D.卡尔顿 罗西
D. Carlton Rossi

Currencies


      Gold Banknotes  and International Reserve 

                                   
Currenci¥$                             





                                


The wine industry in the Xushui region has a long history. It began 5000 years about the time of Xūnyù. However, today, the region is plagued by counterfeit products.

Sun Dawu speaks of one of those companies that sold fake wine. The fake wine was produced by a company that no longer exits.  It was not able to develop its brand. Its customers lost trust in it. It had no currency so to speak.

The wine cost 18 yuan a bottle. It was luxuriously packaged. Almost unbelievably, the packaging and bottle cost 15 yuan a bottle. That left two to three yuan in profits; whereas, the actual cost of the wine was only .05 yuan.

On one occasion, the author remembers a Fujian peasant who brought out his best wine to offer as a toast to D. Carlton Rossi  It too was elaborately packaged and pored from an expensive bottle. It was supposed to be from a famous wine growing region of France. While the author was no connoisseur of wine he did recognize that he was offered red vinegar instead of wine. The author was also able to read the English label on the bottle. It said “piss on peon”. He regretted having to tell the truth to his friend. One doesn’t lie to one’s friend nor withhold the truth.

Sun Dawu began the liquor company of Dawu Group in 2009.  It is managed by his son. It was not established for profit. Rather, it was set-up to ensure that his workers and the local population would not be plagued by adulterated alcohol.

The roasting time of competitive brands of liquor vary. A poor quality liquor can be made in as little as 3 to 7 days. A medium quality liquor can last 40 to 60 days while a high quality liquor takes 80 to 90 days. These liquors vary in price, but are generally expensive. They are sold through expensive and extensive TV advertising.

In contrast, Sun Dawu took a different approach. He concluded that things can not deviate from their original purpose. He proposed that the liquor company use a slow flavor brewing method to produce a low price product of good quality in a mid-range package. The liquor ages two to three years depending on the brand. Basically, they are sold through word of mouth. They are then offered through the Group’s hotel, restaurant and spa.



                  

                               Copper Coin of the Tang Dynasty

The coin of the Tang Dynasty (618-907 A.D.) was made of gold, silver, copper and lead. It was called the Kai Yuan Tong Bao or Kai Tong Yuan Bao. The coin lasted throughout the Tang Dynasty without discontinuity when China was the commercial center of Asia through the Silk Road. Businessmen could cash them in at any time for a paper receipt in more than 40 offices throughout the kingdom. The dynasty reached its zenith during the reign of Emperor Xuanzong. During this period of 44 years the inflation rate was low.

The calligraphy of the Kai yuan was written by Ouyang Xun. He was the lead calligrapher of his age. Therefore, his style was praised by poets. Two of the most famous Chinese poets were Li Bai and Du Fu. The poem of D. Carlton Rossi called was inspired by the form of Du Fu’s poems; although, it was modified in a unique way.  

However, paper currency at the time of the Mongolian Empire undid it. Marco Polo writes how Chinese alchemists produced paper money with as much form and ceremony as if it were actually of pure gold and silver. Large quantities were printed. The system lasted only 100 years. In other words, barbarians introduced a counterfeit currency which bankrupted the dynasty. 

Today, China’s central bank is in a very different situation. It holds a large reserve of gold which might be used to establish the remnimbi as an international reserve currency. It is obvious that China did not purchase this vast store of gold so that it wouldn’t earn interest. One wonders how they will react with Japan’s introduction of an unconventional monetary program called “negative interest rates” after the failure of the Bank of Japan’s unconventional quantitative easing.

If China should back its currency with gold or for that matter include it within its trade-weighted basket of currencies then what might its implication be for countries which do not have a gold reserve and yet are part of the basket? Fortunately, the number of these countries is minuscule. The most negative consequences might be experienced by any of these countries which do not have a gold reserve and yet introduces negative interest rates. The result might be a flight to safety of gold. It is not gold that is a barbaric relic, but rather the neo-barbarism of fiat and virtual currency coupled with negative interest rates.







                               

July 19, 2011

Gold Banknote  ©

It seems to me that a coinage currency composed of gold or silver is a natural and real one. Both are metals found in nature. They are real in terms of their weight, lustre and ring. They are also rather rare or scarce metals.  However, there are two main disadvantages. They can be debased. They are also not so suitable for large trading economies that depend on growth.

Several countries have polymer biaxially-oriented polypropylene banknotes. hey are far from natural. They are not real in terms of weight, lustre and ring. Polymer is neither rare nor scarce.  The main problem faced by banknotes is a kind of replication called counterfeiting. Polymer banknotes though (and earlier paper versions) have promoted the growth of international trade.

A polymer banknote with a face value of $100 is inexpensive to produce. The cost is roughly nineteen cents. The cost to produce a paper-linen banknote is even less. From a cost point of view there is virtually no limitation as to the number that can be printed. Governments print many—far too many. However, virtual currency shows absolutely no restrictions.   

We are wowed and awed by the new holographic security features on polymer banknotes. However, there is a metal that has a characteristic that is unique and not easily emulated. The metal is gold and the characteristic is ductility. Gold is ductile. It can be formed thinner than a hair. It may be possible and desirable to embed a thin, gold strip into the middle of the bill. This would be almost impossible to imitate or counterfeit. However, the issue of counterfeiting pales into insignificance compared to governments that legally issue too many banknotes and virtual currency.    

