The explanation of how it works from his "Me" page on eBay. When I tried to access the website, it wasn't working... Guess that they site provider wants real dollars...
Millennium Dollar® Store of Value
A Private Inflation-Adjusted Currency
Introduction:
For decades, the largest course offered at Harvard University has been economics 10, the introductory course on economics. This happens because everyone, including future doctors, lawyers and business chiefs, wants to understand how the economy will affect their hard-earned money. What follows is a lesson about money that is not taught at Harvard, but you will experience it first hand by the time you retire. Mark Twain would have enjoyed the irony.
1,000% Inflation:
By the turn of the millennium, 60-year old Americans had experienced 1,000% inflation. Since the U.S. dollar was the strongest currency in the world, we can assume that people from other countries fared even worse. In retrospect, this sounds like a lot of inflation, but inflation compounds over time. So, it only takes an average of 4.08% inflation to surpass 1,000% inflation over 60 years. As of August, 2005, the inflation rate in the United States was 3.65% and rising. What does this do to our savings? As we all know, inflation destroys the purchasing power of money. At 1,000% inflation, you must on average save five dollars, to net one dollar, of purchasing power over 60 years. While this may be hard to believe, this is what the numbers tell us. Americans are often criticized for not saving. This is the reason why. Intuitively, Americans understand that it doesn’t pay to save. The real question is why people from other countries, many with even higher rates of inflation, save anything at all. Clearly, something is wrong with our monetary system. Especially, when noted economists and central bankers say, that we don’t really understand how inflation destroys our money. Why is this; and, while we can’t change the past, what can we do to bring inflation under control in the future?
What is Money?
We begin by delving a little deeper into the nature of money. While money has been defined in many different ways, it is generally agreed that money has three primary functions. Money serves as a medium of exchange, a unit of account and as a store of value; which means that money is supposed to represent purchasing power. The reason why inflation, and deflation, are so destructive is that they destroy the primary functions of money by constantly altering the purchasing power of money. But, what causes inflation and deflation? While economists take a macroeconomic approach by calling inflation (or deflation) a sustained rise (or fall) in the general price level; this doesn’t really tell us as consumers and business managers how to respond. So, we have taken a different approach, by offering a microeconomic definition of inflation and deflation. This approach will show each of us how we can individually deal with these phenomena, instead of speculating about the future actions of some central banker. But to get the answers, we have to approach this subject matter like scientists.
Reduction:
In science, there is a philosophy called reductionism; which says, that the best way to understand something is to reduce it to its smallest parts. This is why some physicists smash atoms into components, and then smash the components again into something smaller; and so on. Particle physicists are reductionists; but most astronomers and economists are not, because they tend to look at the big picture instead of the small details. We are going to apply reductionism to economics. Where finance, markets and economies are concerned, the smallest element is not the paper currency, but the monetary unit. The monetary unit is represented by the integer ($1) printed on the smallest denomination of the paper currency. On larger denominations, the integer(s) represent a multiple of one monetary unit ($2, $5, $10, $20, $50 & $100). The activity of finance, markets and whole economies are tracked via the monetary unit. So, what happens if the monetary unit malfunctions? In the United States, only about 8% of the money supply is paper currency and coinage, while the other 92% is represented in other formats, whether paper, electronic, plastic or book entry. This means that the monetary unit has a life of its own apart from the paper currency. But, whatever happens to the monetary unit on the government-issued currency, the result ripples through financial obligations, institutions, markets and economies. It can even spill over into other economies via currency exchange rates & trade, thereby affecting other nominal currencies. In effect, the monetary unit is the vector that carries monetary imbalances and disturbances throughout the monetary system. So, what can we learn about inflation, by using reduction to study the monetary unit?
Inflation Redefined:
We understand that money is supposed to represent purchasing power, but inflation destroys purchasing power. How does this occur? By answering this question, we arrive at a new, microeconomic definition: Inflation (deflation) occurs when the monetary unit on the government-issued paper currency violates the concept of whole numbers by representing less (more) purchasing power over time. This turns inflation on its head. Instead of being the cause of monetary destruction, inflation is the effect that occurs when the nominal monetary unit violates the concept of whole numbers by representing less purchasing power over time. And what about deflation? Deflation is simply the inverse of inflation, the same effect moving in the opposite direction. But what is the concept of whole numbers? The concept of whole numbers states that each additional integer (1, 2, 3 . . .) must represent one additional whole unit. Otherwise, we begin to lose the ability to add, subtract, divide and multiply; which is to say, we lose the ability to count. As it turns out, the concept of whole numbers is critical to understanding inflation; since the concept of whole numbers is the foundation of arithmetic, and arithmetic is the foundation of mathematics. Not only do we lose the ability to count, but our ability to use arithmetic and mathematics in understanding economics becomes impaired. And, it is even more sinister, because the nominal monetary unit (i.e. $1.00) itself does not visibly change, only the degree of purchasing power it represents is changing. As such, we lose the ability to account for the purchasing power of our money without even realizing it, since we are still counting nominal monetary units. But what good is the count, if the units are not whole over time? And so, we begin to think of the government-issued currency as money, while forgetting that money is supposed to be purchasing power; but we have no idea what the government-issued currency will be worth over time. This is what Economics 10 at Harvard doesn’t teach. This explains why the government-issued currency gives rise to inflation and deflation. Quite simply, while money is supposed to represent purchasing power, the nominal monetary unit is not designed to account for a whole unit of purchasing power over time. It is, therefore, violating the concept of whole numbers. This suggests that we can substantially eliminate the destructive effects of inflation and deflation by creating a new currency; whereby, the monetary unit is designed to honor the concept of whole numbers by always representing one whole unit of purchasing power. But, where is the proof? If we are going to act like scientists, then we should be required to provide a proof.
