Problem: inflation. Solution: free markets in money.

A few people asked in comments on the inflation post about the problems with restricting the market for money in our country. We do have the option of holding foreign currencies instead of dollars, and many smart people take up that option, especially in times of volatility in the dollar. But why should we have to invest in the production of a foreign nation (especially a state) if we could have the option of using home-grown industry?

Seth asks:

I have heard questions of the US currency before, but is the alternative we want colonial US where each state has their own currency?

This is not specifically what I’m proposing. Yes, if they want to, I think every state should be able to issue its own money, fiat or otherwise. That’s not the only thing I want to see. Banks should be able to do the same! The first paper money was issued solely by banks, and has evolved into something many of us use every day: checks. When Seth says

There is a great benefit to using one currency, I know what money is suppose to look like, it is hard to counterfeit.

he seems to forget that checks are money too; and issued by private companies. Norms and procedures have evolved to verify that checks are not counterfeited, and the same would be true of any private currency.

Money issue should not be limited to only states and banks forced to register with those states. Frankly, any entity that chooses to issue money should be allowed to do so. One example is the Liberty Dollar, which is a gold and silver-backed private voluntary currency who recently had assets seized by the government for no reason. Liberty Dollars are redeemable for a certain fixed amount of gold or silver, which means that it is very hard for them to inflate. They are better holding than dollars in some cases for that reason. There is a reason the constitution says “No State shall…coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debt.

Frankly, I’ve seen how well the government manages things. I’ve seen how well the manage the dollar which, frankly, is not very well. I would definitely trust currency backed with something over currency which is not backed (like U.S. Dollars currently, which are only worth something because the government requires people to accept them as payment for things). For example, if Google or Paypal introduced silver-backed “Googlebucks” or “Payps,” you could use those. There would be a floating exchange rate and you could use a check card anywhere that automatically converts them to dollars at point of sale (or doesn’t if the merchant prefers payment in one of these currencies!) Check cards do this already with foreign currencies. This is only one step farther.

So, I’ve tried to explain what I think should happen, and how it’s plausible that it could happen. We come to why I think it should happen. Here are a few reasons:

  • I am a big believer in freedom. People should be able to choose to engage in mutually beneficial trade without anyone stopping them. Freely chosen trade always creates a benefit to all parties involved. It is positive sum; value is created from nothing when I choose to make a trade with someone else. Trading items of value for any currency that the seller desires is a mutually beneficial trade and so should be allowed and encouraged. Legal tender laws (saying that U.S. Dollars must be accepted) and government strong-arming of private currencies both diminish this freedom, and thus create less trades than there otherwise would be.
  • A free market in money is good for all the reasons that a free market is always good: competition provides incentives to achieve better service, lower costs, and lower profits. Government dollars are currently more expensive than they should be, and when they inflate it causes massive headaches. That inflation is usually directly a result of poor management of the money supply by the government itself. Competition in this arena would solve that problem. A monopoly enforced at the point of a gun is always bad. In this case, nothing is different.
  • Ultimately, in a mutualist society, every person would be able to issue their own money backed by their own assets, or combine together to form a mutual bank backed by all the assets of its members. This would incentivize local currencies. If you, and the person you are buying from are both members of the same mutual bank, you are free to make trades and purchase from each other without having to deal with any money monopoly at all. Essentially all the members of a town could get together and create “town dollars” which are backed by all the assets owned by people in that town. Only people in the town would accept town dollars and there would be an exchange rate with other currencies. This means people will have a strong incentive to buy and sell locally, which, in my opinion, would be a good thing. And, if a town (or members of a mutual bank scattered across the country) managed itself very well, with everyone gaining many assets, their money would be worth more when traded with the outside world (they would get a better exchange rate). The problems of inflation and poor management only affect small groups of people, rather than the economy as a whole. Decentralization is usually a benefit in this way.

I’m sure many people found this post rather dull, but I don’t think what I’m advocating here is that crazy or that complex.

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A Lion in Late Winter

Many people who know me know that I am a member of Lions Club International and also my local Lions Club in Sandy Spring.   The Lions are a good organization, I just went to a meeting tonight, but I have been missing some of my commitments there recently due to my separation and me just generally blowing anything off until Melissa is gone (either to spend more time with her or because I am too sad to really commit myself).

I hope to redouble my efforts in the near future and be sure to be a useful and contributing member of the club.

My grandfather, who asked me to join, asked me a few years ago why I had done it.  I told him I joined so that I could help people and be an upstanding member of my community.  These are both totally true statements.  But I also had a bit of an ulterior, selfish motive.  The libertarian / agorist political stances I take require me to take responsibility.  If I don’t want the government helping people, building and maintaining institutions, or structuring society, then voluntary organizations need to arise to do all those things in a voluntary manner.  The club just happened to be one such organization that was doing so, and one that I was invited to join by my grandfather.