The way to restrict the printing and restore confindence in money is to require banknotes to have a gold content. The weight of the gold would be a fraction of a gram. Perhaps it would be only one-sixteenth of a gram. However, it is gold and gold is expensive. The cost of this gold limits the number of banknotes that can be printed. It also reintroduces a natural element into what has become an unnatural and unlimited abstractedness. Lower face value banknotes could incorporate a silver metal element. These are banknotes you can trust. These are notes you can bank on. They can foster international trade and trust without a currency war.



September 23, 2011




Gold Banknote ©  and International Reserve 

Currenci¥$©
 

Gold Banknote © immediately reinforces trust in a currency.  It has a strip of gold on it which inspires confidence in the currency. Many civilizations have recognized the value of gold as a standard of value. Many countries, empires and civilizations have trusted  gold throughout the ages. It is therefore natural for an international reserve currency to be based on a Gold Banknote ©.  

Let us say hypothetically that Country A (United States) has a large proportion of gold in its foreign reserves. That gold is sitting in a vault in deep reserves. It is unseen. It serves little purpose. It is valued in a nominal way.  In a sense, it has returned to the bowels of the earth from which it came. 

Let us say hypothetically that Country B (China) may have a relatively small amount of gold in its reserves in proportion to foreign currencies. However, it produces many tonnes of gold every year to meet domestic demand. It is the largest producer of gold in the world.

It would seem that both countries might have an interest in adopting a Gold Banknote © in terms of an international reserve currency. The former might hypothetically want to maintain its currency as an international reserve currency for a longer period of time. The latter might hypothetically wish to establish its currency as an international reserve currency in a shorter period of time. 




August 11, 2011

                     Gold Banknote© 

In an earlier column I introduced the concept of a Gold Banknote© .  It would have been easier for a country like Canada to have introduced a Gold Banknote©  when it had a relatively modest reserve of gold. That reserve was sold. 

One can say now that Canada’s gold reserves are not so much in the bank but rather in the ground. The ground reserves can supply sufficient gold for a new Gold Banknote© . Of course, the gold will have to be purchased at the current spot price rather than that supplied from the bank reserve which valued it at $35 per troy ounce in the past. This is a pity.

In terms of the United States, it is easier to establish a Gold Banknote©. The United States has 147.2 million troy ounces of gold in its reserves. Neither the Treasury nor the Federal Reserve Board regard it as money. However, the price of gold is fixed at $42.22 a troy ounce. This is significantly below the spot price of gold which varies by the second. Today, spot gold trades at $1776 per troy ounce.  

If gold is valued by the FRB at $42.22 per ounce then a gram of gold is worth $1.35. A sixteenth of a gram is worth .0848 and a thirty-second of a gram would be proportionately less. It seems that it is quite affordable if added to a linen or polymer banknote in terms of cost. 

The public cannot see stored gold. The public believes what it sees. A gold strip on a banknote can be seen and believed. 

The IMF holds considerable reserves of gold, too.  It is valued at $47 per troy ounce. The gold is gradually being sold off to help poor countries. Of course, this gold reserve could be used to back or issue a new SDR banknote. However, in keeping with the mandate of helping the poor it would be better to loan gold to poor countries at zero interest so that they can use it on their own banknotes.  It is also necessary that the IMF insists on an agreement among nations about the percentage of a gram of gold that will be used on their own GoldBanknote©  so that there is a uniform standard set.

One of the main impediments to revaluing the gold reserves of the IMF were objections from Canada. The government objected to sales of IMF gold because it would depress the gold price. The Canadian government was concerned about the health of the gold mining industry in Canada. The interests of a few were put ahead of the interests of many. Today, it seems that is true, too.



                       

September 23, 2011



      Gold Banknotes  and International Reserve

                                  
Currenci¥$
 

Gold Banknote© immediately reinforces trust in a currency.  It has a strip of gold on it which inspires confidence in the currency.  Many civilizations have recognized the value of gold as a standard of value. Many currencies have trusted gold throughout the ages. It is therefore natural for an international reserve currency to be based on a Gold Banknote© 

Let us say hypothetically that Country A (United States) has a large proportion of gold in its foreign reserves. That gold is sitting in a vault in deep reserve. It is unseen. It serves little purpose. It is valued in a nominal way.  In a sense, it has returned to the bowels of the earth from which it came. 

Let us say hypothetically that Country B (China) may have a relatively small amount of gold in its reserves in proportion to foreign currencies. However, it produces many tonnes of gold every year to meet domestic demand. It is the largest producer of gold in the world.

It would seem that both countries might have an interest in adopting a Gold Banknote © in terms of an international reserve currency. The former might hypothetically want to maintain its currency as an international reserve currency for a longer period of time. The latter might hypothetically wish to establish its currency as an international reserve currency in a shorter period of time.

D. Carlton Rossi

 


Gold Banknotes©  and International Reserve

Currenci¥$©



August 31, 2011


                    The Real and the Unreal

There is a negative trend in Canadian currency that is taking place at a rapid pace.  The trend is to depict the unreal rather than the real. Real is defined by that which does not imitate or copy while unreal is that which is imagined or supposed.  This short report will deal with the unreality of the Canadian $20 paper cotton banknote.

The $20 paper cotton banknote has several features to prevent counterfeiting that are unreal. These unreal features are being added to make it difficult for counterfeiters to copy the entire banknote. However, in order to prevent counterfeiting the features utilized seem to be illusory and unreal distortions of reality.

