Tuesday, October 4, 2016
States Could Experiment with Export and Resource Backed Currencies
Written on September 15th, 2016
Edited and Expanded on October 4th, 2016
Balancing government budgets, instituting Georgist taxation, and legalizing competing currencies, could potentiate new ways to back legal currencies.
Imagine that community land trusts flourish; that state and local governments had balanced budgets, based their revenue sources solely on user fees, voluntary contributions, and a Land Value Tax; and that they governments establish citizens' dividends and residents' dividends and permanent funds, funded by exports and fees on natural resources.
If each state were to produce its own official state currency, within its own boundaries, controlled by a state public bank, based on and backed by its chief export, it would provide a local alternative to the fiat paper dollar, and to gold and silver.
The three states whose chief export is gold - Utah, Nevada, and Massachusetts - would have only gold, silver, and paper dollars as their official legal currencies; unless they were to produce their own state currencies to compete with the $10 U.S. Golden Eagle, or legalize Bitcoin, or undertake some other measure. Perhaps two or all three of these states would adopt a single gold currency.
Four states - Illinois, Michigan, New Jersey, and Texas - export gasoline more than anything else. North Dakota exports crude oil the most; and Montana, West Virginia, and Pennsylvania claim coal as their biggest export. Unless these eight states were to join into a single currency backed by fuel and energy exports, we would likely see them adopt "Gas Dollars", "Crude Oil Dollars", and "Coal Dollars". Gallon tanks of gas might even become media of exchange.
Six states claim food products as their chief exports; they might join into a united currency - or currency composite - based on the average of the values of food exports across all six member states. Colorado and Nebraska would have a "Beef Dollar"; South Dakota and Virginia would have a "Soy Dollar"; Iowa would have a "Corn Dollar"; Maine would have a “Lobster Dollar”; and Idaho would have a “Potato Dollar”. Well-preserved potato, corn, and soy products - as well as beef jerky - might become media of exchange under such systems.
Eighteen states export vehicles more than any other good. Alabama, Maryland, and South Carolina would have a "Car Dollar"; while Michigan and Missouri would have a "Truck Dollar". States adopting an "Airplane Dollar" include Arkansas, Arizona, California, Connecticut, Florida, Georgia, Hawaii, Kansas, Kentucky, Louisiana, Ohio, Oklahoma, North Carolina, and Washington State.
New Hampshire, New Mexico, Oregon, and Vermont would have an "Electronics Dollar", exporting electronic devices more than anything else. Delaware, Indiana, Tennessee might have a "Medicine Dollar", chiefly exporting medical goods.
Other states would take unique approaches to establishing their own currencies, having unique chief exports. We would likely see such things as the "Alaska Zinc Dollar", the “Minnesota Needle Dollar”, the “New York Diamond Dollar”, the “Rhode Island Metal Waste Dollar”, and the “Wyoming Soda Ash Dollar”. Finally, the District of Columbia - exporting arms and armaments - would adopt a “D.C. Arms Dollar”.
Of course, the downside to each state having its own currency backed by its chief export, would be that states would be largely incapable of avoiding promoting their own industries; and this would interfere with free trade. States and the federal government subsidize - and grant other favors and protections to domestic industries - too much as it is; and such currencies would only embolden government to put more taxpayer money into increasing exports.
The federal government would be obligated to get involved, given its role in ensuring regular, uninhibited, uninterrupted flow of interstate commerce in such goods. This is especially so, if states were to attempt to tax the same goods they back their currencies on, when those goods come from out of state.
Truth be told, if every state subsidized its own chief export in order to keep its state currency strong, then the states couldn't rightfully blame each other without being hypocrites. But on the other hand, the federal government doesn't hold states accountable for favoring themselves or for interfering with free trade, and that rationale ought to stop.
Another thing to consider is whether states should be encouraged to back their currencies on - instead of their chief exports - their chief natural resources (by whatever measure). This might ultimately prove to be better for the economy and for the environment, because when a state's chief natural resource is a mineral resource or an agricultural product - like wood, fiber, oil, coal, or gasoline - it might be less hazardous to the environment, and more popular among the voting populace, that the real value of the product lies in leaving it in the ground.