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Ayecarumba
Ayecarumba
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October 11th, 2011 at 3:49:33 PM permalink
Quote: pacomartin

Although, I initially suggested the idea almost as a joke, I am starting to think that casinos should get together and develop a failsafe $1000 chip with RFID encoding that will be changeable at any casino in the country. It would provide an alternative currency for limited use. The casinos would make a fortune since people will turn in $100 banknotes to get these chips, and circulate them outside of casinos.



Unfortunately, that would be a violation of federal law. There is only one currency legal for transactions in the United States, and it has to come from the Federal Reserve.
Simplicity is the ultimate sophistication - Leonardo da Vinci
EvenBob
EvenBob
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October 11th, 2011 at 4:09:31 PM permalink
So you're buying money with money just to get
miles on your card, if it offers miles. Word of
this will get around and it won't last long. In
this economy people will do anything to save
a buck.
"It's not called gambling if the math is on your side."
pacomartin
pacomartin
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October 11th, 2011 at 7:43:55 PM permalink
Quote: Ayecarumba

Unfortunately, that would be a violation of federal law. There is only one currency legal for transactions in the United States, and it has to come from the Federal Reserve.



I thought about that. It wouldn't be currency in the sense that you can buy a car with those chips, or pay your taxes. But if it was widely recognized to be valuable, and enough casinos accepted the chips, they would be a "store of value", and a way for private individuals to safely pay debts to one another. But no individual would be required by law to accept casino chips.

In a sense they would be like "bearer bonds". Which unfortunately have have historically been the financial instrument of choice for money laundering, tax evasion, and concealed business transactions in general. In response, new issuances of bearer bonds were banned in the United States in 1982. In the United States all the bearer bonds issued by the U.S. Treasury have matured. They no longer pay interest to the holders. As of May 2009, the approximate amount outstanding is $100 million.

The commercial casinos business is a $34.60 billion a year business as of last year. I don't know what the value of all the casino chips issued would be. If the casinos could issue a billion dollars in these interchangeable chips, the industry would benefit. A lot of people would hold onto chips between gambling trips, and use them in private transactions.

Metro cards from the New York City area may have cumulatively several hundred million dollars on them. They could be traded, but they can't be turned back into cash.


There are over $700 billion dollars in Benjamins currently circulating by the Federal government, but probably only $200 billion are inside the national borders. I don't know if $1 billion in casino chips would make much difference because it is such a small ratio.

The original intention was for the Federal Reserve to have the new $100 banknote issued before 2006. So it has been five years since significant amounts of money were written into the budget to begin producing their replacement. At this rate, if the BEP has to start over from zero, it could be 2-3 more years. If a serious counterfeiting problem develops in the next few years, the US could be in for some trouble.

Canada is supposed to begin issuing it's new ultra secure $100 polymer banknote. This may be an opportunity for them to branch out into the lucrative cash business, that the Federal Reserve has dominated so far.

The business of issuing "fiat money" for international circulation is the most lucrative business in the world. Even stealing a few percentage points of the business from the Federal Reserve, whether it is casinos or Canada, would be extremely profitable.

I think it is possible that Sands Corporation could start a fairly lucrative business in casino chips using just their own corporate locations. If they produce a casino chip of particularly high quality, then people could turn them in at the casinos in Singapore, Macau, Vegas, Pennsylvania and probably a location in Europe and Florida (possibly Korea ) in the near future. I don't see how it would be illegal to have a cash point in several other major cities.
AceCrAAckers
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October 12th, 2011 at 6:47:10 AM permalink
Quote: EvenBob

Paco, ever read 'The Jungle' by Upton Sinclair? I read it when I was in college and have thought of it a hundred times since. Good stuff about how people were caught in the company store syndrome at the turn of the century. Loans that could never be paid off, furniture that could never be fully paid for. Appalling working conditions. The book brought about congress to act on the Pure Food and Drug Act of 1906.



