Urgent Evoke

A crash course in changing the world.



Ok, so I get another email today from this site, and lo and behold the new subject is money (my favorite!). So I get redirected to the silly comic strip that the creators actually try to portray as being serious, and a thought comes to mind. Why are such serious subjects being brought up in a COMIC STRIP? It’s as if the web hosts have said to each other, “Ok, so we want to educate a few dopes out there, so how do we go about introducing potentially catastrophic subjects to the elementary school level intelligences?” The wh*** thing comes across as patronizing to the reader, which was the thing that turned me off from this site (not to mention the underlying silly optimism that every person has a magic techno fix for any perceivable problem). Another thing… why do I need to be subject to the web sites propaganda (albeit sometimes it’s a propaganda that I happen to agree with) BEFORE I’m supposed to go out and look for ideas and solutions. It goes something like this: “Ok, here’s the problem, and here’s my solution. Tell me how awesome I am. Oh yeah, and if you have any ideas of your own, make a blog about it. Maybe someone will accidentally click on it and read some of it.”



Anyways, on the subject of this weeks “evoke” (just typing that makes me feel silly), there are a wh*** host of reasons why a “local currency” is a poor solution (to a very real, and very large problem). Local currencies are barely a step above barter. The real joke in the comic (pun intended) was when the argument was made that since it is your locality, you
should have MORE faith in it than some far away government. Needless to say, I burst a gut at that one. How about this: The Detroit Dollar, backed by the full faith and credit of local pimps and crackhouses… and Ford. Or this: The Yuma Peso: In Yuma we trust… where is Yuma again?



It’s silly. Let’s say you found 100,000 units of a soon-to-be defunct currency just lying around. You know things are going to get bad when this currency starts its death spiral, so you want to offload it into something else, real quick. You look at the usual options of foreign currencies (not too appealing since they suffer similar problems), precious metals (retain value, but extremely limited as a currency), or more personal items, such as land, food, ammo, durable goods, etc… and then you hear about some joker in town who wants to start a local currency called the Nowheresville Note, and he and his friends are going around to people saying, hey lets use this instead so we can keep our “money” in the local system and avoid the problems that plague that national currencies. We can support LOCAL business and employ locally.



Ok, sounds interesting at first, but would you REALLY take that over something far more durable, such as gold (which, mind you, I am no proponent for as a currency, just a store of value during bad times- although, realistically in really bad times, such as the scenario suggest, ammo and food are going to be more valuable than gold). Do you really have faith in some local joker to retain the value of that which you are going to pour your wealth into? Where’s the accountability?



Let’s get our hands dirty and expose the real problems. A currency is essentially a commodity. It is bought and sold and traded like any commodity, and like any commodity, its value fluctuates. Now let’s say the Nowheresville Note becomes a reality and for some reason the majority of the town buys into it. The first and most obvious issue would be that of outside trade. Unless this town is going to be an island, and have the standard of living associated with desert island life, Nowheresville is going to have to figure out how to trade its Nowheresville Notes for outside commodities (presumably other currencies). So now, the people of Nowheresville have to make the pitch that their currency has the backing enough to maintain its value over time. Time during which the aspects of the local economy can fluctuate, either up or down and be subject to the annual demand of local goods. Example A: there’s a gas shortage and Nowheresville makes automobiles. Nowheresville economy suffers, manufacturing plants close and layoffs are made. “Foreign” investors who happen to own substantial amounts of Nowheresville notes are going to be aware of this and are apt to realize that their “money” is going to be worth a lot less as the amount of goods and service decrease (the Nowheresville domestic product) and the supply of money has at least presumably remained the same (even worse if it has increased). Generally speaking, it’s not unreasonable to guess that this is going to lead to a run out of such currency while the value has some ‘value’. It’s not just economics that can do this. Let’s say Nowheresville gets hit with a major earthquake (or other disaster) and is devastated. Now what happens to the currency? The economy lies in ruins along with the rest of the town. Indubitably, the commodity known as the Nowheresville note, quickly loses its luster. Now if you had put your wealth into such a commodity, you’d be up a creek without a paddle.



