Article by Ben Doolin on Oct. 15, 2015
My general position on ‘advocacy’… is to advocate ‘against’… which is almost universally against the violation of person or property.
With the respect for person and property, almost any voluntary form of social order is possible. In the absence of, what remains is chaos… in a ‘might makes right’ scenario… or tyranny, like we have now… where a small group of individuals claim to protect person and property… but will do anything they want… to either.
However, ‘lack of imagination’ is a significant hurdle. For those that can’t imagine a single possible solution to a problem… they will continue to assume that the evil they see… is a necessary evil.
‘End The Fed’ is the regular chant of those pushing for liberty… but what would happen if The Fed were just ‘ended’?
Wouldn’t ‘free market currency issuers’ just print all the money they wanted?
How could a free market in currency work?
First, it’s important to consider that ‘money’ has many characteristics that make it ‘preferable’; being a store of value, easily transported, easily divided, widely accepted, etc.
One of the most valuable characteristics is stability.
A free market in currency issue would allow any issuer to try their best plan. I have no doubt that the most widely accepted currencies would be those that offer some guarantee of value. For example, an issuer could guarantee that if its currency could not buy a given quantity of a basket of commodities… that they would ‘buy back’ and extinguish currency until the price rose to that guaranteed level.
Free market currency could also offer new and unique benefits… like discounts when used with preferred vendors.
A good example of this idea is traveler’s checks. American Express traveler’s checks are spendable like cash, accepted just about everywhere and come with a guarantee against loss, a high level of customer service and other benefits offered by American Express.
The greatest benefit of all… is that ‘planned devaluation’ (that we have today, in the constant printing of new money that reduces the value of each dollar… while shrinking the debt burden of The State) would mean a failure for the provider… as opposed to massive benefits taken from all… and given to a few.
But what about ‘fiat currency’ being ‘worthless’?
I have no doubt that some issuers would choose to peg their currency to a tangible commodity like gold. The problem with that… is the massive price swings in gold. If stability were the goal… the plan to issue or buy back to guarantee price… would probably work better.
But what about fractional reserve lending?
Fractional reserve lending by itself isn’t an issue. Fraud… is the issue. Today… few really understand how our banking system works… and few work to spread that information. Even then, it’s difficult to understand. So, our system is fraudulent by design… taking value from consumers without them understanding what is happening.
In the free market… a completely transparent bank could offer a 100% reserve account (no lending, 100% immediate access to all funds) but paying 0% interest. Alternatively, they could offer timed accounts (similar to a CD today) where interest is paid at the market rate but money is not available until maturity. It would also be possible for any number of ‘hybrid options’… like a high leverage account (exposing the client to the risk of the bank failing in exchange for higher interest rates) that might have some limits on withdraw… like withdraw requests being queued and paid when loan payments are made.
The possibilities are both unlimited and very exciting… as well as implying that the violently enforced monopoly on currency issue is ended.
