| Private Currency |
|
Private currencies have a long history, they are still in use today and new ones are created daily due to the advent of the Internet. Did you know there are over 40 private currencies in use throughout the USA Right Now? 
In the United States, during the Free Banking Era (between 1837 and 1866) almost anyone could issue paper money. States, municipalities, private banks, railroad and construction companies, stores, restaurants, churches and individuals printed an estimated 8,000 different monies by 1860. If the issuer went bankrupt, closed, left town, or otherwise went out of business the note would be worthless. Almost all private money issued in conventional Industrial Age money systems fail.  Bernard Lietaer, co-designer of the convergence mechanism of the Euro, discusses why in a interview about the problem of conventional money systems, what money is, and private complementary currencies. In essence, any individual or institution can issue a private currency that is independent of the national currency and underpinned by contract law (or merely good will) rather than the nation state powers. Anyone can issue private currencies, even kids in a street club, the question is who will use it and what confidence will they have in it.
Friedrich von Hayek noted in his Denationalisation of Money: An Analysis of the Theory and Practice of Concurrent Currencies argues (and I agree) that: “The key challenge is to secure widespread acceptance of the non-government money - irrespective of whether it is embodied in paper, on a chip or merely consists of digits in cyberspace”.
The Internet facilitates this potential by extending markets beyond territorial boundaries using Information tools that make global communications commonplace, therefore in the Information Age a community does not have to be limited to a geographic area. Quoting Lietaer: "It enables us to consciously design money to work for us, instead of us for it."
Currencies such as Crowne-Gold, ePayCafe, or even 1DMC can be issued (or barter exchanges completed) by whoever owns a commodity or service. These systems thus do not require a central authority to guarantee the currency and manage its supply. When money created as mutual credit (like “Points” LETS, ROCS, and Time Dollars), is in sufficient supply it will encourage cooperation among participants thereby increasing use, utility, and comprisable strength of value versus National currencies. Demurrage currencies also discourage hoarding and encourage longer-term planning and sustainable investment. Do to the lack in ease of obtaining or earning options for “private credit” it has limited use, there have been few recent attempts to establish large-scale private currencies that are fully negotiable and that aren't restricted to customers of a specific business, industry sector, members of an affinity group, or geographical region. Until now that is, the purpose of the PeacePortal, Free Digital Universe (FDU), ShareMyBiz, ePayCafe, Freebay, and the other platform partners in the Free Digital Trust is to provide the entire world with a common equal law forum where anyone can start from nothing and begin earning a globally viable private currency. Adam Mikkelsen's 1999 paper on Electronic Money & the Market Process - How Digital Developments are Opening New Frontiers for Liberalism comments that:
“Perhaps the most exciting aspect of digital cash is the potential for it significantly to reduce the ability of governments to collect tax. If individuals are paid in anonymous and encrypted digital cash, without the need for intermediary banks, declaring transactions conducted using digital cash to the revenue, and the income derived from them, becomes essentially voluntary. Unless government had access to all phone lines, and to the decrypted information contained on each hard drive of the computers in a particular jurisdiction, it would be difficult to tax income derived in digital cash, particularly income derived from assets held or services performed offshore.” “Where do you store your wealth? As much as I like the American dollar, I like American private currencies even more. I trust John Chambers and Scott McNealy to do the right thing and to treat my wealth with respect more than I trust a US Treasury Secretary to do the right thing.” Alan Greenspan, in “The Future of Money in the Information Age,” argues that the Federal Reserve must not act too hastily to regulate e-money. In the case of the electronics payments system, Greenspan emphasizes that "the private sector will need the flexibility to experiment, without broad interference by government. Government action can retard progress, but almost certainly cannot ensure it." In their essay, Jerry Jordan and Edward Stevens of the Federal Reserve Bank of Cleveland maintain that e-money will eventually crowd out fiat money. They contend that financial innovation is likely to reduce the demand for bank reserves to near zero, but that will not, and should not, necessarily reduce the Fed’s control over the money supply. "The reliability of monetary policy," they argue, "depends not so much on the amount of [central-bank] money demanded as on the predictability of that amount."
