The Solution

by Shelby Moore, III. December 15, 2008

The following proposed solution if implemented, would be immediately available to everyone in the world. It would be embodied initially in program accessible on the internet, then spread out into well known financial interfaces (e.g. credit card forms, ATM machines, etc). This will not be hindered by physical delivery barriers to the degree that my GoldWeTrust.com and other physical dealers are.

The Problem

First let me explain the problem.

The prior posts in this thread explain why due to the recently developing gold & silver backwardation (hyperdeflation), which will eventually close the gold & silver window at Comex, rendering the national bonds & currencies worthless (hyperinflation), then only physical trading of gold & silver in your locale will become possible (disintegration). But this local trading will not help you.

The world economy is interconnected. If goods can only be produced and traded locally, then life will become nearly impossible. We won't even be able to produce locally, because critical inputs to local production will be unavailable locally. For example, gasoline is not pumped out of the ground and refined in your locale. Extend that to food inputs, manufactured necessities, etc.. For example, most seeds now are genetically engineered, and won't produce plants with re-useable seeds. Some where in the chain of products you depend on, there is a non-local critical input. Unless you expect to be adopted by the Amish, the prospect of local gold & silver trading is bleak, especially when you factor in the speed at which the crisis will disintegrate leaving not enough time for society to adjust new financial systems for credit and trading. And the realization that anyone who tries to spend gold & silver locally in the desperation imposed on the masses by this envisioned crisis, will no longer be safe in their own home. Word will spread of who has some. If you can't spend it, what is the point of having it?

The world not only faces this financial system disintegration crisis, but also an epic global demographic re-balancing crisis, some nations on the deflation (workforce reduction) side and others on the inflation (workforce expansion) side.

Note, that there is 17 billion oz of silverware which would only come to market if silver were to rise into the hundreds of dollars per oz, or make that $1000s per oz once the dollar devalues (hyperinflates). And much of that is heirlooms that won't come to market until the owners can not otherwise survive. Even at $1,000 per silver oz with all 17 billion oz trading as currency, that would still mean the 2007 global GDP of $65,000 billion would need to shrink by 75% and Velocity of Money decrease to 1. But if metals go into hiding, we could see Velocity of Money fall to epic lows, maybe even 0.1 as it perhaps was in Dark Ages, so then we would need $10,000 per oz silver to limit the GDP shrinkage to 75%.

Of course the key people pulling the strings of the world financial system (aka “powers-that-be”) know all of this. Their plan is so obvious now. Once all of the key useful assets (e.g. gold in the vaults, banking branches) have been transferred to a few largest banks, then the dollar & bond bubble can be allowed to crash, sending gold & silver to the moon, but making trading of gold & silver dangerously unhelpful. The world economy will implode, there will be mayhem. Out of this mayhem, eventually the key assets will be used to offer the world a new “gold credits” trading (financial) system. The plan for for world domination via a world currency will be nearly complete. This “gold credits” system will be infinitely more liquid than physical gold & silver barter, humans viscerally move to the most liquid form of money, and thus such a “gold credits” system will soak up all the remaining physical gold & silver, as people will ne ed to join the trading system in order to survive.

The Solution

I am publishing this, because if only one person is working on the technical solution, then the solution could be stopped or lost by discrediting, attacking, or death of that one person. I do not need anonymity, because there are many smart people who can implement this technical solution, but only if they are aware of this article (most technical people have no clue this solution is needed). Only the trusted parties that use the solution will need the option for anonymity.

No solution can survive if it relies on trust of a KNOWN entity (e.g. GoldMoney.com), as the “powers-that-be” can attack the known entity. So any solution will need to offer optional anonymity, so that users of the solution can continue operating and building trust, without being persecuted. If entity providing the gold & silver is publicly known, then that entity may not be able to escape persecution.

