Posted on 05/20/2012 5:22:22 AM PDT by Kaslin
When times get tough, the tough . . . switch currencies.
A fascinating report by Eric Garland in The Atlantic tells of the upswing in “local currencies.” In the United Kingdom, the Brixton Pound is being floated, engraved on its paper notes the likes of “David Bowie in his Ziggy Stardust era.” Pegged to the British pound, it serves mainly as a scheme to promote local business and trade, though maybe it’s a tad more than mere boosterism.
Bavarians are also “enthusiastically using the local currency as a protest” — the local currency being the “Chiemgauer.” And “similar currencies have popped up around the world,” including in Canada and the United States.
The Atlantic story also mentions the idea of a “time bank,” a one-step-up-from-barter method based on labor hours and (in some cases) accounting for a variety of skill levels. Such “systems are in use all over the world . . . though the organizers are careful to make sure that the time is never given a specific value in a hard currency, which would open the door to taxation from governments.”
That caveat shows how barter and labor time exchanges might seem the more “revolutionary,” from, say, an establishment point of view. Governments don’t like it when folks evade taxes, at least when normal people do it. (Established rules for offshore accounts, on the other hand, help keep funds safely away from the prying eyes of IRS agents, and that is something common amongst the American wealthy. Just ask Mitt Romney. After all, who wants to pay more?) Government officials get awfully upset when they find someone systematically evading taxes by avoiding “legal tender.”
And, contrary to Garland’s Atlantic article, a number of the time bank buck upstarts do establish exchange rates with official, government-supervised money, allowing taxing authorities to skim from gains made through the trades figured in these offbeat media-of-exchange.
So what’s the point of the new “micro-currencies”? Garland admits that none of these nouveaux monies “has become a standard method of buying and selling to replace the existing monetary system. Yet many are finding larger and larger audiences as the crisis that began in 2008 deepens and evolves, allowing more people to do more business outside the ‘normal’ economy.” Or so he says. He doesn’t give much evidence for a true upswing in these competing currencies. Many have been around for some time.
But his report’s premise has the “feel” of being correct. BitCoin — an Internet currency based on, well, really good software and not much else — is, he claims, “rapidly gaining adoption, now accepted by a variety of companies selling everything from socks to web server space.” Garland quotes a banking industry “futurist” who says that “all of this innovation at the level of local communities is completely logical, and will likely increase in the years to come,” citing the recent disruptions in the international monetary order.
Maybe we don’t need a futurist to tell us this. Or two (Garland is also a futurist. A great gig if you can get it.) During the Great Depression, many communities promoted tokens and other forms of alternate “micro” currencies — currencies that allowed small areas to survive collapsed international markets (the result of protectionism run amok as well as bank deflation and crazed government policy).
But whether or not there has been a big uptick in alternate forms of money, certainly the author’s interest in the subject — and presumably that of his readers, including me — is a result of our frustrations with “the system.” You know, inflationist central banking and the much-bailed-out high finance.
Frustrations with money and banking are not new. In the 19th century, a whole horde of monetary cranks and, uh, inventors/innovators cooked up schemes to replace gold- or silver-backed bank money with a variety of “free money” alternates. After all, the “time bank’s” greatest early proponent was Josiah Warren, an America’s genius utopian experimenter and theoretician of “individual sovereignty.” He set up a “time store” that proved more successful than most such novelties. That is, it didn’t immediately fail, and has been much copied, since.
The trouble with the bulk of the proposals then — and, for all I know, many of the current micro-currencies — is that they were based on the ridiculous notion that money was too scarce and that banks “monopolized money” and thus hiked up an “artificial” scarcity that robbed the common folk, blah blah blah. Except for those few banks that actually served as gold warehouses (and there were some, here and there), the majority were fractional reserve banks, and they did not promote monetary scarcity, they engaged in the contrary practice, creating money by pyramiding debt.
What we should want is for money to be scarce. After all, we want it to maintain value, be useful now and in the future. A money that is infinitely plentiful (or increases in amount over time) is (or becomes) utterly valueless, and does nothing for the common man.
Indeed, this is where monetary schemers agreed with the inflationists of the more mainstream Greenback variety, or the folks who wanted “free coinage of silver.” That is, they were preaching inflationism.
