Competing Currencies?

davagd0284 said:
How would United States Notes fit into this category. These are debt free notes that used to be issued by the Treasury Dept. Although, they can be subject to inflation, they would seem to be a better option. Also, I read that JFK re-introduced silver certificates into the market in the 60's. He issued an executive order (Executive Order 11110) that supposedly was never repealed. Could this be an option as well (silver standard)?
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After JFK was killed, they went right back to the FRN system again.
 
I know that Berkshire trades in Berkshares with the assistance of local banks. Still fiat but regulated.
 
My beef with trading in gold is that you have to get a lot of those 1 grain tiny gold peices to give as change for receiving larger peices. Would we have to do the same for certificates? Setting prices to the nearest currency denomination wouldn't go around here, especially when competively pricing.
 
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I think banks should be treated just like any other business, don't you? I don't understand why a business that loans people money and gives interest on deposits should have any special privileges. It's just a damn business model, people want to make money on their money and keep it safe in the same time, while others want loans. I just don't understand what makes banks more special than any other business. Supplying a demand. It's like giving every pizza shop an unlimited supply of flour and tomato sauce, just in case they may run out and go out of business. Money is a product in a free market.

I should be able to run a bank from my house if I want to.
 
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JosephTheLibertarian said:
I think banks should be treated just like any other business, don't you? I don't understand why a business that loans people money and gives interest on deposits should have any special priveledges. It's just a damn business model, people want to make money on their money and keep it safe in the same time, while others want loans. I just don't understand what makes banks more special than any other business. Supplying a demand. It's like giving every pizza shop an unlimited supply of flour and tomato sauce, just in case they may run out and go out of business.
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The pizza joint isn't a member of an elite club of the central pizza joint establishment. If it were, then they would have the same privileges the banks do.
 
Dr.3D said:
The pizza joint isn't a member of an elite club of the central pizza joint establishment. If it were, then they would have the same privileges the banks do.
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Then I hope they give them an endless supply of pepperoni and cheese too. HEY! THIS IS FOOD WE"RE TALKIN ABOUT HERE! >>>AND I'M HUNGRY!!!!:D
 
Sandra said:
Then I hope they give them an endless supply of pepperoni and cheese too. HEY! THIS IS FOOD WE"RE TALKIN ABOUT HERE! >>>AND I'M HUNGRY!!!!:D
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Yeah, now if they could only find a way to create pepperoni and cheese out of thin air. :D
 
Sandra said:
My beef with trading in gold is that you have to get a lot of those 1 grain tiny gold peices to give as change for receiving larger pieces. Would we have to do the same for certificates? Setting prices to the nearest currency denomination wouldn't go around here, especially when competitively pricing.
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Small amounts can be covered with silver coins such as all the U.S. circulated coins (dimes, quarters, half-dollars, dollars etc.) before 1965.

One of the things I wish Ron would make more of an effort to communicate (I know, I'm nitpicking) is that a "gold standard" doesn't mean everyone will be carrying around 10 lbs of metal in their pockets when shopping. I think thats what people are misunderstanding and why they think it is such an ancient idea.

Nothing would really change. You would still use paper money (but now it would be redeemable for a precise amount of gold whenever you demanded it). And people would still use coins similar to the ones we used before 1965. And we would still use our credit/debit cards at restaurants and online.
 
Flirple said:
Small amounts can be covered with silver coins such as all the U.S. circulated coins (dimes, quarters, half-dollars, dollars etc.) before 1965.

One of the things I wish Ron would make more of an effort to communicate (I know, I'm nitpicking) is that a "gold standard" doesn't mean everyone will be carrying around 10 lbs of metal in their pockets when shopping. I think thats what people are misunderstanding and why they think it is such an ancient idea.

Nothing would really change. You would still use paper money (but now it would be redeemable for a precise amount of gold whenever you demanded it). And people would still use coins similar to the ones we used before 1965. And we would still use our credit/debit cards at restaurants and online.
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This is true..... instead we are using silver plated coins, made to look like they are valuable. What a hoax!
 
I wanted to bring up that there are different ideas being thrown around as the best way to implement competing currencies. One idea is that the dollar could be a unit of currency that any bank could adhere to. So instead of a business having to worry about keeping up with two or three different values for a good, a good could have one price denoted by the dollar and banks could just promise to redeem a specific dollar amount for the currency they issue.

edit: Actually I was looking for some feedback for this approach. Anyone see any downsides?
 
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Efiniti

Efiniti,

I'm not sure I understand your idea. Could you expain in a little more detail?
 
