Posted by: CS | January 30, 2014

No More Paper, No More Gold, No More Central Banks: Time for the Numero, a World Currency

As the World teeters on the brink of a currency war that will enrich a handful of billionaire speculators, disrupt economies and hurt ordinary folk throughout the world, it is time to return to the impartiality of a self-regulating monetary system such as existed when gold and silver were everywhere the monetary standard and all paper instruments were convertible to precious metal.

Instead, today, we have a infinitely manipulable monetary system under which countries strive to take advantage of trade partners by stealing their jobs with an undervalued currency or getting stuff free by printing wads of worthless paper, while stealing from their own citizens by currency debasement.

China and other Asian nations have long been in the job-stealing business, the US and other Western nations have long been in the business of printing worthless paper to cover their expenses.

As a result, resentments build up. China is a currency manipulator. The US rips off the world for $trillions-worth of oil and manufactured goods by virtue of its exclusive right to print the world’s reserve currency. Smaller countries, do what they may, are constantly in danger of economic disruption due to the tidal forces created by currency market manipulation and intervention.

But there is a simple solution, a return to a gold-exchange-standard-type system established under the Bretton-Woods Agreement, but without the absurd waste of energy and resources that a gold-based system entails as it drives the mining of a metal destined for permanent storage in a steel-and-concrete-lined vault. (Why, incidentally, do central banks not simply agree to treat un-mined gold reserves in the ground as a reserve currency and save the world the expense of mining the stuff and then the cost of storing it?)

As I have already explained, such a system can be based on an entirely cost-free resource: namely, the set of the cardinal numbers. Named the Numero, each unit of currency would have a unique whole number. Existing currencies would be converted to the Numero at the current exchange rate with either gold, or the US dollar or, the price of a Big Mac, or whatever.

If the US dollar is taken as the initial standard, then every US-dollar-account balance will be unchanged except in the designation of the currency, which will now be the Numeros not the US dollar. Balances in other currencies would be exchanged at their rate of exchange with the US$ on the designated date of conversion.

Now we would have an electronic currency that cannot be counterfeited, costs nothing to create, and can be traced every moment through a global network of computers that record the ownership of every single uniquely numbered currency unit.

As with gold, the Numero cannot be printed by the government of any country, since that would amount to fraud upon the trading partners of that country. Moreover, it would be a fraud immediately identifiable, since the new units of currency would have unique unauthorized numbers.

The Numero, like gold, would automatically adjust international trade balances toward zero, since countries with trade deficits would run short of currency, which is to say, would experience a contraction in money supply that would depress prices and increase international competitiveness. Conversely countries with a trade surplus would experience an expansion in money supply which would increase prices and decrease international competitiveness.

Minor benefits of the Numero are that it would prevent the theft of money and makes bribery and corruption vastly more difficult than in the past, since it would make questionable money transfers instantly traceable by the monetary authorities.

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