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Periodic Commodity Standard Money

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Trung Tran-Nguyen-Tuan posted on Mon, Jun 11 2012 6:25 AM

Suppose there is a country that allows 3rd parties to print their own kind of money.

Suppose there is type of money that, for every of its unit, the holder can go to a bank and exchange an access to a constant monthly supply of food (or whatever neccessity that such money uses as standard).

The food stuffs are producded, processed, distributed and stored by a non-profit organization (non-profit in a sense that profit from selling X amount of food stuffs is used for operational and fixed costs for storing Y amount of food stuffs, wheras X + Y = total available).

The constant amount of food stuffs to be supplied each in exchange for each money unit can go up or down depending on the maximum storage capacity divided by 120 months. (e.g 120 kg of rice in stored, but only 1 kg can be accessed each month)

What dependencies, issues or potentials do you see in such concept? What structure do you think can make a stable and scalable commodity money.

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Bogart replied on Mon, Jun 11 2012 2:39 PM

If the entrepreneurs and consumers in the marketplace can FREELY select this version of money when other substitutes are readily available then that is the correct one.  That is all that needs to be said in terms of economics. 

In terms of history, people acting freely have not chosen food and water, although critical for existence, as a form of money when other forms were readily available. 

Personally, I doubt that this form of money could be used as it is based on a commodity that is perishable and requires replenishment.  And not only is this commodity perishable but the value of the money would be affected by the weather.

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Throughout history, there are ideas that can only be applied and practiced after certain advancement in technology. I think the agricultural production and preservation follow the same rule.

As we are talking theoretically, somewhere in the future, technological problems can be solved for production and preservation of the surplus food stuffs.

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