We’re a long way from metal-based money, today. And the policy of the age is outright inflationism, so naked and blatant that even William Jennings “Cross of Gold” Bryan might blush. America evolved a credit money (bankers’ money) that was then cut loose from gold, in a series of major political moves: 1913’s Federal Reserve Act, which established a central bank; FDR’s gold confiscation and currency re-evaluation of 1933; and finally Nixon’s closing of the gold window to foreigners in 1971. Since then we’ve been stuck with a pure fiat money standard, now consisting mostly of the ones and zeroes in bank computer databases. It’s quite a triumph of modern civilization, in a way. It’s a wonder it works at all.
Perhaps the question should be: works for whom? And at whose expense? In the theory of money and credit developed by the Austrian School of economics, especially by Ludwig von Mises, it’s the first acquirers of newly created money — through inflationary credit — who get the most benefit. And, in modern life, that means the government. The further down the trickle of monetary transactions you are — that is, the further you are away from government, its employees and contractors — the less benefit from the new money you get, the more detriment . . . in higher prices.
It’s just the working out of supply and demand, only with money.
Today, as the Euro is poised to take a huge hit, and perhaps vanish into history’s dirtiest of dustbins, and the American dollar moves further into jeopardy, it’s no wonder folks are looking for alternatives. Increasing numbers of savvy people now worry that tomorrow’s euros, dollars and yen will work for almost nobody.
Not many people benefit from a monetary collapse.
Which is why some people may now be scurrying towards alternate forms of money, and others invest in the metals that once backed the old forms: gold and silver.
By merely mentioning gold and criticizing central bank inflationism and the Federal Reserve, I’ve of course set up an expectation. When will I mention Ron Paul?
How about now?
Republican presidential candidate, Rep. Ron Paul is well known for being a “goldbug.” In 1981 he introduced a bill into Congress that would re-establish the gold standard. But nowadays, when it comes to dealing with practical reforms to improve the current monetary system, he isn’t touting the old-fashioned gold standard as such. Instead, he echoes eminent monetary economist and Mises protégé, Nobel Laureate F.A. Hayek, promoting Hayek’s notion of the “denationalization of money,” arguing that government policy should allow all currencies to float, favoring none.
Actually, he’s done more than merely argue this. Last year he introduced the Free Competition in Currency Act, as Hayekian a piece of legislation as you could imagine.
Instead of instituting a new “hard money” from the top down, this would let the best money emerge. Let there be (of all things) a free market in money! Right now, we have centrally planned money, and it looks an awful lot like central planning works about as well for money as central planning works in other things. That is, it looks as inefficient and prone to abuse as socialism itself.
The mechanism that Ron Paul thinks would allow for the emergence of better money is normal competition, achieved in this case by removing all or most taxation on trade from one money to another — including taxes on profits from such transactions — and by getting rid of legal tender laws. All the federal government need do is prohibit fraud, and specify what form of money it will take in taxes, etc.
The casual student of economics might wonder how this would work, considering Gresham’s Law and all. Doesn’t “bad money drive out the good?”
The answer is: Only under conditions of exchange controls. When government enforces a rule that equates bad money with good money, at a rate favorable to that bad money, people hoard the good money and pass on the bad, thus “driving” the good money out of circulation. But the competition in currency idea is the opposite of that. It gets rid of the “price control” aspect, the fixed exchange rates. The denationalized money proposal gets around Gresham’s Law by promoting actual free trade rather than traditional, old-fashioned (and disastrous) government-controlled trade.
Let free markets — that is, producers and consumers freely exchanging — decide our money, allowing order to emerge in an evolutionary fashion.
Who knows, maybe one of these local currencies will out-compete the Big Boys of government! More likely, some package of gold, silver and other precious metals will serve as the most popular future basis of money.
But we’ve no way of knowing, now.
We need to give up trying to “predict” and “guarantee” everything.
Even BitCoin could win out, I guess, though I’d prefer buying and selling using money with Ziggy Stardust on the obverse.
B4L
When did the idea of taxing income and wealth become so popular? It used to be that these sort of taxes were the reason that people fled their home countries. Now it’s everywhere and even more egregious than back then. America was founded on the idea of excise taxes and taxes on goods and services. These taxes are universal and hit everyone equally.
