Honest Money

by David Sims

ANYBODY WHO provides a service that others use, or makes a good that others consume, can be the originator of money. All this “first person” needs to do is convince other people (second persons) to take his IOUs (called “bonds,” though they bear no interest) as payment for their goods and services. These second persons can turn them in at the first person’s shop to get some of the first person’s goods. Or the second persons can, instead, use the first person’s bonds as payment for the goods and services of third persons.

The moment that happens, the first person’s bonds enter general circulation and will serve every purpose that money is supposed to serve. Notice that in this scheme there is no interest. None. There are no crooked bankers in this kind of money system who sit back, do nothing, and charge interest on loans. As a result, there is no inflation (though prices may change in response to the laws of supply and demand) and the value of the currency can as easily rise as fall.

Furthermore, there is no reason for this first person’s money system to be the only one in use. Everybody eats bread, so the baker could be one source of money bonds. But everybody also uses soap, so the soap-maker could be another source of money bonds. The competition between the two currency suppliers would lead to better bread and to better soap. And, of course, anybody can join the game, provided that he can supply, with a sufficiently high quality, a good or a service that everyone else needs.

Of course, a degree of caution would have to be used in deciding whose bonds to accept. A sensible person would not, for example, accept the bond of a stranger, or that of someone likely to die soon, or that of someone going out of business, or that of someone likely to disappear by sunrise the next day, leaving him with a handful of worthless paper. But with a modicum of prudence in judging the worth of bonds by the character and past performance of their issuers, the local bond money system can work very well.

The local bond currency scheme will work for an area about the size of an eastern US state’s county, or about a 20-mile radius, and perhaps a little further with the help of currency exchanges. The exchangers would be money middlemen who would take a percentage on each currency swap, but would not make loans at interest. (If they do, kill them.)

But for regular trade on larger distance scales, you’d need a national currency, albeit one issued in a debt-free manner. A proper national currency begins when government pays workers, with legal tender scrip, to build public works for the public good, such as building roads and delivering the mail. The government’s employees are “second persons” who spend their money to buy the goods of third persons, and in this way national commerce has the benefit of a national money system, which, again, is without the interest obligation of debt.

In wartime, the pay of soldiers would result in a greater supply of money (and hence inflation of prices) for the duration of the war. The cost of war would be unavoidable, since the soldiers would need to be paid somehow, and they wouldn’t be baking bread or building houses while they were fighting the enemy. But if wars were fought only to defend the country, and not to further the interests of bankers, then there would be less war to pay for, and the situation in such a case would be much superior, in domestic economic terms, than is the situation we actually have now, under the Federal Reserve’s usury system.

Why don’t we have a money system like this? Jews. And the politicians whom the Jews corrupted. And American naïveté. That’s something you should think about every time you find that you can’t make ends meet in your personal finances. Jewish money, or Federal Reserve banknotes, acquired the “brand name” chic, as every dupe and every fool in America gave “the dollar” — a name it didn’t really deserve — their patronage. And that’s what has led to the economic troubles of the present, and to the worse troubles that are yet to come.

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