Thanks for the response.
At some time in the past we didn’t have cars, phones, computers or airplanes. Seems to me it took years of innovation and trial and error to get these things to work and to get them priced for the larger consumer market. So, saying that we tried and failed has no logical meaning.
I am not some naïve person who does not understand the barriers to private currency. I also understand why there is no great push to privatize currency, the major banks who would benefit are still making billions under the current monopoly, so why change?
Then there are the current crop of economic innovators, such as Apple, Google and Amazon, but currency is not their schtick.
Finally, there are lots of people like you for whom the idea is new, you have no background in the subject and, well, dollars are still OK.
This post is not a working paper of how to create and manage a private currency, but the basics are for private companies and banks to issue their own currency backed by assets. If I give you a quick look, maybe you will change your opinion.
The best candidates would be Pay Pal and Visa. Is Thiel still with Pay Pay or did he sell out completely? These are payment processing companies. If they were to see a profit in creating or processing private currencies, then they would enter that market. Who cares? Profit is profit.
As with most people, your only knowledge of private currencies is either the issuance of dollars 100 to 200 years by private and state banks or Bitcoin. Private currencies would not be in dollars. They would be in Apples, Googles, Pals, Visas or Chases, not dollars.
Second, they would be backed by assets, and not the fictitious “faith and credit” of… (I can’t write it here. It’ll make me laugh at the absurdity of that statement.) Assets would be in any form, gold, stock in another company, market value of the issuing company itself (isn’t that what stock ownership means?), Treasury bonds, corporate bonds, real estate, real estate mortgages. Any thing of marketable value.
The issuing company needs to be big and its assets diverse. Probably 100 billion (as valued in dollars, or maybe 2,400 tons of gold) for openers. It can be done.
After the value of assets, the most important way that help private currencies maintain value is the competition of the market place. This is an important place where monopoly central currency fails. The private banks 150 years ago issued dollars. That was a mistake. Dollars don’t compete with themselves. You issue your own currency. The point is to get away from dollars.
Next, these banks were not transparent. 150 years ago it was almost impossible to know the actual value of the bank, until it was signaled by knowledgeable insiders in the trading value of its stock.
Currency issuing companies would be traded on a currency exchange like ETF’s. Their currency is in essence their stock. The closest approximations today are the indexed ETFs like QQQ or GLD. QQQ tries to mimic the value of the NASDQ 100 and GLD tries to mimic the value of gold. At the end of each day the assets are adjusted to reflect the change in the value of the index or asset and also the net purchases and sales of its certificates.
With currency, the key is maintaining a stable value. Even gold is not stable when valued in dollars. It won’t be perfect. It can’t. But it needs to maintain parity with it initial issuance value. Maybe that is 1/000 of an ounce of gold. Not dollars, weight. Maybe it needs to be a combo of gold, silver, platinum and titanium. The dollar value of gold fluctuates because the dollar’s value fluctuates. The private currency needs not to change in value. That’s the primary problem with fiat currencies. They constantly loose value and you can’t redeem them.
Redemption for dollars used to be gold or silver. That was a fairly good approximation 100 years ago. It would fail, even today. Redemption of private currencies would not be in precious metals. It would be in a competing currency. If dissatisfied you would have multiple options. In the US there are no other options for currencies.
Just like Google and Facebook, first in usually gets the biggest share of the market.
It is worth a try. If nothing else, the effects of private money cannot be worse than the history of abusive and destructive government central banking and monopoly fiat currency.
Next, the market itself will sort these things out. To be acceptable as a top currency it cannot fluctuate in value and the larger the market the better. The internet took a decade to gain traction and now after about 30 years it is a multi-trillion institution.
I did not invent this idea, though I have tweaked it. I think that it will take a non-traditional entity like Pay Pal, Google or Amazon to kick start the concept. B of A still has too much vested in the current system to want to initiate the change. But like Amazon selling on the internet, even Walmart sells billions online now. But like Amazon with internet retail, the first in are usually the biggest. Walmart, the largest brick and mortar retailer is struggling to catch up.
If you are disgusted with the govt’s mishandling of our currency and its theft of our assets, then you should be interested on ways to halt this fraud. Government is NOT going to reform itself. It’s like asking a drug addict to stop using. Good luck, not gonna happen. The only way is to stop asking for permission and to go around them.http://vandanson.com/private-money/http://vandanson.com/wp-content/uploads/2016/07/private-money-lender.pnghttp://vandanson.com/wp-content/uploads/2016/07/private-money-lender-150x150.pngEconomicsFeaturedThe Federal Reserve and Private, Competitive CurrencyRansomexx, Thanks for the response. At some time in the past we didn’t have cars, phones, computers or airplanes. Seems to me it took years of innovation and trial and error to get these things to work and to get them priced for the larger consumer market. So, saying that we...VanDansonVanDanson firstname.lastname@example.orgAdministratorVanDanson