The idea of local currency, esp. bartering time for goods isn’t revolutionary, it’s just good sense. Criminals can’t steal your time or your skills. Valuable work can be performed for procurement of goods to complete another job or task, etc.
There used to be a time when paper currency read, “This note is good for all debts public and private and may be redeemed for lawful currency.” Nowadays, a piece of cloth paper is used and accepted as something of value but is really nothing more than cotton.
As more governments fail and monetary systems collapse, we’re going to see very unique ways of paying for goods and services. Bartering is as old as humanity, but I fear thievery will be more common at first. Hell, the Democrats have been stealing from Americans for almost 100 years.
No, a “medium of exchange” is one attribute, but not the only, of money. It must be a store of value as well. Clearly, the trend for collectivists is to destroy, or at least control these attributes. Some have argued for money to have an expiration date, in order to force spending? In any case if “money” does not maintain value it will eventually be refused, no way around that.
While gold may well be archaic, it is useful to understand it, and why it became money - indestructible, scarce, divisible, homogenous, fungible,recognizeable, etc. The problem today is there isn’t really an objective or standard unit of account. There are standards for distance, time, or weights and measures, but an elastic currency distorts things over time and governments cannot resist debasing whatever is used as money for their own benefit.
Genesis for one. A flat 10% tithe. During the time of the Judges the temples were the government so the 10% tithe financed the government. A 10% income tax would be the best system, as it was then.
I believe we need only 4 forms of taxation: a 10% income tax, an acreage tax (to prevent hording of land at no expense), perhaps some infrastructure fees, and loser pays court costs. The constitution needs to be amended to prevent the government, or any arm of the government, from collecting revenue from any way other than these four ways.
I was a big fan of Bitcoin until last week, when reading more details about it I found the computer miners get paid small transaction fees forever for the Bitcoin they mined. That's not much better than the Federal Reserve, getting paid by the populace forever for doing nothing of value past the initial act of work.
Back to the drawing board for me. Maybe some of the western states will come up with something. They seem to be aware the dollar is in its death throes.
Nice article.
One Objection:
” During the Great Depression, many communities promoted tokens and other forms of alternate “micro” currencies — currencies that allowed small areas to survive collapsed international markets (the result of protectionism run amok as well as bank deflation and crazed government policy). “
The reason for Tokens was that when the tax was calculated, the accuracy was to tenths of a cent. Since the US currency no longer had 1/2 cent pieces, the retailers started producing their own tokens so that they could give a person the proper change, and since that token could only then be used in purchasing at that store, it was an advertising expense (to create the tokens) and increased business.
We no longer need the tokens, because the politicians decided it would be much simpler if they just rounded UP to the nearest penny.
SO... we are all paying EXTRA tax and most are none the wiser.
NO! I'd rather not pay rent to the 'manor lord', if you don't mind. I object to the threat of divesting someone of their property if they don't pay the tax (which can be raised arbitrarily at any time--I know, the assessed value of my home has doubled in three years with NO improvements).
(North Dakotans, Vote for Measure 2 June 12th!--eliminate the property tax!)
One of the purposes of the government or the militia is to protect the borders from foreign invasion. This costs money. A person that owns a million acres should pay proportionally to have his million acres protected.
An acreage tax would not be a property tax. Structures would not be taxed, just the acreage.
The "etc." being the main one - you can't print it.
If they put a tax lien on your property, they don't cart the structure away, they take it, dirt and all.
There are plenty of other ways for the government to raise money, and considering the rules Government has promulgated which often preclude the profitable use of privately owned land, the harvesting of privately owned timber, and other uses, for the government to levy a tax on that land is obscene.
Less government is the goal.
There is no Federal Property tax now.
Would you tax those closer to borders more, because their land is more expensive to protect than Indiana or Iowa?
One of the few Constitutional tasks the Government is required to do (and has done without an acreage tax) is to provide for the common defense.
Otherwise, we could put on a Federal tax for living next to an Interstate Highway, just to fix the roads.
Whether taxes be collected through an income tax, excise taxes, fuel taxes, whatever, it is pretty much a given that someone with a million acres would spend more and pay more taxes than someone on a 75X150 lot, just taking care of the place, and it is far more likely they would be producing food, minerals, oil, coal, timber, or any of a host of other products on their land--all of which at some point would be taxed. So the assumption they they wouldn't be paying their "fair share" is bogus.
