The proceeds of the sale of the Millennium Dollars™ will be invested in cash equivalents, government-issued or guaranteed instruments and eventually Real Mortgage-Backed Securities™. These assets will be used to back the conversion of the MR$ back into USD upon demand, but subject to a currency discount and transfer fee. See the Company's Investment Policy for a discussion on the assets backing the private currency.
asset-backed real monetary equivalent:
The Millennium Dollar™ may be represented in three forms, including as a monetary unit, as an e-mail representing a promise-to-pay defined in the monetary unit and finally as an asset-backed real monetary equivalent (or private currency) defined in the monetary unit. As the volume of MR$ in the marketplace reaches a certain level; then a large percentage of the U.S. Dollars (USD), received in the sale of the MR$, will be used to purchase Real Mortgage-Backed Securities™. The problem that governments have had in the modern era in issuing an asset-backed currency is the selection of the asset. There simply is not enough gold in the world to back the world's currencies. However, the second best hedge against inflation is generally considered to be improved real estate, such as single family homes. By placing Real Mortgages™ on improved real estate, which are themselves self-adjusting for inflation in a free and open marketplace; the inflationary adjustment of the improved real estate flows through the mortgages, through the securitized mortgage pool and finally to the holder of the Millennium Dollar™. This creates a real currency that is directly, or indirectly, asset-backed. As such, we can say that the MR$ can be represented as an asset-backed real monetary equivalent, when it is used as a monetary unit to denominate certain asset-backed securities.
A traditional bank is primarily defined as a financial institution that accepts legal tender (USD) for deposit, and then acts as a credit intermediary by granting loans. Virtualmoney.com is not a bank; since it does not hold deposits of USD, nor does it make loans to the general public. (Virtualmoney.com is a money service business involved in the issuance and transfer of a private currency, which is held in the Company's database as a stored value.)
When a currency, or financial instrument, is indexed to inflation; then a date is chosen on which the real currency unit is said to equal the purchasing power of the government-issued currency unit. This is called the base-line-date. One Millennium Dollar™ (MR$) is defined as equaling one U.S. Dollar (USD) on January 1st, 2000, subject to the reference CPI-U index. Thereafter, the value of the MR$ in USD will be determined by the rate of inflation as measured by the CPI-U. The name of the MR$ was chosen, so that it would be easy for people to remember the base-line-date of this private currency.
CDR:
See Currency Discount Rate.
See Currency Exchange Rate.
See Consumer Price Index for All Urban Consumers.
Consumer Price Index for All Urban Consumers:
The Consumer Price Index for All Urban Consumers (CPI-U), which is tabulated by the Bureau of Labor Statistics (BLS). The BLS is a bureau of the United States Treasury. The Consumer Price Index is used by many employment contracts, as well as the Social Security Administration, to readjust wages and other benefits with respect to inflationary pressures. The Company uses the CPI-U to measure the relative purchasing power of the Millennium Dollar™ in USD, as inflation erodes the purchasing power of the U.S. Dollar over time. The CPI-U is also the designated inflation index for the TIPS, Real Mortgages™ and RMBS, which are assets that will be indirectly backing the private currency. This will allow the inflationary adjustments on these assets to flow through to the Millennium Dollars™.
The Currency Discount is equal to the Currency Discount Rate times the number of USD or MR$ to be converted. The Currency Discount plus the Transfer Fee is the total cost of the monetary conversion.
The Currency Discount Rate (CDR) is the absolute value of the real par value of the MR$, less the Currency Exchange Rate for the MR$. The CDR is the discount charged the consumer, or the merchant, for the conversion of USD into MR$, or vice-versa. The CDR times the number of USD (or MR$) to be converted, plus the Transfer Fee; is the total cost of the monetary conversion. The CDR is analogous to the discount charged to merchants by the credit card companies, or by a currency dealer for converting a foreign currency into USD. In essence, this is one way in which consumers and merchants pay for the services provided by Virtualmoney, Inc.
The Currency Exchange Rates (CER) is the rate expressed in USD at which Virtualmoney, Inc. will offer to sell, or buy, Millennium Dollars™. Typically, this amount will vary slightly from day-to-day, as the real par value of the private currency is adjusted for inflation or deflation. The goal is to maintain the constant level of purchasing power of the private currency; which will then allow the MR$ to fulfill the social contact of money, such that money will be worth as much tomorrow as it is today.
