Daily Archives: 29 April 2009

Local Currencies

The interesting part comes at about 4:50, when Susan Witt corrects the host. The U.S.S.A. requires local currencies to be exchangeable with federal fiat notes so that government may more easily confiscate a share of economic activity.

What excites me is that despite the requirement of backing local currency with federal fiat notes, this is still a step toward freedom.

Local US currency strengthens community “For years now, citizens of Ithaca have been able to solve a growing dilemma: people had needs, time, and skills, but a shortage of dollars, so the Ithaca hours solved this problem. Today, the Ithaca hours have moved from businesses to banks and even the Alternative Federal Credit Union in Ithaca finds ways to incorporate these paper hours. Local currencies gained ground during the Great Depression and then became less popular, but with the economy in a tailspin, local money is once again gaining momentum.” (Read more from inteldaily.com)

Communities print their own currency to keep cash flowing “Workers with dwindling wages are paying for groceries, yoga classes and fuel with Detroit Cheers, Ithaca Hours in New York, Plenty in North Carolina or BerkShares in Massachusetts.” (Read more from usatoday.com)

The PLENTY Relaunch! Tuesday, May 12, 2009, 9-5 (theplenty.org)

What Has Government Done to Our Money?

An excerpt from the book, What Has Government Done to Our Money?, by the great Austrian Economist Murray Rothbard (1926-1995).

“Government imposes price controls largely in order to divert public attention from governmental inflation to the alleged evils of the free market. As we have seen, ‘Gresham’s Law’–that an artificially overvalued money tends to drive an artificially undervalued money out of circulation–is an example of the general consequences of price control. Government places, in effect, a maximum price on one type of money in terms of the other.”

Me: Think of how, when the our government began debasing silver quarters in the 1960s, all the true silver quarters disappeared almost instantly.

“. . . With the name of the country’s currency now prominent in accounting instead its actual weight, contracts began to pledge payment in certain amounts of ‘money.’ Legal tender laws dictated what that ‘money’ could be. When only the original gold or silver was designated ‘legal tender,’ people considered it harmless, but they should have realized that a dangerous precedent had been set for government control of money. If the government sticks to the original money, its legal tender law is superfluous and unnecessary. On the other hand, the government may declare as legal tender a lower-quality currency side-by-side with the original. Thus, the government may decree worn coins as good as new ones in paying off debt, of silver and gold equivalent to each other in the fixed ratio.The legal tender laws then bring Gresham’s Law into being. . . .

Governmental control of money could only become absolute, and its counterfeiting unchallenged, as money-substitutes came into prominence in recent centuries. The advent of paper money and bank deposits, an economic boon when backed fully by gold or silver, provided the open sesame for government’s road to power over money, and thereby over the entire economic system.” (Read more from Mises.org)