The solution is to build a system that provides “gold & silver credits” before the “powers-that-be” does, when it is most needed (i.e. starting 2009 or 2010?). And provide the credits in a competitive free market that allows anyone to offer the credits, and to provide technology for these trusted entities to be both anonymous, yet still build trust by proving they can deliver the physical gold & silver when the credits are redeemed.

Imagine a system where everyone can buy, sell, and trade unforgeable, anonymous, trustable digital gold & silver certificates (“credits”). If feasible, this is Achilles' heel of the “powers-that-be” plan. This would enable the world trade to grow seamlessly while the national currencies become worthless.

There are many details that need to be explained, as the digital certificates must be known to be backed by real metal, else the system will fail, just as every fiat system has. So I must explain how such trust can be proved, while still maintaining the anonymity necessary to avoid persecution. The keys to algorithmically insuring that digital certificates do not become debased, is for there to be a competition for offering such certificates which can not be persecuted, for redemption to be spontaneous and immediate, and for the trust reporting model to be open and unforgeable.

I will get a bit technical now on the bottom-up inner details of such a solution, and this might not seem relevant if you are coming at this from a top-down thinking, where you are trying to visualize how this will work in terms of using it on a daily basis. We first need to explain the key inner technical details that can enable the anonymity, free market participation, proveable trust and unforgeability.

There are two key technical concepts that need to be employed in this solution system.

Public-key encryption means the public-key can become the identity (name) of the user in the system. Anyone could create a private-key and public-key pair, and generate digital certificates. All actions and trust earned in the system, will be associated with that public-key. Any digital certificate can be mathematically verified to be associated with the public-key. There is no need for certificate authority, because we want the identity of the person associated with the public-key to remain anonymous (optional, as the creator can choose to reveal their identity if they want to). The system only needs to associate all trust earned (good or bad) with that public-key. If a key's prime number is sufficiently long, then it is mathematically proveable that even the government's supercomputers can not crack it in reasonable time. The RSA has been sponsoring a competition to see if anyone could develop a way to crack prime number keys faster, and so far even harnessing the power of huge networks of computers, there is always a sufficiently long key length that is uncrackable in reasonable time. To limit the time that could be spent trying to crack a key, it is important that the system has a means for periodically replacing the public-key, using the original public-key to verify that the replacement command is not forged. It is important that such replacement commands be cached in the network, so client programs can retrieve them when they connect.
Since the system will be a public data share, then end-to-end encryption (between only two trusted parties) is not applicable. Fortunately, the MUTE privacy model for peer-to-peer networking, coupled with my suggested algorithm improvement to motivate economic peer cooperation, enables nearly anonymous communication. In other words, it becomes statistically unlikely for any one to associate IP addresses as the source or consumer of particular data in the system, especially if someone only connects for a very short time and consistently changes their connection IP (e.g. use a different WiFi node each time you need to do a transaction in the system and disconnect after you complete your transaction). I have also developed an improvement, where the data itself is split into minimal chunks which are commonly used by numerous different maps, and the n a separate map to those chunks is traded in the network. The maps are cached by the client peer program even between connection sessions, and then the peer network routing hashtable is also virtualized so that any client can alter their position in the hashtable such that all requests for a map (and other maps in the same hash bucket) come to that client (and other clients in same hash bucket), thus making it unproveable whether that map was acquired and cached in a prior session (at a different IP) on behalf of another peer. In this way, it becomes a statistical impossibility to associate any IP address as being the source or the consumer of map (digital certificate, trust data, or other data used in the system). Numerous peers, which were not the source nor consumer of the digital certificate (or associated data), will have a copy of it's map.

