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Source link: http://archive.mises.org/11094/fiat-currency-i-might-accept/

Fiat Currency I Might Accept

November 25, 2009 by

here. HT: Brent Butgereit.

{ 28 comments }

Matt November 25, 2009 at 8:07 am

There’s no way they would put the half-destroyed death star on there. Due to typical propaganda, it would be whole.

Bob Rooney November 25, 2009 at 8:21 am

I guess it is the second death star (half-constructed, but fully operational) of Episode 6.

Sorry for lawyering, but Admiral Ackbar thaught it was a trap.

Cramchakle November 25, 2009 at 8:48 am

You’re both right. It’s half constructed, but I would also expect the currency to include an image of a completed Deathstar. While this Deathstar may be fully operational, it’s not nearly as awe inspiring with the girders hanging out.

Bruce Koerber November 25, 2009 at 8:55 am

Fiat !!!!!

It looks to be backed by something real – you know – like a fantasy science fiction!!!!

Which is more “fiat – ish” the one shown above or the dollar that is being devalued by the unConstitutional coup?

J Cortez November 25, 2009 at 8:56 am

I suspect that Darth Vader’s and the Emperor’s central planning is what ultimately lead to their loss. Evil and central planning are synonymous, I think.

I also suspect that with this fiat currency, they too created a massive bubble of some sort due to credit expansion. I wonder how much the Death Star distorted the structure of production? I mean, it wasn’t a product based on market demand and it’s the size of a small moon.

Gulli November 25, 2009 at 9:19 am

It is definitely fiat:

“Republic credits? Republic credits are no good out here. I need something more real.”
- Watto to Qui-Gon Jinn on Tattooine in Episode 1

Gil November 25, 2009 at 9:30 am

Well what do you think Mike Sproul?

Mike Sproul November 25, 2009 at 9:53 am

Gil:

Nice of you to ask. It’s clearly not fiat money. The empire will no doubt accept it in payment of taxes. Thus it is backed by the tax-collecting ability of the empire. There would have been significant inflation when the rebels blew up the death star.

T. Ralph Kays November 25, 2009 at 11:27 am

Mike Sproul
Try learning the meaning of “fiat money”.

mikey November 25, 2009 at 11:38 am

Fiat money- the money you use to buy a rather unreliable and rust prone Italian made car.

Kevin Delaney November 25, 2009 at 12:13 pm

As a clone in his imperial storm trooper army, I like the fact that one of those bills in my hand is worth ten of the bills in the hands of peasant. One bill in my hand can be worth twenty when I my laser blaster is charged and I am wearing my spooky white helmet.

Of course the purpose of all fiat money is that it’s worth more when in the hands of the elite than when its in the hands of the little people.

Art Carden November 25, 2009 at 12:35 pm

Also, the “Vader as Fed Chairman” jokes write themselves. I’m thinking the “I find your lack of faith disturbing” line from ANH would probably make its way into testimony.

Speaking of SW and funny stuff, this is easily one of the funniest things I’ve ever seen, ever: http://www.youtube.com/watch?v=dOQDvjGtMFU.

Thinker November 25, 2009 at 3:47 pm

“Vader as Fed Chairman”

(Debate on how to combat the crisis between Paul Krugman and Chairman Vader)

Krugman: Chairman Vader is of the opinion that monetary policy is the cure for this crisis. He is false-the answer is massive government spending. His views demonstrate an alarming lack of understanding of basic economics. As Keynes showed, …(Krugman slumps onto the table unconscious)

Vader: I find your lack of faith disturbing.

Chariman Vader

Alvaro November 25, 2009 at 6:12 pm

In libertarian-leaning Firefly, GOLD rules.

http://en.wikipedia.org/wiki/Firefly_(TV_series)

Hard Rain November 25, 2009 at 6:46 pm

The Galactic Empire has always been an amusing allegory to real-world government.

Take their decision to out-source the security defenses of the second Death Star to a remote planet with absolutely no infrastructure filled with hostile inhabitants.

Genius…

Core November 25, 2009 at 6:49 pm

You know, I always thought if were going to have a Fiat currency, we might as well have one that has a kick ass design.

Galactic Reserve November 25, 2009 at 11:18 pm

“Thus it is backed by the tax-collecting ability of the empire.”

And that’s why the income tax must be abolished.

“There would have been significant inflation when the rebels blew up the death star.”

And that’s why Federal Reserve Notes must be abolished.

Anachronism November 26, 2009 at 2:14 pm

I find it strange that the government would accept it’s own paper junk currency as payment for taxes.

If I issue junk bonds backed by nothing and then sell them on Wall Street to gullible investors, I surely would not want them back as a form of payment. Especially if I was mugging someone on the street who appears to be one of my screwed investors, I would not want him to give me back my junk bonds.

So I find it strange that the government will accept back it’s own worthless toilet paper.

Backing November 26, 2009 at 2:28 pm

“If I issue junk bonds backed by nothing and then sell them on Wall Street to gullible investors, I surely would not want them back as a form of payment.”

But the only reason they “buy” them is so they can pay their income tax denominated in Federal Reserve Notes. It’s hard to pay a tax in Federal Reserve Notes unless you “buy” Federal Reserve Notes.

Mike Sproul is right about one thing. The ability to steal the fruits of people’s labor is the only thing that backs Federal Reserve Notes. But that just means that the income tax and the Federal Reserve should be abolished. It’s no coincidence that the income tax and the Federal Reserve both started in 1913.

