How To Recapitalise An Economy Without Banks

Banks are getting a bad press at the moment and it appears governments are people are powerless without them, but are we?

I propose a money system in which the people themselves issue the currency.

For this to be feasible two main things need to happen.

The first is insurance, this is especially relevant to individuals.

The second is appropriate anti counterfeit measures.

Insurance.

Private entities such as individuals and businesses issuing their own currency obviously creates a massive case for fraud. To combat this, issued currency would need to be insured. Insurance industries in most countries are highly developed and I see no reason why these same companies would not want to move into insuring money.

As I mentioned in this post this could take the form of insurance companies issuing cheque books for their policy holders. The insurance companies would make money from charging customers for the chequebook, this would be the insurance premium.

The value and quanity of cheques that could be issued by each polciy holder would be entirely up to the insurance company and the customer to decide.

Anti Counterfeit Measures.

It is highly expensive to create money which is not only hard to copy but also easily recognisable.

Smart phone technology has elimiated this problem. QR codes could be used on the cheque books issued by the insurance companies. This system can perform a number of measures instanly and easily.

Fake.

Cheques can be instantly checked for their validity against the insurance companies database of cheques issued and used.

Value.

The cheques can also be checked for the amount at the same time their authenticity is checked. This is to kerb too many cheques being made and/or cheques being made for too large an amount.

With these two measures we have a currency that is guarenteed and a currency that is highly resitant to counterfeiting.

Liquidity

Where does the liquidity for this new currency come from? Where does the value of this currency come from?

Given that currency can be issued by the people, bounced cheques need to be exchangable for a commodity with intrinisic value. Insurance companies would need to tie the cheques they issue against gold, silver, copper, alumimum basically anything they chose and the policy holder accepts.

The reserves the insurance companies kept would be entirely up to them. At present insurance companies need to hold reserves to pay insurance claims, the extension to insuring their cheques I believe would be small.

Value

Individuals who do not own commodities like gold and silver or even property, how would they obtain cheques from insurance companies?

The money system as it stands at the moment is based on two fundametnal things, property and labour.

Property can be anything from land, a house, gold, silver to machines and technology.

The majority of people have value in their own personal labour. Cheques can be issued against their labour and not just their property. This gives everyone access to cheques.

Again the quantity of cheques an individuals labour gets is entirely between the person and the insurance company.

For example, the salaried worker who gets paid monthly, a months worth of cheques is all that is required.

Workers who get paid weekly only require two weeks worth of cheques.

And I do not mean workers need to be issued with a new cheque book every 2 weeks. The employer of the insurance company’s customer will be issuing their own cheques to their employees at the end of every month or at the end of every week so only one chequebook is required for the foreseeable future.

For example, a new, salaried insurance premium holder would be issued with a chequebook to cover a months income and the start of the policy period and if the customer decided to renew with same insurance company no new books would need to be issued. It would be like car insurance, the only contact you would need with your insurance company would be a phone call to renew your policy. It need not being any-more complicated than that.

In short it would be extremely easy to move to an economy in which people and businesses issue their own currency and it would not need to happen overnight, it is something that could be gradually brought in over a period of time, one or two years would be sufficient. I say this as this as the time frame as it is the same amount of time it took the Eurozone countries to move from the domestic currencies to the Euro system.

The beauty of this type of currency is that it is extremely cheap to issue and modern technology had made it extremely easy to monitor and maintain.

The system of insurance is already in place and the reserves required are already in place to insure this new currency. The fact that the currency can be introduced gradually also ensures all parties involved have time to perfect the system.

With this system no longer are countries dependent on large banks to make currency available. The value of people’s labour and property can no longer be exploited by central banks controlling interest rates, insurance premiums for cheque books would be decided between the individual person/business and the insurance provider. The foundations for this currency are already in place, the insurance framework, technologies and systems simply need to be exploited.

And of course the system would be voluntary, although you would imagine an insured cheque would be easier to exchange than an uninsured cheque but this would be down to the parties involved.

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