Proposal for the policy for the Government of Ireland

Utilizing the Treasury, The Irish Mint, and An Poste

The introduction of Sound Money to circulate alongside Irish Bank Notes

Some bullion coins are already currency. They do not circulate because the designated monetary value is way below the market value and so they are hoarded. Imagine what would happen if the government decided to use silver coin for money and implemented a policy such as this.

We would provide The Irish a reason to save by giving them something of Value to save

Silver coins as money will be allowed to circulate alongside EURO/Irish fiat bank notes.

The following policy to be implemented irrevocably (unless changed by public referendum)

A one ounce silver coin will be issued a monetary value according to its silver content.

The one ounce silver coin .9999 pure contains one troy ounce of silver and will be issued a monetary value guaranteed to be 20% higher than the world spot price at the Friday close each week. While this monetary value will rise according to the world market spot price for a troy ounce of silver it will NEVER fall. This adjustment in the price will be done on the Sat night/Sunday AM time slot.

For example, this is the mechanism for the calculations.

Today Sat 4th Dec 2011 we imagine as the date of implementation.

The Spot price of silver is in Euros E24.27. Plus a markup of 20% or E4.85 = E29.12.

There is one other calculation required. To make a simpler calculation to avoid irritating small adjustments we need a number divisible by 5.

The E29.12 is then rounded up to the nearest multiple of 5 which is E30. All one ounce Silver coins will now circulate for monetary purposes at the designated monetary value regardless of the printed amount on the coin.

Should the spot price of silver rise to a price higher than 80% of the monetary value, such monetary value will be adjusted the following weekend by a multiple of 5 until again the monetary value exceeds the spot by 20%.

Say the spot price rises to 24.50. Plus it by 20% = 29.40. Raise it to the nearest multiple of 5 = 30, so there is no change in the monetary value as suggested in the calculation above.

If the spot price increases to 25.50 we calculate the new monetary value as follows. Plus the spot price by 20% = 30.60. Rounded up to the nearest multiple of 5 = 35.00 as monetary value, for an increase of E5.

If there is a slump in the price of silver and it drops in the spot price to E20.00. Plus by 20% = E24.00. That is a lower price than the high of E35.00 so the monetary value is unchanged and remains at E35.00.

Why do we have this policy of the mark up to at least 20%?

In order for silver bullion coins to remain in circulation and to not be melted down to bullion it is essential that the monetary value be always higher than the bullion melt price or the spot price.

There are costs associated with obtaining silver.

It is possible that governments or government mints can obtain silver at spot price but the price could be higher.

There is a cost to the mint of producing the coin, minting and distribution. Say 10%

Any overage is sovereignty to the government that allows the government to accumulate bullion as a reserve.

As these reserves accumulate it adds strength to the value of all Irish currency and the Irish economy.

 FRACTIONAL RESERVE BANKING OF ANY KIND RELATING TO SILVER OR THE NOTES WOULD BE OUTLAWED.

All people in the world would be confident that the monetary value of a silver coin would never drop. Whereas, silver bullion would fluctuate in value depending on the world spot price, as happens at present.

For Irish citizens the preferred method of saving would be in  silver coins which could only go up in monetary value and not down.

Banks would be able to store, in vaults, any amount of silver coin on behalf of customers. Such “deposits” would be custody accounts secured by the bank but would not be the property of the bank. (Currently, cash deposits, that pay interest, become the property of the bank and the bank is able to lend that money with no permission from the depositor.) It is foreseen that the bank would/could offer services to the depositor for which they could charge.

An electronic bank account could allow a depositor to use the “Money” in the bank to pay for goods and services by debit card as is currently done. As the trade flows back and forth an accounting is kept and the settlement made in specie according to the records. The depositor could claim back from the vault up to as much coin as his account now says he owns.

Banks could, of course, buy their own coins to be held on their own account, which they could make available for sale to the public.

The silver coin deposited in a bank or owned by the bank cannot be loaned out in any proportion (no fractional reserve banking) and at all times the amount outstanding to the customer is 100% backed by the coin on deposit. If the customer opts to accept fiat bank notes from the bank to replace the silver the customer no longer owns the bullion which it has effectively sold to the bank.

An Post

It is suggested that the Government of Ireland form its own commercial bank to facilitate the distribution of Silver coins in the widest dissemination. It is further suggested that the Irish Postal Service, An Post, be utilized for this purpose. It is already in place in every town and has a courier service component operating.