Article I, Section 9 clearly states, “no Capitation, or other direct Tax shall be laid, unless in Proportion to the Census of Enumeration herein before directed to be taken.”
Essentially, you can’t have tax brackets or graduated tax systems, like we do. Excise taxes are the most common way to collect monies for the government.
I do agree with loser-pays court fees. That should be the case across the board.
All possessions are property. Today's property taxes include structures. A better tax would be to tax just the acreage.
Stuff the tax. You buy the land, it should be yours, not rented from the Government.
The government spends money to protect your land from foreign invasion, and should be compensated for it.
There are plenty of other ways for the government to raise money...
Tariffs and sales taxes are anti-growth. Income and acreage should be the two main taxes.
Less government is the goal.
Knocking tax collection to the four ways I mentioned would massively rein in the government.
If there was no property tax we would be back to the privileged few owning all the land and serfdom.
...it remains in the interest of everyone that their landholding be protected as part of the overall jurisdiction. Would you tax those closer to borders more, because their land is more expensive to protect than Indiana or Iowa?
Invading armies don't stop at the borders, they go all the way. Everyone should pay the same rate per acre. If a person owns a million acres, then he has incentives to make good use of the land or he can sell it to someone who can make better use of it than he can. With no property tax, then why develop it, he could squat on it for the rest of his life if he had an alternative income. The left could buy up all the private property and then make it off-limits to everyone, farmers, hunters, what have you.
One of the few Constitutional tasks the Government is required to do (and has done without an acreage tax) is to provide for the common defense.
I despise the taxing of building and structures. It limits growth. May the person who best can develop the land own the land.
Whether taxes be collected through an income tax, excise taxes, fuel taxes, whatever, it is pretty much a given that someone with a million acres would spend more and pay more taxes than someone on a 75X150 lot, just taking care of the place, and it is far more likely they would be producing food, minerals, oil, coal, timber, or any of a host of other products on their land--all of which at some point would be taxed. So the assumption they they wouldn't be paying their "fair share" is bogus.
The left had a campaign in the late 80s of buying land in Costa Rica and South America and not allowing the land to be developed. They would do the same here. Sean Penn and his pals would own half of Wyoming and make it off-limits. We would get no economic gain from the land and on top of that we would pay taxes to the Federal Government to provide the military defense of his utopia.
That's why I said we need to amend the Constitution. We need to simplify and restrict the way the government collects revenue. The four ways I mentioned would suffice. The system we have now is drowning us in fees and over-taxation. It needs replaced.
Tariffs are empowered by the Constitution. It took an Amendment to dip into income.
But you'd tax the person living in a tarpaper shack on twenty acres of swampland more than someone living in a McMansion on an acre and a half next to a golf course?
No.
Where I live an acreage tax is like taxing a manufacturing plant for the machines it owns.
Land is part of the means of production. Wheat farms here commonly run 5,000 acres or more, ranching operations get larger.
Maybe you think obesity really is a problem, because what you propose will make food prices go up.
Maybe you don't own much land, maybe you don't need to, or you would see this is just as severe of a damper on productivity as taxing automakers by the wrench.
What productivity? Food. Timber. Oil and Gas, coal, even the ethanol sold as being so bloody "green", all require land. Even the processed pulpwood you wipe with takes land.
As much labor and investment go into tilled fields over a few decades as a housing development, you just don't see it if you don't know what you are looking at--and sales taxes, fuel taxes, income taxes, excise taxes, etc. are all paid on that investment.
I remain dead set against taxing real property (land), especially to 'protect it', because the only enforcement mechanism is confiscation of that land. What is the greater threat, invasion by hostile Canadians or having the land seized by our own Government? (Hint: My wife's people once owned over 10,000,000 acres. The reason the government used to confiscate all but 1280 of those acres was "back taxes".)
So put your acreage tax where it will filter out in the drainfield.
Most of what is considered "income" is just what I get in exchange for my time and labor. It's an exchange, not a profit.
Tax either too much, and there won't be either the products of the land nor of labor.
At least with a sales tax, you are taxed on what you buy--as with tariffs, which were classically reserved for luxury items.
What's yours should be yours. Period.
