[Note: This article was originally published on 11/4/97 as "Alternative Currency System." It has been extensively revised.]

For an example of gold-based monetary system, see http://www.e-gold.com/.

Private gold-based monetary systems certainly have an important role to play in shifting economic power from coercive political agencies into the hands of private individuals.

I propose that creating, in addition to gold-based systems, sound private fiat money systems, will further increase the shift of economic power from coercive political agencies into the hands of private individuals. I suggest that we need both gold-based and sound private fiat money systems.

The following articles provide critical perspectives of gold and gold as money:

Silver Threads & Golden Needles -- http://investingcanada.about.com/library/weekly/1998/aa040698.htm.

All That Glitters: Part 1 -- http://investingcanada.about.com/library/weekly/1997/aa111197.htm (links to gold sites).

All That Glitters: Part 2 -- http://investingcanada.about.com/library/weekly/1997/aa111897.htm.

All That Glitters: Part 3 -- http://investingcanada.about.com/library/weekly/1997/aa120297.htm.

See Appendix 2 for links to other alternative currency/money systems.

Advantages of the Riegel System
(a) As E.C. Riegel pointed out in Appendix 1, the individual power to issue money is a most awesome power. A gold-based system does not enable this power to be exercised. The Riegel system does. If the Riegel system can be successfully developed, implemented, and launched, it will bring about a much greater shift of economic power into the hands of private individuals than any gold-based system.

(b) Competing gold-based (and other) monetary systems in a free or relatively free market will help to ensure the integrity of the Riegel. Coercive political agencies can to some extent protect themselves against some of the consequences of inflating their currencies by making them "legal tender," forcing their victims to accept and use their currencies. In a free market this "luxury" isn't available. Hence the controllers of the Riegel system are more likely to maintain the integrity of their money.

(c) In a gold-based system, total economic activity is to some extent limited by the total quantity of gold owned by the members of the system. With the Riegel system there is no such limitation. Thus the Riegel system is likely to bring about a greater degree of economic activity -- resulting in more wealth creation -- than a gold-based system.

(d) Coercive political agencies (and banksters in bed with them) own a great deal of gold, which they can use for manipulative purposes. For example, they can at any time dump large quantities of gold on the market, effectively hurting the purchasing power of private gold owners. Coercive political agencies don't own any Riegels and probably should never be allowed to own Riegels. (Conceivably, Riegels could be used to persuade terrocrats (coercive political agents or terrorist bureaucrats) to relinquish their coercive practices, i.e. "go straight." Gold cannot be used in this respect.)

(e) Gold is subject to confiscation -- as has happened in the past. The Riegel, not being physical, is far more difficult to confiscate.

(f) Apart from the increased personal empowerment individuals gain from activating their personal money-issuing power, members of the Riegel economy are more likely to gain a deeper understanding of money, particularly if they study E.C. Riegel's Private Enterprise Money at http://www.mind-trek.com/treatise/ecr-pem/index.htm.

Appendix 4 - RIEGEL REFERENCE VALUE

I have three suggestions for defining a "reference value" for the Riegel: (a) One Riegel = U.S. Consumer Price Index / 160; (b) One Riegel = Commodity Research Bureau Index / 200; (c) One Riegel = Basket of Commodities / 1,000,000.

In the first case, the Riegel reference value is defined more or less as a constant function of the products and services a typical family buys every month. In the last two cases, the Riegel reference value is defined in terms of basic commodities. When using the CRB Index, the Riegel is effectively defined as a function of the commodities that constitute the CRB Index. When defined in terms of the suggested basket of commodities below, the Riegel reference value is defined in terms of the specific commodities in the quantities I suggest.

(a) RIEGEL DEFINED IN TERMS OF US CONSUMER PRICE INDEX

The CPI can be found at http://www.ctdol.state.ct.us/lmi/misc/cpius.htm.

Consumer Price Index

We can think of the CPI as representing an index of all the things the typical family buys and pays for during a month, expressed in US$s.

We could define the reference value of the Riegel as CPI / 160. This would mean that the reference value of the Riegel more or less remains a constant function of what people typically buy.

Because over the long term the dollar tends to be inflated on a continuous basis (the supply of dollars grows faster than the quantity of products and services people typically buy), the dollar gradually loses its purchasing power and the CPI goes up.

Jan 98: One Riegel = 161.6 / 160 = $1.0100
Feb 98: One Riegel = 161.9 / 160 = $1.0119
Mar 98: One Riegel = 162.2 / 160 = $1.0138
Apr 98: One Riegel = 162.5 / 160 = $1.0156

Note that the above doesn't represent exchange rates between the Rgl and the $. I'm essentially defining an agreed-upon reference value for the Riegel. The actual exchange rate in the market will fluctuate according to supply and demand and other factors. But the reference value of the Riegel is being held more or less as a constant representing what people typically buy.

(b) RIEGEL DEFINED IN TERMS OF CRB INDEX

The simplest "commodity definition" would be in terms of the CRB Index. I suggest that the price of the nearest futures contract be used. The reference value of the Riegel can be defined as one two-hundredth of the commodities that constitute the CRB Index.

Commodity Research Bureau Index (Sep, 1996) = 243.40 One Riegel = $1.217

Commodity Research Bureau Index (Nov, 1997) = 242.70 Percentage decline of CRB Index since Sep, 1996 = 0.288% One Riegel = $1.2135

Commodity Research Bureau Index (Jan, 1998) = 236.00 Percentage decline of CRB Index since Sep, 1996 = 3.040% One Riegel = $1.18

Commodity Research Bureau Index (Jun, 1998) = 214.00 Percentage decline of CRB Index since Sep, 1996 = 12.079% One Riegel = $1.07

Note that the reference value of the Riegel relative to the US$ drops when commodity prices decline, and vice versa.

The disadvantage of the CRB Index definition is that it's unrealistic. The typical family doesn't buy these basic commodities. They buy manufactured products and services.

(c) RIEGEL DEFINED IN TERMS OF A "BASKET OF COMMODITIES"

The reference value of the Riegel could be defined in terms of the basket of commodities below.

Based on closing prices of nearest month, actively traded futures contract prices - Aug 2, 1996

1,000,000 Riegel = value of total commodities in basket.

1 Riegel = Basket / 1,000,000 = $1.001508 on Aug 2, 1996

Based on closing prices of nearest month, actively traded futures contract prices - Nov 11, 1997

1,000,000 Riegel = value of total commodities in basket.

1 Riegel = Basket / 1,000,000 = $0.994687 on Nov 11, 1997

Percentage decline of Riegel against US$ since Aug 2, 1996 = 0.681%

Based on closing prices of nearest month, actively traded futures contract prices - Dec 5, 1997

1,000,000 Riegel = value of total commodities in basket.

1 Riegel = Basket / 1,000,000 = $0.960523 on Dec 5, 1997

Percentage decline of Riegel against US$ since Aug 2, 1996 = 4.056%

Based on closing prices of nearest month, actively traded futures contract prices - Jun 5, 1998

1,000,000 Riegel = value of total commodities in basket.

1 Riegel = Basket / 1,000,000 = $0.856299 on Jun 5, 1998

Percentage decline of Riegel against US$ since Aug 2, 1996 = 14.499%

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