Why trust money printed by the same government
that just looted your private pension?
What would you trust if you were in Argentina? You don't want to carry gold around - people aren't accustomed to trading in it and would be wary of it, and even a little bit of gold is a lot of money.
Key characteristic of something you can use as a currency of last resort is that it must be a liquid market - lots of people willing to trade in it.
Things that affect this:
- Whether or not the government can successfully enforces exchange controls (i.e. you accept that thus much gold is equivalent to thus many units of currency).
- Government mechanisms to outlaw rival forms of currency.
- Whether it is easy to determine the worthiness of an item of currency (gold is subject to the archimedes test)
- Whether you can deal in small items (you don't want to have to carry a fortunate around in your pocket, you want to be able to make small purchases).
The idea of redeemable value stores is something I have quirky ideas about from time to time. I first became aware of Gresham's Law (bad money chases good out of a marketplace) at school with marbles, when I accidentally debased the valuing system. I was rubbish at marbles and had lost all of mine but convinced a few people that there would be value in playing for marbles which were 'demented' in interesting ways (this was all I had left). It wasn't a grand plan - just something to allow me to keep playing. People tend to be protective of their marbles, but playing for demended marbles allowed them to have games with lower risk. But after a bit I actually saw a younger kid cripple a worthwhile marble in order that he could enter a game and remember a guilty feeling that I'd done something bad. The marble craze was dead within days. Maybe the craze was on its way out and the only reason the demented thing got traction was because people were already tiring of it. It was an interesting introduction to the idea of a store of value though.
Ideas: barrels of printer ink, ipv4 ip addresses (could you forge a currency from these? Probably not - I think they're site-bound and therefore not all that transferable or fungible), staples, bicycle tires, quality first aid kits. There's an interesting battle going on between free banking and governments at the moment. By bringing the banks further "into the family", eliminating havens like Swizerland and Luxemburg through strategic bailouts and undermining Lietchenstein with espionage, governments are delaying a separation between currencies and governments. Iceland may be a good place from which to launch such a scheme - they have the infrastructure, would be generally considered trustworthy and they are at odds with Britain. New Zealand could work as a base, also.
"What would you trust if you were in Argentina? You don't want to carry gold around - people aren't accustomed to trading in it and would be wary of it, and even a little bit of gold is a lot of money."
Actually a few months back as the economic crisis was hitting full swing, someone posted a really long diary from someone living in Argentina, and he said that (at least during their worst period a few years back) people used gold jewelery as currency, and that since no one trusted the purity, all gold got treated as junk gold, so you were best off having a stock of cheap gold jewelery.
Key characteristic of something you can use as a currency of last resort is that it must be a liquid market - lots of people willing to trade in it.
Things that affect this:
- Whether or not the government can successfully enforces exchange controls (i.e. you accept that thus much gold is equivalent to thus many units of currency).
- Government mechanisms to outlaw rival forms of currency.
- Whether it is easy to determine the worthiness of an item of currency (gold is subject to the archimedes test)
- Whether you can deal in small items (you don't want to have to carry a fortunate around in your pocket, you want to be able to make small purchases).
The idea of redeemable value stores is something I have quirky ideas about from time to time. I first became aware of Gresham's Law (bad money chases good out of a marketplace) at school with marbles, when I accidentally debased the valuing system. I was rubbish at marbles and had lost all of mine but convinced a few people that there would be value in playing for marbles which were 'demented' in interesting ways (this was all I had left). It wasn't a grand plan - just something to allow me to keep playing. People tend to be protective of their marbles, but playing for demended marbles allowed them to have games with lower risk. But after a bit I actually saw a younger kid cripple a worthwhile marble in order that he could enter a game and remember a guilty feeling that I'd done something bad. The marble craze was dead within days. Maybe the craze was on its way out and the only reason the demented thing got traction was because people were already tiring of it. It was an interesting introduction to the idea of a store of value though.
Ideas: barrels of printer ink, ipv4 ip addresses (could you forge a currency from these? Probably not - I think they're site-bound and therefore not all that transferable or fungible), staples, bicycle tires, quality first aid kits. There's an interesting battle going on between free banking and governments at the moment. By bringing the banks further "into the family", eliminating havens like Swizerland and Luxemburg through strategic bailouts and undermining Lietchenstein with espionage, governments are delaying a separation between currencies and governments. Iceland may be a good place from which to launch such a scheme - they have the infrastructure, would be generally considered trustworthy and they are at odds with Britain. New Zealand could work as a base, also.