"Loans that coould never be paid off" This is the trap that all Americans are caught in because of the Federal Reserve. If there is no debt, there is no money. The government borrows more and more and each time they borrow it has to be bigger than anytime before with less effective capital. The end game is the crash of the fiat currency and "appalling conditions" for all us all.
Edward Snowden is not the criminal, the government is for violating the constitution!
pacomartin
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October 12th, 2011 at 7:26:22 AM permalink
Quote: EvenBob

Paco, ever read 'The Jungle' by Upton Sinclair? I read it when I was in college and have thought of it a hundred times since. Good stuff about how people were caught in the company store syndrome at the turn of the century. Loans that could never be paid off, furniture that could never be fully paid for. Appalling working conditions. The book brought about congress to act on the Pure Food and Drug Act of 1906.



I believe that "The Jungle" was standard reading material when I was in school. I remember it, but I can't say that I have thought of it a hundred times since then. Other books had a much stronger impact. While I have never been a socialist, it is hard to ignore what is happening in the world.

The explosion of "fiat" money, and the way it is embraced every year by congress has always bothered (and fascinated) me. It has become the lifeblood of the American economy since the trade balance began to shift in the early '90s.

I go back and forth about the British issuing such small banknotes and relatively small amount of fiat currency relative to many other countries. I think that in many ways they have taken a higher moral position, by denying criminals to access to huge banknotes. Other times I think they are possibly a little bit smarter. The country is not likely to be rocked by intense problems with counterfeiting. Unlike the USA, they are not going to be rocked if suddenly there is a huge turn towards another currency (the Euro or some future Asian currency).
Ayecarumba
Ayecarumba
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October 12th, 2011 at 11:14:08 AM permalink
Quote: pacomartin

I think it is possible that Sands Corporation could start a fairly lucrative business in casino chips using just their own corporate locations. If they produce a casino chip of particularly high quality, then people could turn them in at the casinos in Singapore, Macau, Vegas, Pennsylvania and probably a location in Europe and Florida (possibly Korea ) in the near future. I don't see how it would be illegal to have a cash point in several other major cities.



There is a good reason casinos are required to keep cash on hand to cover their cheques. I would be very wary of playing in a place that might have a "run" on their cage, and not be able to cash me out.

However, you raise an interesting point. Suppose a "whale" puts $1M front money in the Sands' cage in Macau. Can he access that line in Las Vegas? I know that the player tracking system is linked between the two, but are the financials?

I know it is already a hassle to move money between two Vegas casinos located next door to each other, with the same corporate owner, so I imagine doing it with large cheques from international locations would be an even bigger headache.
Simplicity is the ultimate sophistication - Leonardo da Vinci
EvenBob
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October 12th, 2011 at 11:56:36 AM permalink
Quote: pacomartin

I believe that "The Jungle" was standard reading material when I was in school. I remember it, but I can't say that I have thought of it a hundred times since then. Other books had a much stronger impact.



It was mostly about the Chicago stockyards and the
unsanitary conditions before there were regulations.
It was also about the exploitation of immigrants. We
exploit Mexicans now, in those days it was Irish and
Italians. Low wages, substandard housing, same ol
same ol..
"It's not called gambling if the math is on your side."
pacomartin
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November 2nd, 2011 at 4:34:45 PM permalink

Britain finally began circulating it's new high security 50 pound note today. It is worth roughly 58 euros, and US $80.

The standard banknote in most ATM's in the EMU is the 50 Euro note.

As I've stated several times, the British have an aversion to high denomination notes, and circulating the old notes at roughly 3 per capita (considerably lower than Canada or Australia, and a fraction of the European Monetary Union and USA). With so few in circulation, the old notes should be replaced in a manner of months. Although the old notes will remain currency for a long time, people tend to go to the bank to change them just because they feel better about having new notes.

New Zealand also does not circulate very many high denomination banknotes. Britain banned the legal buying and selling of the 500 Euro note within it's borders.

Canada was to begin circulating their new polymer $100 banknotes this month, but a date has not been announced. Canada will convert entirely to polymer in two years.