Another aspect that plagues commodities, of which currencies are, is cornering the market. If a person or entity controls a large enough percentage of a commodity, they have the power to alter the value of the commodity simply be changing the public availability of said commodity. Anyone who peruses financial news articles frequently comes across accusations of various entities “manipulating” a market. The smaller the quantity of the commodity, the easier it is to manipulate (one of the reasons why metal currency proponents often argue that silver makes a superior currency to gold). Again, it becomes obvious that the full faith and credit of Nowheresville is going to be much easier to manipulate than that of The United States of America. Also, the punishment that can be meted out to such perpetrators is going to be much harder to avoid on a national level than a local one (all they would need to do is skip out of town!).



Let’s examine why we use certain currencies. Why do the people of Nowheresville, USA use US Dollar/Federal Reserve Notes (prior to the fictional Nowheresville Notes)? Well… they always have, right? The people of the town get paid in dollars and they spend it at the local co-op, which also prices in dollars. But why is that? Quite simple: tax. Government taxes are the biggest incentive for a currency to be used. This brings me to another problem with local currencies. With certain exceptions, such as food and water, most transactions of goods and services are supposed to be taxed (at least in the United States). By using alternate currencies, you are effectively circ**venting the tax system and could be charged with tax evasion (I kid you not—look up paying tax for bartering… it’s there). Do you enjoy government services? Do you think taxes are something necessary for civilized society? Now let’s take this to our Nowheresville level. Nowheresville has made the Nowheresville Note an official part of the municipal government and has set up regulatory agencies to deal with taxation and monetary policy of the currency. Now I don’t know about the rest of you, but when I partake in observing local politics, I am not instilled with the level of confidence that would convince me to adopt a money system entwined with said municipality. I along with many others, would probably choose to either ignore the system (if possible), or worst case, skip out of town. When I look at local election results, it is uncommon to see a majority vote make decisions in elections. Most of the time, elections are won on a plurality. When municipal monetary policy is being determined on (potentially) plurality results, you can bet confidence is going to drop and people will leave town (this is ignoring the obvious inherent problems of having elections involved with money politics of which municipalities would be more susceptible to than nations).



Ok, so what solutions does this smartass (the author) have? Well first, if you want anything stable (which presumes an initial stability to enact in the first place), monetary policy change must be made on a national level. The nation provides you with national services (armed forces, medicare, etc) and in return, it is expected that taxes will be levied. These taxes will be denominated in a national currency, made legal tender for all debts, public and private (an incentive for use), and most importantly, that tax MUST be paid ONLY in the national currency, effectively forcing the use of it and establishing credibility on the basis of the population and government. Can you say that you have any of that on the municipal level?



But we have that now and there are problems still. This is true, but the problems are not addressed because monetary policy is such a confusing issue, and very few have a true understanding of the nature of the beast. I’m guessing this is one of the reasons why the esteemed writers of evoke decided to go with a local currency solution to circ**vent the complexity pitfalls of current policy (try explaining it in 7 pages of a comic… LOL). I’m going to skip a lot and get to the nitty gritty, but for those who are interested, I seriously suggest Ellen Brown’s "Web Of Debt" for a compete overview of past, present, & future of money and solutions to such problems affecting it.



First, money in the US originates from one place: Debt. For every dollar that is borne into this world, a dollar (plus interest—that doesn’t exist… yet) is owed as a debt. This is done on both a national level (Federal Reserve) and at banks (Fractional Reserve Banking aka money multiplier effect). This, above all else will lead to the failure of the US Dollar. It’s not “lack of confidence” or some other such BS that this website tries to tell you. It’s a money system that is based on an EXPONENTIAL FUNCTION. Debt must be paid off with money that is borrowed as a debt in the future. If you have any doubt as to the veracity of this claim, I suggest you make a visit to Google.




