What gives money value

I was intrigued by a Professor of Eighteenth Century Studies at the University of Indiana, Bloomington, whose name is unfortunately lost in an FT article I cannot now access.

But… this Professor was asked to write about Italian mini-BOTS and assignats. “Some would say they’re complete opposites: assignats “backed” by land, mini-BOTS by nothing. But what gives money value isn’t what’s “behind” it but what’s ahead–who will take it and for what.”

Quite so. Spot on in every way. This is the basis of fiat money. Unless you have no confidence at all in the state which is now fairly unusual in the world, then it is obvious that it is not what is behind it but rather what it is in front of it that is important.

That is why, after ten years of reduced government spending the time is long overdue for local government to be creating its own money in the form of a parallel currency. With council tax, local authorities have a compulsory tax (flawed as it is) that has to be paid. So that is who will take it and that is what they will take it for.

As the current UK government seems to have abdicated both leadership and co-operation, smaller ‘states’ such as local authorities need to take up the baton.

Time for local authorities to demonstrate to our current government what the modern state is all about. Co-operation towards using available resources to improve all our lives.

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