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Submitted by Bo Peng

Making The Last Use Of Reserve Currency Status

I suspect many in the mainstream academia haven't realized what QE2 is.
It is the last use of the dollar's reserve currency status, intended or
otherwise.

In a fiat currency system, inflation should be the
only risk, because fighting deflation should be trivial -- just print
money. This is a fundamental advantage of a fiat system over the old
gold standard. Unfortunately for the US, the dollar's reserve status
means the geopolitical border is not the dam holding the water as in
other countries. As Fed pours in more water, it leaks right out to
lowlands (good investment destinations) all over the world. Given the
current economic prospects in the world, the result is that QE2 cannot
stoke inflation in the US, but causes very unwelcome interference in
exactly the other places in the world where inflation is a big concern.

It's small wonder all the growth EM economies are engaging in the low-grade currency war of capital control.
To them, this is a defensive war for survival against the invading army
of dollars. If the low-grade war proves insufficient, they would
escalate the defensive posture. They have to.

Another
consequence, intended or not, of QE2 + reserve status is that all growth
economies are under tremendous pressure of currency appreciation. Some
may be able to resist it and muddle through until an easier day; others
will have to cave in, therefore caught in the catch 22 of either raging
inflation or shrinking economy, or both. And, of all the growth
economies, China arguably has the most capacity and strongest political
will to resist appreciation. In such a scenario, if the intended target
of Fed's fury is China, as hinted not so subtly by Bernanke, "collateral damage" would once again be the main theme, as has been in all recent offensives launched by the US.

In
summary, Fed's dogged efforts in stoking inflation have caused and will
continue increasing the risk of bringing all growth EM economies to a
halt, significantly increasing policy risks in the rest of the world as
each country tries desperately to deal with the capital tsunami, and all
the while with huge doubt in whether it could reach its domestic goal
of stimulating employment and housing. In other words, Fed is screwing
the world for a slim chance of helping the US economy.

This is
emphatically NOT a moral criticism. But it does represent a significant
abandonment of the responsibilities on Fed's part as the issuer of world
reserve currency.

Let's go back a little in history. Right on
the heels of WWII victory, in 1944 US dictated Bretton Woods that
established the dollar as a proxy for gold in the free world. The
"proxy" part was only convenience, of course, as to be expected and
proven by Nixon in 1971. The arrangement made sense: the US would
provide security blanket, and the rest of free world would pay for it by
accepting and holding the green paper printed by the US. It's the same
idea as gangs collecting protection fee in NY, no cynicism intended.

Fast
forward to Berlin Wall collapse. Now the fundamental premises of the
dollar's reserve status were gone. Europeans quickly realized this
change and created the Euro; why should they continue paying for
protection when there's nothing to protect against? The US has made
numerous fantastic efforts in creating threats (by "creating" I don't
necessarily mean create; often times you just have to doze off for a
second and the enemy will help you out): perpetual terrorism, WMD in
Iraq, perpetual war in Iraq and Afghanistan/Pakistan, Iran, North Korea,
China, even Somali pirates (now it gets really pathetic). But none of
them could ever live up to the high expectations set by USSR.

After
10+ years of trying, it's become clear that this is futile. Nothing
works; none of those idiots could do it. But with the reserve currency
status comes its responsibilities. Win-win is BS-BS; there's no free lunch after all. The time has come to end Bretton Woods II.

Now Zoelick's surprise proposal of a new gold standard makes perfect sense.

With
QE2 the Fed is saying: Ah fuck it, you don't like USD as the reserve
currency? Well guess what? We don't like it, either. So let's drop it
and from now on it's every man on his own. Good luck.

Good luck everybody. We all need it.

We used the University of Colorado, Denver. The rooms were free. We had three rooms, each could seat between 50 and 125 people depending on the room and each had speakers, projector, lights and so on. You can find similar venues very easily, just ask around. We had the rooms from 9 a.m.-5 p.m. or so on the quietest day of the week for this particular campus and they were booked something like two-three months in advance.

Food

We used Einstein Brothers for breakfast and lunch. We planned food for about 100 people and it worked out very well, with food taken to the after-party too. We simply booked online, chose a ton of food and it arrived at 8:15 for breakfast and 11 a.m. or so for lunch. Breakfast consisted of bagels with various schmears, coffees (remember decaf too) and some bagel poppers (think donut holes). Lunch was boxes of bagel sandwiches (remember vegetarian option), iced tea, lemonade, cookies (three kinds I think), chips (including chips that don't suck, like Sunchips) and gherkins.

Set up was very easy, there were a couple of fold out tables and a few people volunteered to set up the boxes, etc., along with the staff from EB. At the end of the day I asked everyone in the room to help clean up one item (we had boxes, empty cups, etc., etc.) and it was done very quickly.

Breakfast mingling took from 8:30-9 a.m. or so. Lunch was one hour: noon-1 p.m. It was a nice enough day that people wandered outside, chatted and so on.

Website

As a hangover from last year, I happily used Google Sites to host www.wherecamp5280.org for free. It has a super simple editing interface. I only built a couple of very simple pages listing the details upfront as you can see.

Tickets

Eventbrite was pretty awesome. You set up your event, add ticket types (with different prices), link to it and you're done. It's entirely free to use if your tickets are free. For wherecamp, the majority of the tickets were free. You can also use their iPhone app to scan peoples tickets if you like, but I didn't do this as it's free and it would have just been a hassle for very little benefit. Tip: tell the attendees this so they don't print out the paper ticket! Also see sponsorship next:

Sponsorship

I used Eventbrite again. This worked out fantastically. Usually people spend a ton of time setting out sponsor levels, making a brochure and all that stuff about what a sponsor gets for their money. What I did instead was set up Eventbrite "tickets" that were priced as powers of two. So $16, $32, $64... $1024. Sponsors could then simply go in to Eventbrite and buy a ticket. This was wonderful for me as I didn't have to screw around with checks and bank transfers.

It was wonderful for sponsors as they could buy a "ticket" and expense that, whereas sponsorship is sometimes a much harder thing to get and has to go through other channels. One big thing to learn from though is that powers of two is a cute way to get sponsorship, but it doesn't match very well to what can be expensed. Often people can expense things with some rule like "so long as it's less than $1,000." Next time I will price things like $190, $490, $950 and so on.

As for "what do the sponsors get," I didn't produce a brochure or have anything particularly in mind. I've run conferences before which do do this and that's fine but this was a volunteer event. If the sponsors didn't come through, all I had to do was not order food (the major cost) and instead point people at nearby cafes, etc. It helps that I've run conferences before and therefore have a level of trust from the people sponsoring to not fuck it all up. I was asked a couple of times, but simply said it was a volunteer conference therefore time was short and we couldn't really produce brochures, etc.

Next page: How about actually getting the sponsors?

eric seiger do

Wednesday, December 1, 2010

Free Making Money

Food

Website

Tickets

Sponsorship

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