Sunday, December 11, 2011

#1: The Riegel Exchange Monetary System – REMS A Proposed Solution to The World's Financial Problems


#1: The Riegel Exchange Monetary System – REMS A Proposed Solution to The World's Financial Problems

The flagship report on this blog is a brief piece by E. C. Riegel with some commentary and thoughts by Thomas H. Greco, Jr. I have read much of Mr. Greco's work in the field of Alternative Currency and conclude that, in modern times, he has the best understanding of Riegel's works and intentions of anyone I have seen, besides myself. 

That said, I feel compelled to make a few comments of my own within this document. I choose to do so by putting such comments inside brackets ending with my initials, as [... - l.o.g.] in bold blue, inserted into the document at the point where clarification is needful as I see it. I do this not to intentionally “interrupt the rhythm and flow of the original,” but rather because it is my contention that whenever discussion of a matter is postponed instead of looking at relevant considerations when they are most current in one's mind, much of the potential value of the commentary is forever lost to the reader. - 

Laurence Gilbert 

To find out more about our proposed Riegel Exchange Monetary System based upon E. C. Riegel's extensive works, please visit:
Valun Mutual Money Plan
E. C. Riegel [date unknown]
With Introduction, Comment, and Critique 
by Thomas H. Greco, Jr. - June 9, 2003 

Editor's Introduction 

Recently, while sifting through the Riegel papers, I happened to find this "thirty pound nugget." It is a summary of Riegel's Valun Money Plan, which shows very clearly the nature of the system and the essential details of its operation. In my estimation, it is both brilliant and reasonably complete. It is fully consistent with the values and objectives of the current movement to transform money and should be very useful to us today as we try to focus on the main issues and challenges and come to some consensus on a plan of action. 

The most fundamental purpose of the valun exchanges is to open the money power to the people at large, and to businesses in particular. The valun exchanges were to accomplish this by performing the clearing function and by allowing members to overdraw their accounts, in effect, creating money. It further intended to create a new money unit or standard value measure. Riegel not only conceived this solution, he also tried to implement it, though with little success. Given the greater awareness and interest that prevails today, and the available technologies, we may have a better chance of succeeding. 

There is no indication of when this draft was written, but comparing it with Private Enterprise Money and Riegel's other writings on the valun program, I conclude that it must have certainly come later. Indeed, I venture to say that this draft represents his most mature thinking on the subject and was probably compiled not long before his death (he died in 1954).

Despite its brilliance, there are a few points here that I disagree with. Rather than interrupt the rhythm and flow of the original, I have decided to append my comments at the end instead of interspersing them at each section. Throughout, I have used italics to set off my comments from Riegel's. I have bolded a few of Riegel's words for added emphasis.

Toward the end of the draft, Riegel offhandedly states that, "The project of course encompasses an economic world revolution and it is difficult to forecast all the consequences." INDEED! - t.h.g.


To establish a sound money unit with a constant purchasing power and a money system that will prevent booms and depressions, inflations and deflations, and assure constant prosperity and universal circulation, the following plan is proposed. 

Name of the Unit 

The proposed name of the new money unit is valun, a word compounded from VALue UNit. It will appear in all desired denominations of bills and coins, and checking accounts will operate like the present. (I have it from Spencer MacCallum that valun was pronounced "val-oon.") 

[Like Greco below, I also propose using the term "Riegel" for the name of the proposed monetary unit, and for the same reasons. I also propose using "Riegel Exchange" wherever applicable to distinguish valun from riegel. I did not discover Greco's similar intentions on this until some time after I had already determined this for myself in early 2006 and later established this fact with my website in February 2007 and subsequent documentation of the same. I feel very strongly that gentleman should be honored in some way for his incomparable contributions to this most clouded and gray subject area. - l.o.g.]

Valun Exchange 

The central clearing house through which checks are to be cleared and from which the currency bills and coins will be obtained will be called the Valun Exchange

How It Will Start
The ideal institutions to start the system are department stores because their lines of merchandise are so inclusive; and they are well known to the public. They would not sponsor anything that is not sound and in the public interest, and with their endorsement the people would have confidence in the new money. 

[I differ here somewhat for the following reasons. I feel that the real ability to bring this forward lies in the two extremes consisting of the producer level on the one hand and the end-user/consumer on the other, with the producer/manufacturer being the critical initiator to focus on rather than the raw materials supplier, the distributor / wholesale area, or the retail sales area, with the end consumer/small family business coming in a close second, and working in consort with the manufacturing sector in bringing the REMS forward.