It will be interesting to see if Canada and Britain use the introduction of the new banknotes to begin circulating a larger quantity of higher denomination notes. It reduces the cost to the Bureau of Engraving and Printing (or the national equivalent), but goes against the theory that untraceable currency is dying around the world, in favor of safer and easier (and traceable) electronic transfers.

Still no sign that the USA will resolve it's ultra expensive FU in production of the new color $100 banknote to replace the now 15 year old design for $100 bill. Production continues unabated as more than 7 billion of the old notes are in circulation.
Scotty71
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November 2nd, 2011 at 6:06:30 PM permalink
Quote: pacomartin


I think it is possible that Sands Corporation could start a fairly lucrative business in casino chips using just their own corporate locations. If they produce a casino chip of particularly high quality, then people could turn them in at the casinos in Singapore, Macau, Vegas, Pennsylvania and probably a location in Europe and Florida (possibly Korea ) in the near future. I don't see how it would be illegal to have a cash point in several other major cities.



First of all I like your posts, thank you.

In this case would the chip be denominated in dollars, would they take a spread on the exchange rate? Otherwise they would spend a lot of capital making chips.

I think if a major casino ran a gimmick (with a predetermined amount of play) where they would pay you out in gold at the spot rate minus a 25bps spread they would see a lot of action. The tea party would probably hold their convention there.
when man determined to destroy himself he picked the was of shall and finding only why smashed it into because." — E.E. Cummings
AZDuffman
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November 25th, 2011 at 1:58:26 PM permalink
Quote: Calder

I'm no economist, but I'd guess if Greece still had its own currency, it would have defaulted two years ago. Only the comparative strength of the northern tier of the E.U. has kept it afloat this long.



A Greek, an Itallian, and a Spaniard have a round of drinks in a bar. Who pays?


The German!
All animals are equal, but some are more equal than others
pacomartin
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December 12th, 2011 at 5:10:26 AM permalink
A Stark Step Away From Europe
Supporters of the City of London fear a wave of future financial regulation from European Union headquarters.
By LANDON THOMAS Jr.
Published: December 11, 2011
LONDON — Has Prime Minister David Cameron of Britain hurt his country’s powerful financial services industry more than he has helped it?

Many bankers and economists are pondering that question after Mr. Cameron’s surprising decision last week to leave Britain out of a historic accord aimed at moving Europe closer to political as well as monetary union.

Mr. Cameron said the pact lacked safeguards to protect the City of London, Britain’s version of Wall Street, against future regulations that might not be in its best interests. And because France and Germany would not bend on his proposed protections, he would not sign on to their plan for more tightly coordinated oversight of European Union governments’ revenue and spending.

Now, though, some in Britain worry that the nation’s ability to halt or shape what is expected to be a wave of future financial regulation from European Union headquarters will be severely constrained if Britain does not have a seat at the negotiating table. And so it remains to be seen whether the City financiers Mr. Cameron wanted to protect will eventually end up feeling grateful — or marginalized.
...

NYTimes article

Maybe the pound sterling and the Canadian, NZ and Australian dollar should be combined to develop a new currency that can hold up to the other global currencies.
pacomartin
pacomartin
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December 17th, 2011 at 6:59:50 AM permalink
The South American Trade Union is known as Mercosur (Sp.) / Mercosul (Po.) and is currently a $3 trillion dollar GDP. It is one of the areas of the world that talks about the value of a common currency. See: Trade common currency in Mercosur's agenda.

The dollar is widely circulated in Argentina, and for over a decade the Argentinian peso was pegged 1:1 to the dollar. The Brazilian Real is stable, but intercountry exchange generally involves changing local currency to the dollar, and then back to another local currency. With the addition of Venezuela, Mercosur is as large of an economy as India.

The combined currency would probably eschew any printed words instead of combining Spanish and Portuguese. Mexico used to have a currency called a real in the 19th century, but now follows the general Spanish definition of calling currency pesos. I don't know if it would be a peso or a real or a dollar (or a new word that is culturally neutral ).
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