The term "dual currency" refers to a situation where more than one currency competes in the marketplace, such as a government-issued paper currency and gold coins. Usually, one of the currencies, such as gold; is better able to hold its purchasing power over time. Thomas Gresham would have referred to the gold as the good currency, and the paper currency as the bad currency. Gresham's Law implies that the marketplace will show a preference to holding, or hoarding, the good currency; while spending the bad currency. Inasmuch as the Millennium Dollars™ is designed to hold its value better than the USD, the Company expects the marketplace to show a preference for holding the MR$ over the USD. (For a more complete explanation see: Gresham's Law.)
See: Federal Deposit Insurance Corporation.
Federal Deposit Insurance Corporation:
This is an acronym for Federal Deposit Insurance Corporation. Traditional banks have the option of securing deposit insurance by the FDIC, which is an agency of the federal government. Virtualmoney, Inc. is not a traditional bank, nor is it FDIC-insured. Economists have noted that the problem with deposit insurance is that it makes all insured banks equally secure for the depositor; but by doing so, it removes the responsibility of the depositor to make certain that the bank holding his or her deposits is sound. This increases the instability of the entire banking system, since the good banks must then cover the losses incurred by the mismanagement and malfeasance of the bad banks. The collapse of the thrift industry in the 1980s highlighted this problem. The Federal Savings and Loan Insurance Corporation (FSLIC), which supplied deposit insurance for the thrifts; was ultimately liquidated; since it was incapable of dealing with the massive losses in the thrift industry. In fact, the inability of FSLIC to deal with the thrift industry's problems, actually compounded the losses; since corrective action on many thrifts was delayed for years. At the time, it was estimated that the thrift industry's losses would exceed $150 billion, and that it would take taxpayers over 40 years to pay for the bailout. Virtualmoney, Inc. believes that people have the duty to assess the soundness of the financial institutions in which they are placing their funds. For this reason, the Company has a policy of transparency.It will fully disclose how the funds backing the private currency are invested.
Ultimately, a substantial portion of the Millennium Dollars™ will be backed by Real Mortgage-Backed Securities™, since the underlying improved real estate will provide the MR$ holder with the best protection against inflation and deflation. However, asset-backed securitization programs can be very expensive, since they require highly-qualified legal and accounting professionals. As such, the Company will invest the USD received in the sale of the MR$ in cash equivalents and U.S. Treasuries government-issued or guaranteed securities for the foreseeable future, until such time as the volume of MR$ in circulation will permit us to begin the securitization of Real Mortgages™.
An account that provides the maintenance for purchases and withdrawals of a currency equivalent that are defined in a master monetary unit, having the constant purchasing power of the United States Dollar on the base-line-date of January 1st, 2000 as measured by the reference inflation index. The purpose of the Gresham Account™ is to carry out the tasks implied by Gresham's Law, namely to convert one's capital into the monetary unit that is best equipped to deal with inflation, while dispersing the inflationary-prone government-issued currency to the less informed. The Gresham Account was named after Thomas Gresham, who first articulated Gresham's Law to Queen Elizabeth I. See: Gresham's Law. (The term Gresham Account™ is a pending trade mark, owned by Virtualmoney, Inc.)
Gresham's Law states: "Good money drives bad money out of the marketplace." In essence, this Law predicts that people will attempt to hoard the "good"currency, that can best hold its value; while spending the "bad" currency that does not hold its value. Management believes that Gresham's Law will ultimately ensure the demand for the Millennium Dollar™, since it will hold its value better than the U.S. Dollar. Inasmuch as the USD is currently the world's reserve currency, management expects to see a global market for the Millennium Dollar™ over time. (For a more complete explanation see: Gresham's Law.)
Refers to the indexing of a currency, or other financial instrument, to the rate of inflation (or deflation) as measured by an agreed upon inflation index. TIPS are often referred to as "indexed bonds," but we prefer to use the term "real bonds." As used herein, the term "indexed" is synonymous with the term "real." (See: "real.")
The Millennium Dollar™ will use the Consumer Price Index for All Urban Consumers (CPI-U) as the agreed upon inflation index to measure the relative purchasing power of this private currency unit versus the United States Dollar. In addition, both the Treasury Inflation Protection Securities (TIPS) issued by the U.S. Treasury, and Real Mortgages™, use the CPI-U as the agreed upon inflation index; which makes these assets appropriate choices for backing the private currency.