The reasoning for this is that the manufacturer is the focal point of the great majority of production in this age of specialization wherein all raw materials going into any “end-product” naturally determines what gets to the shelves of any distributor or large retailer. Thus both all raw materials suppliers and all distributors to retail sales are dependent upon the manufacturer. Without the active participation in the REMS at the manufacturer level there is no 'push' so to speak for it's use. 

All raw material suppliers of course are utterly dependent upon the manufacturer. While ALL steps and processes are necessary, from raw materials to consumer, the manufacturer holds the key position of implementation here for several reasons as I see things. 
Starting at this base level there will logically be this automatic ''push” effect in both directions.  

Everyone else is at the next level to use the REMS because for every one major manufacturer there are many more retailers who will willingly follow whatever their primary suppliers demand. Without the products from the manufacturer there is nothing to sell. Thus the manufacturer base is where the power to explode the REMS lies in my opinion. 

It is also at this base level of production where the greatest ease to introduce the Riegel to the consumer lies due to the fact that the employees making up the manufacturing base are at once the real creator of the products they actually create and also their own end consumer. Their getting paid in Riegels will help accelerate the acceptance of the Riegel from this level to the whole very quickly, and at the same time it will quickly be seen as a win-win by the manufacturer, who tends to operate on a small profit margin anyway, and current instability in 'money' puts a real strain on the manufacturer. - l.o.g.] 

Forming the Exchange
The firms that desired to initiate the system would form themselves into a Valun Exchange and adopt rules governing the operation thereof. 

[I feel that the actual Riegel Exchanges ( RE ) need to be established separate from the direct control of any one group of users to minimize any possible monopolistic controlling tendencies by any one user or participant in the REMS. The Riegel Exchanges function as a service provider for all users, not just one area, and are thus of necessity separate, even though the very needs of any one group would at the same time establish the needful governing rules of how the RE interacts with them, from supplier to end consumer. - l.o.g.] 

Mutual Credit
The members of the Exchange would agree on the line of credit for each (probably a percentage of their previous year's business). This means that each member would be allowed to draw checks in valuns up to the stated credit limit. Checks would be convertible into currency. 

[Again, the RE itself would have this responsibility of determining the needful credit line here, both for businesses and individuals. - l.o.g.] 

Dollar Pool
To quickly establish public confidence in the new currency, the members would agree to pay into a pool, one dollar for each valun issued. This pool would be used to guarantee to any holder of valuns that he could get dollars in exchange, unit for unit. 

[As does Greco in his notes below, I too feel this is an area that would need some considerable study and for the same reasons. Yes, there is a demonstrable initial advantage to doing this, as some current Alternative Currency systems do, but it does pose an additional burden on the issuing members. I do feel though that by focusing on the Manufacturer per above instead of the Retailers and local end-user consumers for bringing this forward much of this issue would resolve itself as being something not needful. 


Some additional thought and discussion definitely is needed on this. I also feel that if/when we can incorporate such into any level of governmental recognition at the sovereign state/nation level, or maybe even at the federal Constitutional level within a framework of a return to true deJure government, then perhaps that official supportive action, tending to give authenticity to the 'Riegel' and the REMS, would preclude any initial need for this requirement at all as well. - l.o.g.] 

General Acceptance
All the members would announce to the public that they would accept valuns the same as dollars in their business, or would exchange dollars for valuns. The effect of this would be to make valuns acceptable to other tradesmen who are not members of the Exchange. The currency bills would carry the legend: This bill will be accepted in exchange for goods and services or for a dollar bill of the same denomination by the firms whose names are printed on the back hereof. 

[As per above, this additional burden and inconvenience really needs to be studied and determined prior to bringing the REMS ( Riegel Exchange Monetary System ) forward. All pros and cons need to be determined beforehand, as I see in this process a possible tendency towards too much big business control and not enough individual people involvement. Yes, larger businesses must be quickly involved, but not in such a way that they will warp into REMS “controllers”. The desire and natural evolution of the REMS is such that control by BIG corporate business will decline as individuals begin to step forward in their new monetary liberty and freedom as Mom & Pop businesses on a much more level playing field. We DO NOT want to allow anything within the foundation of the REMS “Governing Rules” which will negate it's true potential from coming forward, but rather the very opposite. 