Once again, the evil serpent known as exponential growth rears its ugly head. I would point anyone unaware of the problems of exponential growth to the videos of Dr. Albert Bartlett (available on youtube as of this writing). As a side note, one big reason (but yet mostly unknown) why the US has been able to operate on an exponential money system for so long is oil. Ever hear of the term “Petrodollar”? Our currency has been backed for 40 years on oil… and now the peak production of that commodity is causing significant problems for the other.



The solution, in my opinion, has already been made available to us in the past, and it was done by one of our most revered Presidents: Mr. Abraham Lincoln. His solution was called the ‘Greenback system’. It operated not on debt, but on a belief in money as a value (instead of a debt). Money supply presumably would be regulated on the expansion/contraction of GDP (much as today), and the currency would still have all the aspects of legal tender. A key difference being that upon the need for increased money supply, newly created money would be directly spent on services expected from government, providing employment as well, and upon the need of contraction of the money supply, taxes would intake the money to either be recycled or removed as needed. Really, is that far off from what anyone expects of a money system? Why the complexity and quagmire of the current system? Well, my own opinion is that is no mistake, but I will desist from going further.




The other aspect of money growth is the banking industry. The money multiplier effect must be brought to reins if the exponential system is going to be controlled. There are a few solutions to this, among which nationalizing the banking industry or enforcing 100% reserve requirements rank high.



Once again, I’d like to point those with further interest towards Ellen Brown’s "Web of Debt", for few books have covered the subject of monetary policy in the United States better.


Tying it all in, my curiosity as to why these things were not addressed by evoke’s “comic” (hardy har har) is answered in that the issue is far too complex to be covered in seven pages of silly cartoons, hence the simplistic answer it so conveniently provides. Optimism always seems to have simple solutions for insurmountable problems.

-Iron Helix

Views: 97

Comment by LunarLight on April 1, 2010 at 7:11pm
Holy crap. That was a fantastic read. You make me feel incredibly stupid, and it's practically a crime my posts get more views then you.

But, now on to constructive comments.

I think the idea behind this website's silly comics and overall concept is that problems seem less overwhelming when you are roleplaying. Although people don't like to admit it, everything only has meaning because we give it meaning, so this website works on the principal of giving "more meaning" through cheezy little comics and points so that people will remain optimistic about the problems we face. And it's importantant that we don't get depressed or overwhelmed, because then it's hard to get things done. Not that this site will probobly get anything done, but I like to pretend and be optomistic that it will. It gives me good food for thought and there's a chance that some good might come out of it.

As for the rest of your article, it seems pretty solid for the parts I understand, and I have nothing to say but "Good work". We need people with deep insight like yours, not just on this site, but in reality too.
Comment by KingofthePaupers on April 1, 2010 at 9:12pm
Iron Helix: "The solution, in my opinion, has already been made
available to us in the past, and it was done by one of our most
revered Presidents: Mr. Abraham Lincoln. His solution was
called the ‘Greenback system’."
Jct: Yes, a national interest-free Greenback is the ultimate solution.
The money from the Treasury was used down south before.
The "Greenbacks" used by Lincoln paid to win the Civil War.
The "Continentals" did their job until King George did state:
"There'll be no use of your own plates, for gold you'll have to wait."
Though we've been told that their revolt was over tax for tea,
Ben Franklin said "The war's because they took our currency."
The money from the Treasury, its use did almost cease,
To pay the interest to banks, the taxes did increase.
And when we ask "The Treasury, why is it never used?"
In answer, we get silence and an attitude bemused.
So to this day the bulk of the American supply,
Is borrowed from the banks at rates that make debts multiply.
All Governments do service debt by taxing you and me,
Instead of letting Treasury create it interest free.
I see no reason for a tax to pay them interest,
When use of plates by Treasury would lower taxes best.
Jct: But while the FED rules, community currencies can take the
place of the FED money that is being kept in short supply. You
may laugh at home-town currency but when there's no bank
money around, people change their minds rather than starve.
In 1999, under the Time Standard of Money, I paid for 39/40
nights in Europe with a timebank IOU for a night back in
Canada worth 5 Hours which I recorded on my public
do-it-yourself timebank account: http://johnturmel.com/unilets.com
Believe me, I'm in favor of fixing national money too but I'm going
to build myself a lifeboat until the ship of state becomes
seaworthy again.
Comment by Iron Helix on April 1, 2010 at 9:18pm
Ha! Nice response. Thanks. Your prose is something to be admired.
Comment by Ezra Ho on April 2, 2010 at 7:29am
Iron Helix,

