without money by circulating cheques many of which were approved by pub landlords. In Argentina's dollar crisis 2002 the economy switched over to a system of barter networks.

So what I've learned confirms (naturally) what I already suspected. Its no use begging the government to issue more money because we need money. Tradesfolk's needs do not factor into the thinking of a government with centuries of debt to manage. But what we absolutely can do, if only we knew how to organise, is create alternatives to legal tender, which is why, as the economy is dragged under the quicksand, perhaps never to resurface, we should pay ever more attention to LETS.

Categories: Blogs

Newsletter – January 2016

Beyond Money - January 25, 2016 - 09:06

My upcoming course, Exchange and Finance for the New Economy: Principles and Practice.

LEARN    *    WORK    *    PLAY

Come to Greece next summer to participate in my week-long course

View from Alexandros

in innovative finance, exchange, and economics, and collaborate with like minded peers to create a new economy that works for everyone, while enjoying a delightful summer holiday on the magical Pelion peninsula.

This course is designed especially for social entrepreneurs, enthusiastic agents of change, local government officials, and serious students who are eager to co-create a new sustainable and convivial economy from the bottom up. In this highly participatory workshop, we will use a combination of presentations, discussion groups (some on the beach), videos, and simulation games, to dive deeply into the process of exploring and developing innovative methods of finance and exchange, like community currencies and credit clearing exchanges.

Our venue is the beautiful, modern and comfortable Hotel Alexandros, a calm and serene retreat center perched on the hillside overlooking the Aegean Sea within walking distance to the pristine Plaka beach and the clear waters of the Mediterranean.

Course fees are extremely affordable but a few fee concessions may be a available for qualified low income participants.

The course runs from June 24 thru July 1. Course description and registration form can be found at http://www.kalikalos.org/exchange-finance. Space is limited so register early.
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The Big Short and other revealing sources

If you have not seen the movie The Big Short, I encourage you to do so. It is based on the book by Michael Lewis, a former Wall Street insider with an unusual talent for telling a good story and making complicated things understandable. In this book and others of his that I’ve read (Boomerang and Flash Boys), Lewis does a superb job of describing Wall Street corruption and providing important insights about our dysfunctional systems of money, banking and finance.

I also recommend the new book, Healing Capitalism, by my friend Prof. Jem Bendell. The printed book is priced for the academic market (pricey) but the digital format is much more reasonable. In the introduction, which you can read for free, Bendell quotes E. C. Riegel: “we need not petition Congress and we need not waste time to denounce bankers, for they can neither help nor hinder our natural right to extend credit to each other, and this is the perfect basis for a money system.” You can download the Introduction here, and links to free downloads of Riegel’s works can be found at http://reinventingmoney.com/library/.
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In Memoriam

On a personal note, it is in sadness that I report the passing of my dear sister, my only sibling, Mary Lillian (we always called her Marylil) on the second day of the new year. Marylil was a genuinely nice person who was loved by everyone who knew her. Her absence is deeply felt.

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Categories: Blogs

Challenging the Business Barter industry

Matslats - January 16, 2016 - 16:16

About four years ago I realised that my work with local exchange systems could be much more impactful if I concentrated on commercial business barter rather than on LETS and time banks.

I joined the LinkedIn group, Think Barter and voiced some ideas about reducing costs and increasing interoperability with open source software. The response was disappointing to say the least. I heard a lot of parroted and wrong prejudices against open source and was treated mostly with indifference. hanging around for so long with people who want to change the world for the better, I wasn't expecting to face such retarded and defensive views. So I continued working where there was almost no competition because there was no money, and where making a difference wouldn't involve competing for money with people who value little else.

I'm still deeply entrenched on that path, spending about half of my working life simply maintaining a body of software that allows any group of people to keep accounts amongst themselves. I don't have time or the range of skills to 'bring a product to market', nor do I have a business model nor investors. But the lost potential in that sector is agonising me.

You see, the whole industry seems to be shaped by the software providers, and for the software providers. A money system is a network, and thus is most efficient when it is entire i.e. a monopoly. The software providers all dream of being that monopoly. Each company has created a walled garden and seeks to entrap its member exchanges - and their members - within it, so as to feed off the fees generated. If the industry was run in the interests of paying members those systems would be interoperable, but no, paying members are income generating assets more than customers.

The industry has long been plagued by high failure rates. Barter systems, as well as some LETS and time banks, sometimes 'freeze up'. The loss of liquidity has a very obvious cause to people who understand the first thing about exchange accounting. If everyone understands that taking and giving are in equilibrium, but some accounts (i.e. the management) are taking very much more than they are giving, then the rest of the members are all giving more than they are taking, and when they realise this, they drop out, often puzzled. Meanwhile the law usually fails to acknowledge or understand that a theft has taken place, albeit obfuscated by the multilateral nature of the exchange.

The most expensive network Bartercard which has a disappointing track record of national franchises failing and rebooting. However by raising investment capital from the stock market, it has now become the largest in the industry. Aint it always so! Disruption of this industry is needed now more than ever. Barter is one the tools we need to get through the next decade when the scarcity of dollars and Euros will inhibit trade and cause widespread poverty. Corporate leviathans like Bartercard will become the new banks, mediating all transactions, blocking for political reasons, reporting everything to government, and raking in a share of everything.

As far as I am aware, not a single barter network has introduced blockchain accounting. This is because most of them do not want interoperability, and many do not want transparency. Similarly to banks who own the fiat money payments infrastructure, they fear a technology which brings the real cost of transactions to zero. Interoperability and zero operating costs are disasters waiting to happen, and the barter industry has neither the wit nor the legal clout to fend off blockchains as the bank/state did with Bitcoin.

What makes a trade exchange thrive is the quality of the brokering. More than trades being initiated between members, exchange owners usually spend most of their time phoning and visiting members to make trades happen. In a more open network with a fair commission system, anyone with talent and connections could derive income from brokering; and those who brokered their own trades would save on fees.

I'm working on a white paper proposing the 'credit commons', a protocol that would support this kind of activity and replace the whole rotten industry with a voluntary market free of government and currency manipulation. The credit commons would be peer-to-peer infrastructure which would not yield a return itself, but would allow members to avoid global deflationary recession by clumping into nested trading networks that help each other with liquidity. Its no larger project than any silicon valley startup, but there's no rewards for venture capitalists.

So how can we get this built?

Categories: Blogs

Fwd: [New post] Bitcoin: The Political ?Virtual? Of An Intangibl

New post on IJCCR [http://0.gravatar.com/blavatar/e876bc9b5f8c89d41a78d1172407014f?s=32&ts=1366371469]
Categories: Blogs

December 31, 1969 - 17:00
Categories: Blogs, Economics