This $20 banknote has a recognizable portrait of Queen Elizabeth II.  It is somewhat life-like; although in green colour. However, there is also an unreal watermark in the off-centre of the bill. It sort of resembles its life-like version but it is much smaller. It appears ghost-like and to float.  It is a ghost supposedly seen in the light and not in the dark—very strange. Any ghost though is unreal. Just because there is a name for it doesn’t make it real.
Another feature which appears unreal is what is called a broken number 20. Under ordinary light though it appears as mere squiggles that have no resemblance to a number. It magically resolves itself into a 20 when backlit. However, magic is an illusion and not real. When the note is turned around it really doesn’t resemble a 20 at all.

On the back and when backlit it may not appear to be a number 20 to someone for three reasons. First, the zero is horizontal and above a horizontal two. Not only that but the first number or 2 is at the bottom rather than at the top.  Second, the bill has to be turned clockwise to view the ghost-like number which is composed of both red and green colours. The colours are unreal because most numbers we see are black or if not black then are consistent throughout. These numbers have alternate colours which give the appearance of non-numbers.  Finally, when viewed from the back it appears most often as a 50 rather than as a 20. Are we to believe that what is real is on the front but not on the back?  Is it a fifty dollar bill or a twenty dollar bill?

On the front of the banknote in the lower right hand corner is a large green number 20.  When viewed in the awkward circumstance of being backlit and from the back it resembles a strange image that begins with a 0 but ends with what appears not to be a number. One is led to imagine though that it is a backward number two.  However, if one is encouraged to use one’s unreal imagination then one can see a number 50.  Is it a fifty dollar bill or a twenty dollar bill?

Be aware that there actually is a fifty dollar bill. It, too, has the same problem but in reverse. In some ways the 50 resembles a 20.  However, the way the 5 is drawn makes it less likely to confuse with a 2.
Another security feature that appears of unreal nature is the metallic strip on the front.  It’s a holograph which seems to have images of the number 20 and maple leaves along its length. However, a holograph does not offer any information about the displayed object.  It may be termed therefore as unreal.

The holograph appears to be made of silver and perceived to be of value.  However, there is no silver in this metal.  It is aluminum and PET.  The imitation silver may be construed as unreal.

On the back of the bill is a security thread. It is the counterpart to the holograph on the opposite side of the bill. It is partially seen. It is evident though that when backlit it is partially hidden. Under certain circumstances the line is perceived to be complete and under other circumstances the line appears broken.  Is a line there or is it not there? This is not a question one is normally confronted with when one sees something in everyday life; so there is an unreality to it.

There is an unreality to the perceived colour of the thread. In one light it appears green which is traditionally associated with paper banknotes, but in another light it appears gold. This switching back and forth confuses and tricks the eye contributing to a sense of unreality. It would seem that the general public would have difficulty in distinguishing the unchange reference colour and the colour shifting area.

Finally, there are two questions about the colored thread that shoud be addressed. Why sell almost all the gold reserves and yet give the appearance of gold on the security thread?  Is this intended to increase the security of the currency which was once backed by the security of real gold?

The thread’s counterpart which is the hologram appears to be silver. It is not. The thread itself appears to be gold. It is not. The thread is made of silica blocks vaporized and deposited on a metallic alloy.  Both silver and gold look-alikes are copies of the real metals which have value.  Both are copies of real metals that have been regarded as currencies for thousands of years.

On this particular banknote that is viewed there is a bank stamp.  It appears to be a hand stamp rather than an ATM stamp because it is slightly off-kilter. Normally, this should mean the withdrawal of the banknote because it has been intentionally defaced.  The portrait of Queen Elizabeth II is defaced, too.
On the hand stamp there is a bank transfer number. Through this number the exact location of the branc can be determined. Other data can be gleaned from this information of a highly sensitive nature that cannot be disclosed here for various privacy and security reasons.The presence of this bank stamp on the banknote contributes to a sense of unreality and opens up many questions as to why it is there.

 

August 29, 2011

 

 
                     The Natural and the Unnatural

                                  

There is a negative trend in our Canadian coinage from the natural to the unnatural. Natural is defined as that which is pure, unadulterated and in harmonious relation to Nature. In 1920, the fineness of “silver” coins was changed from .925 fine silver to .800 fine silver.

This lower level of fineness continued in our Silver Dollar which was first issued in 1935. While it had the name “Silver Dollar it was not fully the same as silver because the dollar had a sliver less of silver. In this sense, it was unnatural because it was composed of only 80% silver and the rest was copper. In other words, it was called something of a higher value, but it was something different of lesser value.

The Voyageur series ran for years. It was called Voyageur because the reverse side had a design of a voyageur and aboriginal paddling a canoe.  Why wasn’t it called an Aboriginal?  He is at the front of the canoe and he had been here in Kanata for time immemorial. ("Kanata" is the Huron name for village that became  name "Canada") The Aboriginal is the original who lived in harmony with Nature.  The Voyageur exploited Nature for profit motive. He nearly brought the beaver to extinction. Today, the silver-copper Voyageur is relegated to the category of “junk silver” because it is not pure silver. Its sale is taxed unlike pure silver.

Canada celebrated its Confederation in 1967. The Mint waited until the following year and then changed the Silver Dollar. The Silver Dollar became the Nickel Dollar because it was composed of 100% nickel. This was an outright debasement of the currency. It was still commonly referred to as a Silver Dollar and not a Nickel Dollar. There seems to be some misplaced currency in a mere name.

