# Libertarian system for money **URL:** \ **Category:** Great Debates\ **Created:** [August 5, 2011, 2:23pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593 "2011-08-05T14:23:56Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [August 5, 2011, 4:51pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/21 "2011-08-05T16:51:41Z")
> [@Sage\_Rat](#): > > Private banks issuing fiat currency. Instead of a single actor (the central bank) doing its best to determine the value and demand for currency, there would be multiple, local actors, each making their best guess, to create an average closer to what is good. > > Though, you would need to limit this in some way so that some bank doesn’t just go bonkers and crap all over the system. **And you would want them all to be issuing US dollars.** Up to that point, it seemed you were describing a system where CitiBank would issue CitiBucks and Wells Fargo would issue Wellsbux and their relative values would float. Why would that not be the case? After all, a U.S. Dollar is a U.S. Dollar only because the government says it is. Or are we talking about something along the lines of an agreed industry standard? ---
**Author:** ![Grumman](https://avatars.discourse-cdn.com/v4/letter/g/43a26b/32.png) [@Grumman](https://boards.straightdope.com/u/Grumman)\ **Post date:** [August 5, 2011, 4:54pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/22 "2011-08-05T16:54:29Z")
> [@Lobohan](#): > > Yeah, until the Exxon Liberty Brigade burns that store to the ground. _For freedom!_ They can’t do this in a libertarian society without breaking all the same laws that exist against arson right now. > [@Giles](#): > > No, but the Chits are worthless unless the bank originally issuing them will redeem them. Presumably the employees can’t do that, because if they could, their first step after being paid would be to convert them into U.S. dollars; and presumably traders other than the company store can’t do that either. Unless you can freely convert them into real money, they are worthless outside the company store. That’s not how value works. The Exxon Chits would still have value, because anyone who accepted them would be capable of converting them to goods at the Exxon Super-Complex - either directly or indirectly. If Exxon prevents people from converting them directly (requiring Exxon Super-Complex customers to prove they were an employee, for example), all they’re doing is slitting their own throats by devaluing their own currency again. ---
**Author:** ![Marley23](https://avatars.discourse-cdn.com/v4/letter/m/45deac/32.png) [@Marley23](https://boards.straightdope.com/u/Marley23)\ **Post date:** [August 5, 2011, 4:59pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/23 "2011-08-05T16:59:06Z")
> [@Lobohan](#): > > Yeah, until the Exxon Liberty Brigade burns that store to the ground. _For freedom!_ This is off-topic. It makes sense to discuss the benefits and pitfalls of a libertarian banking system in this thread, but generalized libertarian-bashing should go in another thread or the Pit. ---
**Author:** ![Giles](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/giles/32/60_2.png) [@Giles](https://boards.straightdope.com/u/Giles)\ **Post date:** [August 5, 2011, 5:02pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/24 "2011-08-05T17:02:50Z")
> [@BrainGlutton](#): > > … Or are we talking about something along the lines of an agreed industry standard? It is possible for privately-owned banks to issue currency. Two examples are [Scottish pound](http://en.wikipedia.org/wiki/Scottish_pound) notes, issued by three banks, and [Hong Kong dollar](http://en.wikipedia.org/wiki/Banknotes_of_the_Hong_Kong_dollar) notes, also issued by three banks. In each case the banks are highly regulated, in order to preserve the value of the currency. In the case of HK dollars, they are pegged against the U.S. dollar, so you can freely exchange with the U.S. dollar at a fixed rate. However, in terms of libertarian monetary policy, it’s functionally the equivalent of the governments of the U.K. or of China issuing the currency in its own name. ---
**Author:** ![Buck\_Godot](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/buck_godot/32/6573_2.png) [@Buck\_Godot](https://boards.straightdope.com/u/Buck_Godot)\ **Post date:** [August 5, 2011, 5:03pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/25 "2011-08-05T17:03:41Z")
> [@Grumman](#): > > First, Exxon could not prevent other retailers from accepting Exxon Chits, just like they couldn’t force them to accept them. > > Second, if they make their currency difficult to use, all they’ve accomplished is to devalue their own currency through pig-headedness. Nobody will ever work for Exxon Chits unless they get paid enough extra to make up for their inconvenience, just like nobody would be willing to get paid in cows unless they got enough extra cows to make it still worthwhile (and that might be a lot of cows). Unless of course your only other choice is to work for an alternative chip payer (Walmart Chits, Dupont chits etc.) or starve. ---
**Author:** ![Lobohan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lobohan/32/79_2.png) [@Lobohan](https://boards.straightdope.com/u/Lobohan)\ **Post date:** [August 5, 2011, 5:05pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/26 "2011-08-05T17:05:07Z")
> [@Grumman](#): > > They can’t do this in a libertarian society, without breaking all the same laws that exist against arson right now. I didn’t mean literally burning it down. I meant destroying any business that competes with them because they’re more powerful. There is no limit to the unfair business practices they could bring to bear. Edit: Moderation noted. ---