Our Proof:
Economists measure purchasing power in real (or constant) dollars over time. Inasmuch as the real dollar represents a constant amount of purchasing power, it is honoring the concept of whole numbers. Unfortunately, real dollars are only a mathematical concept for economists, but let’s pretend otherwise. Let us assume that it is January 1st, 1940, and we have both real dollars and nominal dollars at our disposal. By definition, we decide that one real dollar will equal the purchasing power of one nominal dollar on that date. Thereafter, the real dollar will represent a whole unit of purchasing power, while the value of the nominal dollar will fluctuate with inflation. We decide to save ten real dollars a week for the next 60 years. By January 1st, 2000, we have saved 31,200 real dollars, but how much is this in nominal dollars? We know that the inflation rate during this 60 year period is 1,000%; hence, 31,200 real dollars would be equivalent to the purchasing power of 312,000 nominal dollars. Most 60-year old Americans could have retired with a savings of $312,000 at the turn of the millennium; however, they didn’t save real dollars. They saved nominal dollars. If one had saved ten nominal dollars each week for 60 years, then he or she would have saved 31,200 nominal dollars; ironically, the same number as our real dollar saver, but representing different levels of purchasing power. Since nominal dollars are not adjusted for inflation, the nominal dollar saver would only have $31,200 in purchasing power; while the real dollar saver would have $312,000 in purchasing power. Assuming inflation was constant over the 60 year period, then the purchasing power of the ten nominal dollars saved each week would decline steadily. In reality, the nominal saver would save only half as much purchasing power; and that purchasing power would be eroded further by inflation to represent only 10% of the purchasing power saved by the real dollar saver. This means, that in our nominal monetary system you had to save five dollars, to net one dollar, of purchasing power over the 60 year period. If, however, you had saved real dollars, then you would have ten times as much purchasing power, while saving only twice as much purchasing power. In doing so, you would have defeated the 1,000% inflation that occurred over the 60 year period, simply by using a monetary unit that honored the concept of whole numbers. And, of equal importance, by using real, as opposed to nominal, dollars, you would be able to continuously assess the progress of your savings over the years against your purchasing power goal. This cannot be done in our current nominal monetary system.
What Has Changed?
From 1940 to 2000, we did not have the option of saving real dollars. We were limited to saving nominal U.S. dollars. Now, however, we have the technology to create a real monetary unit, and to offer a private currency denominated in this unit. We call this monetary unit, and the private currency, the Millennium Dollar®. This changes everything. It means that each one of us can begin to eliminate the destructive effects of inflation (and deflation) simply by using a private currency that is indexed to the government-issued currency for inflation, and then secured by present value assets of the sponsor on a 1:1 basis at all times. Now, there is no reason to repeat history; which will give Harvard economists something new to talk about in Economics 10.
Who Are We?
We are a small group of people from Minneapolis, Minnesota, who are dedicated to resolving the problems associated with the introduction of real (or inflation-adjusted) financial instruments into our nominal monetary marketplace. For some of us, offering the Millennium Dollar®, as a paper currency, culminates 17 years of research & development. This R & D includes the filing of a 1,892-page patent application with the U.S. Patent & Trademark Office. Among other things, the technology resolves a P = NP? problem, that creates a conceptual bridge between real and nominal dollars. This means that we now have the technology required to substantially eliminate the destructive effects of inflation and deflation, which we have chosen to roll out by marketing real monetary products via auctions at eBay. The inventor of the technology is Thomas W. Tripp, who has a B.A. in economics from Harvard University. Tom is the President & CEO of Real Monetary Reserve, Inc, d/b/a Millennium Dollar® Store of Value. Robert E. Nisen, the Treasurer and CFO, was so intrigued by the subject matter, that he came out of retirement to join the company. Nisen formerly owned a bank in northern Minnesota, and served on the Board of Directors of the Independent Bankers Association of Minnesota for 12 years. Bob will be managing the eBay auctions, while Tom manages the present value assets and promotes the private currency in the real world. As the use of our private currency is established, we have an affiliate that intends to offer Millennium Dollars® electronically over the Internet.
More Information:
For more information, please visit our Web site at MillenniumDollar.com. Please note that this Web site is for educational purposes only, and is not a secure Web site. As such, personal or confidential information should be forwarded to us via e-mail through eBay. Thank you for your interest in the Millennium Dollar®, and good luck in the auction. We look forward to doing business with you now and in the future.