The new dollar coin whose design was chosen in 1986 was also to have a voyageur theme. It was to give the impression of maintaining tradition while completely changing it. There was one problem. The master dies were “lost” by the courier service on their way to the Canadian mint. The notorious Chicago thief, Marcus Looney, was ruled out because he had died.  Rocky and Mugsy who had heisted 14 carats worth of gold in the Looney Tune's cartoon "Bugsy and Mugsy" were crossed off the list, too.

The Voyageur theme was replaced by the Loon theme.  The year 1986 was also notable in that the Bank of Canada began selling its gold reserves or rather turning them into unnatural debased paper currencies.   

The Loonie gave the appearance that it was more through its gold-like lustre, but it was actually less through its composition.  It was a debased nickel Voyageur coin.  It was 91.5% nickel and 8.5% bronze plated. It was an alloy the Mint called “aureate” to signify that it was of a golden colour derived from the Latin word “aur”. However, in general English, the word “aureate” refers to excessively ornamented speech. In other words, it looked like something of more value, but was something different of lesser value.

The slang term “Loonie” was coined by the general public.  It refers to a bird called a loon that has a strange call, wail and yodel.  A loonie in everyday English refers to someone who has lost his sense or might it be a dollar that has lost its cents?

In short, the Government of Canada sold its gold reserve for foreign paper currencies.  It created a nickel coin with a bronze (tin, copper) coat or what the mint called an aureate alloy that resembled the colour of gold.  The coin was nickelnamed the “Loonie” by the public who were not fooled by reverse alchemy.

There is a negative trend in our Canadian coinage from the natural to the unnatural. Natural is defined as that which is pure, unadulterated and in harmonious relation to Nature. In 1920, the fineness of “silver” coins was changed from .925 fine silver to .800 fine silver.

This lower level of fineness continued in our Silver Dollar which was first issued in 1935. While it had the name “Silver Dollar it was not fully the same as silver because the dollar had a sliver less of silver. In this sense, it was unnatural because it was composed of only 80% silver and the rest was copper. In other words, it was called something of a higher value, but it was something different of lesser value.

The Voyageur series ran for years. It was called Voyageur because the reverse side had a design of a voyageur and aboriginal paddling a canoe.  Why wasn’t it called an Aboriginal?  He is at the front of the canoe and he had been here in Kanata for time immemorial. ("Kanata" is the Huron name for village that became  name "Canada") The Aboriginal is the original who lived in harmony with Nature.  The Voyageur exploited Nature for profit motive. He nearly brought the beaver to extinction. Today, the silver-copper Voyageur is relegated to the category of “junk silver” because it is not pure silver. Its sale is taxed unlike pure silver.

Canada celebrated its Confederation in 1967. The Mint waited until the following year and then changed the Silver Dollar. The Silver Dollar became the Nickel Dollar because it was composed of 100% nickel. This was an outright debasement of the currency. It was still commonly referred to as a Silver Dollar and not a Nickel Dollar. There seems to be some misplaced currency in a mere name. 

The new dollar coin whose design was chosen in 1986 was also to have a voyageur theme. It was to give the impression of maintaining tradition while completely changing it. There was one problem. The master dies were “lost” by the courier service on their way to the Canadian mint. The notorious Chicago thief, Marcus Looney, was ruled out because he had died.  Rocky and Mugsy who had heisted 14 carats worth of gold in the Looney Tune's cartoon "Bugsy and Mugsy" were crossed off the list, too.

The Voyageur theme was replaced by the Loon theme.  The year 1986 was also notable in that the Bank of Canada began selling its gold reserves or rather turning them into unnatural debased paper currencies.   

The Loonie gave the appearance that it was more through its gold-like lustre, but it was actually less through its composition.  It was a debased nickel Voyageur coin.  It was 91.5% nickel and 8.5% bronze plated. It was an alloy the Mint called “aureate” to signify that it was of a golden colour derived from the Latin word “aur”. However, in general English, the word “aureate” refers to excessively ornamented speech. In other words, it looked like something of more value, but was something different of lesser value.

The slang term “Loonie” was coined by the general public.  It refers to a bird called a loon that has a strange call, wail and yodel.  A loonie in everyday English refers to someone who has lost his sense or might it be a dollar that has lost its cents?

In short, the Government of Canada sold its gold reserve for foreign paper currencies.  It created a nickel coin with a bronze (tin, copper) coat or what the mint called an aureate alloy that resembled the colour of gold.  The coin was nickelnamed the “Loonie” by the public who were not fooled by reverse alchemy.   

 

D. Carlton Rossi



August 25, 2011

                                                           

                       1862 $10 Legal Tender Banknote

Historically, the banknotes of the United States were green.  They had greenbacks during the Civil War and they were called “Greenbacks”.  It may be supposed that they were also green because they represented a promise of the future credit of the United States which depended on a favourable outcome of the Civil War.  It was though a war which went on longer than expected.  Don’t most wars go on longer than expected? Don’t most civil wars go on longer than expected?

It is well known that counterfeiting was a serious problem in 1860.  It is estimated that one-third of the banknotes were counterfeit. When the Union decided to print banknotes to fund its war efforts it had to confront the problem of counterfeiting.   The Secretary of the Treasury, Salmon P. Chase, contracted the American Bank Note Co. to produce a coloured ink that would not erase.  A green color was chosen.

The color green was chosen for another reason.  The technology of photography at the time of the Civil War could not produce color.  Therefore, the back of the banknote was green rather than black to prevent counterfeiting. 

It is not entirely certain though why a green color was chosen over a number of other colors.  It was known that when a green banknote was photographed it became a gray colour.  The question that should be asked therefore is not why the back of a banknote was green but rather what is significant about the color of a gray photograph of a banknote.

