THE BORSODI CONSTANT AN INFLATION-FREE CURRENCY

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When he returned to his Exeter, New Hampshire home, Borsodi began discussing his idea with the officers of all the banks in town. He also wrote to the head of the Federal Reserve System and talked for hours with Federal Reserve representatives in Boston. Borsodi was very open about what he intended to do and he took the stand that, while the United States Constitution forbids the counterfeiting of this nation's currency, it in no way limits the minting or circulation of a completely alternative medium of exchange.

Although no one particularly agreed with Dr. Borsodi, no one disagreed with him either. He now says, "I think they probably said to themselves something like, 'Oh well, let the old man go ahead. He can't do anything much up there in Exeter.' I think this is the attitude they probably took toward the whole affair."

And go ahead he did. Borsodi figured that if it was a good idea to back a currency with gold and silver, it'd be an even better idea to back it with a whole market basket of commodities.

That is, if certificates were printed and distributed with the guarantee that they'd always be 100% redeemable in fixed amounts of, say, 30 of the world's most widely used resources . . . those certificates would automatically increase in value as the value of the resources increased (in terms of constantly degraded national currencies). Whereas a dollar will now buy less than one-third as much gold or wheat or silver or iron or tin or cotton or copra as it bought in 1945 . . . such a certificate (which is issued with the guarantee that it will always be exchangeable for a fixed amount of all these goods) will, by definition, perpetually buy the same amount of gold or wheat or silver or iron or tin or cotton or copra. Year after year after year after year.

By issuing a certificate firmly based on real wealth , in other words—instead of politicians' empty promises—Borsodi thought he could create a medium of exchange that would be inflation-proof . . . or "constant". And he decided to call his new currency just that . . . the constant.

Does the idea work? Well, Borsodi presented his thoughts to a number of people who—over a period of about three years—have "deposited" a total of approximately $100,000 in something called the Arbitrage International "bank". (Deposits and withdrawals can be made by an individual at any time just as if he or she were dealing with a real bank, and all monies are fully protected by the Federal Deposit Insurance Corporation.) The funds, in turn, have been used to buy and sell Borsodi's 30 basic commodities on the world market.

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