Irish Mint

At a time when the world spot price of silver drops any appreciable amount it is also the time that the seigniorage to the government is greatly increased and so it is an opportunity for the government to buy bullion to issue in to coin at the much higher monetary value or at a later date at a still higher value. However, at no time can anyone demand the mint buy bullion from them. The mint will be instructed to coin silver money to meet demand but it will be the prerogative of the bank to decide when and where the bullion is obtained and how much is paid. The Irish mint will provide the same guaranty of weight and quality of the coins as at present .There will be no taxes on monetary coin.

It is recognized that a .9999 pure silver coin is not the most durable as its softness causes wear and tear. It is further recognized that sterling coin of 92.5% pure with the balance alloyed with copper provides a much harder more durable coin. It is proposed that at a future time consideration be given to production of sterling silver coins but still containing the full one ounce of silver as has the current one ounce silver coin.

As we expect the silver coin to be used initially as a vehicle of savings it is not expected that the one ounce silver coin will go into immediate circulation to any large degree. At some point the coins will start to be useful for circulation and trade and that would be the time for the Irish Mint to provide sterling silver coins in any amount until the demand is sated.

There is recognition that the Irish mint production will not be able to obtain silver in sufficient amounts in the initial introduction. Therefore it is suggested that any silver one ounce coin issued from a reputable mint with the required guarantee of quality and weight will likewise be monetised. For instance the Canadian One ounce silver Maple Leaf and the US silver eagle could also be monetised as described above.

Quoted from Alasdair MacLeod — http://financeandeconomics.org/

Speech given to the Committee for Monetary Research and Education

At the Fall Meeting, 20th October 2011.

“Please just accept, even if you don’t follow my analysis, that sound money guarantees a stable yet progressive economy where people are truly equal. It allows people to save properly for their retirement so that they will not become a burden on the state. It leads to democracy voting for small governments. It encourages peaceful trade and discourages war. It is the only path, after this mess, that leads us to long-lasting and peaceful prosperity. We really need everyone to understand this for the sake of our future.”

Quote from Detlev Schlitchter in Paper Money Collapse, bottom p157-top p.158

“In terms of the predictability of price trends, the moderate inflation officially targeted in paper money systems today has no advantages over the moderate secular deflation in a commodity money system. But in all other respects, and in sharp contrast to generally held beliefs today, secular deflation has many advantages. In a commodity money system, the monetary asset is likely to provide a small steady return through the on-trend decline in prices, which allows those without investment expertise (or the means to purchase investment advice) to save through cash holdings. On the other hand, the constant injection of new money in a paper money system has to lead to the distortions of interest rates and to the misallocations of capital that we analyzed earlier and that will progressively unbalance the overall economy.”

From the bill to monetize the MEXICAN Libertad coin as put before the Mexican Congress (2011)

“In order to palliate the financial crisis and the economic recession, central banks and governments have reacted by injecting more liquidity and credit; these actions have intensified the causes that provoked the instability, further weakened the whole system, caused a world crisis of deficits and sovereign debt and further increased penury and scarcity in the majority of the population.

These “rescues” and emergency repairs have succeeded in prolonging for some additional months the life of the financial system, but they will cause its collapse to be much more dramatic and painful. The International Monetary Fund has itself warned that “the risk of a double recession has increased” (IMF Report, June 1, 2010).

For families, the inflationary rise in prices, the evaporation of savings and the loss of purchasing power are causing a distressing situation of tightness and anxiety which are depressing and negative for interpersonal relations, as well as setting up a vicious circle of want and scarcity.

The ultimate origin of the financial and economic problems of today dates to August 1971 when real money – backed by precious metal – was substituted by fictitious money, which can be issued exorbitantly because it consists of nothing other than paper and computer digits.

By HUGO SALINAS PRICE in Dorothy’s Silver Shoes delivered at the London GATA conference, London Eng. Aug 6^th 2011 (Adapted from Ireland from a US presentation)

“The restoration of the silver currency of Ireland by the very simple procedure outlined here can provide the life-saving alternative. There is, at present, no practical proposal for a viable action in the field of money. Perhaps there can be no other practical proposal? Perhaps a return to silver money is the only path out of the present crisis of civilization?

Let us hope that a political leader in Ireland understands this message. The popular appeal of silver is universal; “silver shoes” will take that leader far- and the Irish people will follow him on that road!”

My thanks to Hugo Salinas Price, President, Mexican Civic Association Pro Silver, www.plata.com.mx for his patience in reviewing this presentation which has been largely inspired by his writings and those who contribute to LeMetropoleCafe.com