90 day real bills - a continuing topic
roadrunner
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Real bills link
Another article that helps explain this often misunderstood topic. In a gold standard real bills allow commerce and wages w/o having to do all transactions in
gold money. When nations went back on the gold standard after WW1 they didn't include real bills, thus neutering the standard. Regardless of any type of
monetary standard, if fraud is the intent, then it doesn't matter what the standard is as fraud will result (ie Commodity Furtures Modernization Act of 2000).
Currently, we have no monetary standards in effect.
Another article that helps explain this often misunderstood topic. In a gold standard real bills allow commerce and wages w/o having to do all transactions in
gold money. When nations went back on the gold standard after WW1 they didn't include real bills, thus neutering the standard. Regardless of any type of
monetary standard, if fraud is the intent, then it doesn't matter what the standard is as fraud will result (ie Commodity Furtures Modernization Act of 2000).
Currently, we have no monetary standards in effect.
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Since there is probably no one alive who has actually used them in commerce I think we would have some major adjustments in our thinking.
How do we deal with default? Say an issuer can't deliver on one real bill but has others outstanding? Would they run their course as is or be discounted further to account for increased risk?
How will they fit in this electronic age we live in with respect to potential fraud? Would bill brokerage firms and clearing houses exist to distribute them?
Its an idea that could do amazing things for our economy on a micro level . The bills of solid companies or individuals would be in demand and possibly trade at a premium. Or is that impossible?
bad debt. Can't go foward with all the default risk currently on the books, or off the books. Whichever entity is issuing the real bill, they have
to be extremely sound financially. That means revamping our entire rating system as well since the existing one is useless. Lots of work to do long
before any new system could be considered as it too would fail because of the existing overload of bad debt.
I tossed this topic out there more as a way of understanding how the old system worked. With real bills maturing in 90 days, there isn't a lot of time
for any single entity to Ponzi the system as the big banks have done over the past 12-15 yrs.
It's a mess. I do think that Ron Paul's idea of competing currencies makes alot of sense.
I knew it would happen.
Ron Paul's idea of competing currencies makes alot of sense
Dont we already have this?
Knowledge is the enemy of fear
A real bill is just a short term note why wouldn't they be snapped up instantly? People park money in CD's for 90 days at .5% interest why wouldn't they buy a real bill that pays 4% ?
Its a short term bond issued by a company in effect. If you were willing to buy 100 shares of stock in IBM why not a bill? If the discount rate is 4% then you buy a bond for $9900 dollars and they give you back $10,000 at the end of 91 days . Transactions like that happen every day in treasury bonds with absolutely no backing whatsoever why are they safer ?
Why can't I write a bill of my own and guarantee to frame a house in 91 days ? If I'm known and respected and I can get it endorsed as deliverable then it should be possible. If my reputation is good then my bill is as good as gold. Those who don't have a reputation can write a bill and the discount will be at a steeper rate. Maybe its 20% ? someone will buy a 20% discount bill if the risk/reward fits for them.
<< <i>A real bill is just a short term note why wouldn't they be snapped up instantly? People park money in CD's for 90 days at .5% interest why wouldn't they buy a real bill that pays 4% ?
Its a short term bond issued by a company in effect. If you were willing to buy 100 shares of stock in IBM why not a bill? If the discount rate is 4% then you buy a bond for $9900 dollars and they give you back $10,000 at the end of 91 days . Transactions like that happen every day in treasury bonds with absolutely no backing whatsoever why are they safer ?
Why can't I write a bill of my own and guarantee to frame a house in 91 days ? If I'm known and respected and I can get it endorsed as deliverable then it should be possible. If my reputation is good then my bill is as good as gold. Those who don't have a reputation can write a bill and the discount will be at a steeper rate. Maybe its 20% ? someone will buy a 20% discount bill if the risk/reward fits for them. >>
Because you can die or get drunk and not perform.
The tragic thing is that so few realize what "real" money's function is. Prosperity with low borrowing costs. Simple as that.
And who knows that? Your neighbor? Your kid's teacher" Bwaaahahahhahahahahaaaaa
Real bills would be just another non-functioning rehash of the already failed competing currency monetary theory.