Virginia legislates its own currency

 By ehpien

Throughout the last 25 years of our existence - the only 25 years that nef has existed - we have advocated the idea of multiple currencies.  Open money pioneer Michael Linton spoke at our first conferences.  So did the green dollar pioneer David Weston.  We have been supporting the Brixton pound experiment, just as we have been cheering on the Berkshares project by our transatlantic partners at the New Economics Institute.

What is fascinating about the complementary currency movement is that it is genuinely worldwide.  There is a great deal of activity in North America, as you would expect, but also in Latin America, Japan, Africa and Indonesia.  The other is how it attracts people from across the political spectrum.  It is an idea that attracts radical localists, leftists, nationalists, free traders (Friedrich Hayek wrote the classic Denationalisation of Money) and liberals.

So it is worth pointing out that those of us who have been prophesying a revolution in multiple currencies - providing multiple different yardsticks of value for different aspects of our lives - have been proved right by the decision of the US state of Virginia to give themselves the power to issue their own currency (PDF).

Closer reading of this unexpected document also suggests some reasons for scepticism.  The magic words 'gold or silver or both' as the backing for this currency, to be introduced if the US dollar is overwhelmed by hyperinflation or depression, is clearly the work of ultra-conservatives in the state's legislature.  So we applaud the idea and the precedent, but warn that a currency based on precious metals is likely to be 'sound' at the expense of being useful.  It will be scarce, exclusive and delusory in its dependence on what Keynes famously dismissed as a 'barbarous relic'.

That does not rule out gold or silver based currencies.  Far from it.  They will be useful as stores of value.  For for an effective medium of exchange, all we can do is to learn the lesson - it is possible for human communities to provide themselves with the monetary tools they need.

The way to create new kinds of money that are both 'sound' and useful is to link their value to commodities, preferably local agricultural produce or local renewable energy,