This weekend is the Berkshire Hathaway annual meeting. As a native Iowan, I always like to see lads from the Midwest do well by doing right.
So in the Swiftian tradition, I offer the following business proposal.
These days Washington has an interest in nationalizing all and sundry, but particularly focuses on the broken down and downright dysfunctional. For those teabaggers and others more fortunately named, how about opting out of Dollars and dodgy central bank behavior altogether by voting with your wallets.
Before the advent of US central banking in 1913 there were thousands of currencies issued by local banks. Bank Notes traded at discounts to one another based on distance and the perceived faith in the issuing institutions.
The US Federal reserve with its quasi public-private shadowy ownership is taking some rather questionable assets on to its books. You can opt out of this by holding another currency.
But, who to trust? The Peso? Come on that thing is a bit fluey?!!! The Canadian dollar is just a rag doll dragged around by the US dollar. The Euro is looking a little frayed around the Eastern edges. The Brits are setting rates at 315 year lows. The Swiss franc smells of an off cheese under a mountain of old bank debt. I like the Norwegian Krone, but have a softness for Scandinavia, that you may not share.
Meet: your new central Bank manager
Berkshire Hathaway
Perhaps it is time for a resurgence of private currencies. I propose the Berkshire buck= BH1. The Berkshire buck (berky) is a note representing a 1:100,000 of a share of Berkshire Hathaway. A single trusted party will purchase shares of Berkshire Hathaway and hold them on reserve against the published supplies of Berkies. So the current Berkshire buck would be worth about USD $0.93 as of Friday May 1, 2008.
The holding ratio would be fixed and audited. No issuer shenanigans and inflation at the Berkshire issuing treasury. The Berkshire treasury and central bank have one mandate, keep a constant 1:100,000 ratio of shares held to notes issued and outstanding.
C-Note be damned! Behold, the B-Note.
Berkies are freely traded and easy to mark to market. Berkies hold an Aa2 rating better than many countries. They own a 20% stake in ratings agency (Moody's), kind of like being your own reserve currency.
Setting this up as a business is pretty straightforward, you hire a bank note printer such as Giesecke & Devrient Gmbh. They will be desperate for business with the Zimbabwe hyperinflation market gone. Next, get the legal framework drawn up and then work some distribution angles.
Issuing currency or (securities) as such is illegal in the US. So just produce them offshore and wait for them to leak into the country, like Dollars and Euro's do globally into other countries.
It works as a business because of breakage. Over time notes get lost etc. This attrition could cover the printing and running cost of the currency. $1-2billion in Berkies could yield 1-2% a year for the producer from breakage, hey that is $10-20m/year alone.
If that wasn't enough income you as the central banker could fix an annual discount rate of 1% of the date of issue on the note. This approach has been used to stimulate economies by increasing the money velocity in many economies. If the company Berkshire Hathaway ever paid a dividend the central bank could retain it, yet another source of income.
Berkshire has a big positions in Costco, Well Fargo and AMEX which could be great physical BH buck distribution partners.
Central banker 2.0: inflation is a passe income method and don't even mention buying toxic assets.
In terms of income, the BH central bank could advertise on the notes. Sell space on the lower denominations for consumer goods and premium products on the high end notes. Wouldn't a Mercedes or Gucci brand want to be on a few BH100's. Wow, talk about value and a halo effect for marketers or a brand?
The lower denominations could become collectors items, do I hear 1BH buck Pokeman marketing magic, nothing like a little liars poker for the tykes. Marlboro man on the 5BH sounds about right for the price smokes for a butch American currency. Cologne companies could put scratch and sniff decals on BH50 notes. The central bankers returns could get interesting fast and money velocity would equate to eyeballs for markets.
You probably haven't seen a 500 Euro note, unless you dabble in the arms or drugs trade on the weekend to make ends meet (damn that bonus). The markets for higher denomination notes are a bit unsavory such as the black market which has an interest in high denomination bank notes. Printing +$1,000 Berkshire note would have high demand but could get dicey so be careful, don't want to taint the brand equity.
So there you have it, a "value" currency, the Berkshire buck. You have nice Midwestern gents as trustee central bankers in Warren and Charlie.
FYI, take a look at the notes, I put Charlie on the BH100 as he likes Ben Franklin and doesn't get much air time. Also note the "All seeing eye" on the 1 Berky note has a nice eyeglass to improve its vision. Please don't tell the illuminati :), the name dollar has been around as a brand for awhile.
On another note (pun intended), I built some 3.0 sharpe trading systems and am looking at working with a proprietary trading shop using commodities, debt, forex and volatility. Anybody know what a "good" deal is these days?
