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Brief Monetary Theory for Intelligent Students and Investors.

The Insane Plague of the virtual Coins or Bitcoins.

The principal intrinsic characteristic of the bitcoins is that they lack the support from real and tangible values or assets. As are the gold and the silver, precious and scanty metals, which were endorsing the value of the former national notes. As are the assets of the companies, which give his essential value, not that of market, which is a controllable speculation, to his shares and bonds and debts. As are the current money, which possess the support and the financial and juridical actions of the Central, national or supranational, Banks, since is the case of the Euro, to endorse his value and guarantee his intrinsic security, against the excessive covetous actions of the international speculators without principles.

Resultado de imagen de Jesus and the Tiberius denarius A Tiberius Denarius. The payment to the Caesar.

The Properties of the real Money.

There are some essential properties of the money, which last in him from the beginning of his existence as «intermediary in the exchange of goods» of the Humanity. The money is a deposit of value and this quality stems from his previously mentioned property. All the economic agents did accept it as «complete instrument» in the exchange of goods and services. Because his value was remaining reasonably in the time and there was no loss or wastage in his possession, while was acquired the final «wished good«. The money is also, as corollary, the unit of the economic value, since all the goods and services cost a multiple or a submultiple of the monetary unit. The money is, with it, a sure and trustworthy mean of payment. And, as his corollary, is a standard of deferred payments or debts liberating between debtors or recipients of the money of others, for his use in an agreable time, and the private or professional borrowers.

Resultado de imagen de secure money  MODERN MONEY MOVEMENTS.

All this does that the hard cash, should have a solid and resistant nature, in order that it does not affect the durability of his value in the reasonable time. But, also, the money already overcame long ago the barrier of the material disadvantages of his guard, coming and goings and concentration for great payments. Being based on the confidence of all on his already mentioned properties and using the modern digital and telematic means, the money has transformed his physical expression towards the countable notes with infinity forms. Allowing almost instantaneous transactions in the time and at any distance in the world.

The corrupt and spurious money.

This does not happen with the so called fake or virtual or ethereal money, since they are essentially speculative or of fortune values. Designed precisely, to facilitate this function of not productive and of very high investment risk, to fluctuate in not known time periods. The nature of fleeting electromagnetic beats that have this money, without seizable physical supports, allows them the highest rotation speeds of his transactions, which also favor his behavior of virtual, speculative, desirable and in high degree attainable values.

The extension and the operations of this speculative and degraded money feed and promote by the greed of his possible holders. The greed is an untid passion, which looks for the possession and hoarding all kinds of desirable goods for the person that suffers it. And this is independent from his real need and usefulness for the subject. In turn, the greed is supported and nourished by the vanity of the subject, which is another untid passion. This character of both concerns more or less seriously the soul powers of the, specially the understanding and the will. This way, is being created a perverse correlation, which is of difficult resolution.

Resultado de imagen de tulips bubble Bitcoins fever could eclipse the Tulip Mania. Just wait enough.

We have an example of these speculative values, in the so called Bubble of the Tulips developed in the first half of the 17th century.

Far from the desolations and brutalities of the first Great European War, the so called the Thirty Years War (1618-1648), Holland lived at the time an epoch of growth and commercial opening. And it placed as one of the great European powers. In this period of wealth, the Dutch leader classes found in the tulips an object of ostentation and collection. The tulip is an original flower of Turkey, which form remembers the great turban of the Ottoman sultans. In 1593, the botanist Carolus Clusius introduced in Holland the first tulips. The noble classes collected them and they turned into a wealth symbol.

Though for being flowers his negotiation was in summer, the Dutches designed, to prolong it, a kind of futures market for the tulips. The producers offered to deliver a given bulb in the epoch in which it was blooming and the buyers acquired its delivery right. This turned into a speculation that was autofeeding. Charles Mackay in his book «Multitudinous Deliriums: the obsession of the tulip and other maddened markets» wrote that in 1635 40 bulbs were sold for 100 thousand florins, when the annual salary of a craftsman was 200 florins.

