The Caribbean Interbank Market News Scan as of 8:01 am EDT

Currency PairExchange Rate
GBP/USD1.2112
USD/XCD2.7000
GBP/XCD3.2702
USD/JMD148.9190
GBP/JMD180.3710
USD/DOP54.0399
CAD/XCD2.0978
CAD/JMD115.7050
EUR/USD1.0432

Source: OANDA

Traders should keep in mind creating alternate systems

Is there a value play or logic in using regulated, fiat money? The arguments for the use and role of money, a physical or digital representation of the value of one’s wealth or work, are plausible. It would be disingenuous to say that society should go back to a bartering system for exchanging goods and services given the consequences of impaired logistics and issues surrounding the storage of the items kept in reserve for bartering. However, I believe a crucial question regarding the definition of money needs to be revisited in order to bring certainty into trade and the value of the items we trade for.

I see money as private. Money started out as private and should go back to that status. The only reason humans engage is to trade value and as a medium for trade between private individuals, money itself should be private. Money should reflect the energy, intellect, data, commercial value, and knowledge of the individual who generates it and issues it. Fiat currency relegates the common consumer to regulated markets that may or may not meet a consumer’s need for certain goods, services, or privacy. And poor monetary policy by the issuers of fiat currencies are only leading to a devalued currency that lays at the core of inflated consumer prices.

As much as we tout competition in American society, this is where American government, a mechanism employed by American society to ensure the smooth flow of commerce, should be forced to compete with alternative payment systems. Traders should promote the use and acceptance of alternative payment systems and currencies by multiple vendors. Traders should also advocate for the exchange of alternative and fiat currencies where such exchanges reflect the necessity to engage in trade on alternative platforms or purchase goods and services that are only offered on alternative platforms.

For example, a consumer may purchase food and clothing items from a digital Walmart or Amazon store, but can only afford the police protection services offered by state or federal governments. An end-user may, like today’s central banks, maintain her own portfolio of “reserve currencies” for use on numerous platforms.

Expanding the payment system scheme can also make government more efficient by requiring government to expend resources on the activities it is most expert at and leaving other activities to the private corporate sector.

The concept of “government” is not going away. The concept can be refined and one ideal way is to have it co-exist with alternative payment systems.

Alton Drew

19 April 2022

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Disclaimer: The above is provided for informational purposes and should not be construed as financial or legal advice or as creating an agreement to provide financial or legal advice.

Decentralized finance: Is it time to return to the Articles of Confederation?

A decentralized payment system and the money that runs on top of it requires a public administration that is more people-based than the system of public administration Americans have today. 

Since 2007, Americans have been witnessing an exponential shift in the structure of the political economy where large private and public corporations (government) have been experimenting with ways to streamline employee functions while loading more operational and quasi-management functions unto individual employees.

Meanwhile, these corporations, particularly large corporations, have become bigger and executive power increasingly centralized.  In the larger political economy, we have seen centralization in the banking system not only with the advent and growth in importance of the Federal Reserve System but also in the Executive Office of the President where over the past 245 years the power of decision has moved from the common person to the Congress to the executive branch.

I believe there is a battle of two major narratives occurring over the issue of how best to manage society; to manage human beings.  The first narrative, as espoused by increased centralization, is that society is best managed through two major funnels, corporations and large government.  In a democratic-corporate system, resources are extracted, managed, processed, and delivered by private corporations chartered by government pursuant to an agreement that private corporations will encourage taxable, transactional activity and in return keep profits as income.

Private corporations maintain their oligopoly by persuading government that this form is the most efficient at managing resources while contributing to maintaining the peace.  By employing labor and selling to labor the very fruits of their work i.e., goods and services, the corporate model sells the aspirational narrative of moving ahead and creating a stable quality of life in return for your allegiance to the corporation in the form of hard work.

The second narrative is that humans are best managed when they manage themselves.  While the democratic-corporate model conjures up “The Truman Show”, the voluntarist-self sufficiency model argues that people do much better when they manage their own resources and capital and enter into relationships or strategic partnerships on a volunteer basis, particular when such relationships serve their self-interests.

Whereas in a democratic-corporate system humans are connected by and transact in a government-central bank authorized and issued money, distinct monies are issued by the individual in a voluntarist-self sufficiency model where the demand and supply for such distinct, individual money is determined by a market that recognizes the unique knowledge and data held by the individual or the individual household issuing the money.

The democratic-corporate model is a coerced federation model while the voluntarist-self sufficiency model is a confederation model.  It is a model made up of allies and one that operates better in a decentralized financial system where the emphasis, again, is based on individual value.