This latter point of 'desired direction' for future commerce is likely to be a point of major contention going forward, so this too will need to be thoroughly examined and considered in relation to our efforts in introducing the REMS. - l.o.g.] 

Issue of valuns would, of course, be confined to members who had agreed to the dollar pool. They would write checks for their purchases, and would cash checks in the regular way for payrolls. 

[See above and also stick with Riegel's equivalency of A and B members – l.o.g.] 

Pool Cages
The dollar pool would set up cages in the department stores where dollars would be available to all on demand, in exchange for valuns. 

[While this could be done and have a value in some instances, the most likely instance for a Reigel Exchange is much like that of a present branch bank – l.o.g.] 

Spread of the System
Because of the dollar pool guarantee, any merchant and employee would accept valuns and thus there would be many merchants besides the sponsors who would trade in valuns. No one would, of course, be obliged to do so, except for competitive reasons. Such dealers could open checking accounts in the Exchange but would not have credit, and, of course, would not pay into the dollar pool. 

[As mentioned previously, a possible sticky point may well be acceptance by large corporations who have a vested interest in the continuance of the present bogus monetary system. I believe it will be in the best interest of legitimate corporations to utilize the REMS, but they may well need some serious education along this line. – l.o.g.] 

End of First Phase
The first phase is intended merely to demonstrate the feasibility of the plan and to win public confidence and to lead to the accomplishment of the ultimate purpose of the plan, which is to completely separate the valun from the dollar and all political money units. The time when this can be accomplished will be automatically determined by public reaction. 

Parting of the Ways
It should be noted that the dollar pool will buy Valuns with dollars but not dollars with valuns. In other words, the valun will be guaranteed to not fall below the dollar, but there is nothing to guarantee the dollar from falling. In fact, the dollar is sure to fall, and that is the main reason for starting the valun system - to protect valun users against inflation and to maintain a constant price level. 

At the outset all goods will be priced the same in dollars and valuns. For instance, a pair of shoes will be priced $10 and V10. In due course the inflationary factor in the dollar will cause the dollar price to rise to say $10.50 but the valun price will remain V10. Thus the public will discover that the valun is worth $1.05 and will refuse to exchange one valun for one dollar. From then on the disparity will increase and therefore, the dollar pool will have served its purpose and may be dissolved and the dollars and valuns contained therein, returned to the sponsor depositors. Thereafter the valun and dollar will each be on their own.  

The valun will become the storm center to escape the inflation 
storm and people will turn to it in self defense

Why Price Disparity
That prices should rise in one unit and not in another, or more in one than another, may seem puzzling, but that is going on all over the world. The dollar is the most nearly stable unit in the world. Therefore, prices are rising in terms of other units more than in dollar terms. 

When the valun is launched, it will be more stable than the dollar, and will in fact be the only stable unit in the world. The stability of a unit is determined by its issue policy. The issue policy of the valun is that its issuers are solely private enterprisers who issue it only for purchases of actual values under competitive conditions. The issue policy of a political unit is that it may be issued for any purpose by the government including all kinds of non-productive projects. There are billions of dollars issued against no production - hence the inevitable inflation. 

[Here you see the whole “investment” mentality where it is only made to appear legitimate in the first place due to the built-in necessity for “growth” caused by unpayable “debt” due to uncontrolled greed and also the uncreated interest. As stated before, Riegel tends to play down the role of the Banking Elite, and I feel that is very naive as our current situation with it's banker created “commodity money” and “money makes money” philosophy proves. 

It will be difficult to realize the full potential of the 'stability' of the Riegel against other world currencies, including the dollar so long as the great majority of raw goods and processes are controlled by the current fiat monetary system worldwide mostly. – l.o.g.]. 

Every valun issued will be against actual value received by the issuer. Thus there will be many more dollars than valuns bidding for the same goods, with the result that dollars will decline in power while valuns will remain stable. 


[This section on Price Disparity could be expanded greatly here, but I will only point out a couple of things at this time. 

