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June 13, 2010

The Moron Nation Monetary System: A Modest Proposal

[UPDATE: I meant this post as kind of a joke, by the way. You can treat it as an open thread if you want until Ace or one of the other cob-loggers regains consciousness from their weekend bacchanals.]

I think the time has come, friends, to start planning for a day when our Federal Reserve Notes no longer have quite the purchasing power we've become used to. Whatever a bottle of Val-U-Rite Premium Vodka costs in dollars now, the price is sure to skyrocket in years to come. So it behooves us all to ensure a certain amount of monetary stability in the Moron Nation.

More after the jump.


First, remember that "money" is just a name for a commodity that is used as a medium of exchange. That's all it is. The commodity can be anything: wheat, corn, fish, toasters, hobo-skins, whatever the market determines is best. Over the course of several thousand years, precious metals -- particularly gold and silver -- have proven to be excellent mediums of exchange. Since we are good students of history here in the Moron Nation, we choose to use precious metals as our medium of exchange: gold and silver.

Ace of Spades money will exist in coin form only, and will be denominated according to weight rather than amount. (In other words, the Moron Nation currency will fluctuate right along with the market. No fixed exchange rates for us! Down with inflation!) No banks in the Moron Nation may practice fractional-reserve banking: the money supply in the Moron Nation shall never exceed the total amount of physical gold and silver present in the economy.

Our money will be privately-issued and open to competition. The Ace of Spades money is our sentimental favorite, of course, but any commodity-backed medium of exchange is welcome in the Moron Nation. The market will determine who succeeds and who fails. The Moron Nation not only will not issue currency, but is forbidden from doing so -- the temptation to acquire monopoly over the issue of money would be too great. Relying on the market for the available money supply will ensure a more fiscally prudent, pro-growth, and less inflationary fiscal policy.

The Ace of Spades money will be minted in coin form only. Bank notes and promissory notes just don't feel like money to Morons. Nearly all tradesmen and retail establishments in the Moron Nation accept cheques and debit cards, however, so the lack of paper money is a small inconvenience. Credit is available from many banks, but with strict collateral requirements. All credit is issued in terms of gold ounces or fractions thereof.

All bank accounts, clearing accounts, securities accounts, etc. shall be held in units of weight of gold or fractions thereof. A bank is obliged to redeem cheques or promissory notes in actual gold upon request. Banks will be audited no less than four times each year to ensure that their reserve of precious metals is sufficient to meet 100% of their despositors' statements of account. (There would never be a bank-run panic in the Moron Nation!)

The basic Moron Nation coins shall be designated as follows:

The Fool - 1/10 oz fine silver (~ $1.80US at current rates)
The Cretin - 1 oz fine silver (~ $18US at current rates)
The Dullard - 1/10 oz fine gold (~ $150US at current rates)
The Moron - 1 oz fine gold (~ $1300 at current rates)
The Buffoon - 5 oz fine gold (~ $6500US at current rates)

We will issue no coins at less than 1/10 oz of silver because we are not into living a cheap-ass lifestyle. Let our competitors fart around with piddling copper and bronze coins. We will also pledge never to debase our currency beyond the basic alloying needed to preserve the coins for circulation. Modern technology has provided many inexpensive machines that vendors may use to assay Ace of Spades coinage to make sure it conforms to the weight and purity standards. In a market-driven monetary system, counterfeiting has no meaning, but cheating would be caught quickly and punished with civil and legal remedies.

The Ace of Spades currency will be actively traded on international currency exchanges, and exchange rates will posted prominently throughout the Moron Nation. (Because Morons value transparency and fair dealing!) The Moron Nation will set no limits on who can use or redeem Moron Nation coinage -- any human being in the world may acquire, use, and sell Moron Nation money.

To avoid bitmetallism problems, no fixed exchange-rate between gold and silver will be established or enforced. (This will prevent Gresham's Law from driving out the undervalued currency.) Gold and silver prices will fluctuate independently of each other, and be tracked on the various trading exchanges. It will be up to the various business establishment to set their prices according to market forces.

All prices and exchanges in the Moron Nation shall be expressed in terms of weights, not amounts. For example: a winter coat might cost 4 oz of silver, whereas a dinner out with your family might cost 3 oz of silver. By pricing goods in this way any competitor might introduce his own money into circulation and be sure of a fair valuation so long as the exchange value of the underlying commodity is well-known. (The competitor might choose to use palladium, platinum, copper, or some other commodity as the foundation of their money.)

The government's sole responsibility in the monetary system will be to establish and enfore a universal system of weights and measures, and standards for assaying the quality of commodities used as money. Further, the government will act as an impartial auditor of the various holding banks and clearing-houses.

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posted by Monty at 04:01 PM

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