Inflation is the result of money backed by no current individual data value

Money is not only the physical acknowledgment of what is owed, it is also a claim on an asset.  Money is a receipt documenting the assets a bank holds for an individual and this receipt can be traded for some commodity, good, or service.  The counterparty on the other side of the trade should feel comfortable that the receipt can be redeemed for the assets held at a bank or traded with another counterparty for commodities, goods, or services.

Most of the electorate have no receipts to trade because they have no assets upon which they can issue receipts.

The ideal money is not money issued by the Federal Reserve or U.S. Treasury.  An ideal money is one issued directly by the individual, is backed by commodities or intellectual property, and contains up-to-the-minute data on the value of the individual’s assets.

Ideal, individually issued money should contain the individual’s identifying information, verifiable address, documented assets, and their real-time value.  In an ideal, individually issued money environment, most of us, now, would be walking around with worthless currency.  Our receipts today are backed by nothing that we own or produce.

You could argue that the money in your pocket or on your debit card that you use to buy a hamburger is the result of the hard work that you put in at AT&T.  But is it?  Yes, you have an employment contract with AT&T, and yes, they promise you some payment, x, in exchange for some service, y.  The service you provide, however, is not a commodity that the traded receipts can be used to make a claim on.  The receipts the wage earner receives from AT&T are either issued on the assets AT&T used to borrow money from a bank or from the services it sold with your help.

When you trade the receipts (money) you get from your AT&T wages in return for personal goods and services from a vendor, you are simply reselling someone else’s receipts.

In a value-driven, individual micro-bank environment, the portion of your value that you exchange with me in the form of individualized money should contain the data reflecting your real underlying wealth; the currency; the inputs for your value.

If you picked up a ten-dollar bill off the ground and bought a burger, fries, and a drink, what can I ascertain about your economic value? Nothing.  Even if you believed that the very act of picking up the dollar generated some type of economic value, the act itself is no longer current. The act is not an existing commodity on which an current economic value can be assessed.  Time passed and the duration of the act has reduced to zero any value it may have contained.

The wage earner/non-asset holder is left with no choice in an ideal, individual micro-bank scenario but to create a current asset that contains their data, skills, knowledge, and abilities.  The demand for this individual micro-economy will determine the value of the money the asset generates.

Banks, institutions with 500 years of experience pricing assets, along with the assistance of fintechs, can help the trader design and issue the money issued against assets.

And what would be the role of government in this scenario?  Other than offering a dispute settlement service, nothing.  The data contained in an individually issued token should be sufficient for a trader to determine the token’s underlying value.

The real reason we have inflation is not because of increasing money supply or price gouging on the part of greedy corporations.  This current round of inflation is an acknowledgment that the consumer is exchanging money backed by either nothing or by individual assets quickly depreciating to zero.  

Alton Drew

02.04.2022     

CFTC Awards Approximately $10 Million to a Whistleblower

March 18, 2022

Washington, D.C. — The Commodity Futures Trading Commission today announced an approximately $10 million award to a whistleblower who voluntarily provided original information that led the CFTC to open an investigation. The whistleblower gave useful information at the earliest stages of the investigation and later provided supplemental information. 

“This award demonstrates the continued success of the CFTC’s Whistleblower Program,” said Acting Director of Enforcement Vincent McGonagle. “The CFTC is committed to rewarding whistleblowers who identify misconduct in our markets.”

“The CFTC has granted a number of multimillion-dollar whistleblower awards to date,” added Whistleblower Office Director Christopher Ehrman. “These large awards are putting market participants on notice that whistleblowers continue to provide significant information to the Commission.”

About the CFTC’s Whistleblower Program

The CFTC’s Whistleblower Program was created under Section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Since issuing its first award in 2014, the CFTC has granted whistleblower awards amounting to approximately $330 million. Those awards are associated with enforcement actions that have resulted in monetary sanctions totaling more than $3 billion. The CFTC issues awards related not only to the agency’s enforcement actions, but also in connection with actions brought by other domestic or foreign regulators if certain conditions are met.

The Commodity Exchange Act (CEA) provides confidentiality protections for whistleblowers. Regardless of whether the CFTC grants an award, the CFTC will not disclose any information that could reasonably be expected to reveal a whistleblower’s identity, except in limited circumstances. Consistent with this confidentiality protection, the CFTC will not disclose the name of the enforcement action in which the whistleblower provided information or the exact dollar amount of the award granted.

Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected. All whistleblower awards are paid from the CFTC Customer Protection Fund, which was established by Congress, and is financed entirely through monetary sanctions paid to the CFTC by violators of the CEA. No money is taken or withheld from injured customers to fund the program.