A gray photograph has a similar color to the uniform of the Confederate soldier. It may be surmised that unauthorized banknotes in the North were easily recognized because the color was similar to the gray uniform of the enemy and the “Grayback” currency of the Confederacy. In this way, the word “counterfeit” and “confederate” may have been linked in a subtle way.

The North was industrialized. It had the engraving and printing technology. Counterfeit confederate banknotes were printed there to undermine the economy of the South. It resulted in price inflation in the South.

The open question may be as follows. Were backs of Union banknotes green so that they could be deliberately counterfeited through photography in the North to be distributed in the South? Confederates might more readily accept a counterfeit Union note whose back was gray.

 

D. Carlton Rossi




August 19, 2011          

           Gold Banknote  currenci¥$©


There are two extremes.  On one side, there is too much fiat currency. On the other side, there is not enough gold. 

It is difficult to return to a gold standard.  It’s true that gold lasts, but it is equally true that it is scarce. It’s hard to find: it’s expensive to mine. The opposite of a gold standard currency is a fiat currency.

A fiat currency doesn’t last in the sense that new anti-counterfeit steps must be regularly devised and applied. It doesn’t last in the sense that it wears out.  It’s supply is also almost limitless. It’s inexpensive to produce, too.

Gold is most suitable for an old-style barter economy.  This type of economy limits trade in terms of scope and dimension. It favours barter for goods as opposed for services. Fiat currencies can replace a gold currency.  They can foster international trade in both goods and services.  However, their scope and dimension are almost unlimited. For example, a country can borrow money now and then print money later to pay for it.

Of course, a country can back a currency with a reserve of gold. However, what large-sized country has a large enough reserve to back its own currency at the current price of gold? What large-sized country has a large enough gold reserve to back an international reserve currency at the current price of gold? What block of countries has a large enough collective reserve to back a common currency at the current price of gold?

The unscrupulous counter that currencies should be entirely abstract ideas.  Generally speaking, we are moving relentlessly in this direction with our credit cards, our debit cards and our automatic deposits. This means that we have no need to hear, see or touch what is of value.  We don’t need to hear the ring of a gold coin.  We don’t need to see a reserve of gold buried in a vault.  We don't need to feel the quality of a linen banknote.  We don’t need to be human.  

The unscrupulous want to replace everything material with their immaterial ideas, however unsound they might be.  They want to manipulate you.  They don't want to shake your hand, but rather they want to shake you down. They want to control without hands or in a hands-off way.  They want to control in an unseen unseemly willy-nilly way.

The solution is neither to move backward to gold as a currency nor is it to return to a currency backed by gold.   The solution is not to move totally toward a virtual currency that has no materiality, but has the potential of total controllability and manipulability. The solution is a Gold Banknote©.  I have not patented this idea. It is not a money maker for me.  It is your idea now. It belongs to your world.  It can become your banknote in your future. 

D. Carlton Rossi

 



August 11, 2011

                          Gold Banknote©

In an earlier column I introduced the concept of a Gold Banknote© .  It would have been easier for a country like Canada to have introduced a Gold  Banknote© when it had a relatively modest reserve of gold. That reserve was sold. 

One can say that Canada’s gold reserves are not so much in the bank but rather in the ground. The ground reserves can supply sufficient gold for a new Gold Banknote© . Of course, the gold will have to be purchased at the current spot price rather than that supplied from the bank reserve which valued it at $35 per troy ounce in the past. This is a pity.

In terms of the United States, it is easier to establish a Gold Banknote©. The United States has 147.2 million troy ounces of gold in its reserves. Neither the Treasury nor the Federal Reserve Board regard it as money. However, the price of gold is fixed at $42.22 a troy ounce. This is significantly below the spot price of gold which varies by the second. Today, spot gold trades at $1776 per troy ounce.  

If gold is valued by the FRB at $42.22 per ounce then a gram of gold is worth $1.35.  A sixteenth of a gram is worth .0848 and a thirty-second of a gram would be proportionately less.  It seems that it is quite affordable if added to a linen or polymer banknote in terms of cost. 

The public cannot see stored gold.  The public believes what it sees.  A gold strip on a banknote can be seen and believed. Stainless trust doesn't rust.

The IMF holds considerable reserves of gold, too.  It is valued at $47 per troy ounce. The gold is gradually being sold off to help poor countries. Of course, this gold reserve could be used to back or issue a new SDR banknote.  However, in keeping with the mandate of helping the poor it would be better to loan gold to poor countries at zero interest so that they can use it on their own banknotes.  It is also necessary that the IMF insists on an agreement among nations about the percentage of a gram of gold that will be used on their own Gold Banknote©  so that there is a uniform standard set.

One of the main impediments to revaluing the gold reserves of the IMF were objections from Canada. The government objected to sales of IMF gold because it would depress the gold price. The Canadian government was concerned about the health of the gold mining industry in Canada. The interests of a few were put ahead of the interests of many. Today, it seems that this is true, too.


D. Carlton Rossi





 

July 19, 2011

                       Gold Banknote© 

It seems to me that a coinage currency composed of gold or silver is a natural and real one.  Both are metals found in nature.  They are real in terms of their weight, lustre and ring.  They are also rather rare or scarce metals.  However, there are two main disadvantages.  They can be debased.  They are also not so suitable for large trading economies that depend on growth. 