So it appears government may not inhibit, and has good reason not to inhibit, growth in private currencies. The question then becomes will Peer Users join into big enough groups to give a private community with it’s own currency (and sub-currencies) utility? e-money will break the monopoly of financial Brahmins. ... All manner of clever financial instruments will surface once the masses can drink from the same river of electronic money as the pros. ... The law of the Net is: he who owns a computer not only owns a printing press, but also a mint, when that computer is linked to e-money. Para-currencies can pop up anywhere there is trust (and fail there, too). US libertarian J. Orlin Grabbe's 1999 Smart Cards and Private Currencies explained that the target was both Big Brother and the Brahmins –
the whole objective is to denationalize money, to decentralize it, to put it beyond the control of regulatory authorities who operate to maintain a government or central banking monopoly, to create mobile network banks that do not become sitting targets for Big Brother information collectors, to distribute private currency operations in such a way that they can be said to exist in no single political or legal jurisdiction — or for that matter cannot be said to exist in any jurisdiction. Electronic monetary transactions will take place out there, somewhere in cyberspace, unobserved by third parties. The intent is to deliver an honest service at an honest price, and to give the user of the system complete privacy. "Currently in the U.S., there are no restrictions on who can issue electronic money. In many respects, as noted by Osterberg and Thomson, the monetary value that circulates on such cards functions a lot like the private bank notes issued by nationally chartered banks after the National Banking Act of 1864, up to the founding of the Federal Reserve in 1913. However, their analogy is a little misleading, because non-banks may issue electronic money also. There is no monopoly held by a special category of commercial banks or other financial institutions (and even if there were such a regulatory monopoly, the regulations could not be generally enforced without driving the electronic currency market offshore)." An enthusiast for the Murabitun sect's Fatwa Concerning the Islamic Prohibition of Using Paper-Money as a Medium of Exchange asked You want to be radical? You don't need to blow up the bank, just burn your bank account. For that you need an alternative. What is the alternative?The answer is the Free Digital Universe.
“Information technology will create equivalent opportunities for competitive choice in domiciling economic activities, but with important differences. One is that unlike the medieval frontier societies, cyberspace is likely to be in due course the richest of economic realms. It will therefore tend to be a growing rather than a receding frontier.” Impacts of the Information Age:“The new megapolitical conditions of the Information Age will make it increasingly obvious that the nation-state inherited from the industrial era a predatory institution. With each year that passes, it will seem less a boon to prosperity and more a obstacle, one from which the individual will want to escape. It is an escape that desperate governments will loath too allow. The stability and even the survival of Western welfare states depends upon their ability to continue extracting a huge fraction of the world’s total output for redistribution to a subset of voters in OECD Countries. This requires that the taxes imposed upon the most productive citizens of the currently rich countries be priced at supermonopoly rates, hundreds or even thousands of times higher than the actual cost of the services that government provides in return.” – Sovereign Individual ““You will also see the re‑emergence of associations of merchants and wealthy individuals with semisovereign powers, like the Hanse (confederation of merchants) in the Middle Ages. The Hanse that operated in the French and Flemish fairs grew to encompass the merchants of sixty cities.7 The "Hanseatic League," as it is redundantly known in English (the literal translation is "Leaguely League"), was an organization of Germanic merchant guilds that provided protection to members and negotiated trade treaties‑ It came to exercise semisovereign powers in a number of Northern European and Baltic cities. Such entities will re‑emerge in place of the dying nation‑state in the new millennium, providing protection and helping to enforce contracts in an unsafe world.” “…. It is computerized information, not manpower or mass production that increasingly drives the U.S. economy and that win wars in a world wired for 500 TV channels. The computerized exist in cyberspace – the new dimension created by endless reproduction of computer networks, satellites, modems, databases and the public Internet.” - Neil Munro
            |
“