And we do good work!  We genuinely help people and help organizations that help people, and we do it all with voluntary action.  I am proud of all the good things that lions do, but it’s not exactly a radical organization (and I do consider myself a radical).  I’m too timid to try to push it in that direction, mainly because I don’t think it’s my place to do so, and because putting a political slant on something that is generally a-political feels like I would be cheapening it.  I would like to expand my horizons, though, and possibly join or form another organization that does take radical agorist stances but also helps people and supports the community in which it arises.

The one thing I can’t abide at the Lions Club meetings is the pledge of allegiance.  I basically just mumble through it, considering each of the phrases and whether I could support them or not, deciding not and continuing to mumble, until we get to “with liberty and justice for all” which I put some force into.  I hope that doesn’t make me a bad person or a bad lion!  The invocation is also a little sketchy, since I don’t believe in God, but generally I can get past that.

I recommend that everyone join an organization whose sole purpose is to help those who need help.   The Lions are a good one.  I’m sure there are others.  If you know of any that are also trying to “build the structure of a new society within the shell of the old,” will you let me know?

Kids Rights: trade

If you’ve ever talked politics with me, you know I have a thing about voluntary trade.

When a voluntary trade takes place, it is always mutually beneficial. Both of the people involved are getting what they want out of it, no one is being coerced, and the world is a better place because the exchange took place.

And yet, good kids are getting suspended for buying candy in school.

Being an entrepreneur at this early stage can give more valuable lessons than can be learned in a classroom. A child can learn that being a good citizen means helping others by fulfilling their needs and providing a useful service. They can learn math skills and simple economics.

These principles were recently demonstrated by season 4 of HBO’s The Wire, which I know is a favorite of the blogosphere. That season, focused on kids in a Baltimore city school, showed one character, Randy Wagstaff, who was selling candy in school, and got in trouble for it. The trouble he was in cascaded until it ruined his life, and all because he showed some initiative, and the system shut it down. I don’t think that is the way to help kids who are just trying to do right by themselves and everyone around them.

Suspending kids who engage in this kind of trade is counter-productive, and a travesty. They should instead be lauded for having that spark of ingenuity and the drive to not just sit around playing video games, but to DO something.

Finally, you all know, or should know, my take on black markets. When something like candy is banned in a school, a black market will form. Obviously! And participation in the black market should be lauded! Free mutually beneficial trade is a boon to all who participate in it, and when your participation is underground, it can’t be taxed or have other extra burdens placed on it.

Agorisma

My political beliefs lead me to desire to live in a society where people have the maximum possible freedom to act to improve their own lives, and where no one prevents them from making the choices to do what they believe is the right thing.

Agorism is a strategy and a tactic for bringing about such a society.

It comes from the greek word Agora, which means “open marketplace.”

Many freedom-lovers believe there is sufficient evidence to show us that a society that values freedom will not ever be handed down to us by our political leaders.  It seems as though the longer governments stick around, the more laws there are, and the more restrictions they impose.  Starting a new government, like the founders of America did, can alleviate some of this oppression, but it only creeps back in time.

This amoral oppression must be pushed back, but not through violence, elections, or revolutions, since all of these things only perpetuate the cycle.  Agorists believe the marketplace is the proper tool to use to end this oppression.  Individuals must work together (or form cooperatives) to provide better service than the government at all tasks essential to the continuance of civilization, and to ignore the government when it gets in the way of the free market.

For instance, one could create a private mint or a private court system that people choose to use to mediate disputes.  If private (hopefully competitive) agencies spring up to take care of these essential functions,  they can do a better job than the government for less cost.  Why would people want to continue to pay taxes and listen to politician blowhards if they are getting what they need more efficiently elsewhere?

Agorism also requires some level of civil disobedience: asking those around us to ignore governmental decrees that are unjust.  For example, one could hire an undocumented immigrant, engage in barter or use an alternative currency to avoid taxes, or engage in online file sharing.

Agorists call this system of undocumented transactions the counter-economy.  The idea is to engage in mutually beneficial trade even when the government (falsely) tells you it is wrong to do so.  The simple and often hidden truth of trade is that it benefits both parties, and so harms none.

Hence, a call for all to participate in black and grey markets.  If the trades you are engaging in in these markets are mutually beneficial, then they are moral.  Make as many trades like this as often as you can.  Make this point to others who question you, and get them involved.  Working together we may be able to create a market, and a society, that is truly free.

I didn’t go into nearly enough detail here, but hopefully I will be able to expand on these ideas in small chunks.

The idea of agorism has been around for nearly 30 years, but the internet has created a boomlet of interest more recently.  Learn more about the history of agorism, including its inventor, Samuel Konkin III,  at Wikipedia.