In the realm of global financial systems, the practice of issuing money based on existing receivables introduces a profound shift from traditional money creation methods, such as those reliant on debt. This approach not only enhances financial stability but also promotes a more equitable distribution of economic power. Here’s a deeper look into how money issued from existing receivables can reshape global financial integration:
Overview
Money issued from existing receivables refers to the creation of currency based on the value of outstanding invoices or payments owed to a creditor, rather than on credit or debt issuance. This model is foundational to the Credit-to-Credit Monetary System, which seeks to stabilize and secure monetary value by directly linking it to tangible economic activities.
Mechanism
- Definition of Receivables: Receivables are defined as all or part of, or an undivided interest in the creditor’s contractual right to payment of a monetary sum from a third person (the debtor).
- Valuation: The first step in issuing money based on receivables is accurately valuing these claims. This involves assessing the likelihood of payment, the creditworthiness of the debtor, and the timeframe for expected settlement.
- Monetization: Once valued, these receivables are converted into liquid assets. This is done by issuing currency units directly proportional to the value of the receivables, effectively monetizing the expected income.
- Circulation: The newly created money is then introduced into the financial system, where it can be used for further economic activities, such as lending, investment, or as a medium of exchange.
Benefits
- Reduced Inflation Risk: Since the money supply expands only in proportion to actual economic activity (goods and services sold), there is a lower risk of inflation, which often plagues traditional fiat currency systems where money may be printed without backing.
- Enhanced Stability: The currency’s value is inherently more stable as it is backed by actual goods and services that have been exchanged but not yet paid for. This ties the currency directly to the real economy.
- Improved Liquidity: For businesses, converting receivables into currency enhances liquidity, allowing for quicker reinvestment and reducing the cash conversion cycle.
- Economic Growth: With increased liquidity and reduced credit risk, businesses can expand more readily, contributing to overall economic growth and stability.
Challenges
- Risk of Default: The major challenge is the risk associated with the non-payment of receivables. Bad debts could potentially lead to decreases in the money’s value if not properly managed.
- Regulatory Oversight: Strong legal and financial frameworks need to be in place to ensure that the issuance of money is strictly proportional to the value of legitimate receivables.
- Global Acceptance: For such a system to influence global markets, it must be widely accepted and integrated into international trade and finance systems.
Global Implications
- Currency Exchange: Money issued from receivables could play a significant role in international trade, providing a stable and reliable currency option that could potentially reduce reliance on major reserve currencies.
- International Debt: This system could help reduce international debt levels by providing countries with a means to issue currency backed by their own economic output, rather than borrowing.
- Trade Balance: Countries could use such currency to balance trade deficits more effectively by ensuring that exports are directly financed by the currency issued against them.
Conclusion
Issuing money with existing receivables represents a transformative approach to how currencies are created and managed, offering a stable, inflation-resistant, and growth-promoting tool within the global financial architecture. As this system matures, it could lead to significant shifts in how countries manage economic policies and interact on the international stage. This model underscores the potential for a more balanced and equitable global economic order, driven by real values rather than speculative capital movements
Central Cru: Issuing Money Based on Existing Receivables
Overview
Central Cru, integral to the innovative Credit-to-Credit Monetary System, is issued based on existing receivables, marking a significant evolution in monetary creation and management. This approach emphasizes its role as genuine money—stabilizing, liquid, and intimately linked to concrete economic activities, adhering to the historical and intended essence of money.
Issuance Process of Central Cru
- Identification of Receivables:
- Central Cru is issued against specific existing receivables that have been assigned to Central CM Series LLC by Resource Mobilization Inc (RMI) and other entities. These receivables are concrete obligations arising from delivered goods or services, enforceable and verifiable as financial assets.
- Valuation of Receivables:
- Existing receivables are precisely valued based not on the debtor’s creditworthiness but on the intrinsic value of the creditor’s right to payment of a monetary sum from the debtor. This reflects their actual and immediate economic worth.
- Conversion to Central Cru:
- The valued receivables are converted into Central Cru at a predetermined rate, with each unit representing a quantifiable amount of these receivables, echoing the way historical currencies once represented tangible assets like gold or silver.
