Political Theory

Imagining a Nation: Geoland Part IV: The Monetary System

“An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense…that gold and economic freedom are inseparable”

-Alan Greenspan

Part I, II, III

Despite the above quote, Geoland won’t quite run on the gold standard. Instead, the Geodollar will run on a gold peg. The only goal of the Geodollar is to consistently maintain it’s value against gold. So if gold rises in value against our currency, more Geodollars can be printed to offset the inflation. If gold starts falling in value, then we’ll have to print less until that equalises. The amount of gold you can buy with one Geodollar in 2020, should be exactly the same in 2095 (or close enough). I think an algorithm can be designed to spit out a number every quarter that helps keep this amount within an acceptable range, in the long run balancing out to zero inflation and zero deflation (against gold). But the bank of Geoland doesn’t have to keep any gold in its vaults, that’s the main difference between a gold standard and this gold peg.

It’s important to know how government money gets into our system, which most people barely understand (and it’s taken me a lot of reading and thinking to semi-comprehend it). Currently, the standard system is for governments to print money and lend them out to banks at very low interest rates, and these banks then lend them out to the public (or are expected to at least), they demand a higher interest rate and take their profit from the spread. Another, recently popular, system is quantitative easing (QE), which means that the government borrows money from the central banks that print them, and then use the borrowed money to finance their programs. It’s helped keep inflation of important goods like food low, but has tacked on to gigantic government debts and created massive asset inflation, creating a stark, uneven, and unearned lack of balance of wealth between the majority of workers and asset holders typically within the wealthiest 20,10, 1 and 0.000001% of society (getting exponentially starker the further up (or down) you go).

Our system will be different. Instead of a loan to a bank middleman, each citizen will be allowed to choose where the money is distributed, with the amount printed divided by the number of adult citizens equalling the amount that each citizen distributes: they can either send it to a government department, or a domestically focused charity. There will be strict rules for the charities, I couldn’t just start a charity dedicated to buying myself a golden toilet seat and direct the money there. I envision charities devoted to supporting the arts, education, scientific research, environmental improvement, healthcare, sports, and ones providing a safety net for those in need who find the citizen’s dividend doesn’t cover their more extreme situations. When citizens don’t have the time or interest to choose where their money goes, the President of Geoland will be allowed to choose how to direct those excess funds (but within the same rules: government departments or approved charities only). This is a still a system of debt and credit. But instead of expecting interest on our loans, we expect to be repaid in artistic creation, in scientific breakthroughs, better healthcare, sports, and charitable works. We expect a more interesting and prosperous nation as our interest. Although, even the worst case scenario, one that finances dull art, corrupt science, and self-serving charities, even that I would take as an improvement of the current system  employed by the real world.

In times of war however, the money all goes to defence, since we can’t borrow money, we’ll have to put our money directly to work in self preservation (and the citizens will have to approve of this cost they bear via a positive vote). It has to be a real war though with a clearly defined enemy and end-target, not some propaganda “war on drugs” type nonsense, nor endless regime change.

The second part to our monetary system is that we will accept private currencies too. Several smart thinkers have considered a system where a currency is supported by a basket of commodities rather than a gold standard. I like the idea, but because it’s never been run and tested, I don’t want to burden Geoland with it. However, if a bank wanted to create such a currency and lend it out, they’d be welcome to do so. Then, every year the citizens would be asked to vote on private currencies to consider paying taxes with and if at least 25% of the population likes it then our government must accept it. So, for example, if bitcoin became very popular in Geoland and a majority of voters wanted to accept it, then people could pay all or part of their taxes in bitcoin (at the market rate against the Geodollar). The citizen’s dividend would be paid out with the same percentage of bitcoins that we’d received. So if people paid 70% of their Land Value Tax with Geodollars, and 30% with bitcoin, every citizen in Geoland would receive their dividend in that same percentage. (In reality, the high volatility of bitcoin would be a problem, it’s just an example.)

This system is designed to build our society from the bottom up, rather than having everything trickle down from the top, (and it does trickle, you can almost hear the slow staccato drops of a man with a dangerously enlarged prostate trying to put out a fire by urinating on it.)

Lastly, we’re putting Henry George’s beautifully bearded face on any printed Geodollars, though if they decide to have a purely electronic currency, that won’t matter.

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