Money is exchangeable stored value. Money must not be an instrument of government tyranny. Our store of money must be an investment that yields people the best-possible returns.
Yet, money production has been monopolized by governments everywhere. But even so, money is just another product. Under government monopolies, innovation to satisfy the customers for money products has stagnated, and the quality of money products has just kept getting worse.
Lately, digital government money gets attention from all the usual suspects. Progressive governments want their crony-socialist banks to expand government power over the people. Digital government money threatens to be a key tool to further deprive persons of secure property, liberty to move and work and buy, and lifesaving health treatments.
Fortunately, though, in the USA, government monopolization of money is unconstitutional. The Constitution merely authorizes the national government to produce precious-metal coins and to regulate what weight of precious metals is treated as being present in each coin from each producer. The Constitution doesn’t empower governments to force people to accept government money or to force people to not use other money. Above all with respect to money, the Constitution requires that no person shall be deprived of the liberty to produce better money or to use this better money.
Digital money for the people needs attention from We the People. Private money producers can offer us money that will gain purchasing power, will be stable from boom-bust cycles, and will help us add way-more value.
The first two gains, in purchasing power and economic stability, would be possible with digitally-handled gold money.
Gold money’s purchasing power gains would come because discovery and mining gold is costly, so the world’s quantity of gold grows slowly, and governments can’t inflate this quantity faster. Meanwhile, usage would grow faster. The population using gold money would grow faster, and would add value proportionately faster. Producers also naturally grow more productive and would add value even faster. The net result would be that gold money’s purchasing power would again gradually increase, like it did in the 1800s between wars.
Gold money’s economic stability would come from being backed by 100% reserves. Gold money backed by 100% reserves couldn’t be created out of thin air. Since its quantity would increase only slowly and its purchasing power would increase faster, it couldn’t cause the same large boom-bust cycles.
Handling gold money digitally would bypass any need for in-person handling of physical gold or even of physical warehouse receipts.
Most money payments are already handled digitally by systems comprised of sellers, seller interfaces, payment processors, buyer interfaces, and buyers. Payments backed by 100%-reserve balances of physical gold can already be arranged digitally using companies such as MasterCard as the seller interface and payment processor and using apps such as Glint as the buyer interface.
Glint balances are in warehoused physical gold, and many countries don’t treat gold as money, so these features add costs. Small fees for warehousing and bookkeeping are unavoidable. But the fee for exchanging the physical gold for government money and the taxes on capital gains on gold holdings could both be driven to zero.
Past economic shocks have brought rapid growth in other financial innovations. Growth could be coming soon to gold money handled digitally.
All three gains from digital money for the people — in purchasing power, economic stability, and added value from investing the money’s stored value — will ultimately come from using digitally-handled stock-based money.
The purchasing power of stock-based money will grow as the population grows, as people grow more productive, and as the underlying stocks grow in value.
The economic stability of stock-based money will come from the fact that stock-based money will be actual ownership of productive assets, which can’t be created out of thin air, so stock-based money will be stable; it won’t cause boom-bust cycles.
Boom-bust cycles have long been produced by unstable, inflated government currency, causing significant short-term losses in stocks. Such economic-cycle-driven temporary losses in stocks’ purchasing power will become a relic of the past once the money in widespread use can’t be inflated.
The eventual move to stock-based money could be sped up if people first transition to gold money backed by 100% reserves. This transition step would quickly free us from government money, bringing stability. On the other hand, this transition step might not even be necessary.
Many people, by investing directly in mutual funds, or by having pension plans, already allocate significant portions of their holdings to stocks, to earn stocks’ superior long-run returns. Some of these savvy investors would gladly be the first adopters of stock-based money.
Stock-based money will end up substantially increasing the overall investments in the underlying companies, and these companies will produce substantial increased value for customers. Once all money is stock-based money, the total investment in all companies will have doubled.
Computing and communications have gotten vastly-more economical. Using these advances to produce stock-based money will help us all add value dramatically faster.
James Anthony is an experienced chemical engineer who applies process design, dynamics, and control to government processes. He is the author of The Constitution Needs a Good Party and rConstitution Papers, the publisher of rConstitution.us, and an author in Daily Caller, The Federalist, American Thinker, American Greatness, Mises Institute, and Foundation for Economic Education. For more information, see his media and about pages.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.