- Circulation and Use:
- Central Cru is introduced into the financial ecosystem, functioning like any traditional currency for transactions, investments, and reserves. Its circulation is meticulously regulated to align with real economic output, curbing inflation and ensuring stability.
Benefits of Central Cru Issued from Receivables
- Stability and Trust: Central Cru’s reliance on actual receivables offers a robust alternative to fiat currencies, which are often subject to inflation and fluctuations.
- Enhanced Liquidity: By converting receivables into Central Cru, businesses instantly gain liquidity, fostering reinvestment and accelerating economic activity and growth.
- Economic Growth: Directly linking money supply to genuine goods and services promotes sustainable economic expansion, with currency issuance grounded in productive activity.
Challenges in Issuance
- Default Risks: The primary risk is the potential non-payment of receivables. Mitigation strategies include rigorous legal enforcement and continuous monitoring of receivable statuses.
- Regulatory Compliance: Ensuring adherence to national and international financial regulations is critical for maintaining system integrity.
Global Implications and Acceptance
- Facilitating Global Trade: Central Cru’s predictable value can make international trade smoother and less risky, promoting economic integration.
- Reducing Dependency on Major Currencies: As Central Cru becomes more recognized, it could lessen global reliance on key reserve currencies, fostering a more diversified and stable economic environment.
Historical Understanding of Money Pre-Nixon Shock
Before the Nixon Shock of 1971, which effectively ended the Bretton Woods system and detached the US dollar from the gold standard, money was commonly understood as a direct representation of tangible assets. During the gold standard era:
- Direct Asset Link: Currencies were directly convertible into a specific amount of gold, establishing a clear, tangible basis for their value.
- Stability and International Trust: This link fostered global trade and investment, as currencies backed by gold were seen as more stable and reliable.
- Inflation Control: The gold standard helped regulate the money supply and control inflation, as the creation of money was directly tied to gold reserves.
In this historical context, money represented a credible claim on a universally recognized asset, ensuring its value was perceived as stable and less prone to manipulation compared to the fiat currencies that followed.
Conclusion
Central Cru, issued based on tangible existing receivables, revisits the foundational principles of what money was meant to be—stable, reliable, and reflective of actual economic transactions. It offers significant benefits in terms of stability, liquidity, and growth potential. As the Credit-to-Credit system matures, Central Cru is set to redefine financial interactions globally, transforming modern monetary systems and returning to a more stable, asset-backed monetary foundation
Primary Reserve in the Credit-to-Credit Monetary System
Overview
In the Credit-to-Credit Monetary System, the concept of a primary reserve mirrors the traditional role of gold and other tangible assets in backing currency prior to the Nixon Shock. Here, a primary reserve is defined as existing, tangible assets that directly support the issuance and value of money. In this system, these assets are not merely symbolic but are integral to the function and stability of the currency, similar to how gold once underpinned the value of money in the global financial system.
Definition and Function
Primary Reserve:
- In the context of the Credit-to-Credit Monetary System, the primary reserve consists of existing receivables and other real assets that have been legally and financially validated. These assets provide a direct, measurable backing for the currency issued, ensuring its stability and value.
Function:
- Stability: Just as gold provided a stable base value for money, existing receivables and tangible assets stabilize the currency by linking it directly to the real economy.
- Value Assurance: The primary reserve assures the holders of the currency of its intrinsic value, as each unit issued is directly backed by a quantifiable and verifiable asset.
- Inflation Control: By limiting money creation to the value of the primary reserves, the system inherently controls inflation, preventing the devaluation of the currency through excessive supply.
Composition of Primary Reserves
The primary reserves in the Credit-to-Credit Monetary System are composed of:
- Existing Receivables: These are payments owed to businesses for goods or services already delivered, representing a clear financial claim that can be legally enforced.
- Other Real Assets: This can include tangible assets like real estate, commodities, or even contractual rights that have inherent value and can be liquidated if necessary.
Management and Regulation
Management:
- The management of primary reserves is crucial for maintaining currency stability. This involves regular assessments of asset values, ensuring legal enforceability of receivables, and strategic liquidity management to meet currency demand without compromising asset backing.
Regulation:
- Regulatory frameworks are essential to maintain the integrity and trust in the primary reserve system. This includes audits, transparency in asset valuation, and compliance with international financial standards to ensure that the reserves are sufficiently robust to support the currency.