It seems that you are too cynical about our broken socio-economic system. I am familiar with the Web of Debt concept as well which is why I support the vision of TVP in abolishing the monetary system. Yes, this site may at times appear patronising to someone of your abilities, but considering it is funded by the World Bank Institute, no doubt a worthy accomplice of the Fed, it provides a mainstream avenue for people like you and me to voice their opinions.
Comment by Mark Mulkerin on April 2, 2010 at 8:02am
So Iron Helix,

May I play devil's advocate? Granted that the local money hot off the printer is simplistic, but it obviously spurred you to contribute ...

Also, living in a country (city/state) of 4 million, when does a currency cease being local? Is it a question of size, population, sovereignty?

Finally, what if your federal government isn't meeting its service obligations? What if the national currency is by the elites for the elites? Or if a country is suffering hyperinflation? Can a community come up with a legitimate form of exchange to meet local needs with local resources?

You can reasonably respond to anything Evoke puts out that it is more complicated, the answers aren't that simple, etc. so what? I loved the Lord of the Rings movies - simplistic, sure, but still enjoyable.

Cheers.
Comment by KingofthePaupers on April 2, 2010 at 12:32pm
Mark Mulkerin: "living in a country (city/state) of 4 million, when does a currency cease being local? Is it a question of size, population, sovereignty?"
Jct: Ithaca Hours may be touted as local but they're accepted elsewhere. People think that because there is enough local to support full employment, that it was because it couldn't leave town. In 1999, under the Time Standard of Money, I paid for 39/40 nights in Europe with a timebank IOU for a night back in Canada worth 5 Hours which I recorded on my public do-it-yourself timebank account: http://johnturmel.com/unilets.com So Local only refers to where the IOUs were created, not where they will be accepted. I'll take 5 Ithaca Hours to put you up in Canada.

MM: Finally, what if your federal government isn't meeting its service obligations? What if the national currency is by the elites for the elites? Or if a country is suffering hyperinflation? Can a community come up with a legitimate form of exchange to meet local needs with local resources?
Jct: That's what's great about the Time Standard of Money. An IOU for an Hour of labor is understood by everyone.
Comment by Iron Helix on April 2, 2010 at 4:54pm
For an effective local currency, the municipal government should really run it. It should be good for paying taxes and the city should pay whatever expenses it can with the new currency. That would be a good start for a local currency, since it would at least provide some semblance of stability and accountability. Obviously, the larger the population/acceptance base the currency has, the more likely it will work. That being said, it is still going to have the vulnerabilities described above.

I guess in a way you could compare it with municipal bonds vs. treasury bills. It’s going to be much more common to see municipalities default on their bonds than the nation. Ideally, the population would not have the means of squirreling out of using the currency, which is why a greenback system on a national level is one of the best options out there. The system is already in place for a single, legal tender currency setup with a (arguably) functioning tax system. Currencies without those two features are not going to gain the traction and support they would otherwise would have.
Comment by Dr Pete on April 8, 2010 at 1:16am
This is terrific, thanks! It definitely puts that wh*** subject into a different perspective!
Comment by nomadHAR on April 10, 2010 at 9:42pm
i am glad to see that people are starting to consider the idea that money and currency may well not be the answer. perhaps we could look into revisiting the social ideas that created money in the first place.

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