Sound Monetary Policy

[Recycled from 18:51, 14 December 2004]

I am a member of a small and as of the present not-very-successful barter network called the HOUR Exchange (www.hourexchange.com). In the current issue of their publication, the Hour Trader, they reprint excerpts from R0obert Swann's "Putting Power in its Place" and the E.F. Schumacher Society's "A Place of Local Currency in the World Economy". These essays can be found also at www.smallisbeautiful.org

Essentially, it shows how many of the world's current ills are the result of structural inefficiencies and weaknesses in the current monetary system, which exists mainly to serve the interests of global capital.

Please note, I didn't say global capitalism, or Global Capitalism, or even the globe's capitalists -- I said global capital, and if you don't think *that* is a dangerous beast, you haven't been paying much attention.

There is some wisdom to be found in this composite essay, but I'm afraid I don't care much for the primary solution offered at the conclusion: a "universal" measure of value which would be agreed upon by thousands of local banks and currency boards and which would be based on something objective (gold, kilowatt-hours, sacks of wheat) and which would be extremely stable over the long term.

Problem, is, there obviously is no such thing, and can't be. The price of any commodity, even the most basic, is inevitably going to vary over time, relative to any other commodity. Indeed, relative to every other commodity. Heck, even the relative value of gold to silver is embarrassingly elastic.

The closest we could come to such a stable standard of value would be a universal currency embraced by all the world's banks and national treasuries, perhaps an expansion of the Euro into the "Globo" -- exactly the opposite of the sort of system that Schumacherians would support.

As for me, I think that global capital is indeed a danger to civilization, trapping us in genocidal and ecocidal variations on the Prisoner's Dilemma. But I also think we could control the beast if we chose to, and under control it would provide a reasonably good system for bringing the world together and providing for everyone's needs -- much the way U.S. corporations, restrained by Federal, local, labor group and consumer group power, used to serve the needs of working people.

Which reminds me: before we reform global capital, we need to get our own country back from the drunken bullies. But that's a post for another time.

Also, remind me to tell you about the Gross National Value, the measure nobody is measuring.