The government spends money to protect your land from foreign invasion, and should be compensated for it.
The government spends more money telling me what I can and can't do with my land than it does protecting it against foreign invasion.
With the sh*tty job along the southern border, they should be issuing checks.
40,000,000 people isn't an invasion? Why do I hear spanish (mexican) spoken in WalMart? In North Dakota?
The chief expenses of government come from filling their own pockets and filling the great teat, and taxing the rest of us for the privilege of picking up the tab.
Wean the population--they can't suckle forever--especially the able-bodied.
One more thing:
One of the goals of the Socialists and of the Agenda 21 folks is getting people off of privately owned land, and herded into the cities where they are more easily controlled. Maybe you like those ideas. But I have found land under the careful stewardship of private owners seems to do better (be more productive) than land overseen by flunkies who are just there for a paycheck.
The Federal Government already owns over half of the land west of the Mississippi. Maybe it could have a sale and return some of that land to productivity instead of taxing the land of those who are productive.
First, there is no Federal Property tax now, nor should there be. Property Taxes are State, County, or local. Measure 2 in North Dakota in June would eliminate taxes on real estate at any level. Consider that we are the second largest oil producer in the US, and that the state gets a cut of every barrel of oil and every cubic foot of gas produced and that we have a 6 billion dollar surplus in the State coffers, we don't need a property tax. We have enough to run the state for six years now without collecting another dime, and we have more than 30 other major sources of revenue for the State.
As it stands, the serfs pay land rent to the government or get their holdings confiscated, buildings and all--because the buildings are on the land.
Kindly tell me just what the difference is.
Free men own their land, owing no one.
Some own more land than others. Some spend their money on farmland, others put it in the stock market, still others buy the latest fashions, but all have the option of buying land.
Some have more beanie babies than others, should we tax those too? Am I hearing 'acre envy' here?
You say you won't tax structures, so the owner of a 50 story office tower won't pay any more than the guy in a one bedroom shack with the same acreage?
Either you haven't thought this through, or worse, you have.
By the way, the land doesn't just sit there--without a long term plan, it won't yield anything but expense for the owner, although wildlife may do pretty well. Timber harvests (and replanting), crop production and rotation, even knowing which portions of the land are most suitable for what are things seldom learned within a couple of years. Some of the best stewards of land have passed it down through fifteen or more generations. Relatives of mine are on land which has been in the family since the mid 1600s and that is still productive land, except where the government won't allow the harvest of timber, timber planted by an ancestor 180 years ago. For the last 350+ years they have been paying taxes on that land. Enough.
My wife's people were given official deeds to the land they had owned far, far longer. Often the fellow who delivered the official deeds was accompanied by the fellow who served them notice of lien for back taxes (same wagon), and being without government issue cash, lost ten million acres of land, all nice and 'legal', but morally obscene.
Land taxes were used to strip southern farmers of their land (bought up by Carpetbaggers) after the Civil War. It is a time honored way to take land away from the owners, all nice and legal.
But from the rest of your spew, I suppose you'd think it's someone else's turn.
The left could buy up all the private property and then make it off-limits to everyone, farmers, hunters, what have you.
Google "Nature Conservancy". They do. What's worse, is those selfsame special interest groups lobby or sue to have policies implemented to make it impossible for the owners to pay their property taxes and force the sale at bargain prices. The Government also (and here's the favorite) takes land from private owners and makes 'wilderness areas' and 'wildlands', and Parks and National Monuments and establishes buffer areas which limit the uses private owners can put their land to--all the while private owners are paying taxes on the land.
Everyone should pay the same rate per acre.
So, if I own a gold vein, that should be paying the same rate per acre as West Texas scrubland? An Acre of Manhattan is worth the same as an acre north of Wamsutter, Wyoming? B.S.
Sean Penn and his pals would own half of Wyoming and make it off-limits.
The Federal Government does, and has, for everyone but a few tourists.
BUT you would open the door to the Federal Government (again) taking (more) land from those who have paid for it, with the same old tired excuse, so it could be 'more productive' (than the Indians, than the flyover country people, still the same forked tongue), even though the uses the owners can put their land to are often proscribed by the selfsame government you would have tax the land.
You miss who the threat is, here. Government is not the solution, it is the problem.
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