Little by little, the market attracted the popular classes. The futures market and the new and numerous small investors finished shooting up the tulips’ prices. Then, the simple possession of the tulip was replaced by the purchase and sale rights market. And, sometimes, without getting yet the acquired bulb, already it was sold with a juicy added profitability.

Resultado de imagen de tulips bubble A chart of the Tulips’ Prices.

But, being a product conditioned by the effects of the climatological conditions, and when the crops of 1637 were poor, the speculative financial tensions began. The sales of that spring were not good. And, the most experts started distrusting the guarantees that had been given to acquire tulips. At a given time, it was accepted that their price was very excessive and the orders of sale happened. The commercial agreements could not be respected and at a breach of contract followed other one. In the fall of the supposedly real value, remained caught thousands of small savers. That financial economic crisis struck hard the Dutch economy. And it generated a period of deflation, low wages, familiar ruins and business closing.

The Kindness Therapy of the confident Money for a broken Economy.

In 1948, after the World War II, the awaited monetary reform was realized in the West Germany. The measure, both simple and important, consisted in reducing the volume of the money in circulation. This way, after the inflation of last years, the old reichsmarks turned into the new deutschmarks, in the proportion of ten of the first ones for one of the new ones. Both the producers and the merchants were waiting for this measure, which facilitate and guarantee his operations of production, purchase and sale.

Soon, jointed this with the German discipline and the laboriousness, the shops began to fill with articles and the workers already were possessing sure and admitted payment means. Little by little, they were leaving the prices controls and the rationing, artificial measures destined to limit the inflation and to distribute the few available goods, with State controled, imperfect and inflexible measures.

Resultado de imagen de West Germany money reform  WEST GERMAN CURRENCY REFORM (JUNE, 20, 1948).

And, the economic cycle that does that the people react in the managing of the money, against his more adverse experience of depreciation and inflation, appeared also in the West Germany. And this event, together with his horrifying experience of 1923, with the retermarks of the Republic of Weimar, are the origin of the determination of Germany in having always a firm currency, the mark or the Euro, that could not be devoured by the inflation and that allows the healthy and sustained economic development.

An example of an unsuccessful and ruinous money for his last holders and all the Nation.

The Scot John Law came to France in 1716. His central idea was to create a bank that could issue notes to his borrowers, with the guarantee of the rustic properties of the country. This simple idea is in the base of later numerous forms of swindles to covetous and not much intelligent investors. His personal skills allowed him to know the Duke of Orleans, the Regent of the Kingdom.

In this epoch, the financial situation of France was disastrous. The expenses of the kingdom did duplicate the income of the Treasure, which arks were empty. And the collectors of taxes and his collaborators were looking rather for his own benefit. A decree of May 2, 1716, granted to Law the right to found a bank with a capital equivalent to 250 thousand sterlings pounds. The Bank could issue notes or bonds, which it dealed in the shape of «lendings to the State«. Which began to use them for his multiple and unavoidable payments, with public full value and liberation character.

Resultado de imagen de Law's banque royal NOTE OF THE BANQUE ROYAL, SUPPORTED WITH SILVER.

Since France had been reducing the weight of the precious metal in his coins, Law’s notes were almost like a guarantee against the embezzlement and the prevarication of the Administration of the Kingdom. And, this «acceptable money» in a capable latent economy produced great and unexpected benefits with the extension of the transactions for the whole economic body of the country. And Law’s bank turned in the «Banque Royal» of the country.

The Regent of the Kingdom, full of pleasure, proposed an additional emission of Law’s notes. And Law thought of developing his original idea: to create a «Company» to exploit and bring to France the great quantities of gold, which was supposed that existed in the subsoil of Louisiana; and to benefit also from the impulse that would receive the trade. At the beginning of 1719, the new «Company of the Indies» obtained commercial monopolies in the territories of French influence in the India, China and the South seas. And then received that of the tobacco, the collection of taxes and the right to coin metallic currency.

