Hi, the founding fathers of the USA also said (iirc) that the people needed to be educated. For ppl (like me) who are not professionally in banking the money issue (in full) can seem complicated. I think that for sufficient political over sight #1 thing for a new system must be simplicity. Only what is simple people can understand, only what people can understand they can inspect, police & keep righteous. What do you think of this system: a Gov issued fiat *), legal tender law **), fit for debt ***), and taxes payed in it ****). Now the money will work as money in exchange. Then a central gov owned bank as the infrastructural backbone, with collective accounts for banks (privacy from gov). Retail account *****) & savings account services banks who are prohibited to lend out a single dime (inspected by gov), by law prohibited to lend anything. Then a separate mortgage & consumer credit sector ******), al so heavily policed by gov. By law nobody can resell a loan to a third party *******). Then a third sector which handles business upstart & expansion credit, these investments are in the form of plain loans and can neither be traded to third parties. It is my understanding that this third sector has to be dominated by political will of the people, to prevent that sector from growing up those tiranical and corrupt corporations the USA founding fathers may have talked about. The money would then be spend into circulation and taxed out of it, the government never lends a single coin from anyone (only taxes). As a rule the (next) go vernment never pays back loans, so that future govs won`t be able to get credit either ... I`d say this is simple, what people expect too. To round it off: international businesses are prohibited henceforth, and politics rules on import/export tariffs to protect its markets and industries out of long term self interest (at a cost to global economic effeciency ********). This program also requires the government to be a faithful true democracy ... ... Is this something, if not why ? I personally don`t believe in gold / silver mon ey that much. *********) http://theeconomiccollapseblog.com/archives/it-is-now-mathematically-impossible-to-pay-off-the-u-s-national-debt ------------------------------------------------------------------------ Notes: ------ What do you think of this system: a Gov issued fiat *), legal tender law **), fit for debt ***), and taxes payed in it ****). Because that sentence may seem like a foreign language to some, and this was about simplicity for the real people: explanation of the words used here: *) a Gov issued fiat *) With that I mean: the Government pays some people to create a very hard to copy paper money for 5, 10, 25, 50, 100 and so on, and also design coins. These then get printed in millions upon millions and can then be used. The word "fiat" means that a single sheet of paper money, or a coin, if it was not officially 'money' would be worth next to nothing. The paper money would be worth less then toilet paper, and the coins would be worth as much as scrap metal alloy (which is presumably less valuable then pure metals). When you are using blocks of gold or silver, or diamonds or something else of value, to pay for things or services you want in the markets, then the money itself has a substantial value, and then it is called a "commodity" money (the money itself is a 'commodity' that is a (seriously) valuable thing). That's all there is to it, don't overcomplicate it in your mind ! **) legal tender law **) With that is meant that if someone shows up in a shop with a bundle of 'money' (coins, paper) of the official money of the territory where that shop is located, then he will be able to buy products and services that are sold for that money in that shop. It forces shops to accept the money, basically. It does not force a specific price, but it forces the use of money. ***) fit for debt ***) This is the same as 'legal tender' but then for debts. If you owe someone something, then with this law you are able to pay off your debt using the money of the nation. ****) and taxes payed in it ****) This means that you have to pay taxes to the Governmen in the money of the nation, and not for example pay your taxes in ping-pong balls or a foreign currency, or gold or silver, or rice, etc. why have a money ? (little bit complicated) ------------------------------------------- The reason for the above is to make the official money something that has a real use in the nation, so that it gets used and when it gets used it will have a value for everyone. What has value for the first person, also has value for the second and third persons and between them if they know and can rely on the fact that the first person wants that. This is a little bit complicated, but with some examples you'll understand. I for example have no use for diamonds whatsoever, I have more use for salt crystals. A diamond to me is almost like garbage, and a hunk of gold metal is simply nothing more then something that would clutter up my closets. But I know it has a great value for other people, and therefore I can trade it with them or even others who have no use for gold or diamonds either, because they would give me things I want to have or fetch things I want to have to trade me for the gold and diamonds if I was willing to not ask more then they want to give. For example I could easily get a great meal from any restaurant if I sell the owner 1 kg of gold first for some money worth one meal. I don't care for diamonds or gold, but others do and therefore it has a value for me too. This is exactly how you