Saturday, September 10, 2011

Financial Crisis: Time to Diversify Currencies?

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The idea of creating, using, or producing currencies other than those officially sanctioned by the state, is gaining momentum.

This from the BBC website today:

Parliament is to debate a call for foreign currencies to be made legal tender in the UK. Such a move would protect savers by allowing them to hold the currency least likely to be devalued, Tory MP Douglas Carswell told the Commons. He said people could then "extricate themselves from the monetary masters that hold them all captive".
Ryan Grant at the Distributist Review goes further, calling on American states to exercise their legal right to mint their own currencies, in response to what Grant sees as the inevitability of the collapse of the US dollar as a credible global currency.   

The root of our system of currency and credit is not based on value, the thing money is supposed to represent, but on debt, its antithesis. .....

Among Grants five solutions to the debt crisis is that the government must 

Allow and promote local currencies based on local assets, namely to have currency which is based on value and not on debt

David Boyle at The New Economics Foundation meanwhile is critical of

The idea that every nation, or even every continent, should have just one currency to serve everybody’s needs is a piece of eighteenth century Whig ideology that we have been stuck with unthinkingly ever since.  The plight of Spain and Greece is evidence of how faulty it is. 

Boyle calls for currencies that are as diverse as human societies.

With the collapse of the Euro a distinct possibility, and calls for the drachma to be reintroduced into Greece's domestic economy, such radical measures may be forced into the mainstream whether we like it our not.

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between-the-lines said...

Grant and Boyle make good sense, yes.

But Carswell?

So how exactly are ordinary folk supposed to "hold the currency least likely to be devalued"?

If that was our bag we'd be down the FOREX making a lot of money instead of plodding to our low paid jobs and doing household chores.

Just look at the Swiss Franc. Until the last few days you'd have said it was a good bet. But no. There they go devaluing it all of a sudden. People who aren't professional currency traders just don't have the time to spend working all this stuff out endlessly.

As usual the neolibs are long on populist rhetoric, but short on reality.

Al Shaw said...

Agreed. The two proposals are quite different in their ethos and application.