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MODEST PROPOSAL: SILICON MONEY

 
Silica, gold and silver have something in common, first, I think we are entering a crisis stage, which will force some type of monetary re-evaluation.
 
January 11, 2010
“I want the national guard on the streets with the people to fight against speculation,” said Mr Chávez during his weekly television show, Alo Presidente. “Go ahead and speculate if you want, but we will take your business away and give it to the workers, to the people,” he said, stating that there was no reason for businesses to be raising prices.
The above, seemingly benign and crazy statement is symptomatic of other statements from the history of government’s response to out-of-control inflation. Inflation being the expansion of the money supply. It’s “seemingly benign”, because Venezuela like Greece, is far away and uses their own currency.
However, this monetary crisis is different, it is worldwide, and not countrywide. We are all tied into international world trade, through the dollar and oil. And all world governments are printing money as fast as they can cut trees to make paper. So what happens in Venezuela may precipitate a global international crisis. The speculation and instability surrounding, oil being shipped into the U.S., could be the trigger for out-of-control inflation.
Quotes such as the one by Mr. Chavez, can be seen at the beginning phases of all out-of-control inflation cycles. It is an indication that the first phase of “Gresham’s law” is now beginning to effect world economies. In this case Gresham’s law is applied to “bad credit” driving out and down the “good asset” classes they were created to protect. The classical interpretation of the law is that in the beginning stages of high inflation, “bad money drives out good money”. Governments debase their own currency by adding lead or tin or copper to the silver and gold. In an all paper money system this is equivalent to; “CDO’s” debasing their underlying asset classes, real property. Gresham’s law is a law because it’s the only one of two real concepts economists have ever been able to come up with.
The second law of economics is: Thier’s Law, (the other real concept). At the end of a high inflation period good money, (gold and silver) comes back into the market place and drives out the bad money, (paper). (Bernholz, p.132)
Once Gresham’s law begins, inflation happenings quickly until governments are forced through Thier’s Law stop the presses and cope with printing too much money. At this point some form of re-monetarization occurs. We should be thinking, now of how we want this outcome to occur; I know the bankers are.
MODEST PROPOSAL: SILICON MONEY
Gold and silver have been used for thousands of years to balance and control the printing of paper money. Their use, as a balance, is related to their rarity in our world. When our current world monetary crisis comes to a head a year or so from now there will again be a move to re-monetarize paper money. This will, undoubtedly be with some kind of peg or ratio to the dollar. And gold and silver are the obvious candidates.
I think this is great and necessary to rein in the rouge banking community. However, I think we are using the wrong peg. I propose we use 99.999% pure silica, Silicon. 
Why? Silica, sand, is the most common element on the planet, but it takes huge amounts of energy to produce pure Silicon from sand. Silicon could be coined in numerous denominations and alloyed percentages to cover world trade. An alloy of silicon, gold and silver would be both durable and beautiful. A coin tied to the amount of energy necessary to produce it would encourage world alternative energy production, as Silicon would float against energy. Raises in energy costs would cause raises in the cost of the production of Silicon stimulating alternative energy production to reduce energy costs. Silicon also has the production infrastructure in place, in the semiconductor industry, to produce the coinage.
This will also help disarm the banking community as they try to scam up ideas on how to make a second or third derivative of sand.
If not silicon, then develop some other tri-valiant alloy using a rare earth element tied to the energy production cycle. A twenty-first money system designed to transition us into the development of solutions for our future energy needs.


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