**Author:** ![Chronos](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chronos/32/134_2.png) [@Chronos](https://boards.straightdope.com/u/Chronos)\ **Post date:** [August 5, 2011, 5:07pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/27 "2011-08-05T17:07:35Z")
We already have multiple competing currencies. You can trade in frequent flier miles or credit card rewards points or cereal box tops or World of Warcraft gold pieces. All of these have their niche, but overall, the market has chosen US dollars printed by the federal government as the most favored, by far. ---
**Author:** ![Grumman](https://avatars.discourse-cdn.com/v4/letter/g/43a26b/32.png) [@Grumman](https://boards.straightdope.com/u/Grumman)\ **Post date:** [August 5, 2011, 5:11pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/28 "2011-08-05T17:11:33Z")
> [@Buck\_Godot](#): > > Unless of course your only other choice is to work for an alternative chip payer (Walmart Chits, Dupont chits etc.) or starve. Again, Exxon faces the same problem. They cannot pay their employees’ wages in a form the employees won’t accept without destroying their business. There’s nothing legally stopping Exxon from doing something this suicidally stupid _right now_, but they don’t, because it would be suicidally stupid. ---
**Author:** ![Giles](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/giles/32/60_2.png) [@Giles](https://boards.straightdope.com/u/Giles)\ **Post date:** [August 5, 2011, 5:18pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/29 "2011-08-05T17:18:15Z")
> [@Grumman](#): > > There’s nothing legally stopping Exxon from doing something this suicidally stupid _right now_, but they don’t, because it would be suicidally stupid. There is in some jurisdictions, e.g., [the Truck Act 1887](http://en.wikipedia.org/wiki/Truck_Acts) in the U.K., and similar laws in Australia. Even if there is no legislation specifically barring truck in the U.S., minimum wage laws would partly bar it, because a minimum wage would be specified in U.S. currency, and payment by some other means would not satisfy the law. ---
**Author:** ![Czarcasm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/czarcasm/32/4050_2.png) [@Czarcasm](https://boards.straightdope.com/u/Czarcasm)\ **Post date:** [August 5, 2011, 5:21pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/30 "2011-08-05T17:21:27Z")
> [@Giles](#): > > There is in some jurisdictions, e.g., [the Truck Act 1887](http://en.wikipedia.org/wiki/Truck_Acts) in the U.K., and similar laws in Australia. Even if there is no legislation specifically barring truck in the U.S., minimum wage laws would partly bar it, because a minimum wage would be specified in U.S. currency, and payment by some other means would not satisfy the law. Would this regulation exist in Libertaria, though? ---
**Author:** ![Giles](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/giles/32/60_2.png) [@Giles](https://boards.straightdope.com/u/Giles)\ **Post date:** [August 5, 2011, 5:25pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/31 "2011-08-05T17:25:00Z")
> [@Czarcasm](#): > > Would this regulation exist in Libertaria, though? Of course not, because minimum wages would not exist there. I was just saying that some countries have laws that would stop you being paid in company scrip. ---
**Author:** ![Lobohan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lobohan/32/79_2.png) [@Lobohan](https://boards.straightdope.com/u/Lobohan)\ **Post date:** [August 5, 2011, 5:34pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/32 "2011-08-05T17:34:30Z")
> [@Grumman](#): > > Again, Exxon faces the same problem. They cannot pay their employees’ wages in a form the employees won’t accept without destroying their business. There’s nothing legally stopping Exxon from doing something this suicidally stupid _right now_, but they don’t, because it would be suicidally stupid. Help me here. What would keep Exxon from deciding that the town their major refinery hub is in should be their company town. They start up supermarkets and whatnot to compete with the local shops and take losses for a year to run every business in the town out of business. Then you get every person in the town working for Exxon. They buy the right to run the police department, and whatever other social services that the Libertarian govt. allows them to. Then they start the Chit program. First it’s alongside govt. money. Then replacing it (maybe with a huge transition bonus, and a media campaign (they run the internet and cable in this town too) to quell any fears). Is there any reason they wouldn’t do this to have a captive workforce? ---
**Author:** ![Giles](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/giles/32/60_2.png) [@Giles](https://boards.straightdope.com/u/Giles)\ **Post date:** [August 5, 2011, 5:43pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/33 "2011-08-05T17:43:59Z")
> [@Lobohan](#): > > … They buy the right to run the police department, and whatever other social services that the Libertarian govt. allows them to. … If the police department can be privately owned, and run for the benefit of a private company, then I don’t think you are in Libertaria any more. And I think that’s part of the problem with Libertaria: you have to do something to control monopolies. At least, if there’s only one store in town, another store can start up in competition with it. However, a police force has legal powers that can be used against people, and it’s particularly if a private company owns and controls it. Even if another private police force could be set up with the same legal powers in competition with it, you would just be doubling the problem. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [August 5, 2011, 6:05pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/34 "2011-08-05T18:05:19Z")
