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L. Neil Smith's

Number 836, August 30, 2015

There Ain't No Such Thing As Social Justice

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The Power to Issue Money
by Jim Davidson

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Attribute to L. Neil Smith's The Libertarian Enterprise

"Ah, take the Cash, and let the Credit go,
Nor heed the rumble of a distant Drum"
—Edward Fitzgerald, The Rubaiyat of Omar Khayyam

One of the really important questions you should think about is: Who should have the power to issue money?

Now, a great many of you probably haven't thought about this question, ever. After all, since the beginning of recorded history, various types of governments, including republics, kings, priest-kings, and dictatorships have issued money. If you open up your wallet, you probably find some paper money in there issued by some government, or on behalf of a central bank that is authorised by some government. Very likely, you also have some credit or debit cards issued by banks or credit unions, but these are only corporate extensions of governments, so not really that different. My wallet has a couple of Ron Helwig's Shire silver and gold wire cards, too.

If you are fond of history, you may have heard of the tendency of Roman emperors to debase their gold and silver coinage, and the tendency of the Byzantine emperors to stick with the good stuff. You may have heard that Revolutionary France was beset with inflated paper money called the assignat by the national assembly and the mandat by the Directorate—the same Directorate that shed enormous quantities of blood in its search for peace and justice. You may know that one of Napoleon's secrets to popularity was restoring gold and silver coins to circulation and melting the printer plates used to make the paper money. You may be aware of the adventures of Marco Polo with paper money in China under Kublai Khan. And you are probably aware of the creation in 1913 of a Federal Reserve that gradually replaced gold and silver in the United States with paper money and coins made out of base metals like zinc.

If you aren't fond of history, essentially nothing in the preceding paragraph means anything to you. Which might be ok, if you weren't living in interesting times. As it turns out, Thucydides was correct in believing that the future, if it does not mirror the past, at least reflects it. And, of course, Santayana says that if you won't learn the lessons of history, you may be doomed to repeat them.

Given that there is currently a sovereign debt crisis that has turned Greece into an economic wasteland, plunged China's markets down, and which is very clearly spreading to many other countries in the coming months and years, and given that the money you have in your wallet is only backed by the full faith and credit of the United States, which has not exactly shown itself to be credit-worthy or faithful, you may find yourself very interested in the question: who should issue money?

Your Power

Now, if you believe, as I do, that the only just form of government is one that derives its powers from the unanimous consent of the governed, you should recognise who has the power to issue money. Since governments are issuing money and since all the powers that governments have must have been either seized from the people or delegated to the government with the consent of the people, it follows naturally that the power to issue money comes originally from the people. It is also my view that powers are not collective in nature but, like rights, are individual in character. In other words, you have the power to issue money.

Whether that comes as a surprise to you or not, it is clear from simply looking around that not everyone is issuing money. If each individual has the power to issue money, why isn't everyone doing so?

It turns out that one of the key features of money is acceptability. It matters a great deal less if you issue money than it does if someone else accepts it. In order to generate demand for its currency, your national government accepts that currency for payment of taxes. The fact that there are a great many taxes, not only at the national level but also at state and local levels, means that there are lots of places where the national government's currency is accepted. Not only is it accepted by tax authorities, it is also accepted by merchants because they know they can use it to pay their taxes, and so forth. Taxation Is Theft

Many years ago, at the end of the last century, I met a member of the Somena First Nation up in Canada. I was attending the world congress of the International Society for Individual Liberty at the time. Meaghan Walker-Champion explained to me that she had spoken to the elders of her community and they had many long talks among themselves thinking about what the Somena word for "tax collector" would be. They concluded that the word in their language was the same as the word for "thief."

Writing at the end of World War Two, E.C. Riegel reached the same conclusion. He noted that money is extremely useful in trade and commerce, and that the issue power properly belongs to those engaged in trade and enterprise. Since governments are not engaged in buying and selling, but only in stealing from others, they are entirely inappropriate to the purpose of issuing money. He makes these and many other excellent arguments against state socialism in A New Approach to Freedom. My friend Spencer MacCallum helped organise E.C. Riegel's papers. An authorised, free, and complete version of A New Approach to Freedom is available on the web here.

Copies of the book in hard cover were still available from Spencer's the Heather Foundation the last I heard. I very strongly recommend this book to anyone interested in the topic of money. Here is a brief excerpt:

"To desire freedom is an instinct. To secure it requires intelligence. It must be comprehended and self—asserted. To petition for it is to stultify oneself, for a petitioner is a confessed subject and lacks the spirit of a freeman. To rail and rant against tyranny is to manifest inferiority, for there is no tyranny but ignorance; to be conscious of one's powers is to lose consciousness of tyranny. Self government is not a remote aim. It is an intimate and inescapable fact. To govern oneself is a natural imperative, and all tyranny is the miscarriage of self government. The first requisite of freedom is to accept responsibility for the lack of it."

Denationalisation of Money Brings Freedom

Another author who wrote extensively on the topic of money was FA Hayek. Hayek is widely known as the Nobel Prize winner in economics in 1974 for his "pioneering work in the theory of money and economic fluctuations." In my opinion, Hayek's greatest contribution to economics was his 1976 (and subsequently revised through 1990) book Denationalisation of Money—The Argument Refined: An Analysis of the Theory and Practice of Concurrent Currencies.

Again, if you really want to understand money, who should issue it, and what damage is done by having governments issue money, you should read Hayek's book. The paperback, used, from Amazon's network of resellers, might set you back $3 or more.

Here is a brief excerpt to give you some of the flavour:

The truth is indeed that legal tender is simply a legal device to force people to accept in fulfilment of a contract something they never intended when they made the contract. It becomes thus, in certain circumstances, a factor that intensifies the uncertainty of dealings and consists, as Lord Farrer also remarked in the same context, 'in substituting for the free operation of voluntary contract, and a law which simply enforces the performance of such contracts, an artificial construction of contracts such as would never occur to the parties unless forced upon them by an arbitrary law.