Several countries have polymer biaxially-oriented polypropylene banknotes.  They are far from natural.  They are not real in terms of weight, lustre and ring.  Polymer is neither rare nor scarce.  The main problem faced by banknotes is a kind of replication called counterfeiting. Polymer banknotes though (and earlier paper versions) have promoted the growth of international trade. 

A polymer banknote with a face value of $100 is inexpensive to produce.  The cost is roughly nineteen cents.  The cost to produce a paper-linen banknote is even less. For the U.S. $100 banknote issued on February 10, 2011 the cost was 11.8 cents. From a cost point of view there is virtually no limitation as to the number that can be printed.  Governments print many—far too many paper currenci€¥$©. 

We are wowed and awed by the new holographic security features on polymer banknotes.  However, there is a metal that has a characteristic that is unique and not easily emulated. The metal is gold and the characteristic is ductility. Gold is ductile. It can be formed thinner than a hair.  It may be possible to embed a thin, gold strip into the middle of the bill. This would be almost impossible to imitate or counterfeit. However, the issue of counterfeiting pales into insignificance compared to governments that legally issue too many banknotes. Those governments have both demonized and demonetized what they call the barbaric relic.

The way to restrict the printing is to require banknotes to have a gold content. The weight of the gold would be a fraction of a gram.  Perhaps it would be only one-sixteenth of a gram. However, it is gold and gold is expensive.  The cost of this gold limits the number of banknotes that can be printed. Of course, the gold content adds value or a premium over the face value of the bill. It also reintroduces a natural element into what has become an unnatural and unlimited abstractedness. Lower face value banknotes would use proportionately less metal element of gold. These are banknotes you can trust. These are notes you can bank on.

 

D. Carlton Rossi

 


July 14, 2011

                             

On the 140th Anniversary of Macleod's View
of Gresham's Law


However, I would like to draw your attention to a paper called Uses and Abuses of Gresham's Law in the History of Money published in 1998 by Professor Robert Mundell. It so happens that I had the honour of attending a lecture roughly fifteen years ago given to a doctorate class at the Chinese Academy of Social Sciences by this Canadian born Nobel Economist.  Just as a point of interest I asked him whether the large expansion of the money supply would lead to inflation in China.

In a prior commentary, Gresham's Law was discussed in terms of the nineteeth century novel call Doctor Thore by Anthony Trollope. Doctor Thorne was published in 1858. It was the third novel in Trollope's series known as the Chronicles of Barsetshire. The novelist draws on Gresham's law both in the economic and moral sense. It is no coincidence that Gresham's law is the theme of the novel. In 1858, the British economist Henry Dunning Macleod published a paper on it; thus, reviving interest in this theory of money. It says basically that bad money drives good money out of circulation.

However, I would like to draw your attention to a paper called Uses and Abuses of Gresham's Law in the History of Money published in 1998 by Professor Robert Mundell.  It so happens that I had the honour of attending a lecture roughly fifteen years ago given to a doctorate class at the Chinese Academy of Social Sciences by this Canadian born Nobel Economist.  Just as a point of interest I asked him whether the large expansion of the money supply would lead to inflation in China.

Professor Mundell implies that Gresham’s Law is not so easy to express nor understand. The phrase ‘bad money drives out good,’ is not a correct statement of Gresham's Law nor is it a correct empirical assertion.” The correct expression of Gresham's Law is "cheap money drives out dear, if they exchange for the same price."  In the empirical sense it is the opposite case. “Good money drives out bad”.  As he says, the great international currencies have always been good money which have driven out weak currencies.


Author's note of February 13, 2016:

Is it any wonder that the Canadian copper penny was driven out of circulation because the value of the melted copper was worth more than the penny's face value.



D. Carlton Rossi

 


July 11, 2011

This is notice of copyright.  The word and image of currenci€¥$©  D. Carton Rossi  July 11, 2011 12:38 pm  is used.

 D. Carlton Rossi




June 20, 2011


                          

                            Image Credit: One Last Continue

Jan. 13, 2010: The Supreme court of South Korea has ruled that virtual currency is the equivalent of real money



Bitcoin Worth less than a Penny

On Sunday June 19th I watched the collapse of a virtual currency called Bitcoin. It fell to less than a penny before there was any recovery. Bitcoin is both the name of the open source software that allows trade and a P2P network (Peer to Peer) that is formed by running the software.

There were several reasons as to why owners wanted to own Bitcoin. It seemed that the primary one was that owners were disenchanted with fiat currency which has a centralized issuing authority. With Bitcoin there was a limited and controlled expansion of the monetary base and it is known to everyone in advance.

The second reason of interest was that early participants would benefit the most. This was because there was a diminishing geometric expansion of the money supply with an expansion of users. However, later participants might own a deflated currency as the programmed money supply of Bitcoin reaches 21 million. In this sense it may resemble a pyramid scheme.

Thirdly, the Bitcoin whitepaper of an anonymous Japanese student called Satoshi Nakamoto was adopted by hackers.  It was a means of bartering services. “For example, a Hacker News community member named Nicholas Carlson just boasted that he is being paid for a programming project in bitcoins” according to Jason Calacanis and the LAUNCH team in an article called L019: Bitcoin P2P Currency: The Most Dangerous Project We've Ever Seen.

It would indeed be ironic if a hacker was paid in Bitcoins to compromise Bitcoin virtual currency. Last week malware was discovered to steal users’ credentials. Recently, Symantec said that the 'Infostealer.Coinbit' Trojan aims to find your wallet file and then mail it to the attacker. There is also similar code which looks for the file, but uses FTP to transfer it to the attacker's servers. Today, Bitcoin users are less than awed by a flawed system. 