Global Implications
- Global Trade and Investment: A stable, asset-backed currency can enhance international trade and investment, as it reduces the risk associated with currency volatility and inflation.
- Economic Stability: By providing a stable monetary base, primary reserves can help maintain global economic stability, much like the gold standard did in the past.
- Financial Innovation: The Credit-to-Credit system allows for innovative financial products and services that can leverage the stability and reliability of the asset-backed currency.
Historical Context and Modern Application
Before the Nixon Shock, primary reserves typically consisted of gold, which provided a universally recognized and stable backing for currencies worldwide. The Credit-to-Credit Monetary System revisits this concept by using modern assets that have inherent economic value, thus ensuring the currency’s stability and public trust. By returning to a system where money is directly backed by tangible assets, this approach seeks to address many of the vulnerabilities and instabilities introduced by fiat currency systems.
Conclusion
The primary reserve in the Credit-to-Credit Monetary System serves as a modern equivalent to the gold standard, offering a reliable and tangible backing for currency through existing receivables and other real assets. This system not only ensures monetary stability and value but also aligns with historical practices of money issuance, promising a more stable and equitable financial system. By adhering to this model, the Credit-to-Credit Monetary System provides a robust framework for sustainable economic growth and stability in a global context
Secondary Reserves in the Credit-to-Credit Monetary System
Overview
Secondary reserves in the Credit-to-Credit Monetary System are crucial for enhancing financial stability by providing additional security and liquidity. These reserves, acquired during the process of money circulation, act as a supplementary layer to the primary reserves and play a vital role in the system’s robust financial architecture.
Definition and Function
Secondary Reserves:
- In this system, secondary reserves comprise assets acquired by the issuer during the process of circulating money. These include securities, real estate, and other valuable assets that bolster the monetary system beyond the primary reserves.
Function:
- Liquidity Enhancement: Secondary reserves ensure additional liquidity, facilitating convertibility into other currencies or money through mechanisms like swap agreements and ordinary trading activities.
- Risk Mitigation: These reserves help stabilize the currency during economic fluctuations and mitigate risks associated with primary reserve fluctuations.
- Confidence Building: Demonstrating that the currency is supported by a diverse asset base beyond primary reserves enhances user confidence.
Composition of Secondary Reserves
- Government Securities: These include bonds and other securities that provide stable returns and are easily marketable.
- Commercial Assets: High-grade corporate bonds, commercial real estate, and other significant liquid assets.
- Foreign Exchange Reserves: Holdings in foreign currencies and commodities like gold that support international trade and provide additional security.
Management and Regulation
Management:
- Managing secondary reserves involves strategic asset allocation and regular market analysis to ensure they are readily available and maintain value, supporting liquidity and overall monetary stability.
Regulation:
- The acquisition, valuation, and utilization of secondary reserves are governed by stringent regulatory frameworks to ensure transparency, prudent management, and alignment with monetary policy goals.
Historical Context and Modern Application
Before the Nixon Shock of 1971, gold served as a primary reserve in many monetary systems. The subsequent removal of the gold standard shifted the focus to secondary reserves in the fiat system, often backed merely by government credibility, which has led to issues like increasing national debt. The Credit-to-Credit Monetary System aims to restore stability by backing currency with tangible assets for both primary and secondary reserves.
Global Implications
- Enhanced Monetary Stability: The strategic use of secondary reserves contributes to a more resilient global monetary system, able to withstand economic shocks.
- Sustainable Economic Policies: With tangible assets to leverage, economic policies can be more sustainable, reducing reliance on speculative financial instruments.
- International Confidence: The tangible backing of secondary reserves increases international confidence in the currency, promoting its acceptance for global trade.
Conclusion
The role of secondary reserves in the Credit-to-Credit Monetary System is to support the primary reserves by ensuring they remain intact and their value preserved, in line with the system’s goal to maintain money as a stable store of value. By effectively managing these reserves, monetary authorities can enhance liquidity, manage risks, and ensure the stability and sustainability of the economic environment. This approach marks a significant improvement over traditional fiat systems, which often rely on government strength alone, providing a more robust foundation for economic growth and stability