can create value in money in the real world: someone needs money to pay his taxes and stay out of jail for not paying his taxes ? Then money has a value for everyone. You can pay with it in a shop ? Then ... it is as simple as that. Once the money has value, it becomes the great way that everyone can trade with anyone using money. I may want a meal, and I can provide a coat say. Now what ! Big problem, the barter economy is very inefficient because people don't have things that they want from each other all the time. Say I do find someone who wants my coat, but that someone can only provide me with two second hand tables ! What do I want with that ?! Enter 'money,' be that gold-money or "fiat money" and everyone can trade using money "because everyone wants money." But why does everyone want money ?! Because of the above laws, legal tender laws, have to pay taxes in it, that cause money to have value for some, even many or all, people. This may all seem a little bit complicated and it is a little bit complicated, but it works very well doesn't it (so long as the Government doesn't print far too much money that is). If you understand this a little bit, follow the examples, you'd know a lot about the most important aspects of trade. If you think in examples you probably undertand, at least that is how I understand it too. *****) Retail account is the bank-account ordinary people have, with which we can pay things and get payed electronically or by checks and so on: regular bank account of real people. Shops and so on can also have a bank-account like this, simple pay and be payed bank account. ******) Credit sector is simply businesses or persons giving other people loans, 'credit' means loan. *******) Nobody can resell a loan means that if you and I where to make a loan to each other, say you would lend me 100,-, then you can not say to someone else "hello, I have made a loan for 100,- with Jos, do you want to buy this loan from me and have Jos pay you the 100,-." By prohibiting that, the loan would only be valid between you and me and between nobody else. There is one possibility to change a law to another person, and that is if I take a loan with someone else for 100,- and then give you your 100,- to end the loan. But that mean I have to do it. ********) Cost to economic efficiency: that may sound smarter then it really is, because it only means that one nation would do nearly everything, including for example making their own energy. But it may be much cheaper to buy the energy from another nation, maybe the Sun shines a lot harder there so they can make energy easier then us. But to protect the nation and not make it dependent on the demands of that nation who could cut us off from energy, we could put a high cost on that energy when it crosses the border only because we (the government) say so. That makes that cheap energy much more expensive, maybe more expensive then energy made in our own nation. Then people will buy locally made energy, and that will make everything more expensive so that means 'less economic efficiency.' Things will be more expensive. But in return we won't be held hostage by that other nation, we will have more power over ourselves, be more independent. In theory this could even cause economic efficiency if extensive global free markets cause nations to start to depend heavily on each other and maybe cartel formation occurs, which could create power-positions that could then be abused for price increases for lack of competition. In the long run global free markets may therefore not produce efficiency at all, and they are inherently susceptible to global shocks and imbalances: if a nation making energy gets a big earthquake then all nations depending on that energy also get a big shock. This may even cause economic and social disasters globally! But if all nations are very reliant on their own production and consume a lot of what they make for themselves, entire continents could sink in the sea and most nations might feel nothing economically and socially. Which also frees them up to help... *********) I don't believe in gold/silver money that much, because it has been used in the past and never worked out either: the rich where rich and the poor worked hard. With gold money you risk power in the hands of big business and banking, and you lose power as a Government over your money system, you don't have the power to make up a new money suddenly, and you risk all your gold / silver getting lost from international trade. In actual life people would also quickly start to use paper money and coins as a substitute for gold and silver coins; and strangest of all the value of gold and silver in coins would to a degree reflect its status as a fiat currency rather then its commodity value. So you think you have a commodity money, but it is effectively a fiat and the gold gets forgotten because it isn't even needed; which is also how it happened historically up to now. However, theoretically and very simply speaking, there is a beauty in the gold or silver coin money. It may work better for areas with no serious government or lacking the technical ability to issue and maintain a fiat currency. Another benefit is that gold or silver as a fiat currency will be relatively hard to counterfit, because it is very costly to create gold from other materials and so on. In theory gold or silver could work very nicely, however there are the money players to contend with. It may therefore be smarter to use a fiat currency fully under Government control, to use that as an additional weapon against potential money players.