The response of the potentials investors was disproportionate and unexpected in all the aspects. This way, the Stock Exchange of the titles of the Company had to move successively to a bigger place. And the value of the contiguous areas to them shot up, since the people wanted to be close to the operations places. The títles rose fabulously of price. Persons who invested initially a few thousands, were within a few weeks owners of millions. It seems to be that the term millionaire arose in France in this epoch. And the Company was issuing more shares, at higher prices, but lower than the market, throughout this year.

Resultado de imagen de john law  The honorable John Law.

Meanwhile, Law was object of the major gratefulnesses and distinctions. He was ennobled with the dukedom of Arkansas and named Financial Controller of France at January 5, 1719. The Scot, even, frenchified his surname with the most euphonic of Lass. The Banque Royal, at the same time, was increasing his lendings and, therefore, the notes with which it was doing them. At the end of 1719, there were around 1200 million French pounds of these notes circulating in the financial channels of the French economy. And, what in a beginning was a benediction, nobody thought that it could turn in a mortal embarrassment. And the financial engineering of the epoch began to work.

It was supposed that the sale of shares of the Banque generated own resources, destined for the exploitation of the idle lands of Louisiana. But, thanks to another agreement with the duke of Orleans, this fresh capital was destined to give more lendings to pay the expenses of the French government. Only the interests earned by them, could be destined to the golden extraction and this one would form part of the hard reserves of the Banque. All this generated a whirlwind of cycles of dealing of lendings to the State, emission of notes by the Banque Royal and purchase of his shares, which was selffostering and uniformly hastening «ad infinitum». Or not …?

At the beginning of 1720, the prince of Conti, irritated because he could not acquire a share package at the price that he considered suitable, sent to the Royal Banque a great quantity of notes, to be changed in real money. It is said that 3 carts were needed to transport them. Law appealed to the Regent, who ordered the prince to return a considerable part of the gold got for his notes. The exploitation of the resources of Louisiana failed, the mines were conspicuous by its absence and the whole financial farce swindler sank. An increasing number of persons claimed daily at the Banque for his hard cash. One day of July, 1720, 15 persons died in the riot formed in front of it.

The Regent concealed Law, to save his life and made him go out of the country. In France remained missing fortunes, a great deflation, collapsed prices, diminishing business, an increasing unemployment and a lasting fear against all the banks.


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Enrique Alonso nació en La Habana. Tras el establecimiento del régimen comunista se trasladó a España, licenciándose en Ciencias Químicas en la Universidad de Oviedo.

Es titulado por la Universidad Complutense en Química y Tecnología del Petroleo (dos cursos) y en Logística por la Cámara de Comercio de Madrid (un curso). Ha realizado su labor profesional durante más de 30 años en REPSOL y empresas anteriores, absorbidas posteriormente. Su trabajo se centró en la investigación de lubricantes (Centro de Investigación de la calle Embajadores), el área comercial y la logística de lubricantes (unas 100 mil Tm. al año de productos a granel y envasados, con un presupuesto total de unos 1000 millones de ptas).

Ha sido colaborador en la década de los 80, del diario Pueblo y, a través de la agencia EFE, de diversos diarios españoles e hispanoamericanos en temas de política internacional y militares.

Es autor de la novela “Operación Elefante”, publicada en 1982, que trata minuciosa y extensamente de las operaciones y tácticas de las guerrillas y contraguerrillas en la Angola socialista prosoviética de Agostinho Neto, apoyada desde 1975 por tropas cubanas. 

En 2005 publicó en inglés el ensayo “On the Nature of War”, que es una teoría de la guerra basada en el desarrollo y la aplicación práctica de 10 “sistemas operativos”.

Actualmente es colaborador permanente de la revista española War Heat International.

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