Backyard Aquaponics
A place to discuss aquaponics

To have a truely "free market" in money Tamo... would mean that anyone could print and issue their own currency....

Neither the banks or governments would/will ever allow that to happen.... and the whole "free market" economy as we know it would collapse if we did allow it....

But within the "current" banking system... and globalised "free market" economy..... it was the banks lassiez faire attitude and belief that their was a free market in terms of creation, issuance of money/debt....

That has led to the current global "financial crisis".... just as it did in 1929.... surely you don't dispute this....

The corrollary is that the current crisis would not, or may not have occurred if the financial system was, or had been more regulated.... hardly something the neo-liberal/neo-cons fo the "free market" philosophy were going to spruik or encourage...

The banking sector has IMO operated totally within, and on, the philosophy the there was a "free market".... and created debt accordingly.... and unsustainably....

And IMO... allowing that sort of lassiez fare "free market" philosophy within financial systems ... will always, when taken to extremes by rampant greed and ideology, result in an inevitable failure of the system...

Yep. Just like with any other product, there would be different people trying different things. Over time, there will be winners and losers in terms of acceptance, and most likely we'd end up with 1 or 2 or 3 "standard" currencies.

The major difference between fiat currency issued by force, and a free-market currency is that the consumers who use the currency would be much more concerned about the value-backing of the free-market currency. If another party is not forced to take it, I need to make sure that my value is protected.

Some examples would be actual precious metal coins. The precious metal in the coin would be its own store of value, and no additional backing is required.

Another example would be a note issued by banks against reserves the bank holds in a vault. This was actually common in the US during the late 1800s. In such a bank, it is likely that the depositors would make sure that the bank actually kept those reserves on hand so they could redeem their money. This observation by consumers and potential banking competitors would require the banks to keep those reserves of value (usually gold) on hand. Prior to the invasion of Nanking by the Japanese at the beginning of WWII this was actually the case. Banks would redeem the notes of competitor banks to make sure they weren't loaning out more reserves they had, which would be a competitive advantage to the competitor. This mutual checking kept them all solvent.



I agree that banks and governments wouldn't allow it. It takes power away from them. I personally don't think the economy would collapse. If we imagined a free-market monetary system, it's seems likely to me that the US dollar and the Australian dollar wouldn't go away. The central bank printing machines would go on printing. Over time, people would stop using them though because they have no backing by real value.



Well, it's true that the banking system has led to the current crisis, as it did in 1929. It's just not a laissez-faire system. A given bank on the corner only keeps a small percentage of reserves on hand because they can always just get more from the central bank should a large number of customers want their money at any given time. This fractional reserve system encourages a bank to loan out more money than it has. After all, why not? The bank earns money on interest from loans. The more loans out there, the more money it makes. If it can make more loans than it has money and not worry (because it can always get more from the central bank), why wouldn't it? As long as the loans are good, the bank makes more and more and more.

Of course, over time, the managers at these banks want to make more and more loans because they get paid better if they do. And what's the harm? They can always get more cash from the central bank. So the requirements on borrowers become less and less strict. Eventually, the banks are just giving loans away. So people borrow and borrow. Whatever it is they're buying goes up because demand goes up. And then the other shoe drops, and enough of these new borrowers can't repay the loans. The bank can only collect on whatever collateral it got for the loan in the first place. So now the bank has some asset that it can't sell. All that demand that came from the easily available money is gone. The asset is now worth substantially less than the loan was for. The bank has a huge loss. All the cash borrowed from the central bank doesn't help since nobody is borrowing to keep feeding the cycle.

This time around it was real estate. In 1929 it was stocks. All of this stems from the central reserve creating more and more money which creates this mindset that the bank can make loans without having actual money itself.



I'd agree that a great deal more regulation is one option. We could make banking rules saying they need to keep 100% reserves on hand instead of 5%. We could say borrowers must meet certain standards.

The problem with central planning is not that it isn't logical from a certain viewpoint. The problem is that it isn't adaptable to an ever-changing marketplace and stifles innovation. The world changes, and pretty quickly. If a whole sector or a whole economy is mandated by a small group of people, then those people cannot react to those millions of changes in different geographical areas at different times, each with their own local conditions. In an information-theory context, a distributed network of less powerful processors is vastly more powerful than a seemingly powerful central processor. The Internet is the quintessential example of this. There is no central server, which is why it works.

In addition to the adaptability, I personally find central planning of any kind an immoral violation of my natural-born freedom. To me, government exists solely as an agency to protect my rights. Any laws tha t go beyond that role are evil in the same way slave holding is evil. I also find telling adults what to do because the person/group making the rules knows better the height of arrogance. But that is a philosophical and moral argument rather than an economic one.



Agree with the creating unsustainable debt part. Again, it's just not laissez-faire. It's that "mixed economy" bit that has a central planner core.



The beauty of competition is that the competing players force each other to be limited. If Bank A were to start creating unsustainable debt, a competing bank (or depositors -- us!) could simply redeem the notes issued on Bank A and cause Bank A to collapse. Bank A doesn't want that to happen, and the threat of such a possibility prevents Bank A from creating the unsustainable debt in the first place.

I realize that my opinions are relatively unpopular in the world today, and current trends are going much more strongly in the stronger regulation direction than in the complete freedom direction. But that's OK. Someday I'll have my AP farm, and I won't care about the monetary policy of governments one way or the other.

unsustainable debt How much does the US owe now. And how much is Australia going to owe after all these gov payouts don't work.

Ok haven't read the last few posts, but DUFF, do your recall funny money........cause this is where we could be going

RupertofOZ wrote

To have a truely "free market" in money Tamo... would mean that anyone could print and issue their own currency....