It is impossible for me to explain in the space limitation of this essay, how those above technical concepts can be used in every aspect of a full working solution trading system. Astute technically capable readers (programmers, mathematicians, and monetary theorists, especially those with all 3 talents) will be able to deduce the integration and system design. Let me now explain a few key top-down concepts for such a solution system. Note that the following concepts would not be presented to the user in such a technical fashion, rather they would be simple forms with submit buttons. And realize that free market search for offered trades (like eBay or GoldWeTrust.com) user interface could be put on top of this, so that people just point and click on what they want. And ultimately these trades could be not only trading fiat for metal, or metal-for-metal, but also metal for real goods. Thus completely replacing the current financial system, while also eliminating the inc ome tax, copyrights, patents, government bloat, and all other forms of statism. This solution could accomplish algorithmically what the US Constitution was intended to do contractually.

Someone has 1000oz silver bars they want to sell into the system. Perhaps they decide to offer their digital certificates in 1 gram granularity (31,103 separate certificates, 1 for each gram of the 1000oz bar). The certificate will include the public-key, quantity & type of metal, the size of bar that must be redeemed, and any delivery details for redemption, including any % premium. The certificates are digitally signed with the private-key so forgery is mathematically impossible.
The certificates are traded (from the creator in prior step) to some other public-key (other anonymous person) in the system, by the creator's program using the receiving public-key to encrypt the certificate. Only the intended receiver will be able to decrypt the digital certificate with the receiver's private-key. The receiver then stores this privately as proof of ownership, or can re-trade this again.
At some point, some owner has enough certificates that they want to redeem for the actual metal bar. So they encrypt a message with the public-key in the certificates and send it through the system. Only the creator of the digital certificates will be able decrypt the message. The creator can then respond on how to physically redeem. I envision that during times of intense persecution threats, these bars might be pre-placed and the redeemer will be given sort of a treasure map to go retrieve the bar. In more sane times, the bar may simply be shipped to the redeemer. Note that most people will never need to redeem physically, they will simply use their certificates as money.
When a bar is or attempted to be physically redeemed, then both the redeemer and the creator will have the right to submit proof to the trust record associated with their public-key, which is a floating data in the system. By reviewing these trust data, traders can ascertain the reputation of a digital certificates' creator. These reports can be mathematically verified to not be forgeries, because they will include, the public-key of the reporter and be signed with the private-key of the reporter, plus a copy of the digital certificate, which can be verified mathematically was generated by the creator's public-key attached to the trust record (at this point the digital certificate has been redeemed or proven to be worthless by it's owner/redeemer, so no need to keep it private).
Note I didn't specify how and what gets traded for a digital certificate. The system should have a means for publishing trade (buy/sell/barter) offers as digital certificates. Also, encrypted messages between public-keys are enabled. And external systems (e.g. websites purchases) could be integrated through an API to this system. There is no theoretical limit on what can be done. I could even visualize financial accounts and cash registers around the world, hooked into the system, by using some kind of VPN to connect non-fixed, random IPs when entering the greater internet.

It is too late for the “powers-that-be” to take down the internet. The internet is a key component of any fathomable plan for world domination:

http://grep.law.harvard.edu/articles/03/06/06/1441247.shtml

“...I think the biggest threat to privacy is Moore's law. The human population does not double every eighteen months but the ability to keep track of us does. This may be a prescription for an omniscient government...”

(1) See http://ShadowStats.com. It is a self-evident fact that changing the weightings for the basket of goods in CPI changed the result percent. It is an "Enron-like" accounting gimick. From mid-1980s to early 2000s, some things (e.g. gas, Asian manufactured goods) were declining or fairly flat in price, while others things (e.g. healthcare, housing, education) were rising at 10+%. By re-weighting and using other statistical tricks (e.g. hedonics), the official CPI was reported several percent lower than the actual basket of goods that matter most to people. For example, if 80% of one's economic net worth is tied into the price of their house, and housing prices were rising nearly 10%, then the individual sees the CPI at 3% (and thus interest rate at 5% cost) lower than his gain.

Disclaimer: The above are my personal opinions. I seek safe harbor. I am not a professional advisor. I am not responsible for anything anyone does after reading this. Seek your own counsel on all matters.

Contact Information

Shelby Moore, III Davao City, Mindanao, Philippines | E-mail