As I allude to in the title, an appropriate public administration structure for a voluntarist-self sufficient society may be one governed by an articles of confederation.  If you read the Articles of Confederation agreed to by the Congress in November 1777, you see a document where the majority of government power laid in the hands of a limited congress that left in the hands of a very limited executive the day-to-day administration of interstate infrastructure.  States were independent sovereigns and allies in the interstate administration of commerce and trade.  The independence of the states was stressed throughout the Articles.

Can we, as individuals, enter into our own “articles of confederation” with each other?

Can we re-visit this model and do some work to bring it up to speed with a society that, while digitally connected, at the same time enjoys a technology that allows each individual to generate their own value and thus issue an individual money that reflects that energy?

Alton Drew

6 April 2022

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Disclaimer: The above is provided for informational purposes and should not be construed as financial or legal advice or as creating an agreement to provide financial or legal advice.

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     

Foreign exchange rates and dollar index as of 6:22 am AST

Currency Pair21 March 202222 March 202223 March 202224 March 202225 March 2022
EUR/USD1.104981.103681.100931.10088 
GBP/USD1.317481.316321.320521.32306 
USD/CNY6.359056.355546.362586.36854 
USD/CHF0.931750.93220.934120.93303 
USD/NGN415.42415.043415.732415.115 
USD/ZAR14.940114.938814.874714.7795 
USD/AOA449.794449.794449.438448.867 
USD/INR75.66375.968575.975976.1238 
USD/JPY119.145119.274120.537121.022 
USD/SAR3.745243.745243.745243.74524 
Dollar Index98.4998.4698.7898.84 
Sources: OANDA, MarketWatch

Foreign exchange rates of interest as of 4:14 pm AST

Currency Pair21 March 202222 March 202223 March 202224 March 202225 March 2022
EUR/USD1.104981.10368   
GBP/USD1.317481.31632   
USD/CNY6.359056.35554   
USD/CHF0.931750.9322   
USD/NGN415.42415.043   
USD/ZAR14.940114.9388   
USD/AOA449.794449.794   
USD/INR75.66375.9685   
USD/JPY119.145119.274   
USD/SAR3.745243.74524   
Dollar Index98.4998.46   
Sources: OANDA, MarketWatch

How can the private sector help government navigate an uncertain second half of the 21st century?

As I shared in my last post, I see the current conflict in eastern Europe as a milestone in the United States government’s move toward a post petro-dollar world.  The jury is still out on the Biden-Harris administration’s ability to map out the best route through uncharted waters where the U.S. dollar is no longer the world’s reserve currency or finds itself sharing that status with the currency of an emerging China.  The first step the private sector can take in getting ahead of the U.S. government and helping direct a soft landing into the second half of the 21st century is by redefining the narrative on the role of the U.S. government.

The current narrative bought into by the electorate is that the federal government is a protector of individual rights and freedoms; inalienable rights of free speech and press; the freedom to choose their political leaders; the freedom to assemble and criticize government policy; the right to have a jury of their peers; and of other personal or commercial liberties.  Maintaining these narratives is necessary on the part of the federal government if it is to get the electorate to buy in to what I deem as the federal government’s primary mission:

  • To maintain the tax base;
  • To maintain the physical and social infrastructure that facilitates and expands the tax base; and
  • To define, design, and deploy money that transmits to domestic and global societies the underlying value (currency) of the U.S. government, a value created and supported by the government’s ability to coerce and extract taxes.

The private sector is charged by the federal and state levels of government to operationalize government’s primary mission.  Labor is converted into a source for taxes when the private sector employs it. 

The private sector accounts for and submits to the government payroll and income taxes derived from labor’s compensation.  The firms that comprise the private sector also submit taxes to the federal and state levels of government, also contributing to the tax base.

The private sector employs human, financial, and natural resources to construct and deploy the physical infrastructure that facilitates the discovery, extraction, processing, and distribution activities necessary for getting goods and services into the hands of the consumer/electorate.  The ability to efficiently move goods and services into consumer/electorate hands helps to encourage or incentivize the consumer/electorate’s compliance with taxation and laws.

Private social agents are primarily operationally responsible for maintaining America’s social infrastructure.  Schools, churches, mosques, and families are the primary suppliers of narrative, philosophy, and teachings consumed by individuals.  Unlike the commercial private sector that operates via state-issued license or certificate of public convenience, social agents, for the most part, receive their “license” from heritage, lineage, traditions, or other social customs.  Where government attempts to supplant lineage, traditions, customs, or philosophies is where the trouble starts, but more on that next time.

The last prong of the mission, the definition, design, and the deployment of money is also carried out by the private sector, specifically the banks.  The banks resell and distribute money by lending money to the consumer/electorate and business associations (firms).

I define “money” as the physical representation of the acknowledgment of the economic value you have generated for exchange with a counterparty.  “Currency”, on the other hand, is your knowledge, data, or intrinsic value, that you put into generating economic value.