I don’t see why it wouldn’t look exactly like what we have today. AFAIK, there isn’t anything in libertarianism that precludes the government controlling and regulating currency and the supply and management of currency. -XT ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [August 5, 2011, 6:18pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/35 "2011-08-05T18:18:04Z")
What xtisme said. Libertarians are all over the map when it comes to how money should work. Of course there’s lots of fanwanking about alternative money systems, and there are more ‘gold standard’ people in the libertarian community than in other political groups, but there’s wide variance of opinion. If you look at two of the big ‘heroes’ of the libertarian movement, Friedrich Hayek and Milton Friedman, you’ll find some pretty conventional thinking. Friedman was a Monetarist who would be broadly supportive of everything Bernanke has done so far. Hayek wasn’t a monetarist because he didn’t think government had the tools to determine the ‘right’ level of the money supply, but he also admitted he didn’t have a better answer. He believed in the Fed, though, and thought that a central bank should control the money supply. He just didn’t like the rather arbitrary and personal decision-making from various fed chairmen. He didn’t want an individual to have that kind of power over the economy, so he spent a lot of time trying to work out automatic systems, such as tying money supply triggers to the value of a basket of commodities or something. But ultimately he died without ever coming up with a better way. The Gold Standard has been getting some surprising support from unlikely sources lately (or maybe not so surprising, given the failure of central banks in the 2000s), but it still has so many problems in the real world that I don’t think it’s a viable option. Ultimately, all a currency should be is a proxy for barter - a way for people to exchange goods and services without having to move physical goods through intermediaries and such. But the implementation of a system of currency almost certainly requires the government to be involved, so there’s no pure ‘libertarian’ answer. ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [August 5, 2011, 6:54pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/36 "2011-08-05T18:54:04Z")
> [@Czarcasm](#): > > I don’t think that could be done in Libertaria. They couldn’t stop other stores from accepting Exxon Chits too, could they? They could just ask them to. If the other corporations are doing the same thing they’ll agree to keep the system working. > [@Grumman](#): > > Again, Exxon faces the same problem. They cannot pay their employees’ wages in a form the employees won’t accept without destroying their business. That presumes the workers would have a choice. They can go full bore “company town” like **Lobohan** says. Or the corporations could get together and decide to blacklist anyone who refuses to accept corporate chits or otherwise complains about the system, so they’d have the choice of accepting them or becoming unemployable. Or both. ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [August 5, 2011, 6:58pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/37 "2011-08-05T18:58:56Z")
> [@puddleglum](#): > > I am not a libertarian so I will not defend this idea, but the answer is called free banking. Anybody could create their own currency as long as you could convince someone else to take it. Banks, companies, even individuals, would create their own currencies and anyone would be free to accept or not accept them. Different currencies could trade on exchanges like national currencies do currently and if anyone tried to inflate or deflate their currencies too much people could just stop accepting that currency and switch to stable currencies. Bitcoin is an example of a privately created currency of the type that would be created in Free Banking. Right. I am not a governmental minimalist, but I used to have some anarchist influences–okay, I read _Illuminatus!_ at 17–& I still like the idea of privately issued scrip. Of course, it lacks the institutional stability of that issued by the better central banks, but so have some governments’ treasury notes in the past. ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [August 5, 2011, 7:16pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/38 "2011-08-05T19:16:41Z")
> [@Der\_Trihs](#): > > They could just ask them to. If the other corporations are doing the same thing they’ll agree to keep the system working. What are these…corp-or-ations…of which you speak? We here in Libertaria know of no such thing. Yes, people run businesses here, and some people form partnerships to run businesses. But to treat a business as if it had a body, like a person? Of course such a thing could only occur on your statist dystopian planet. Imagine the government providing limited liability to investors in a business venture! ---
