Imagine Life with Competing Currencies

Well, I'd rather have the choice, than being forced to have my salary and savings in a monopolized currency which inflates badly. What is it now, minus 98% since the last connection to the gold standard was abandonded in 1971? It has been a very very bad investment to use dollars.

Probably one currency will dominate in retailing. It doesn't get much better than 100% gold (or silver) so that will likely dominate. It's like we have a spontaneous standard for language. Markets have proven to be extremely efficient when it comes to establishing good standards. Politics has not.

For long term savings and loans, there might be another currency dominating.

And any border region in the world, and all countries which have swithced currencies (like european countries have switched to the euro) live with double or even tripple currencies. It's a small problem, but it's well worth it.

I've been in a cash business all my life.

I want real money for my product, guess why?

My suppliers are nor stupid they want real money for the product they are selling to me.

Guess what again? My crew wants to be paid in real money too.

Right, my accountant will prepare my quarterlies for worthless money..not MY accountant..

Business people are smart, if they aren't they GO OUT OF BUSINESS.

Sign on the front door.

"We will be accepting real currency only commencing this Monday, thank you for your patience."

Like I said before, the Fed reserve building in DC? It's gonna be leased out to an organic pet food research laboratory. Guess what again, when the fed leases out the building? Bottom of the lease on page 26?

"All lease payments to be made in Gold or Silver backed currencies only"...they ain't stupid.

T

Most transactions are electronic, your bank and starbucks' bank can sort out the exchange rate in the backend.

My family takes the peso at our business in Texas and Az. It's no big deal. Also I read where the dollar will make a huge come back in 2008.

Oh, I didn't even mention the amazing possibilities with debit cards.

You could have a debit card associated with two accounts (or one with two different values--a dollar value and a gold value or whatever), and stores would charge whichever type they want; you would leave it up to the store and your bank to make the currency exchange.

Again, the market is heroic when it comes to facilitating trade. Otherwise there would be no market.

I believe that in order for competing currency to function correctly no peg can be constructed, i.e. $1 = x grains. Monetized metals as is the case for the dollar would need to maintain a free-market float. This would eliminate concerns for economic growth being constrained by precious metals availability. The easiest way IMHO to accomplish this is simply to remove the tax on nominal appreciation of the specie. Individuals could than place their savings in accounts such as E-Gold or similar intermediaries. When one needed to replenish fiat necessary to transact business they would simply convert the gold/silver at the market rate and electronically transfer the funds to their demand deposit accounts.

This would amount to least intrusive reform while at the same time giving people a conduit for storing wealth.

If gold money “coins” were to be used to transact business then weight would need to be the determining price association. I see this as impractical, but possible. I believe the method above to be superior and still provide incentive for people to divert savings to precious metals if the fiat is mismanaged and debased at a percentage much higher than actual GDP growth.

I have tried to create some discourse on this matter in other blogs but can not establish a consensus opinion as to the viability of this concept.

You forget that European countries worked in multiple currencies for hundreds of years. No problems.

I lived in Italy for three years. EVERYBODY could convert between dollars and lira and marks and francs and francs.

Competing currencies would be irritating only to those that kept going down in value relative to "paulies".

'Jolly

...but this is really missing the point.

First off go to any town near the Canada/US border and tell me if it's all that complicated to have too currencies accepted at stores.

Secondly, most people will still make every day purchases with dollars (after all there are millions in circulation, and since the Fed will be forced to let rates rise if they're competing with gold). The "competing currencies" (really just gold and silver coins for most people) will be used for saving (since saving in dollars is a sure way to be stolen from).

Very likely contracts will be made in dollars by some people and in gold or something of commodity value in other cases.

This really DOESN'T sound that difficult. You forget that businesses will want to do everything that they can to make BUYING THEIR STUFF as easy as possible.

Like when Mexico revalued the peso. They had two different bills worth the same amount (i.e. 3 and 3000 peso notes). I'd probably do business in both currencies but my savings would be in paulies.

You're forgetting that eventually a currency will dominate the rest and chances are it will be a currency that is backed by gold.

Yeah, I'm sure at the very beginning it might be a little extra work, but shortly thereafter it would all work itself out in the free market.