I do a lot of thinking these days on economic matters. A lot of people can see the obvious hyperinflation coming, with colossal debts, low interest rates, crazy countries like Australia with no formally regulated reserve ratios (yeah thats right slaves, I'm born free), and so on. For those who do not know, its pretty damn simple, I get a dole cheque and then my bank loans it out. Over here my bank could loan it out 500 to one if they wanted. Yet, my account balance still reports my ill gotten money, and then I buy myself smokes and food for two weeks, and maybe pay some bills. It doesn't matter if I cannot pay the bills, I can just whip out another card (a credit card) and spend my pension all over again. When these multiple claims to one dollar eventually land in other peoples accounts, any extra money needed is borrowed from the Reserve Bank, who electronically print it, on loan at the cash rate. When you wonder why your homeloan rate just skyrocketed, its because the bank counterfeits more money than it ought to.

So with super fucking low interest rates the banks have little incentive to keep reserve ratios sensible, and we get a 25% increase in the money supply (America's is more like 150%) just look at the Broad Money statistics from your central bank and you will see a similar tale. Quite clearly we are all fucked, and are all gonna die. Not quite, for a start, this is a bullshit monetary system. Some propose a gold standard, which looks a little hard to get started because our central banks have literally barely any gold and lots of notes, and price controls never work out. For every $1 worth of gold at current prices against the Aussie dollar, there are about $500 worth of Aussie Dollar notes in circulation.

A simple solution would be to buy all the bonds off of their foreign owners with freshly printed cash. Yeah, we will make Chinese bond holders feel quite rich. This probably bothers the bigots of the world, oddly enough. Do not despair, Hayek is here! Is it a revolution? No. Is it a new regulatory structure? No. Is it a gold standard? Hell no. It is called free banking, and is similar to a gold standard, another name for it is natural money. All we really need to do get rid of legal tender laws, allow people to pay their taxes some other way (or just suspend taxes for a while and run the economy on Obamaism Volunteerism, I dunno), and then we have just colossally jibbed all the bond holders who thought they were getting compensated from us monetizing the debt.

Simply fractional reserve banking without the Government behind it sounds a bit crazy. With free banking, Alex Jones can run an incredibly boring warehouse and call it a full reserve bank. People can make term deposits, and then Alex Jones can loan it to their debtors. However I am much more interesting, I can sell notes in exchange for their silly gold certificates, which I then use as a reserve. The cool thing is that for the first hundred or so guys, its like a badass non-collapsing ponzi scheme, I sell them notes that entitle them to more gold certificates than exist, I'd probably get rid of the gold and actually just hold a reserve of badass stocks, gold is for outdoor switches, and pretty girls... and industrial tycoons that do business with large sums of money. A lot of people could. I could also make loans of notes, out of thin air, so to speak, and fuel my own business cycle.

However, with free banking and natural money, when reserves get scarce compared to amount of notes and the net amount of debt people can simply pay their loans with AlexJonesDollars and a: bolster my reserves. b: pay the debt with something other than more debt. The falling value of my currency verses the value of AlexJonesDollars on the private market would indicate the need for this to my customers, who fill my reserves for me, and keep their houses and businesses.

There would also be other fractional reserve banks with silly currencies. Some of these will be less reckless than mine, I can imagine the Peter Schiff dollar would skyrocket beyond the value of anyones. So would the Warren Buffet.

The most problematic thing about a gold standard enforced by the Government is that it is enforced by the Government. When defense issues arise and the ends justify the means, faggots will always remove the gold standard, and print fuckloads of Mugabe-bucks to pay the army. Because there is only one currency, poor and unfortunate Larry Ellison and Bill Gates are caught in the crossfire. The collective servitude that is a central money, no matter how convenient, is never worth it. An economy is never perfect, which is exactly why a central currency causes pain for everyone and distorts price signals. Free banking irons out stupid banks, stupid gold standards, and stupid commodity bubbles (commodities just become the better currency against shitty fractional reserve ones ran by lunatics like me).

The tricky part I've not thought of, and that is Government financing, and legal tender for court settlements. Perhaps that is what must be paid for in gold.

Sorry about using Alex Jones as an example, but banning fractional reserve banking is pretty paleoconservative, and very commie. Ironic, isn't it?

John Tate.
Genius.