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Author Topic: The money suply in the anarco-capitalist system  (Read 5436 times)
oihan70
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« on: September 03, 2012, 01:01:16 PM »

Hello everybody.

I have recently discovered the anarco capitalism, and I find it very interesting.

I have been watching some videos on youtube that explain how a law system could work without a goverment, and it makes sense. But I still haven't found an explanation of how would the money be created. Who would create it? I'm not talking about the bills and the coins, but the money suply. Would there be dollars? Euros? Yuans? Without a state, would anybody create money? And, above all, wath would give that money real value?

Thank you, and forgive my english. Wink
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SinCityVoluntaryist
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« Reply #1 on: September 03, 2012, 01:52:44 PM »

 Hello! Smiley

 Many articles focusing on Rothbard have talked about this. Basically, the idea is that private minting firms would exist that would compete with each other to make the most fitting form of currency possible. Consumers would pick the coin that fit their demands for size and design, thus allowing them to travel with the most convenient form of money possible.
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AutodidacticJoe
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« Reply #2 on: September 03, 2012, 02:22:06 PM »

https://mises.org/daily/1829

And with technology these days we can create and trade currencies even easier. E-gold, Bitcoin.

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Tom J
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« Reply #3 on: September 03, 2012, 07:29:14 PM »

Check out Professor George Selgin's writings and videos. He's a well respected free market principled active economics professor who explains the subject well. He also speaks favorably of bitcoin, unlike the austrian gold bugs. Here's a favorite video of many.

The Private Supply of Money | George A. Selgin
http://www.youtube.com/watch?v=-gn55fTRXZw

Also: http://www.freebanking.org/
« Last Edit: September 04, 2012, 10:40:13 AM by Tom J » Logged
macsnafu
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« Reply #4 on: September 03, 2012, 09:47:50 PM »

Hello everybody.

I have recently discovered the anarco capitalism, and I find it very interesting.

I have been watching some videos on youtube that explain how a law system could work without a goverment, and it makes sense. But I still haven't found an explanation of how would the money be created. Who would create it? I'm not talking about the bills and the coins, but the money suply. Would there be dollars? Euros? Yuans? Without a state, would anybody create money? And, above all, wath would give that money real value?

Thank you, and forgive my english. Wink
As the others point out, there are plenty of links.  But it helps to have a basic understanding of money and how it works.

Money originated in society to deal with the problems of barter.  If one person didn't have anything the other person wanted to trade for, then he would have to find another person who did have what he wanted, trade with them, and then use whatever he traded to trade with the other person for what he wanted. This is indirect exchange, where someone trades for an item that they don't want to use only so they can use it to trade with someone else for something that they do want to use.  One definition of money is the medium of indirect exchange, or the most commonly traded commodity (commonly traded because it is being used for indirect exchange). 

If that makes sense, then you can understand that many things were historically used as money, such as shells, salt, and other commodities.  But people eventually decided that precious metals like gold and silver were usually the most useful commodities to use as money.

In more recent historical times, banks were created to store money for people and to loan money out.  Credit instruments like checks were created so that you could simply write someone a check which they could deposit in their bank and the banks would transfer the gold or silver from one person's account to the other person's account.  This was a convenience so that you didn't have to carry the gold or silver on you when paying for things, especially large purchases.

Dollars, as we know them, were originally money substitutes.  They were actually certificates that represented a certain amount of gold or silver that was stored at the bank, and a person could take these certificates to the bank and redeem them for actual gold or silver that the bank had.  However, people tended to not redeem them, as it was easier to carry the paper certificates than to carry the actual gold or silver, and eventually, the government cut the backing and created Federal Reserve Notes (today's U.S. dollars) that are not backed by gold or silver, and people simply use the FRN's as money.

Now, if you understand all that, it's not hard to see how money can work in anarchy.  People will simply decide which commodities are best to use as money.  Perhaps we will use gold and silver again.  Given the advantages of certificates, banks could issue certificates backed by gold and silver again.  They could call them "dollars" if they want, but maybe they'll be called something else. 

However, given today's technology, whatever commodity or commodities are chosen as money, the banks will still likely use electronic transfers, and allow their customers to use debit cards for purchases and "cash" (certificate) withdrawals. 

Theoretically, anybody could issue commodity-backed certificates, but organizations better known as banks will probably be considered more trustworthy, and more likely to redeem their certificates, than Uncle Fred or that guy operating out of a van in a dark alley.

Hopefully, that makes sense to you.  But if not, check out the links provided above.
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r3VOLutionRefugee
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« Reply #5 on: September 04, 2012, 12:19:17 AM »

I'll try and throw a  VERY concise and probably incomplete explanation out there:

Money can be anything, so long as it contains a few key characteristics.  First of all, it must have some level of scarcity.  This is the answer to 'where does money's value come from?'  Value is completely subjective.  Gold has no inherent value, we just know how much of it there is, and its rarity gives it value.

Secondly, there is value from scarcity, there must be some kind of natural, impervious limit to the rate of its creation, or entry into the marketplace.  You can increase the amount of gold in the market, but we know the limit of the rate of increase, and it is finite.  So something like Bitcoin would seem worthless given the fact its just digital, but the network has a hard programming limit on the number of bitcoins that can possibly be created, thus giving it scarcity, and a predictable rate of increase.

There are more characteristics, but these two are important regarding value.
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BobRobertson
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« Reply #6 on: September 04, 2012, 08:53:04 AM »

Oh, why not, I'll throw in my little insight as well.

Money is not a thing, money is a _function_. The function of "money" is to act as a medium of exchange, something traded or held NOT for itself but for that which it can be traded.

Currency can be, and has been, practically anything you can think of. Cowrie shells, obsidian, cattle, glass beads, "wampum", Bitcoin, pretty much an endless list.

As r3VOLutionRefugee points out, there are certain attributes which make various commodities more effective as currency, especially scarcity. The commodity so chosen gains a "value" from its use as currency that it would not have otherwise, which is why a metal like gold has a "price" far out of proportion to its industrial use.

Bitcoin is an excellent example of scarcity, fungibility, durability. Now that people have the habit of money, we have skipped entirely the "inherent value" stage and gone straight to a completely fiat, yet still scarce, commodity.

If the US government had not persecuted e-Gold out of existence, I do not believe Bitcoin would have been invented.
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MAM
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« Reply #7 on: November 07, 2012, 11:01:16 PM »

Money is for convenience... It isn't a "thing" to be created. It's just easier to trade in Gold than bushels of hay for example...
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