My Friends,
After many positive recommendations I have relented and begun to watch Game of Thrones. It is a pretty sick show to be sure, and it is probably the first show I have watched since The Wire in which I find myself actually caring about the characters.
After many positive recommendations I have relented and begun to watch Game of Thrones. It is a pretty sick show to be sure, and it is probably the first show I have watched since The Wire in which I find myself actually caring about the characters.
Sorry Peggy, but your trailblazing path to the top of the male-dominated world of 1960s advertising doesn’t make you that interesting to me.
One exchange of dialogue has stuck with me for the past couple of days; it is from the scene where Tommy Carcetti tells Alec Trevelyan Little Finger tells Ned Stark, the Hand of the King, that it is gold and not soldiers that wins wars.
Ned doesn’t always like what Little Finger has to say.
This conversation is spurred by the fact that the king, Richard is unable to exercise control over his wife’s family, the Lannisters, because he (and therefore his realm) is deeply in debt to the supper-rich Tywin Lannister, the head of the family. Heavy is the head that wears the crown it would seem.
Using my knowledge of monetary-ism I think I have formulated a way in which Boromir Ned Stark could actually get the king and the realm out from under the thumb of the Lannisters.
To begin with, in the land of Westeros there is no paper currency but rather gold itself. So far there has been no indication that there exists goldsmiths who receive deposits of people’s gold and issue receipts payable for gold on demand, which people would then trade instead of gold for simplicity’s sake. This is how our paper currency evolved and it is a logical step in the development of commerce, but we can’t assume anything. This is actually an advantage for the land because we can assume that goldsmiths, who would realize that depositors claim their deposited gold infrequently and then issue more receipts than they had the gold to back so they could lend them out with interest, thereby inflating the currency, would simply not exist. This method of usury called Fractional Reserve Banking (FRB) is what we have today all over the world, and it evolved from the basic fraud of lending more than one has committed by the original goldsmiths.
No, in Westoro there is simply gold and no smiths. And while inflation doesn’t seem to be a problem, scarcity indeed does. So what can the king do about this lack of a finite resource? Well he can cut his dependence on it and issue a fiat currency, that is currency not backed by anything but faith in the king and his government. We actually have fiat currencies today but they really don’t alleviate national debts because central banks typically emerge and become the sole lender to the government, trading central bank notes (legal tender) for government treasury bonds. Governments then owe interest to the central bank for this loan (the interest is of course in excess of the amount of principal generated aka THE ENTIRE MONEY SUPPLY) and are forced to borrow more (with interest of course) to pay off the existing debt. This is how countries get into debt in the first place and why they will never get out.
So, back to Westoro, the king and his treasury should issue currency, and not borrow it from a bank like we do today in exchange for government bonds. Thomas Edison once made the very apt observation that if a government can issue a dollar bond, it can issue a dollar of currency; both have the same value and the latter comes without interest.
Now there are two immediate problems with this idea: inflation and acceptance. With regard to inflation, it is true that flooding the market with a new currency would devalue the existing gold, gold-backed or fiat currency. So set up an exchange: in the short-term and have the new paper currency redeemable for gold and vice-versa. Paper money is more convenient than heavy-ass gold and the state would simply be playing the role that the original goldsmiths from our history with one key exception: They would NOT lend out more currency (gold-receipts) than they could back with their gold reserves, or in other words keep a fractional reserve. You may think this restriction of the money supply is limiting and it is, but its short-term for a transitional process which could happen very quickly if the problem of acceptance is dealt with.
How do you make someone accept a currency? Well, in the case of our fiat currency we have faith in our government. In the case of a gold-backed currency, like this transitional one I propose for Westoro, people will have faith in the money because it is redeemable for a perpetually scarce and valuable resource. Still, there may be some intransigent types who simply like the weight and shine of gold and possess such an abundance of it that they could retard the complete transition to paper currency. Short of a government seizure of gold bullion (like that which was conducted in the United States during the 1930s), there is one more way which this transition could be peacefully effected: Make all taxes payable in the new currency. People will soon realize that aside from the luxuries of jewelry, it doesn’t make sense to hoard a currency that is now useless for something which everyone needs money for.
As the currency circulates and grows in popularity (as it will if its the exclusive means of paying taxes) the gold backing can be removed. A gold backing would be unnecessary, much like it is today. This is where the temporary restriction of the money supply (a by-product of backing it with scarce gold) would be lifted. The only thing determining the size of the money supply would be the how much money was needed. The treasury could print off more to undertake large public-works projects or the raising of an army, and conversely shrink it when the supply was excessive and inflated. As long as the king never outsources the printing of money to a private firm or decides to borrow it with interest from a central bank, there should be relative stability in his realm. As for the gold the treasury received from the exchange, the government could pay off any existing debts which it had already agreed to pay in gold, but the rest could be credited back to the citizens of the seven kingdoms in equal measures as a return from a wise and benevolent government. (This is not unheard of; even today the citizens of resource-rich regions often get regular sums of money which symbolize their share of the mineral wealth being extracted from their homelands). The value of this gold would the be relative to how much existed, and while it would not be formally circulated as currency, private transactions could still be conducted for a sum of gold the same way they could theoretically be conducted today.
If you were expecting more talk of military strategy and think the title of this entry misleading, I assure you that this issue of currency is more pressing than all the allegiances, hordes and dragons which threaten the balance of power in Westoro. Whoever controls the money supply in Westoro will prosper and run the show no matter which ambitious lord presumes to usurp the Iron Throne. If the king controls the money supply through his government treasury he will truly be in charge of his realm and not be beholden to usurers.
…
I’m not much for subtlety and nuance so I will come out and say explicitly that this type of monetary policy could alleviate many of our current monetary problems. It would actually be easier for us because the gold standard has already been abolished. We would simply have to move from a debt-based fiat currency to a debt-free fiat currency. A simple matter with minimal upset of the economy as it is now. There are five simple steps:
1) Issue a new currency, tied to the value of our dollar. Have the treasury print it, DO NOT borrow it from a central bank or contract a private firm to print it. Begin circulating it.
2) To offset inflation, incrementally increase the cash reserve banks must keep on hand. This would keep the money supply stable. Right now Canadian banks are not required to keep any reserves on hand. They could loan out billions for example without a cent in their vault. If this egregious fraud doesn’t rustle your jimmies, your jimmies may well be un-rustle-able.
3) Make all taxes exclusively payable in the new currency.
4) ????
5) PROFIT!!!
If it could work for Middle -Earth, Westoro, it could work for us. I’ll leave you with a quotation to ponder:
“Give me control of a nation’s money-supply and I care not who makes its laws.”
-allegedly uttered by Mayer Amschel Rothschild
or his son, Nathan Mayer Rothschild
Stay Thirsty,
-Andre Guantanamo
For further information about our monetary policy and how to turn money from our master back into our servant as it was originally intended to be, check out the following:
Or, for a more intimate glimpse on the intricacies of the Canadian system,
Write-Errantry 