**Author:** ![IdahoMauleMan](https://avatars.discourse-cdn.com/v4/letter/i/71c47a/32.png) [@IdahoMauleMan](https://boards.straightdope.com/u/IdahoMauleMan)\ **Post date:** [August 5, 2011, 7:20pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/39 "2011-08-05T19:20:41Z")
> [@Sam\_Stone](#): > > What xtisme said. Libertarians are all over the map when it comes to how money should work. Of course there’s lots of fanwanking about alternative money systems, and there are more ‘gold standard’ people in the libertarian community than in other political groups, but there’s wide variance of opinion. > > If you look at two of the big ‘heroes’ of the libertarian movement, Friedrich Hayek and Milton Friedman, you’ll find some pretty conventional thinking. Friedman was a Monetarist who would be broadly supportive of everything Bernanke has done so far. Hayek wasn’t a monetarist because he didn’t think government had the tools to determine the ‘right’ level of the money supply, but he also admitted he didn’t have a better answer. He believed in the Fed, though, and thought that a central bank should control the money supply. He just didn’t like the rather arbitrary and personal decision-making from various fed chairmen. He didn’t want an individual to have that kind of power over the economy, so he spent a lot of time trying to work out automatic systems, such as tying money supply triggers to the value of a basket of commodities or something. But ultimately he died without ever coming up with a better way. > > The Gold Standard has been getting some surprising support from unlikely sources lately (or maybe not so surprising, given the failure of central banks in the 2000s), but it still has so many problems in the real world that I don’t think it’s a viable option. > > Ultimately, all a currency should be is a proxy for barter - a way for people to exchange goods and services without having to move physical goods through intermediaries and such. But the implementation of a system of currency almost certainly requires the government to be involved, so there’s no pure ‘libertarian’ answer. The one thing I would add is that governments often need to borrow - especially from their own citizens - to fund large enterprises such as war-making that can’t be sustained from a nice, sustainable collection of tax receipts in a stable Libertopian environment. At many points in history this is a turning point where a country begins to devalue the currency. The government is effectively asking their own citizens to go without and sacrifice some of their own assets, in order to buy material from outside sources or convert productive capacity to munitions-making…ultimately a wealth-destroying exercise. While it may be possible for a pure Libertopia monetary system to theoretically exist for a while, I would argue that the practicalities of large government borrowing and war-making would be a large shock that almost requires issuance of a fiat currency and subsequent devaluation. Essentially, the gubmint needs to dictate to the public that their little green pieces of paper that were once worth 1 ounce of gold, are now worth 0.5 ounces of gold. The other 50% was needed to buy arms, uniforms for the troops, and other munitions that are now useless or gone. It had to devalue, because if it didn’t, there wouldn’t be enough gold left to back all of the original pieces of paper at 1 ounce of gold per piece. But we really didn’t have any other choice. It was do that, or become enslaved. At least the devaluation scenario above is clear and obvious. It’s sort of what FDR did back in the 1930’s. And lo and behold, a lot of people didn’t like it. It’s one of the reasons he had to make holding gold illegal…that was serving as a store of value, despite his attempts to devalue the greenback. What happens instead today is a slow, almost invisible drip feed of inflation and devaluation so that the government can get away with it, by doing it more slowly over time. At least, I hope it will stay “slowly”. ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [August 5, 2011, 7:35pm UTC](https://boards.straightdope.com/t/libertarian-system-for-money/591593/40 "2011-08-05T19:35:33Z")
> [@Sage\_Rat](#): > > Though, you would need to limit this in some way so that some bank doesn’t just go bonkers and crap all over the system. And you would want them all to be issuing US dollars. I don’t know that that is the answer. If I’m issuing my own coins, the government really doesn’t want me calling them dollars, & shouldn’t. > [@Grumman](#): > > There’s nothing inherently wrong with the government issuing currency. This is something that _anyone_ is legally capable of doing, if people trust you enough to sell you things in exchange for IOUs. As long as the government doesn’t pull a Mugabe and start acting like an idiot, you’d probably have de facto official currency issued by the government anyway, just because it’s the issuer whose currency people have the most confidence in. Well, not, “just because.” But yes, giving private citizens the freedom to issue their own currency & coins, _with the knowledge that it’s unlikely to supplant the national currency to any degree,_ has a certain libertarian appeal. > [@Grumman](#): > > They can’t do this in a libertarian society without breaking all the same laws that exist against arson right now. There’s a reason I use the phrase “governmental minimalist” to describe a subset of self-described “libertarians.” There’s a difference between liberty and small government, & the minimalists like to confuse the two. In a minimal-government régime, enforcing a law against private terror or eliminationism may be difficult. > [@Chronos](#): > > We already have multiple competing currencies. You can trade in frequent flier miles or credit card rewards points or cereal box tops or World of Warcraft gold pieces. All of these have their niche, but overall, the market has chosen US dollars printed by the federal government as the most favored, by far. It’s not just the market, it’s an effect of governmental authority as well. (A positive one, mind.) [Previous page](https://boards.straightdope.com/t/libertarian-system-for-money/591593.md?page=1) [Next page](https://boards.straightdope.com/t/libertarian-system-for-money/591593.md?page=3)