 

D. Carlton Rossi

 


April 4, 2011 

uninterpretedanduninterrupted

I stood on dusty road on an arid plain. There lay land of sand with low lying desert plants typical of M. E. The day was bright.  I was we of the four horsemen. We were the four horsemen of the Apocalypse, but we were horseless. We were the horseless men. On the right side of the road was a fallen amphora. An invisible hand stood it upright. This handless amphora was dark brown in color and had an intricate design of flames cut out of the side.  A fire lit in it.  Its purpose was to light the way for horseless men. Other amphorae did upright themselves in the distance on either side of the road. The year was 3 B.C. We sat at wood bench by side of road. Earth Mother met me. She put a mud mask on my face and told me that it would give me special powers. Mud was placed on the faces of my companions, too. I was given two weapons and so were the others. They were called axes. They reminded me of adzes. However, they were more like small hoes. The handles were made of wood and were about two feet in length. They would make us invincible in battle. We arrived at the palace at hour midnight. The palace was made of white marble. We entered a large, bright room. All was white. In front of us was a spiral staircase. On top of the staircase were four, white, marble busts. I led the horseless men to the right of the staircase. At this point one of the busts behind me spoke and I turned around to address her.  It was a woman of classical features. She asked me "Where are you going?"  I said to her that "I'll kill the IMP." Then she said to me that "The question began not with Who but with What". While she said this she looked down. I then knew the answer to our quest was at the bottom of the staircase. We turned round and walked down twenty steps. We entered the subterranean underground. The cavernous, cadaverous basement was also made of white marble blocks and shone. The ceiling was high. There was a lone sentry in our way and he ran away to the left when he saw us. The passages went a short distance to the left and right and then curved to the front. The wide corridor ahead sloped downward and went as far as the eye could see. On the floor was a variegated wave pattern. We stood abreast at the juncture of the sword's hilt. Our four held high our axes in both hands. A mass of men ran toward us. They were clad in black scaled armor. Perhaps there were twelve men across the front line and the whole corridor was filled with a cacophony of swelling yelling. There was a chaotic echoic roar. Our four could maneuver better because we had more space to handle our weapons. Each axe was swung exceedingly fast in a set pattern. They were of the bee, locust, fly and mosquito. The whole line of four arched like a bow. Our bodies arched like a bow. A charge went through our bodies and our hair stood on end. A high- pitched twang was ear heard from the bow. Aeroarrow was propelled at fantastic speed. It went through basemen. The breathless army collapsed in an instant. At our feet was metal coinage of grey-black color. The coins were shaped like pharaonic vultures. The debased coinage piled some twelve inches thick. But the coinage was still alive. We horseless men stamped on the coinage with the heels of our feet to kill our foe.  It died.  


D. Carlton Rossi

  

 

March 13, 2011 

                            Hell Bank Note          

It is normally regarded as bad luck to burn real money.  However, some believe that it is good luck to burn fake money.  Of course, you will need real money to buy fake money which will be burned, so this may not be the best investment.  Pictured here is the 100 yuan Hell Bank Note of China.  It can be used in both Heaven and Hell.  Notice how the number WF190888 means "only want to make more money".  On the front of the bill is the Jade Emperor whose name is Yuk Wong or Yu Wong.  He is the Taoist Monarch of Heaven. The money is burned as a tribute to Yan Luo who is the King of Hell.  In other words, live relatives can ask the King of Hell for a shorter stay or escape from punishment for their dead ancestors. 






 

 

February 7, 2011                     

                    

                        Gresham's Law


Sir Thomas Gresham was financial agent of Queen Elizabeth I.  He made an observation about coins containing metal of different value but have the same value of legal tender.  In his opinion, coins made of cheaper metal will be used for payment while those of more expensive metal will be hoarded or exported.

I'd like to direct your attention to a dusty old novel by Anthony Trollope called Doctor Thorne. It was completed in 1858.  I've paid homage to Trollope by writing a poem inspired by the novel. 

In the novel, there is a Squire named Frank Gresham.  He is Gresham of Greshambury.  Now Gresham owned a lot of property, but also owed a lot of debt.  He sold a third of the whole value of the property to pay the debt. The Squire also borrowed large sums on mortgage.

The property had descended from one Gresham to another without entail.  Squire Frank Gresham encumbered it.  He sold it, too.  One could say that the bad coin—Frank Gresham—drove out the good coin of his ancestors.

The Squire and his wife Lady Arabella proposed a radical solution to the estate's problem.  Their only son—Francis Newbold Gresham—who was also known as Frank Gresham must marry money.  He should not marry Miss Mary for love but must marry a woman of fortune.  The good son Francis Newbold Gresham eventually marries Miss Mary for love; but, fortunately she had gained a fortune through inheritance.  Therefore, young Gresham was doubly blessed.

The United States is the world's largest debtor.  The question is will it marry for money or for love? Can it marry for both reasons?

D. Carlton Rossi

 


February 6, 2011
     

                   

The dollar was the idea of Secretary of the Treasury, Salmon P. Chase. It was he who had it created, and it is his portrait it bears. Later, it was Chief Justice  Salmon P. Chase of the Supreme Court who voted against the legality of the paper tender. 


                         The Civil War

It was in 1862, during the American Civil War, that the United States Note became legal tender.  It was issued by the Treasury as a form of fiat currency to pay expenses of the Union.  It was eventually expanded by The Third Legal Tender Act to the limit of  $450,000,000. 

