Would privatizing currency be a possible solution to our current economic woes?

I'm sure this is not the answer you are looking for, but our current monetary system is privatized. The Federal Reserve is not a Government entity. They are their own bank.

The money we use now is actually the Federal Reserves IOUs. What's backing it... well it was once gold. Now nothing.

If you're wondering why the dollar is falling, and we suffer from inflation, it's because our money has no backing. In fact I recently read an article about how Abraham Lincoln was able to pay the same amount for a loaf of bread as George Washington. Now a days we're taught that inflation is "natural" and there is nothing we can do to stop it.

Interesting huh? You're idea would work, as long as money (whatever form it is) continues to have backing and people continue to accept it. But as we've seen with our banking system, keeping money backed, is a very hard thing to do.To be more specific, most people don't actually see there money anyway.

In fact, there is an estimated $2000 cash for every person in the US- yet for a lot of us, our bank accounts exceed that number. How is that possible? When you put your money into a bank account the bank only needs to keep so much of it in reserve.

Right now it's 3.5%- but because I'm not very good at math let's say it's 10%. So if I put in $1000 the bank only has to keep $100 in actual cash. They can loan out the other $900.

But when you get a loan, do you get cash or does the bank simply right a number in your account? If they right a number in your account, they can turn around and loan out even more money because in essence they have $1900 in their bank. Does that make sense?

And even if they do give you cash, chances are you'll go to another bank and put it in an account or you'll give it to someone else that will go back to a bank and put it in an account. Then that bank can turn around and use that money to make more loans. Whether we'd like to believe it or not, the same thing would hold true for "personal" bankers.

As long as everyone doesn't cash their money at once, personal bankers, private bankers, or even Government bankers would have no incentive to fully back their money. On a wider scale, I think they'd certainly wouldn't keep a 3.5% reserve, but even a 20% reserve wouldn't work. Can you imagine if rumor spread that all money backed by guns weren't actually 100% backed.

If anything it would be worse with everyone trying to cash out their backed-by-guns money. Any little slip up like that- even if it was just in one area could cause the whole economy to collapse. Plus we'd be relying on people's integrity to keep their money backed 100%.

That is a whole lot of faith to put in society.

This is not really an answer, unfortunately. Just a bunch more questions.

Having little or no knowledge of how the actual currency market works, this initially scared the Hell out of me. But, after really considering it, it's really just a way of returning to the barter system from days or old. You'd just need some sort of exchange to constantly determine the value of any given currency.

Sort of exciting to think about!

Well, just to point something out, Noah was guided by God who is probably better at building ships than those who built the Titanic. Note: I'm not an economist, either. Anyway, to the real point: Back when America had that system, the problem wasn't only the cost of exchange, it was that many banks couldn't cover all the money they were printing and giving out.

There would need to be massive government oversight to make sure no money makers engage in illegal/unethical practices. You can say everything has to be transparent, but that doesn't mean it'll happen. Big money brings out big crooks.

Really, what this boils down to is just another form of investing. You would "invest" in different currencies. The big difference is that investing would be compulsive.

You would always have to worry about the state of your investment in your chosen currency. Today, the only people who really have to worry about currency rates are travelers, forex traders, international business men, etc. The average US citizen can rest easy knowing that the US dollars they have will be worth something when they wake up, even though it may be devalued internationally. Some people don't play the stock market because they don't want the risk and they don't want to worry.

This would force people to take the risk, and lots of people would be burned. Also, this would make things very unstable. This market would be much more volatile than the stock market, and much more complicated.

I could see this inciting mass panics to change currencies when a currency starts to tank. Buying anything would be really complicated if the value of your money constantly changed. Would you have to time your purchases to coincide with upswings in currency value?

And paying bills and taxes would be majorly complicated.

This would not work well for everyone. The market is not the cure all, often it is the problem. Do you recall the last time there was an attempt to reform the health care system?

The conservatives jibed "Do you want your health care run like the Post Office? " (They object to the Post Office for some reason). But the liberals replied "Do you want your mail delivered by the insurance companies?"

They had the right of it; "Montana, sorry no mail, you're too spread out to be profitable. " "Inner cities, you're blackballed, it costs to much to insure our mail carriers" etc. What I am saying is there are two different goals involved. The government tries to serve everyone.

Sometimes it's inefficient; but, that's the goal and it tries. Corporations exist to make money, if anyone gets served that's just a coincidence. Providing a stable currency is a vital public service that can't be left to chance.

It's all very well getting paid in Mahalo dollars if it's just extra beer money. Not so if that's what you are saving to retire on. Private companies are efficient, but they come and go.

Their goal is to make a profit. This is not what you want controlling the currency.

My feeling is that there is very little done by the government that could not be done by private enterprise. Even national defense employs private industry to develop new technology. While the criminal justice system and the standing military may be functions that are best assigned to the government, anything else we can privatize is better.

You know how painful it is to go to the DMV or to file taxes? The less we have the government perform these functions and the more these industries are subject to market forces, the more efficient they will be. And unlike the government, when a part of a company is failing, it does not get more money, but less.

Disclaimer -I am not an economist either... But some thoughts come to mind... - Another form of virtual currency exists today - airline miles - and the owner of that currency pretty much decides how you can spend it - there are blackout dates, small quotas for miles tickets, nearly impossible to convert one currency to another - the issuer of the currency is the supreme lord - not exactly ideal for the picture you paint above - what happens if the issuer of the currency goes bankrupt - we need some assurances here that the currency we work with will have standing tied to a solid standard and can be converted at will to that standard ( like Mahalo dollars to real ones) - Do we have to wait till the 15th of the month if we have to cash out ;-) - the administrative overhead will be huge for any entity that needs to manage its own currency - not a very productive idea - what prevents the aritificial irregularities from developing within each of these currencies as indeed happens today in various countries that do have their own currencies - how will each of these currencies be (equivalent of) FDIC insured - if not how do you create stability against volatile runs caused by short term problems I am sure there are lots of good that will come too, that others will articulate ..just wanted to share my 2 cents.

I cant really gove you an answer,but what I can give you is a way to a solution, that is you have to find the anglde that you relate to or peaks your interest. A good paper is one that people get drawn into because it reaches them ln some way.As for me WW11 to me, I think of the holocaust and the effect it had on the survivors, their families and those who stood by and did nothing until it was too late.