The main thing here deals with the primary reason(s) for the issuing of these massive amounts of unbacked FRNs (Federal Reserve Notes - NOT real Constitutional dollars) in the first place. We must realize at this point that in Riegel's time we did not yet have a fully 100% fiat monetary system in place like we do today; we had money that was “backed” by gold until 1971. Also, many other countries were even less advanced along these lines of corruption than the U.S. There are two real sides to this point: 

First, something Riegel deals very little with, though obviously he was well aware of it's effect, is that of interest, which creates "debt" and the fact of why that is so. The interest established at the point of creation, from whatever source, is never created, so you have a situation wherein every time such money is created from a loan with interest attached, the money pool is shrinking. This FACT mandates an ever increasing frenzy to create more and more goods and services in an effort to maintain oneself in a position of solvency while chasing a smaller and smaller pool of actual money. Within such a reality one realizes that a usury-based monetary system, if allowed to run it's natural mathematical course to predestined implosion, always requires a substantial and ever-growing number of LOSERS by design. This is also the reason everything is measured in how much "growth" takes place. The usury itself is nothing less than pure economic theft and rape of the people's created value, being done by literal economic parasites and/or vampires.

Secondly is the part which the Elitist members making up most of the government offices play here. Without going into a lot of historical reference, suffice it to say that there are in existence primarily 2 different historical factions that generally are looked upon as "The Elite."

They joined together many hundreds of years ago to support each others' unique needs,
desires and goals. Eventually, they will likely turn on each other and destroy themselves, but meantime they maneuver and work together up to a point. The historical families and/or individuals making up the so-called Money Power families are mostly separate from the general Government Power families, the latter usually consisting of historical ethnic "Royalty" bloodline mostly. Both factions discovered centuries ago that by joining together it was much easier to control the 'common' people for their separate benefit, and they have done that very effectively. - l.o.g.] 

The Permanent Set Up
The permanent organization of the Valun Exchange should include any person or organization. Membership should be of two classes: the A members, those who are allowed credit, which means the power to overdraw the checking account and thus create valuns; the B members, those who will have the depositing and checking right without the overdraft right. It is proposed that the territory of each Exchange be the state in which it is located. Any person or company in the world should be eligible for class B membership in any Exchange but will naturally choose the nearest, and as membership in any locale justifies, a local Exchange will be opened. Exchanges would be mutually owned by their members without capital, acting essentially as central bookkeepers and clearing houses. 

National, state and local governments should be admitted as members of any Exchange but should qualify only as class B members without the power to create valuns. So far as valuns are concerned, governments should be obliged to balance their-budgets by denying them the over-draft power. 

International Exchange
There should be one Exchange devoted to international trade to enable any trader anywhere to draw a check in favor of any trader anywhere else. This Exchange should be confined to class B membership. Any credit that an international trader is entitled to would be secured through some other Exchange and transferred to the International Exchanges to be drawn against. 

International Governing Board
Each Exchange would have a representative on an International Governing Board that would determine matters of universal interest and regulation. Effort should be made to permit each exchange to have autonomy within proper limits. 

The most important question upon which men differ is credit policy. The Governing Board could set what is deemed to be the most conservative policy and provide therefore a minimum percentage to be charged for loss insurance, and from there up graduations of more liberal policies, with appropriate percentages for loss insurance for each. Each Exchange could then choose its own credit policy. The appropriate loss insurance percentage would then be added to the check clearing charge. Thus members of the various Exchanges would pay more or less as their policy was more or less conservative. 

The insurance fund thus set up against defaults would be held by the Governing Board subject to draft by any Exchange to cover any loss from credit default.

[I believe a Governing Board should be established within each state to establish and oversee local exchanges within each state. When such is set up, it will of necessity adopt a set of Rules & Guidelines as established by the forthcoming REMS Committee, which will be universal for all prospective exchanges at every level in order to participate. This is necessary in order to preclude future corruption of the whole system and to synchronize the goals and functions of the REMS across the board. – l.o.g.] 

Members' Charges
It is contemplated that the expenses of the Exchanges would be borne by the members through a per check charge for all checks cleared, thus each would pay in ratio to service received. No interest charge is contemplated for debit balances and there would be no loans in the present banking sense, and of course no notes issued. 

The currency bills and coins should be printed and minted by the Governing Board and supplied to Valun Exchanges, so that they would be uniform the world over. 


The project of course encompasses an economic world revolution and it is difficult to forecast all the consequences. The following is a catalogue of obvious accomplishments:

* Provide a stable price level.
* End the debt-money system. Credit would be extended solely upon the ability to deliver goods and services.
* Abolish interest within the system.
* Take the money-creating power out of the hands of government and banks and place it in the hands of private enterprisers.
* Make government operate on a cash basis; prevent deferred and delusive taxes through inflation.
* Assure distribution of goods by distributing money power.
* Prevent inflation and deflation; boom and depression
* Defeat bureaucracy, fascism, and communism by taking the money power from government.
* Defeat hidden money control from any quarter.
* Assure full employment and a high standard of living. Give the people the veto power over war and government extravagances.
* Supply the perfecting element in democracy and private enterprise.
* Unify commerce in one world of business, in spite of the separatism of politics.