Backing November 26, 2009 at 2:38 pm

“There would have been significant inflation when the rebels blew up the death star.”

Mike Sproul, I know that’s really sad isn’t it. Things were better with Darth Vader in charge.

That “inflation” just leads to people using something else as money, like gold or silver or carbonite. That’s what happens when you use money backed by state violence.

T. Ralph Kays November 27, 2009 at 3:25 pm

The Origin of RBD, a fable by T. Ralph Kays
Most scholars believe that the advent of the theory we now know as the Real Bills Doctrine is lost in the murky shadows of early human history. Take heart however; thanks to an amazing family tradition of maintaining a detailed and completely accurate oral history I can bring you the astounding tale of my ancestor, the inventor of RBD. (Originally called the Ralphs Bills Doctrine, and yes I am named for my illustrious relative)
It all happened a long, long time ago, back when all commerce was based on barter and consumers had no regulatory agencies to protect them from the predatory practises of big business. Ralph was a potter and made a poor living in a small village. The poor living was possibly due to most of the pots he manufactured being lopsided and only randomly being capable of containing liquids for more than a few minutes. His son later claimed that the dubious quality of his pots was caused by his fathers preoccupation with discovering the science of economics.
Ralph was pondering his lack of success in making trades at the weekly marketplace, held in his village, for the items his family needed, when a flash of brilliance lit up his face. It wasn’t his fault! It was because there was no common item of exchange that people could trade with to get the things they needed! He pondered through the night in his little grass covered hut, and by early morning had a solution. He spent the first hours of daylight scribbling on many small pieces of papyrus and by mid-morning was ready to implement his plan. First, he hung a large sign over the door to his hut that read “Ye Olde Banke”, and with everything ready, went out in the village to proclaim his genius to everyone. He explained how everyone would benefit from his innovation, how everyone would save valuable time by being able to conduct business with new efficiency, how people would be able to easily pass their wealth on to multiple heirs, how the village would finally be able to fund the civic improvements that so many yearned for. (In truth Ralph was the only one yearning and most of his yearnings involved civic improvements built of clay somehow) Then he showed the villagers all 100 of the scraps of papyrus that he had so carefully scribbled on.
” I have invented currency” he announced “and it can be traded for anything. We will call them Ralphbills and everyone will use them.”
” For what?” someone in the crowd said, “you’ve already scribbled on them so we can’t write on them and the only other use would leave ink all over our arses.”
“No, they are valuable not for what they are, but for what they represent”, Ralph paused dramatically at this point, then in a hushed voice said “these represent my home”. He looked around expectantly, but was disappointed to see only blank stares. “My home, you know; the hut, the garden, the goat pens, the beautifully landscaped front yard, the outhouse; the whole kit and caboodle!” He looked around as his meaning slowly dawned on the crowd. “Everyone recognises my home has value, right? These represent my home, you could say, the value of these is backed by the value of my home!”
“So you are saying, if I go home and scribble on 100 pieces of papyrus and come back here I can trade them for your home?” came another voice from the crowd.
“No, no, no” said Ralph, “that would be counterfeiting, I will only trade my home for these specific pieces of papyrus. See they all have unique serial numbers.”
“What if I don’t have all 100, what if I only have 10 of them?” from a third villager.
“If you have 10 then you have one tenth of the value of my home” said Ralph. “These are MONEY” Ralph cried triumphantly.
Pudgy little Ralph Jr cried out “but daddy, daddy, that means….”
“You are right” crowed Ralph, “we are RICH.”

to be continued

billwald November 28, 2009 at 12:30 pm

Doesn’t matter what you call the system. It will not be honest unless it is TRANSPARENT! No system where people can hide assets and deals will be honest.

Financial data only has economic value when it is restricted. If the system was 100% open then the people could ONLY improve their economic standing by working harder, smarter, or longer. Advancement by murder, stealing, bribery, and black ops would be minimized.

I propose a 100% electronic money system in which every transaction is posted on the web. Coins could be issued in denominations up to, say $20 which people could use to buy a newspaper, a cup of coffee, or play “Tooth Fairy” with their kids e.g. small enough that a briefcase full of them large enough to bribe a senator would be to heavy to carry.

ALL taxes would be eliminated EXCEPT a 10% max electronic transfer tax, half to be paid at each end of the transaction. At the opening bell, half the tax revenue the tax receipts would go to the 50 states state on the basis of the present electoral college, one share for each representative and senator. The rest to the federal government.

Every person could down load any part of the financial record he desired including his neighbor’s green fees.

Physical objects could be stolen but not bought and sold for money. I suppose they could be traded but could be only used for personal use/consumption. This would be piddling compared to the assets required to bankrupt a country or finance a war.

T. Ralph Kays November 28, 2009 at 1:20 pm

billwald

I laughed out loud when I read your post, great joke, absurdity taken to the extreme. But it occured to me that you might be serious, so let me make something clear, I don’t care if you want to try living that way, and I don’t care if you want to try convincing other people to voluntarily live that way, but if you think I will ever submit to that kind of slavery then you are crazy.

The Comrade November 29, 2009 at 2:29 am

Gulli:

Oh wow, I constantly think of that scene whenever I een think of fiat money. It makes me feel that inflation can only be sustained as far as the power of the state extends. Good on Watto for asking for something worthwhile.

On the other hand, Lucas comes across as a modern regulation-liberal type, showing how he thinks slavery would exist in a free market (as if the Hutt-controlled mafia worlds were free market at any rate) and he identifies it with the gold standard.

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