With the costs and the revenues so out of line, surely there must be a case for driving retail electronic payments (ie, digital money) into the marketplace? But if cash does get priced appropriately, then what (and who) will be best placed to provide the alternative? What I mean by this is that if a combination of technological advance and dissatisfaction with economic arrangement reinforce each other, then we may find ourselves not only replacing the medium of exchange (ie, notes and coins) but also the store of value that it animates (ie, Sterling). After all, national currencies are (like nations) a relatively recent invention.
While Britain’s economy may move closer to that of the Congo every day, I don’t think that mobile phone top-up vouchers will replace the circulating medium of exchange i around here any time soon (obviously, since e-topup dominates in the U.K.), but perhaps there are a few people out there beginning to wonder if the Totnes Pound (or, more likely in my opinion, the Tesco Pound) mightn’t be a good alternative for the weekly shop and a better long-term hedge than Sterling (which dropped like a stone after last night’s speech by the Governor of the Bank of England). There seem to be proto-alternative currencies popping up all over the place at the moment, so there are a few people out there who are doing more than just moan about the fiat currency:
An East Sussex town is introducing its own currency in an effort to encourage shoppers to support the local economy.[From BBC NEWS | England | Sussex | Lewes launches its own currency]
When the discussion of alternative currencies pops up from time to time, the “default” assumption alwasy seems to be that a return to gold or gold-back currency is the way to provide monetary stability and fiscal responsibility. There was an interesting discussion about this on Samizdata the other day, beginning with the obligatory reference to the Austrian school:
As an admirer of the writings of the Austrian economics school, I have a great deal of sympathy with this argument, although I do not think that gold per se needs to be the anchor of a currency. Given the vast gyrations in the price of gold in recent years, I do not see it as a very practical option for man[From The enduring appeal of gold-backed money | Samizdata.net]
The gyrations in the price of gold, though, are surely more properly understood as gyration in the price of money. The price of a barrel of oil in gold is (I think — I don’t have the relevant chart to hand) more stable than the price of a barrel of oil in dollars. There must be someone out there who can tell me whether I’m right or wrong on this.
These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]