Comments and Critique by Thomas H. Greco, Jr. 

Name of the Unit
I propose that the unit be called the "Riegel," in honor of the man who contributed so much to our understanding of money and exchange. I also like it because it is a homonym of "Regal" and thus carries with it the concept of sovereignty. Besides that, I just like the sound of it. 

The Dollar Pool
This is a feature I do not recall seeing in any of Riegel's other materials. I can see the advantage of it but it does pose an additional burden on the issuing members. Some additional thought and discussion is needed on this. 

Parting of the Ways
In Riegel's example, he presumes that the dollar will continue to be debased while the valun will hold its value in terms of real goods and services. I agree, however, since the valun system will for some time be more limited, people may be willing to exchange some valuns for depreciated dollars because of the dollars wider ranging utility. If inflation of dollar prices were to accelerate, however, which is very likely at some point in the future, people would begin flocking to the valun system because its superiority would become more obvious. 

[I fully agree and believe that the time at which serious inflation, possibly hyper-inflation, occurs is upon us now in the near-term. I believe this is one of the reasons so many people are arousing from their slumber more than anything else, even if they do not presently perceive the actual reasons specifically of their anger. – l.o.g.]

Price Disparity Riegel, throughout his work, speaks in favor of an "abstract value unit," and his valun is presumably the implementation of that thinking. He expects that the valun and the dollar will in a short time part company. I myself cannot see how that will happen without a lot of help. A value concept gets established in the minds of people through its use. Since people are well accustomed to using the dollar value concept, what will it take to lift them out of the "rut" of dollar thinking and onto the high ground of valun thinking except some physical reference which allows them to compare the two side by side? In my view, any new value concept must be defined in concrete physical terms if it is to have any hope of separating from the established value concept. Thus, my oft repeated advocacy of a "market basket" standard.

Everyone knows how an index number, like the consumer price index, works - you take a basket of commodities (and services) and compare their total dollar cost today with their dollar cost at some time in the past. Now, if you take the reciprocal of that index number, you get the value of the dollar in terms of goods and services. My proposal is to define the new unit (valun) as a specified amount of some specified commodities. Then, there would always be a clear distinction between the value of a dollar and the value of a valun. 

[I totally agree at this point with Mr. Greco's reasoning above. – l.o.g.] 

So far as governments are concerned, Riegel would limit them to class B membership, i.e., he would deny them the overdraft (issuing) privilege. I am inclined to be a bit less strict. I, too, have serious objections to governments forcing people to accept both their services and disservices, and would prefer that such services be required to stand the test of competitive markets. But that is something that can only partially be dealt with through the monetary realm. 

We are seeking an alternative exchange mechanism to the present centralized government-banking dollar system, which enables unlimited monetization of federal government debt. Surely, the federal government must not be allowed to do that in an alternative system, but I think the purpose of dispersal of power will be served by allowing lower levels of government to monetize a portion of their anticipated tax revenues. As long as taxes are with us, I am willing to allow lower levels of government to use them as a basis of issue. There must, of course, be limits on the amount so monetized, just as there are limits on the amounts allowed to private businesses. Local, municipal, and perhaps even state governments should be allowed overdraft (money creation) privileges so long as the same credit limit criteria are applied to them, as to the private business members.

[I differ with Greco here as I see the necessity of preventing government participation at any level in the money creation capacity. If they ever get their foot in the door, it lays open a plethora of continued possible corruption devices on their part and enticements to do the same on the part of Government Officers. It is too tempting, and Riegel realized this. Further, if you make an exception for one entity, before you know it there will need to be exceptions for others. And soon, the whole REMS will be corrupted beyond salvation.

What the government has at it's disposal at all times in the case of real emergencies is the ability to "request" an emergency "advance" from the Governing Board subject to their approval. This is one of those items that must be considered in advance and written into the by-laws/governing rules of said Board, so nothing destructive of the REMS occurs. At the same time, the possibility for unexpected events must be considered in advance thoroughly. - l.o.g.] 

With those provisos, I think we have here a good plan. It remains to adapt it using today's technologies and to promulgate it to a wide audience. - t.h.g. 


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