My friend has some questions about how free market money would work and problems that might arise.
here's his questions:
"
--- New set of question not based on the gold standard but Ron Paul’s “competing currencies”
Ron’s main point is to take money and make it private
Q1: In essence Bank of America has its own notes as does chase and now markets have to pay for the overhead in maintaining such a number of different currencies and prices of goods have to be constantly changed per the currency you hold as in buying a can of beans may cost $1 BOA but perhaps $.75 chase, if you support Competing Currencies, how do you envision yourself managing your notes and from what bank and keeping track of such logistics?
Q2: Does it matter if your Bank has a run and you lose your savings as they are not insured?
Q3: Does it matter that many during hurricane Katrina had no bank transactions and the FED was able to guarantee transactions, this would not be the case in CC so an example would be, no home, no money in the bank?
Q4: in ref to Q2 and Q3 - I know an answer might be, individual responsibility but what about the economic consequences that domino from such monetary instability?
First point to make: Only poor people use USDs. Anyone who can afford it puts their money into stocks, commodities, whatever. In this way, there is already free market based currency. Stock exchanges are like banks in this sense. Some people do monitor their "money" 24/7. Others pay firms to do this for them. You are also able to keep a pile of gold under your bed.
Second: Bank runs occur because of fractional reserve banking. Many economists have held this to be nearly impossible in the free market, since banks would exchange any paper they were given for the commodity the paper was supposed to represent.
Third: In the free market, you would be able to get short term loans from private sources in case of an emergency. Fourth: What monetary instability. Gold has kept its value relative to other products over the long haul. There is nothing more unstable than using the same notes that a central bank prints more of any time it wants.
A1: This is an incentive for banks to avoid inflating and thus devaluing their banknotes.
A2: This is an incentive for consumers to monitor their banks and select one with a low or nonexistant inflation policy.
A3: Worst case scenario, temporary currencies(eg bottles of water and cigarettes) take the place of normal ones until things get back to normal.
A4: A wary market is the best way to keep banks from inflating(that is, printing banknotes worth more gold than they have), which avoids monetary instability.
About people managing different money...
I I have some family in Bosnia, and I've been there a few times. Bars, stores, and even most government clerks accept Euros, Bosnian Marks, and the Croatian Kuna as different forms of payment. People and businesses managing multiple currencies isn't a problem and isn't impractical.
In a free currency market, I'd probably hold onto a few forms of the paper currencies from different banks, and hold some extra of one or two kinds for spending. It's really not all that hard. It's even simpler than making sure you get the 4 food groups of your diet every day.
Agreed GJ. I was just talking to a family member about this last night. How we handle different credit and debit cards, and it would be of almost no inconvenience to handle more than one currency.
But North Americans in particular, can be incredibly dull and unimaginative people. Tell them about private roads or private courts, and they nearly have an aneursym.
limitgov: Q1: In essence Bank of America has its own notes as does chase and now markets have to pay for the overhead in maintaining such a number of different currencies and prices of goods have to be constantly changed per the currency you hold as in buying a can of beans may cost $1 BOA but perhaps $.75 chase, if you support Competing Currencies, how do you envision yourself managing your notes and from what bank and keeping track of such logistics?
In a free market, all (honest) money would be commodity-based, whether gold, silver, platinum, palladium, etc. So it wouldn't matter if your not comes from Chase or BOA, but their notes would be backed up by something, so the receiver of the note would probably accept any note as long as said bank was relatively close to them.
limitgov: Q2: Does it matter if your Bank has a run and you lose your savings as they are not insured?
Hell yeah it matters! Why would you put your money there?!?!
limitgov: Q3: Does it matter that many during hurricane Katrina had no bank transactions and the FED was able to guarantee transactions, this would not be the case in CC so an example would be, no home, no money in the bank?
I don't really understand this question, could you rephrase it? What is CC?
limitgov: Q4: in ref to Q2 and Q3 - I know an answer might be, individual responsibility but what about the economic consequences that domino from such monetary instability?
The consequences would be that the irresponsible ones would fail and die off, and the responsible ones would be successful and fruitful.
Periodically the tree of liberty must be watered with the blood of tyrants and patriots.
Thomas Jefferson
liberty student: Tell them about private roads or private courts, and they nearly have an aneursym.
Tell them about private roads or private courts, and they nearly have an aneursym.
I thought that was our plan. That's why I keep telling people about such things. ;)