Neither the banks or governments would/will ever allow that to happen.... and the whole "free market" economy as we know it would collapse if we did allow it....

What about issuing/printing you own currency?……..it is being done in Germany

What about doing it here??


There will soon be 65 regional currencies in operation alongside the
EU's, but the financial authorities are not worried yet, writes
Ambrose Evans-Pritchard

* Comment: UK's standoffishness on euro looks better than ever

If you live in the Bavarian region of Chiemgau, you can exist for
months at a time in a euro-free zone of hills and lakes with a
population of half a million people. Restaurants, bakeries,
hairdressers and a network of supermarkets will accept the local
currency: the Chiemgauer.

Notes are exchanged freely like legal tender. You can even use a debit
card. Petrol stations are still a problem, but biofuel outlets are
signing up. Dentists are next.

The Chiemgauer is one of 16 regional currencies that have sprung into
existence across Germany and Austria since the launch of the euro five
years ago.

Another 49 regios are in the pipeline. They are outside the control of
the political authorities, mostly run by activists, farmers,
eco-enthusiasts, anti-globalists, and citizen committees.

Some are rural, others circulate like underground money in Berlin and
Bremen. Hamburg has two: the Alto and the Hansemark. Italy has its
version in the Valchius Valley, in the Alps.

The phenomenon, not seen since the Great Depression, has left experts
scratching heads at the Bundesbank. The mighty reserve bank, which
issues euro notes and coins worth €146bn for a third of the eurozone
economy, is relaxed about the risk of monetary anarchy. But it is
sufficiently puzzled to publish a 63-page report probing the eruption
of this movement.

Entitled "Regional Currencies in Germany, Local Competition for the
Euro?", it concludes that the tiny scale of this bizarre Schwundgeld -
scrip, or specie - poses no threat to the orderly management of the
euro system.

The rise of the regios dates exactly from the abolition of the D-Mark,
replaced in turn by a stateless technocrat currency ever further
removed from local life.

A pure coincidence, said Prof Gerhard Rösl, author of the Bundesbank
paper. "The assumption that this springs from a general scepticism
towards the euro is not valid."

Rather, the movement is a rejection of "capitalist globalism", pushed
by idealists fighting to save regional cultures. The currencies are
"luxury" scrip that flourish most in areas with the lowest
unemployment. They offer users a "prestige gain" in their
neighbourhoods, and a glow of good feeling.

School teacher Christian Gelleri launched the Chiemgauer, with the
help of pupils, as an experiment in January 2003 at a rate of 1:1
against the euro.

Four years later, it spans two districts and is accepted by 550 shops,
firms, and companies, including eight supermarkets and four
co-operative banks. It has 40 issuing offices, and usage is expanding
by 70pc a year. Monthly turnover is still a miniscule €135,000
(£88,000) - or rather C135,000.

"People have taken to it because it is a way of supporting good
causes," said Mr Gelleri.

The Chiemgauer is designed to lose 2pc of its value every quarter,
generating a profit for the issuing body as shops claim back the
euros. Some 60pc of the profit is used for local charities, sports
clubs, kindergartens and such.

Shops accepting the money take a loss of up to 5pc, akin to
interchange fees paid when credit cards are used. "Merchants pay the
cost, but they go along because they don't want to lose business,"
said Mr Gelleri.

The idea stems from the century-old writings of Silvio Gesell, a
German economist who believed that interest and rent charged on
capital is pernicious. He argued that usury aggravated economic
downturns because the wealthy began to horde cash.

Austria's Tyrolean community of Wörgl launched a scheme based on his
theories, in 1932, reputed to have slashed unemployment at the height
of the Depression. It was watched by Keynes and Irving Fisher, who saw
a fast-depreciating currency as a possible answer to the 1930s
"liquidity trap".

"I came to the idea by studying Keynes and Fisher, but for us it is
more a way to build regional strength. We're not enemies of Europe,"
said Mr Gelleri.

The Wörgl experiment was declared illegal by Austria's central bank
when a further 200 other communities launched copycat currencies,
threatening the authority of the state. Though article 35 of the
Bundesbank's founding law forbids the circulation of
"quasi-currencies", the experiments are being treated as a harmless
eccentricity.

However, they are a remarkable expression of people power, and a
subtle threat to the established order. Would they be sprouting with
so much energy if the Germans still had the D-Mark in their pockets?
One suspects not.

Really only an extension of barter schemes ... like "lets" .... and work fine if people are prepared to accept them....

But you can't and wont be able to pay your taxes or mortgages by such currencies...

I though egold was a good idea. All deposited currency was backed by purchased physical gold. However, the gov crushed this movement fast. They sited the fact that the money was not traceable. The claimed that millions in illegal activity was being routed through the system. Seems to me that, if this is true, the government also depends on money as a way to watch people and what they are doing.

I joined an online barter community where I trade my labor and services for other peoples labor, services, and goods. Its a pretty good thing, but there are just not enough people doing it. There would have to be some way to convert between credits and real currency before more people would use it. That's the only way I can trade my labor for something like a new fish tank from tractor supply who will not barter.

Dan, that is indeed the trouble with barter, and why money was created in the first place. In economic-speak it's called the "double coincidence of wants." Meaning that you have to want what the other guy has, and the other guy has to want what you have. Money separates the two, so you can sell to one guy and buy from another.

You're absolutely right that the government uses to money to watch what we do. In the US, any transaction with a bank over $10,000 is reported to the IRS automatically no matter who is involved or what it is for.