Hayek is correct. Legal tender is a scam. But, so is every other aspect of government imposed by coercion. Without your explicit consent, government is just bullying. Perhaps you should stop being bullied.

Hayek went on to write, in the same book:

"It seems to me to be fairly certain that "(a) a money generally expected to preserve its purchasing power approximately constant would be in continuous demand so long as the people were free to use it; "(b) with such a continuing demand depending on success in keeping the value of the currency constant one could trust the [issuers] to make every effort to achieve this better than would any monopolist who runs no risk by depreciating his money; "(c) the issuing institution could achieve this result by regulating the quantity of its issue; and "(d) such a regulation of the quantity of each currency would constitute the best of all practicable methods of regulating the quantity of media of exchange for all possible purposes."

Issue Money

Every once in a while, exciting things come up. Recently, I learned from my old friend and colleague, Kevin Wilkerson, that his Voucher-Safe technology would allow people to issue their own currency. Now, think about that for a minute.

Say what you please about Bitcoin, whether it is great (and doing $20 billion a year in transactions suggests it is great to many people), or whether it is awful (since it is based on nothing but mathematics, not a tangible good like gold or silver). But it isn't your currency. It is the invention of Satoshi Nakamoto, and it is maintained by the committee in charge of the Bitcoin protocol.

Moreover, it has some serious privacy limitations. Every transaction is made part of a permanent record, a record which has grown in size and scope to include something near 40 gigabytes of data.

You might not want your transactions to be recorded on that blockchain. Then again, other forms of money have their own limitations. Credit card money and checking accounts are particularly compromised with respect to your privacy, and they can be leveed at any moment to make your funds accessible only to the tax authorities. Little wonder, then, that Voucher-Safe wallets have provision for Bitcoin, and its major competitor, Litecoin.

What Voucher-Safe provides for is the opportunity for people to not only issue money but to transact with others, using money of their own choice, in complete privacy. The Voucher-Safe system creates and destroys vouchers with every transaction and does so in a fashion that cannot be monitored. It can't be monitored because it isn't based on a central server keeping accounts and recording each transaction that occurs. You can keep track of transactions in your own individual wallet, or delete records, or even refuse to allow transaction records to be created.

Best of all, the system uses XMPP, the messaging protocol that was designed for the Jabber chat system. Users of Jabber know that it includes encrypted messaging, called OTR or "Off the Record." The Voucher-Safe system doesn't use the web, except for getting a copy of the open source wallet client to your computer. So, you don't have to wonder about the numerous security holes, gaping holes judging by recent experiences, in the so-called "secure web sites" you visit. Because XMPP is a protocol that is designed to be extensible, applications can be added to your Voucher-Safe wallet to make all kinds of activities. I gather that a simple gambling game based on coin flips has been demonstrated as a prototype.

What's the Catch?

The catch, of course, is that it costs money. If you want to begin issuing your own currency, there are fees to pay. There are costs collected from wallet users, transaction fees. In other words, it isn't free. It is not so expensive that any company able to raise a few hundred thousand dollars, or having profits in that range, or any non-profit with similar finances, or any new group of people choosing to work together couldn't become currency issuers. And, of course, as with all new technologies, it is logical to suppose that over time, the price of being a currency issuer may come down—after all, electronic pocket calculators in 1971 cost around hundreds of dollars and today are just as effective for about $5.

But, you have free money from the government, right? You've seen what it costs you to use the dollar, or the euro, in terms of a loss of freedom (ask the Greek people how they like being part of the euro, today), in terms of taxes, and in terms of the not-so-hidden tax of inflation. If you don't want to pay for issuing your own currency, you certainly don't need to do so.

There are also opportunities, not only for people who would like to issue their own currencies, but also for those who wish to be agents, including exchange service operators, people who wish to be merchants, and people who simply like the idea of freedom to choose. In fact, there is an entire network being developed to promote digital cash in all of its splendour. At various levels of participation, members get access to a virtual privacy network that is among the very best in the world. So, your web browsing, e-mail, and all other online activities can take place within an encrypted "tunnel" to secure servers. The new group is called the Digital Cash Alliance.

You can reach them at which gives a good overview of the alliance, its team members, advisers, and plans. The link you want is to their secure site at Note that they use a self-signed security certificate, of course, for all the numerous reasons that certificate "authority" security certs are to be avoided, so your browser is likely to warn you about the connection.

Why Me?

Why am I interested in digital cash? Quite simply because things are not okay the way they are. If the future I was taught to expect were here, I would have a flying car and be taking frequent vacations beyond the Moon. There would not be a giant military-industrial-financial complex gaming the people for more debt-fueled wars, destroying privacy and freedom, and enhancing the wealth of the richest one-tenth of one percent. There would, rather, be freedom. Look around you.

If you would seek reasons to have digital cash, look about you. Look all over. You won't find freedom, you won't find progress, you won't find prosperity, you won't find peace, you won't find anything resembling justice anywhere you look. If you want those things, you are going to have to build them.

And if you want to build things so very radical as freedom, progress, prosperity, peace, and justice, you'll need tools like digital cash. So, that's why me. You should reflect on your own reasons, and choose to join the Digital Cash Alliance.

Jim Davidson is a sovereign individual, serial entrepreneur, storyteller, world traveller, and very happily married. In January 2012 he withdrew from public life for a few years. He is now an unpaid adviser to the Digital Cash Alliance and working to change how the world thinks about money, including who should issue it. You can learn more about their work at their secure site which, of course, uses a self-signed security cert because certificate authorities are bogus.

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