As governments began to issue nominal currencies, laws were passed dictating that the government-issued currency was legal tender. This simply meant that consumers and businesses must accept the government-issued currency in payment for goods and services. However, it does not mean that people cannot accept other currencies, at their discretion. Historically, people have preferred gold coins over the government-issued paper currency, yet the gold was not always declared to be legal tender. Sometimes, the gold coins were issued by another government. The Millennium Dollar™ is not legal tender, which means that consumers and businesses are not required to accept MR$ in payment for goods and services. (See: "preferred tender.")
One of the primary uses of money is as a medium of exchange between consumers, businesses and governments. By continuously varying the purchasing power of money over time, inflation and deflation begin to destroy the use of money as a medium of exchange. A private currency that is self-adjusting for inflation and deflation will restore the use of money as a medium of exchange.
A private currency offered by Virtualmoney.com, which represents the purchasing power of the United States Dollar on January 1st, 2000 as measured by the reference CPI-U on October, 1999. The Millennium Dollar™ (MR$) may be represented simultaneously in the marketplace in three different forms, including as (i) a monetary unit defined by an abstract mathematical formula, (ii) as an e-mail representing a promise to pay denominated in the MR$ monetary unit and (iii) as the monetary unit used to denominate an asset-backed real monetary equivalent (or private currency). The private currency is represented as a stored value on the Company's secure database. Just as the paper, on which the USD is printed, represents a "dollar;" the asset-backed real monetary equivalent can become a representation of the Millennium Dollar™. (The term Millennium Dollar™ is a pending trade mark, owned by Real Monetary Systems, Inc.; and exclusively licensed to Virtualmoney, Inc.)
See the Millennium Dollar™.
Virtualmoney.com is a money service business involved in the issuance and transfer of a private currency, which is held in the Company's database as a stored value. The U.S. Treasury has estimated that there are over 200,000 money service businesses (MSBs) in the United States, which are involved in one or more of the following activities, including: (a) currency dealers or exchangers, (b) check cashers, (c) issuer's of traveler's checks or money orders or stored value, (d) sellers or redeems of traveler's checks of money orders or stored value, (e) money transmitters and the U.S. Post Office.
A symbol representing the Millennium Dollar™. The term 100 Millennium Dollars™ can be expressed as 100 MR$.
See: Millennium Dollar Trademark.
See: money service business .
The term "nominal" as used herein simply means that the subject currency, interest rate or instrument is not self-adjusting for inflation and deflation. For instance, government-issued currencies are nominal, since they are not self-adjusting for inflation and deflation.
Any financial instrument that is denominated in a nominal currency unit (such as the U.S. Dollar) and a nominal rate of interest. Nominal financial instruments are not self-adjusting for inflation and deflation. The government-issued currency itself can also be referred to as a nominal financial instrument.
The current monetary system; which is based upon a currency unit (USD) that is not adjusted for inflation and deflation.
The nominal par value refers to the purchasing power value of the United States Dollar (USD); or such other nominal financial instruments, that may be denominated in the nominal currency unit. The nominal par value is the purchasing power of the USD expressed in Millennium Dollars™. In MR$, the nominal par value of the USD is equal to one divided by, one plus the percentage change in the reference CPI-U index since the base-line-date.
Gresham's Law predicts that in a dual currency situation, people will prefer the "good" currency that holds its value best over the "bad" currency that does not. While the Millennium Dollar™ is not legal tender, we believe that it will become the preferred tender; since the MR$ will be asset-backed and self-adjusting for inflation and deflation. (See: "legal tender.")
A currency that is issued by a private company, as opposed to being issued by the government. In the United States, the issuance of a private currency is legal, provided that it is done legally.
A promise-to-pay is a promissory note, according to the Uniform Commercial Code (UCC). The Millennium Dollar™ e-mail is a promise-to-pay the recipient the stated amount of MR$ upon demand. The demand occurs upon the user's acceptance of the MR$ e-mail, whereupon the MR$ are credited in his or her Gresham Account. See the Millennium Dollar™.
The use of the term "real" refers to interest rates, currencies and/or financial instruments, which are self-adjusting for inflation and deflation over time. For instance, financial instruments denominated in Millennium Dollars™ are real, since the monetary unit they are denominated in is indexed to the rate of inflation and/or deflation, as measured by the CPI-U. The term 'real" is derived from economics, where the rate of interest over-and-above the rate of inflation is said to be one's real rate of interest.
real financial instrument:
Any financial instrument, such as the Millennium Dollar™, Real Mortgage™, RMBS or TIPS, which is denominated in a real currency unit and (in the case of the fixed-income instruments) a real rate of interest; thereby making it self-adjusting for inflation and deflation.