Source: Commodity Futures Trading Commission

CFTC chairman lays out priorities for managing commodity market and cryptocurrency risks during bursts in market activity…

Today, Commodity Futures Trading Commission chair Rostin Behnam delivered remarks at the FIA Boca 2022 International Futures Industry Conference where he described the CFTC’s priorities for managing commodities markets through what he describes as bursts in market activity.  These bursts, in some part due to technology-driven innovation in the markets, reflect the influence of monetary policy and global interconnectedness on markets.  Mr Behnam argued that market innovation emerges when there is a backdrop of regulatory reassurance.

Regulatory reassurance means the management of the risks that emerge from the bursts of transformative change in the markets.  Mr Behnam sees these risks being managed in one of two general ways.  Either the bursts themselves will have to be managed or the markets will have to get comfortable with the fallout from these risks.

Mr Behnam appears to prefer a middle-of-the-road approach by noting that policy priorities rest with core markets by achieving regulatory certainty and creating fail safe market mechanisms.

Two major policy tools stood out during Mr Behnam’s remarks.  First was an update on proposed rule making that addresses risk governance for derivatives clearing organizations.  DCOs arrange or provide on a multilateral basis for the settlement or netting of obligations.

Second, Mr Behnam wants Congress to pass legislation that gives the CFTC authority to develop a regulatory framework for the cash digital asset commodity market.  Mr Behnam noted his support of President Joe Biden’s executive order calling for coordination by financial regulatory bodies to create a framework for ensuring consumer and investor protection in the cryptocurrency market.

What is missing from Mr Behnam’s consumer/investor protection narrative is the portion that discusses government securing its legal tender turf.  While the government’s position as source of the nation’s circulating currency is not under immediate threat, the federal government’s concern has often been dressed in the rhetoric of financial stability or economic growth.  I believe market makers in the cryptocurrency trade are already mindful of this but earlier predictions about increased scrutiny are taking fruit.

Alton Drew

16.03.2022     

National Futures Association notice on swap dealer member supervision over marketing materials …

Notice I-20-48

December 22, 2020

Effective date for Interpretive Notice establishing SD supervision requirements over use of marketing materials

NFA recently adopted an Interpretive Notice entitled NFA Compliance Rule 2-9(d) Swap Dealer and Major Swap Participant Supervision of the Use of Marketing Materials. The Interpretive Notice provides guidance to swap dealer (SD) Members regarding their regulatory obligations under Compliance Rule 2-9(d) related to their use of marketing materials. The Interpretive Notice is based on supervisory principles that are tailored to reflect that SD Members conduct business exclusively with counterparties that qualify as eligible contract participants and negotiate bilateral, bespoke swaps tailored to a counterparty’s specific needs. The Interpretive Notice will become effective on May 31, 2021.

NFA Compliance Rule 2-9(d) places a continuing responsibility on each SD Member to diligently supervise its employees and agents in the conduct of their swap activities for or on behalf of the Member. Compliance Rule 2-9(d) is broadly written to provide each firm with some degree of flexibility in determining what constitutes “diligent supervision” and in developing and implementing written supervisory procedures tailored to meet the Member’s particular needs. Although NFA leaves the exact form of supervision to the SD Member, all SD Members are required to have written policies and procedures designed to achieve ongoing compliance with applicable NFA and CFTC requirements. In discharging their supervisory obligations, SD Members should have written policies and procedures (supervisory program) governing the use of marketing materials if they provide marketing materials to counterparties and potential counterparties.

The Interpretive Notice requires an SD Member to adopt a supervisory program that is designed to reasonably ensure that marketing materials comply with all applicable NFA and CFTC requirements including rules related to fraudulent and deceptive practices. While SDs have flexibility in designing their programs, the Interpretive Notice requires that an adequate supervisory program include policies and procedures related to:

  • Review and approval of marketing materials;
  • Training; and
  • Recordkeeping.

NFA’s Swap Participant Advisory Committee supported this Interpretive Notice, which was unanimously approved by the Board.

More information regarding the Interpretive Notice can be found in NFA’s December 2, 2020 submission letter to the CFTC. If you have any questions related to the Interpretive Notice please contact Mike Otten, Vice President, OTC Derivatives (motten@nfa.futures.org or 212-513-6046).

Source: National Futures Association

Traders need more than a breach of fiduciary duty claim before collecting damages

Traders in commodities should bear in mind that when bringing a claim against a commodities trade advisor that you will need more than a claim that the advisor breached their fiduciary duty if seeking damages for an advisor’s alleged acts of churning a client’s account.

Yes, a relationship between you, the trader, and your commodity trading advisor can give rise to a fiduciary duty. But going before a Commodity Futures Trading Commission judgment officer and trying to get a ruling in your favor based on fiduciary will require a showing of fraud or other corresponding violations of the Commodity Exchange Act or CFTC rules.

Keep in your mind during your quest for damages that you may find relief in state law where a commodity trading advisor is also responsible for making decisions regarding other people’s assets.

See Daniel J. Emily v. Guy K. Gleichmann and United Strategic Investors Group, CFTC Docket No. 14-R007.

The above item is presented for informational purposes and should not be viewed as legal advice or treated as retention of an attorney.