Imagining a world without the dollar

The dollar doesn’t have much clout these days. The greenback has lost 12 percent of its value against foreign currencies since the chaotic period after the failure of Lehman Brothers in 2008, and nearly 5 percent since the end of 2010.

Economists are debating the end of the era of the dollar, while news organizations paint it as a 98-pound weakling. Our so-called “fiat” currency, backed only by the full faith and credit of the government, no longer commands respect. So wouldn’t we be better off without it?

Imagine you woke up tomorrow and the dollar had vanished. The Federal Reserve was out of the business of supplying money. How would you go about your affairs?

The obvious answer is that life would become one big swap meet. It would be like your local farmers market, except that instead of a vendor selling carrots in exchange for dollars, she would have to trade them for the onions in the neighboring stall or for the paring knife of the cook with no vegetables at all. The problem with this is what economists call “non-coincidence of wants” — the carrot seller may not want onions, and those onions may rot before she finds someone who does.

This highlights the convenience of currency as a medium of exchange and a store of value. It follows that in a world where the United States no longer had a currency, there would be an incentive to use someone else’s.

Democrats have refused to accept economic gravity on government spending. The large masses of voters receiving government aid will never vote for someone who promises to reduce their government candy. We do not have strong enough protections for property rights in the Constitution. The majority can easily vote themselves the property of the minority. The majority will never surrender this power even after economic collapse occurs.

I have feared the same thing now for about 20 years. It all came to me when I heard someone make the following Statement,

...In any given country, you have 3 types of people economically speaking,

You have those people who produce more wealth than what they consume

You have those people who produce about what they consume...

You have those who consume more than what they produce...

Right now those who consume more than what they produce consistute a voting majority. We will never really resolve our economic problems until this situation changes.

"Imagine you woke up tomorrow and the dollar had vanished."

Imagine that after awakening, you found that the debt bulls (dollar bulls) had vanished.

"The obvious answer is that life would become one big swap meet...The problem with this is what economists" [debt regime clowns] "call “non-coincidence of wants” — the carrot seller may not want onions, and those onions may rot before she finds someone who does."

Barter clubs in a previously defaulted country have grown to enormity and offer a virtually unlimited variety of products. The government there has not yet been successful in establishing control over them and remains a benign observer and student of the process.

The debt regime will continue to bloat and vaporize, as it has in ever other similar historical instance. That's inevitable. But some individuals and groups want to keep it going as long as they can (those who depend on government and services for their evaporating wealth).

As for the arguments from the status quo in favor of refusing to allow the dollar to balance with the currencies of their trading partners (which lack of US manufacturing causes us to rely on increasing debts), they are obviously the ones wanting global government.

* With the currency and trade wars ahead, there’ll be no global government.

* With a currency of low value and lack of manufacturing base, there’ll be no big US government. Only small government can survive a low currency without sustainable revenues from manufacturing.

The free traitors are in favor of big, communist government. It is they, who are in league with foreign communist nations. It is they, who depend on the current big government to stifle new, small business competition (real work, the manufacturing of domestic products). It is they, who depend on big government, public education and social programs to keep their own familial harpies out of their roosts to rule us instead of them. And they are obviously in control of the speech and candidates of all political parties.

So the shrinking dollar is a consequence of globalism. So as our government shrinks for lack of revenues, we’ll be freer.

Pay attention to the candidate most hated by both political parties and their controlling constituents.

There is a very viable alternative to the dollar, that is both legal, and at the State and local level would help to stabilize the dollar. During the Great Depression, it proved its utility hundreds of times, and it still finds some use in small parts of the US.

It is called “scrip”. It is *not* legal tender, but provides a complementary currency to an unstable dollar, because it is a very controlled currency. And best of all, it keeps local markets and local government functioning.

Article I, Section 10 of the US constitution forbids States from issuing any legal tender other than gold and silver coin. So a State would need to set up a public-private partnership with a corporation to issue scrip. This corporation would have its officers appointed by the State, and its books carefully audited by the State, but technically, at least, it would not be controlled by the State. It would not be a State office.

The value of the scrip would be set, as well as the prices of goods that could be purchased with scrip. But the entire use of scrip, by buyers and sellers, is entirely voluntary.

And it works no matter if the dollar is inflating, or if there is a shortage of physical dollars and nobody will accept electronic payment or checks, or just about any other problem.

A modern incarnation of scrip could even be printed on plain paper, because its reverse side would be printed with an encrypted, but public domain bar code called “data matrix”, which can be read by lots of scanners already out there.

Here is an example of the use of modern scrip in a realistic situation.

Because the federal government has “printed” too much money, strong inflation is hitting the marketplace. So instead of letting the value of your dollars erode, you convert some of them into scrip issued by the State licensed scrip corporation.

Say you start with a 1 to 1 conversion, so for $10 you get a “10 scrip note”. Just for doing the conversion in the first place, the corporation increases the value of your note to a “12 scrip”.

You go to a grocery to buy a gallon of milk. Today it costs $3, and the grocer says that tomorrow its price is expected to rise to $4. Yet today, with the fixed price of scrip, milk that costs “3 scrip” will still cost “3 scrip”, except the grocer is offering a discount on milk for those who buy milk at his store, so it only costs you “2.5 scrip”.

When you purchase it, State and local sales taxes are added, so the final price is “2.75 scrip”. The retailer then scans your scrip note, and the scanner displays your name and that the value of your scrip note is “12 scrip”. To confirm you are paying “2.75 scrip”, you enter your PIN number.

Your scrip bill is now worth “9.25” scrip. Were it your original $10 bill, today you would only get about $6.80 back. Tomorrow, perhaps $5.75. So all told, you have done much better by using scrip. But the goodness does not end there.

When lots of people buy scrip, it concentrates dollars with the State corporation. It uses those dollars to buy hard to get goods that are not manufactured in the State, especially things like pharmaceutical drugs. But it also pays retailers in dollars if they need to buy things in dollars, and the bulk of its gross profits go to the State, and from there to the cities, so they can pay for garbage pick up, police and fire protection, etc.

So the more “buy in” to the scrip system by producers, retailers, and the public, the better for everyone. Even if the dollar blows up, scrip will pick up the pieces.

Ironically, those who are now investing in gold and silver should be some of the strongest proponents of scrip, as it, not the dollar, is what maintains the value of their specie. With a still functioning market, they can not only buy things with their gold and silver, but they can get change for their purchases.

We’re NOT going to do away with the dollar. I know a lot of people here fantasize about how much fun it would be to barter for everything, but we’d have to go back to living an Indian lifestyle, with a consequent reduction in population of between 95 and 99%. Currencies pre-date the Romans by 500 years. You simply cannot have anything past a very primitive society function without it.

We will always have a dollar (as long as we don’t break apart), but its buying power will be MUCH LESS than it is now. I’m expecting it drop by two-thirds. If we weren’t the reserve currency of the world, I’d expect a much, much, larger drop. But even a two thirds drop will mean the effective tripling of just about everything we buy (maybe somewhat less for stuff that’s truly US, but tripling of everything else). It will not be fun, and anyone on this site, with the means to prep-up, but hasn’t, is simply an IDIOT. Because it must happen - our debt NOW is way beyond our ability to pay it back, it will keep growing, and growing. The only thing that keeps us alive financially is China’s kindness.

It’s over for the dollar as we know it...but not for the dollar as we see it - it will still be there, and it may buy you a stick of gum or a cigarette, but that’s about it.

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