The private sector in assisting government’s navigation of the 21st century has to first acknowledge an inconvenient truth.  The private sector is an agent of government.  The private sector is the creation of a public policy called “capitalism.”  As an agent, it advises the government on what the transactional portion of society is prioritizing.  Also, as an agent, it should advise the government on whether policies government wants to pursue actually facilitates the government’s aforementioned mission.

The private sector must re-evaluate the narrative behind its and the government’s existence and roles.

Alton Drew

22.03.2022

For consultation on how this political or legal event impacts your foreign exchange trade, request an appointment at altondrew@altondrew.com.

Call to action: To support this page, please visit our advertisers. You may also visit the sidebar and make a donation via PayPal.

Disclaimer: The above is provided for informational purposes and should not be construed as financial or legal advice or as creating an agreement to provide financial or legal advice.

Will isolationism force the U.S. government’s currency to compete with other domestic currencies?

Over the past month, Americans have been moving their attention from the pandemic to the war in eastern Europe.  Not fully appreciated by an American public glued to the media scenes of evacuees, missile fire, and troop advancements is the closer economic alliance of China and Russia.  United States government officials have been prognosticating with unfounded confidence that economic sanctions against Russia in addition to stiff resistance from Ukraine’s military will thwart Vladimir Putin’s plans to pull more of Ukraine into the Russian orbit.

What I am seeing is a greater incentive by Russia, China, and other nations to go their own way by expanding alternative payment systems that move capital that underlies trade between Europe and Asia.  Speculation has increased that sometime in the future, the world may go from pricing oil in dollars to pricing oil in yuan.  With Russia being amongst the world’s top producers of oil, accepting yuan as payment for oil would put Europe in a pickle: dumping the long established petro-dollar for yuan.

As the United States continues to lead from behind on the eastern European portion of the world stage, I don’t hear many Americans contemplating what a new world order would look like where the United States issues a currency that finds itself limited to buying Caribbean vacations.

One currency scenario in a post petro-dollar world could see the greenback sharing legal tender status with alternative currencies.  These currencies could be digital, virtual, or actual (paper & coin).  The issuers, from 30,000 feet down, look like competitors, with potentially hundreds of communities issuing, circulating, and using their own currencies.  Right now, I would classify the issuers in this post petro-dollar world into three main entities.

The first entity is the public corporate body or government.  The government issues a currency in exchange for tax receipts.  The public corporate body’s currency is created by its ability to coerce, by law and force, individuals to pay a tax in exchange for protection of property and person.

The second entity is the private corporate body or corporation.  The corporation issues currency to consumers in exchange for revenues.  The private corporate body’s currency is created by its ability to provide the consumer with goods and services that consumers are willing to exchange their work energy for.  The private corporate body’s currency is backed by goods and services.  The greater the quality of these goods and services, the higher the demand for their attached currency.

Last is the private bank.  The private bank’s currency is created by its ability to store and secure its customer’s commodity wealth.  The currency the private bank issues, the tradeable receipt, allows the bearer of the currency to redeem her tradeable receipt in the form of a commodity.  The currency is commodity-backed.

An isolated U.S. government means that the currency it issues will incur reduced demand and a lowered value.  Domestically, the government issued currency will purchase fewer goods as competing imports diminish in availability.  The currencies of private corporations that provide valuable goods and services and private banks may see an increase in their value.  The taxpaying consumer will want to make a switch.

Under this scenario, government, if it is to survive, may have no choice but to enter agreements with private banks and private corporations to set a domestic exchange rate which in turn allows government to collect taxes via the use of alternative currencies.

The war in eastern Europe may set in motion events leading to competing currencies in America. 

Alton Drew

21.03.2022

For consultation on how this political or legal event impacts your foreign exchange trade, request an appointment at altondrew@altondrew.com.

Call to action: To support this page, please visit our advertisers. You may also visit the sidebar and make a donation via PayPal.

Disclaimer: The above is provided for informational purposes and should not be construed as financial or legal advice or as creating an agreement to provide financial or legal advice.

Africa: Foreign exchange rates as of 11:05 am AST

Currency Pair14 March 202215 March 202216 March 202217 March 2022
USD/NGN415.34415.241415.161415.592
USD/GHS7.03247.096087.117657.21492
USD/ZAR15.024115.074915.110115.0241
USD/GMD53.290453.245253.180953.0686
USD/AOA465.372465.372460.64452.606
USD/UGX3,589.463,593.013,573.673,570.82
USD/RWF1,006.381,007.041,005.521003.51
USD/KES113.301113.257113.35113.453
Dollar Index98.9398.7398.5798.13
Sources: OANDA, MarketWatch