An instrument used in the place of legal tender, such as a check, draft, e-mail, credit card, debit card, smart card, etc., that is denominated in a real monetary unit, such as the Millennium Dollar™.
A monetary system that is based upon a real currency unit that is self-adjusting for inflation and deflation. The introduction of the Millennium Dollar™ will begin the creation of a real monetary system, which will ultimately compete with the existing nominal monetary system. Eventually, the two systems will become integrated, thereby representing the evolution of our current nominal monetary system into a real monetary system. This will be characterized by people using the paper government-issued currency on a cash basis in the very short term, where inflation is insignificant; but where the real currency unit will replace the government-issued currency unit to denominate the holding or obligation of capital for longer periods. This will substantially protect the users of the real monetary system from inflation and deflation over time.
Financial computer software for the accounting of purchasing power of monetary units over time. Real Monetary Software carries out the Real Monetization process(es), thereby creating a conceptual bridge to assist people in understanding the benefits of real financial instruments in the nominal monetary terms they can understand. (The term Real Monetary Software™ is a pending trade mark, owned by Real Monetary systems, Inc.)
A term that represents a number of patent-pending processes, which collectively resolve certain problems associated with introducing real financial instruments into a nominal monetary marketplace. The role of Real Monetization™ is to create a conceptual bridge, so that participants in the marketplace can understand the benefits of using real financial instruments in the nominal monetary terms that they are accustomed to dealing with. The Real Monetization™ process(es) will be carried out by the Real Monetary Software™. The Real Monetization™ process(es) is the subject of a 1,891-page patent application; which was filed with the U.S. Patent and Trademark Office by Thomas W. Tripp, and subsequently assigned to Real Monetary Systems, Inc. Virtualmoney, Inc. has obtained the exclusive right from Real Monetary Systems, Inc. to use the Real Monetization™ process for the issuance of a real monetary equivalent that is linked to the U.S. Dollar. (The term Real Monetization™ is a pending trade mark, owned by Real Monetary Systems, Inc.; an affiliate of Virtualmoney, Inc.)
A mortgage that is denominated in real terms, including real dollars and real rates of interest. The advantage of the Real Mortgage™ is that it protects the purchasing power of the lender's capital, since it is self-adjusting for inflation and deflation. It also benefits the borrower, since the self-adjusting nature of the Real Mortgage™ means that we can factor the inflationary premium out of the amortizing rate of interest. The acceptance of the Millennium Dollar™ in the marketplace will begin to create a market for the Real Mortgage™. At a 5% real rate of interest, the Real Mortgage™ would typically result in an initial mortgage payment that is about 25% lower than competitive nominal fixed-rate mortgages. (The term Real Mortgage™ is a pending trade mark, owned by Real Monetary Systems, Inc.; an affiliate of Virtualmoney, Inc.)
Real Mortgage-Backed Securities™:
The Real Mortgages™ will be securitized using structured financing, and then used to back the Millennium Dollars™ (along with TIPS government-issued or guaranteed securities). The Real Monetization™ process will then be used to create a liquid market for Real Mortgage-Backed Securities™, thereby resulting in a lower real rate of interest for borrowers. Inasmuch as asset-backed securitization programs require expensive legal and accounting services, they can only be performed in asset pools exceeding $50 million or more. As such, the Company must expand the volume of Millennium Dollars™ in the marketplace before it can expect to begin purchasing Real Mortgage-Backed Securities™ from an affiliate. (The term Real Mortgage-Backed Securities™ is a pending trade mark, owned by Real Monetary Systems, Inc.; an affiliate of Virtualmoney, Inc.)
The real par value refers to the purchasing power value of the Millennium Dollar™; or such other real financial instruments, that may be denominated in the real currency unit. The real par value is expressed in USD. In USD, the real par value of the MR$ is equal to one plus the percentage change in the reference CPI-U index since the base-line-date. The real par value is the price in USD at which Virtualmoney, Inc. intends to begin the offering of MR$ for sale. However, the Company may subsequently sell MR$ above, or below, the real par value; as it manages the assets backing the private currency. See The Real Monetary Compact for a more complete discussion of this process.
See: Real Mortgage-Backed Securities™
As Albert Einstein observed, we live in a space-time continuum. As we move through the space-time continuum our government-issued currencies come under inflationary and deflationary pressures, but they do not adjust for either. The purpose of issuing a private currency is to provide a monetary unit that will be self-adjusting for inflation and deflation, as it moves through Einstein's space-time continuum. This will convert our current monetary system into a complex adapting system, since the self-adjustment of the MR$ unit will flow through to the real financial instruments and the real financial institutions holding them; thereby substantially protecting borrowers and investors from inflation and deflation.