The Legal Tender Notes had little behind them.  They were not backed by gold.  They were not backed by bank deposits.  They were not backed by government reserves.  They were popularly called 'greenbacks'.

The Treasury of the Confederate government relied heavily on the printing of notes which were not compulsory legal tender.  The notes were backed by public confidence in the Confederacy's survival.  The Confederacy printed $1.5 billion in paper money.

The Union and Confederate governments differed in their ability to raise money to finance the war effort.  The Union government relied on loans, income taxes, tariffs and excise taxes. On the other hand, the Confederacy derived about 75% of its revenue from Treasury notes.

As a result, the inflation rates in the north and south differed.  In the north it reached 80%.  In the south, there was runaway inflation which appeared with military reversals in 1862.  It reached 9000% by war's end. 

It was Lincoln who introduced the Legal Tender Note which was not backed by gold.  It depreciated currency for the masses.  However, government bonds paid interest in gold. Therefore, the banks that loaned the money received sound money in gold.

The Legal Tender Note depreciated in relation to gold. The Anti Gold Futures Act was passed in mid 1864.  This prohibited all gold futures contracts and imposed severe penalties.  The note reached its nadir during the summer of 1864 when the Union government temporarily shut down gold trading for two weeks in June.

On the other hand, the Canadian dollar (from August 1, 1854 under the Province of Canada and later under the Dominion of Canada) was on a gold standard of both the American eagle and the British gold sovereign. The dollar was defined as 15/73 of the British gold sovereign. It was also convertible upon demand.

The U.S Treasury Note depreciated against the Canadian dollar during the Civil War. The note fell from close to parity in 1862 to less than 36 Canadian cents.  On July 11, 1864 a Canadian dollar was equal to $2.78 United States dollars.

D. Carlton Rossi

 

 

February 4, 2011 

                   

                     

                     Non-Raptor Petrosaurus


Petrosaurus is a non-raptor found in the Athabasca Tar Sands of Alberta. Its colour is black gold.  It lives on dead plant and marine organisms.  It may also eat other dead dinosaurs. Truly, it is a voracious scavenger.


It resembles its modern relative the vulture.  Its wingspan is sixty feet.  The head is bald like the bald eagle; however, its colour is like night rather than daylight. In other words, the colour of its bald head is more loon-like than moon-like.  It tears apart its food with hooked beak.


This dinosaur has a heavy environmental footprint.  The depth of the footprint exceeds 75 meters.  During periods of low flow it can drink 1.3% of the annual average flow of the Athabasca River.  Its effluent is highly toxic and accumulates in tailings ponds.


Its ancestors lived in the early Cretaceous times which began 144 million years ago.  The climate was warm and subtropical.  There was no polar ice.  Petrosaurus is a unique dinosaur. It can not only modify the environment, but these modifications change the climate which in turn change the environment in a vicious cycle.  


 

February 3, 2011       



                   

                             Petrosaurus by Neuquen


                                  Petrosaurus

On January 30, 2010, Mike Stathis wrote an article called "Dismantling John William's Hyperinflation Predictions". He says that "As a consequence of this link (dollar-oil), it could be argued that the dollar is not exactly a true fiat currency.  At the same time, the dollar is not backed by a finite asset directly under its possession". 


The Gold Standard was introduced into Canada in 1853.  It was based on both the British gold sovereign and the American gold eagle.  The gold sovereign was legal tender at one pound equals $US4.86. 

In January 1929, Canada no longer redeemed Dominion notes in gold.  This meant effectively that Canada was no longer on the gold standard. Most of its gold reserves were sold in the late 1980's and early 1990's under the then government of Canadian Prime Minister Brian Mulroney.  Money of Canada has now no direct link to gold.

Canada has the second largest oil reserves in the world.  These reserves are under its control and in its possession.  The production from the Alberta oil sands is increasing.  It is estimated that production will reach 2.7 million barrels by 2015.  A great proportion of the exports will be to the United States. According to Kathy Lien in an article called "Commodity Prices and Currency Movements", the correlation between the Canadian dollar and oil prices was approximately 80% between the years 2006-2009.  For example, when the oil price soars the Canadian dollar soars. Canada currently has a petro-currency.  It is called Petrosaurus.

D. Carlton Rossi















December 18, 2010  


The Logic of Illogic




Cut taxes by $858 billion for two years.

Quantitative easing of $850 billion over two years.



D. Carlton Rossi





December 3, 2010     




                            
                        

                           Canada's Gold Reserves


Canada's reserves of gold totaled 21 million ounces in 1980. One metric tonne of gold equals 32,150 troy oz.  The Bank of Canada's sale of gold reserves reached their highest level from 1991 to 1996. 


D. Carlton Rossi



 
         
                   
                             
                                A Free Society


"Deficit spending is simply a scheme for the confiscation of wealth.  Gold stands in the way of this insidious process.  It stands as a protector of property rights".

Gold and Economic Freedom, 1966, Alan Greenspan


"To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities"

Guidotti-Greenspan, 1999





                                        


The poet publicly discloses that a fiften page analysis which posits an hypothesis has been completed with respect to the former gold reserves of the Bank of Canada. It highlights the previously undisclosed involvement of various, public officials both within the United States and Canadian governments as well as executives of a particular listed company in regard to the sale of those reserves. The outcome was the total depletion and deletion of Canada's gold reserves. 



D.卡尔顿 罗西

November 29, 2016




Negative Interest Rates