-
FiatLux posted an update 5 years, 3 months ago
On solutions, and in response to a member who asked about states bypassing the Fed: Maybe groups of individuals should simply start transacting with each other locally without using any government-issued currency. That’s one way to opt out of the system a little right now, today.
In the medium term, I think states issuing their own currency and bypassing the Fed would be messy but not impossible. Especially if a state issued a parallel currency only for use within that state; then people could still use federal currency to pay federal tax, at least until there were no more federal currency reserves in the state. Federal tax would be the biggest hitch.
The second-biggest hitch would be the federal gov’t benefits and subsidies that individuals and local economies rely on to survive. The states could step in and use their own currency to replace any lost federal benefits and subsidies, while simultaneously stimulating the state’s economy (which it could do simply by issuing its own currency and making its own loans to small businesses) and thereby creating an environment with more jobs, where fewer people needed federal benefits to survive.
That takes care of the liabilities to and from the federal gov’t, with the exception of Treasury securities, held principally by pension funds. At this point, I don’t think anybody should be relying on Treasury securities to have much value in the long term anyway, but I’m not very knowledgeable about that.
The federal trade deficit would be immaterial in this scenario. The state would, however, need a means of exchange to pay for goods imported from out of state. That’s perhaps the biggest problem. Historically, countries have used gold or an agreed-upon (often gold or gold-backed) reserve currency for this purpose. Maybe this is why a few American states, like Texas, have started accumulating bullion.
States that did this would probably need to band together to counter the giant pushback they’d get from Mr. Global and his central banks. It’s hard but could all be done.
The Giza Forum (Legacy)
Closed Archive of The Old Forum
There are books available on creating alternative currencies – one of them is “Money: Understanding and Creating Alternatives to Legal Tender” by Thomas H. Greco, Jr. (2001).
My fear is that due to the revenue loss caused by Covid, restaurants alone will equate to major losses, many/most state are likely bent over a barrel right now regarding their budgets and the unexpected loss of revenue. Daddy Sam likely has them right where he wants them regarding some of the likely “policy shifts” coming down from the top.
Never the less, I encourage others to attempt to similarly experiment with decoupling from the existing ponzi scheme and finds what jives with your local economy. Great post, these are the types of discussions that I miss on Giza, lately it seems were being drowned in politics and other matters that are entirely out of our control. I prefer to put my focus and energy into things that I can influence and put into motion.