Today, our monetary system may be complex, but it is unable to adjust to inflationary and deflationary pressures; since it is based upon government-issued currencies, that are not designed to adjust. As these pressures build up, this inability to adjust can lead to financial and economic dislocations; which are sometimes powerful enough to dislodge governments, but more frequently impoverish their citizens. The thrift debacle in the United States in the 1980s, and the currencies crises in Southeast Asia in the late 1990s; are two examples of such dislocations. In order to understand the utility of the Millennium Dollar™, one must understand how money functions, or fails to function, as it moves through the space-time continuum.
The MR$ is defined as equaling the purchasing power of the nominal USD at the turn of the millennium, thereafter the MR$ substantially holds its value, while the USD fluctuates in value over time. It is this fluctuation in the purchasing power of the government-issued currency, that leads to financial and economic dislocations. By indexing the MR$ to the USD, and properly backing it with assets; we can begin to create a real monetary system, that will function as a complex adapting system.
One of the primary uses of money is as a store of value. By continuously altering the purchasing power of money over time, inflation and deflation begin to destroy the use of money as a store of value. A private currency that is self-adjusting for inflation and deflation will restore the use of money as a store of value.
The term technology as used herein includes the use of (i) asset-backed securitization, (ii) real financial instruments and (iii) the Real Monetization™ process. By utilizing this technology, the Company can create an asset-backed private currency that is self-adjusting for inflation and deflation, as measured by the CPI-U. In essence, TIPS and RMBS, which are self-adjusting for inflation and deflation, will be securitized; and then used to back the final stage of the private currency. The Real Monetization™ process will then be used to resolve certain problems associated with the introduction of real financial instruments into our current nominal monetary system.
The purpose of the TimeSafe™ is to offer a private currency, a special account and the monetary conversion and transfer services; such that users can purchase, hold and distribute a private currency. It is called a TimeSafe™, since the private currency is indexed to the government-issued currency, such as the USD; on a fixed base-line-date. Thereafter, the private currency substantially holds its value, while the value of the government-issued currency fluctuates with the inflationary and deflationary pressures over time. In effect, the TimeSafe™ allows the user to fix the purchasing power of his or her currency as of the base-line-date. Virtualmoney.com functions as a TimeSafe™. It holds only Millennium Dollars™, which it sells or redeems in USD.
An acronym for Treasury Inflation Protection Securities, which are offered by the U.S. Treasury. TIPS are the first modern real financial instrument offered by the U.S. government, which is indexed to the rate of inflation, as measured by the CPI-U. Today, there are 27 government indexed (or real) bond markets around the world.
The Transfer Fee is a lump sum charge for each monetary transfer, although the amount of the Transfer Fee may vary by the type of transfer and/or by who is effecting the transfer (i.e. a consumer or a merchant). The Transfer Fee, along with the Currency Discount, is the total cost of effecting a monetary transfer.
Nominal fixed income instruments issued by the U.S. Treasury with a term of one year or less. Treasury Bills generally keep up with inflation; since the funds can be rolled over, as the Treasury Bills reach their short term maturity dates. As such, a 'ladder" can be created, whereby a portion of the Treasury Bills comes due each month. The principal returned each month can then be invested in higher yielding Treasuries, as inflation pushes up interest rates. All Treasuries issued by the United States Treasury are assumed to have an implied credit rating of "AAA."
Treasury Inflation Protection Securities:
Indexed (real) bonds issued by the U.S. Treasury, which are auctioned off at a fixed margin floating over the rate of inflation as measured by the CPI-U. The Treasury began offering TIPS in January, 1997 with terms from five to thirty years. The TIPS market now exceeds $115 billion. All Treasuries issued by the United States Treasury are assumed to have an implied credit rating of "AAA."
One of the primary uses of money is as a unit of account. By continuously varying the purchasing power of money over time, inflation and deflation begin to destroy the use of money as a unit of account. A private currency that is self-adjusting for inflation and deflation will restore the use of money as a unit of account.
The Uniform Commercial
Code (UCC) is the legal code drafted by the National Conference of Commissioners
of Uniform State Laws. The UCC codifies certain laws dealing with commercial
transactions, specifically those involved in the sale of goods, both
tangible and intangible, and secured transactions.
A symbol representing the United States Dollar. One hundred USD can be represented as $100.