Acala said:
Efiniti,

I'm not sure I understand your idea. Could you expain in a little more detail?
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If we abolish the Fed then we'll be left with the banks issuing their own currency for their own commodities. Of course these currencies are arbitrary numbers that are assigned a value relative to the amount of a commodity (like $1 of a BankA Note could be worth .03 grams of gold).

The problem I see is that let's say we get two or three reputable big banks issuing their own currencies through silver, gold, etc. Obviously the value of gold per gram is not equal to the value of silver per gram so the value between currencies representing those commodities will most likely be different as well.

So if we have these two or three reputable banks issuing their own currency then businesses would be accepting two or three different currencies. They would have to price their goods or services on two or three different values and constantly keep up with the fluctuations in value of each of these currencies to efficiently price their goods. The level of complexity would increase proportional to the amount of banks issuing their own currency.

My thought is that instead of abolishing the dollar we can make the dollar a unit of currency that any bank can adhere to. So no matter how many banks or how many different currencies we get the currency will stay the same on the consumer level. The dollar could just be a standard of currency.

BankA, BankB, and BankC can all issue currency in denominations of the dollar (the standard $1, $5, $10, etc) so any business can accept any currency and not be worried about doing the math. They only have to consider if they trust the stability of a currency issued by a bank. $1 of a BankA note would just be redeemable worth a certain amount of gold equal to $1 of a BankB note worth a certain amount of silver equal to $1 of a BankC note worth a certain amount of another commodity. The value of the currency stays the same while the commodity and amount of that commodity per currency differs.

Now the only problem that exists is who gets to decide what commodity the dollar unit gets pegged to initially? It would probably be through a currency board that could even be chartered by the government. It doesn't really matter. Only the free market decides the true value of commodities and if the government is assigned this task and fails (its quite hard to fail at just assigning the dollar to something) then the worst that can happen is still having decentralized money.

I was reading up about decentralizing money online and come across a link speaking of some of Hayek's proposals. This is idea came to me. It probably is one of Hayek's proposals.

But like I said I hadn't really discussed this with anyone so there could be some problems with this system.
 
Competing currencies is a great idea. A return to the gold standard is not.

By the way, what they are doing to the Liberty Dollar company is pathetic, but if you thought that was a "competing" currency then you are wrong. Even with the ridiculous inflation of FRN's, even they maintanied value better than Liberty Dollar coins that you paid $25 or $50 for when they were only worth $15-$19 in metal.
 
Look South for the solution

efiniti said:
I wanted to bring up that there are different ideas being thrown around as the best way to implement competing currencies. One idea is that the dollar could be a unit of currency that any bank could adhere to. So instead of a business having to worry about keeping up with two or three different values for a good, a good could have one price denoted by the dollar and banks could just promise to redeem a specific dollar amount for the currency they issue.

edit: Actually I was looking for some feedback for this approach. Anyone see any downsides?
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Mexico produces legal tender silver and gold coinage, without a peso denomination, which are exchangeable as currency at most Mexican banks in accordance with the current commodity prices, and although I am a die-hard, Liberty Dollar face value fan, I could see the benefit of pricing in metal weight rather than "dollar" amount.
Still, the definition of a dollar, in accordance with the Rule of Law, is that $1 equals 371.25 grains of silver, and therefore the Liberty Dollar's regularly increasing face value offers a tangible and graphic example of the Federal Reserve's insidious, hidden tax: INFLATION.
 
Agree with Gideon

There is a problem with using a currency name (like "dollar"). First of all, it makes it easier for the government to debase it because people get focused on the name "dollar" rather than the weight of the underlying commodity (gold or silver or whatever). Better to allow the market to trade in quantities of the metal - or notes representing 100% reserves of the metal. Then the people will be focused on the weight and it will be harder for government to dupe people into accepting a debased currency.

There is also a problem of having notes in particular denominations (or token coins in particular denominations) that are pegged by government to a specific amount of more than one commodity. When the US had the dollar pegged to both gold and silver, there were problems. This bimetallism is a form of price control that prevents the relative values of gold and silver (for historical example) from moving relative to each other. As a result you will have situations like we have been facing with first our silver token coinage and now our nickels and copper pennies, where the market value of the metal exceeds the assigned nominal value as currency. Say, for example, you set the value of gold and silver to the dollar today and issued coins and notes at that rate. Then suppose the value of silver on the market goes up relative to gold. Now people will pull all the silver coinage out of circulation because the silver content is worth more than the nominal currency value. Gresham's law. Not good.

Better to use weights of metals as currency and let them float relative to each other. Let banks act as warehouses and issue full-reserve notes. Hang anyone who issues an unbacked note or mints a coin with fraudulent content. No more business cycle!
 
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