Parallel currencies can also be powerful

I think most can agree that in order to properly function any state requires a system of defence and of justice.

Considering the modern state perhaps we should add that it also needs to have the right to create its own currency.

We know that creating a currency for public purpose requires just two conditions:
1. A reason for and so a means of, spending it
2. A means of legally obliging its payment.

To many this will seem to exclude Eurozone countries as modern states. But in the video (below) Warren Mosler is surely correct when he suggests that any country unhappy with the Euro should not exit it at all but should simply introduce a parallel currrency (which is entirely legal), and which the national government would accept in taxes. New government spending in the parallel currency would ensure that it entered into the economy quickly.

Indeed, I consider that with local authorities in the UK facing their worst ever budget cuts, they should be doing something similar – preferably through the Local Government Association so that it has national importance.

What’s more, I’m pretty sure that if there was not so much misunderstanding, misinformation and confusion of what money is for and where it comes from – they would already have started.

 

Comments

  1. Neil Robertson -

    Hi Peter,

    Very interesting stuff.

    I think there is an error in the link at the top of the article. It states “which is entirely illegal” and the linked article suggests that it is legal

  2. Peter May -

    You are quite right – apologies! Not what I thought I’d said and now altered!

  3. Andrew (Andy) Crow -

    I thought at one stage that the Italian government was going to do this, but they seem to have backed off. On the face of it it seems a very sensible option; indeed the Euro might be working much better if it had been introduced as a parallel common currency instead of a clean sweep replacement.

    Southern Europe can’t afford to be trading in Deutsch marks and the Euro zone, having no central tax authority, is not redistributing the profit the Germans are making trading on a currency which is in reality undervalued for them.

    Do you have info on how the Bristol system is working-out ? I read somewhere that the local authority is accepting Bristol pounds as payment for council tax which is precisely the sort of official backing a local currency needs to legitimise it.

    Unsurprisingly there seems to be very little mainstream media coverage of how the set-up is working, if indeed it still is.

    1. Peter May -

      Bristol still accepts Bristol pounds in payment of council tax and the Mayor used to be paid in them. I’m not sure if that still happens. but when he was, they were creating money. I know they’ve now merged with the Bristol Credit Union which personally I thought a bad move – there’s lots of unhelpful legislation involved. The people I know in Bristol regard the Bristol pound as a curiosity rather than a force for change, so it doesn’t seem to be ‘sold’ on any sort of radical platform. Maybe they are trying to work under the radar? Bristol always strikes me as quite prosperous – maybe the Bristol pound keeps them that way??

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