The Case for Regional Currencies
August 28, 2012
For most in the United States the dollar seems an inevitability. But it was only in the aftermath of the Civil War that Lincoln’s Whig party got what they had been aiming for for decades: national currency. Up to then all sorts of currencies had circulated. First the various scrips of the colonies, later competing banking currencies. Then already the main aim of a ‘national’ currency was not wellbeing, but centralizing power in the hands of a few.
However, it relegated the more remote areas of the United States to eternal depression.
As we have seen with the euro crisis, in large currency areas regional imbalances are inevitable. Greece imports more from the North than it can export to its suppliers. As a result it has a negative balance of payments and loses euros to Germany, Holland and a few other countries. This means deflationary pressures (a dwindling money supply) that can only be solved either by going deeper and deeper into debt to maintain a healthy money supply, or structural redistribution from North to South through Brussels. The latter, of course, was the plan of the Eurocrats when they implemented the Euro. But while the Germans like importing Euros from Greece, it does not like giving them back. And who can blame them? They delivered goods and services for them.
This pattern is clearly recognizable in Europe through the Euro crisis and at the time it was predicted by a number of economists. But few realize this is always going on any national economy that is more than a city state.
For instance: the economy of the small nation of Holland is basically centered around the West, where Amsterdam is still at the heart of it all, complemented by a number of lesser cities. However, the North and South have forever known depressed economies, with difficulty getting full employment and structurally lower price levels. It is exactly the same issue: negative balance of payments with the core, in this case the West of Holland, net outflow of money (earlier Guilders, now Euros) and deflationary pressures as a result.
In every economy, even in a mature currency area like that of the United States, every region still generates most of its production through trade with regional partners. Yes, under the pressures of globalization and the ongoing onslaught of Transnationals against local economies, less and less is regional trade, but it still is quite substantial. There is basically no reason why this trade should not be financed with regional currencies. It basically is completely unnecessary and actually insane to allow these economies to wither away just because they cannot cope with (inter)national competition and as a result have too little money circulate locally to finance its regional economy.
The same is going on in the US where regions like Arkansas and rural States are under-developed and often actually quite poor.
Economists and bankers will explain ‘structural adjustments’ are necessary: people must give up natural rights to accomodate international corporations so that they can compete with core areas. Labor markets must become ‘flexible’, meaning lower wages, fewer worker rights. Of course, in the minds of these people, regions exists to provide optimal return on investment for capital.
But the simple truth is that economies only exist to provide the people with what they need for a decent life.
Centralization of Power
The Civil War delivered a death blow to State Rights and local independence and paved the way for the American Empire. National Currency, created and controlled by Washington, instead of by the States, was instrumental in this. As we know today, the Federal Government is corporation, owned by its shareholders in London and has very little to do with the American People.
The same thing is now going on in Europe. With typical banker logic the debtor nations, to be save, must first be destroyed. They must give up control over their budgets and all fade away in the grandiose idea of Europe. Otherwise they will marginalized by the USA and China. We must all compete, of course, or go down. It has nothing to do with what the people really need. Nobody is interested, except some Eurocrats and other megalomaniacs.
The trend is clear: the Euro was a major step forward to World Currency. Where the US could still be plausibly, though not factually, be presented as one Nation, in Europe this is impossible. Power is being centralized at ever higher levels, in ever fewer hands.
Regional currencies come in many guises, with many different monetary architectures, but by their very nature they only circulate in a regional area and are controlled by people actually living in the region.
So they both decentralize power and end regional imbalance. Local trade can always be financed, there is no dependence on (supra)national scarce currency.
If something goes wrong, through either mismanagement or abuse, the controllers will have to answer to their neighbors, instead of hide behind a police state.
This is not to say governments or even international bodies cannot create their own units. In fact, monetary stability is closely linked with the presence of different units: if one fails (usually because of corruption) than the others continue. Why should the economy be destroyed if the money men mess up? It just makes no sense.
Besides Regional Currencies there is also much scope for international cybercurrencies. Bitcoin is an example, although still rather primitive from a monetary perspective.
What would happen if Facebook created its own unit? I think everybody can answer this question for himself. The only reason it has not happened is because Facebook is part and parcel of the control grid.
The monopoly on currency must go. Why offer dozens of brands of crisps at a supermarket and call that ‘consumer choice’, while insisting on one size fits all currency controlled by those proven guilty?
The good news is that there is no legal monopoly. There are only legal tender laws. These give Fed Notes and the Euro its power, but it is not a monopoly. And well managed private party currencies of all sorts have managed to find a place under the sun.
We don’t have to wait for either the banks or the government to clean up their act. They never will.
Comprehensive monetary reform requires local and regional units, to combat imbalances associated with too big currency regions, while ending excessive power centralization.
Dedicated people can create fully viable currencies chipping away at the Money Power’s domination and interest slavery.