Money In A New World

There are too many comments on my earlier post on "the scandal of money," so I thought I'd respond with a post on the main page:

A wise man, a Swiss-French philosopher whose name I forget, when told of the invention of paper money, said that the only way in which it can work is if everyone has the freedom to issue paper notes. I agree.

So I can issue an IOU. So can you. So can ITC Ltd. Some will circulate – “gain currency” – while others, like mine, won’t. The only question we must now ask is what The Law should be on the subject.

Very simple: These are all “private law” contracts binding on those who issued these notes. Just as we cannot be allowed to issue dud cheques and get away with it, in exactly the same manner, no one can be allowed to freely default on his notes – like the RBI does with impunity today.

There will thus be many kinds of notes based on a variety of real commodities, and these will compete. The result will be that all notes will be “property titles” to tangible properties. There will be no irredeemable paper notes, as is the scandal of today.

In my example of ITC issuing notes redeemable in packs of India Kings, the note will not mention any rupee value or any validity date. The note will exchange at a “price” determined by the market, in an accounting unit of common money. ITC will be bound as a note issuer to always redeem the notes, and it will engage in this manner of profit-seeking precisely if there is a profit in it. There should be, for it is an interest free way of raising funds.

The reader is advised to look at the entire matter first from the point of view of the consumer – the note-holder. And second, from the point of view of a citizen in a “rule of law society.” A note convertible on demand into a tangible asset is surely a far better world for note-holders than the world of today. And won’t citizens be better off under the natural laws of justice? – which begins with private property. Aren’t these laws simple, easy to understand, and moral as well? Won’t everyone agree to abide by them? Won’t “outlaws” be quickly identified and dealt with – with the full support of the law-abiding citizenry? That is, there will be no “enforcement” problems. Compare this with the complicated but immoral laws, rules and regulations of today. Compare this to FERA – and the Directorate of Enforcement.

See The Light?