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Wednesday, January 20, 2021

Money in Liberland: How Will It Work?

Liberland Constitution: §IX.5. No law shall abridge the right to issue and/or use any commodity or item as currency or provide any incentive in that respect unless any party to the transaction is legally prohibited from possessing such commodity or item; nothing in this provision shall prevent the Public Administration from issuing its own currency so long as all financial liabilities vis-a-vis the Public Administration may be satisfied in selected other currencies.

Money provides such an advantage over barter that it is indispensable for a functioning economy today. Modern civilization has long accustomed itself to a government or pseudo-government entity creating and maintaining the money supply. Indeed, these fiat currencies have dominated the economy across the globe throughout living memory. Recently, cryptocurrencies have been on the rise, but they are far from replacing dollars, pounds, and yuan. The nascent Free Republic of Liberland is taking steps to encourage more widespread acceptance of cryptocurrencies, such as planning its own ICO and accepting a variety of currencies for its services. However, the future state-issued Liberland cryptocurrency (LLM: Liberland Merits) will be just one of any number of currencies in circulation within Liberland: some will be accepted by the Public Administration, and some may not, but all will be legal to use in private exchanges. In fact, Liberland Merits may have more to do with civil obligations and privileges than with ordinary free market exchanges. With LLM focused on government interactions, how will money be provided for the rest of the Liberland economy?

In short, it will be provided the same way all goods and services are provided in a free society: by mutually voluntary human interactions in the market. Without a government-mandated currency — printed or otherwise fabricated with a legal obligation to accept it in payment of debts — people will be free to produce or accept any currencies they choose.

A variety of alternative currencies have been offered over time, but most governments oppose monies (and any other services) that compete with their own. China prohibited ICOs. The U.S. prosecutes men for selling Bitcoin. Although Bernard von Nothaus got a somewhat light sentence after being accused of domestic terrorism for his Liberty Dollar alternative currency, Jonathan May did several years in prison for attempting to create a non-fractional reserve alternative to the Federal Reserve system. In Liberland, all cryptocurrencies will be free to compete on the open market with both privately manufactured specie and paper instruments.

I speculate that no more than a handful of currencies will dominate Liberland’s economy. Bitcoin will be a tough contender, given its current dominance of the cryptocurrency market, but Monero’s focus on privacy with its usability being as broad as Bitcoin’s thanks to XMR.to could give it an edge. Some people will prefer paper instruments, which would be IOUs or promissory notes backed by an individual’s or corporation’s creditworthiness and assets. Some who prefer their currency to have intrinsic value might use traditional specie. Coins can be minted expressly after the manner of the Liberty Dollar mentioned above, or metal bars and rounds manufactured by such companies as KitcoApmex, and JM Bullion can be pressed into service as currency. Similarly to the issuing of paper instruments in a free society, a company’s reputation would affect the value of their issued coins. Of course, just as with government currencies, paper instruments and even gold and silver currencies can be exchanged digitally.

To summarize, without the government disrupting the market for money, the market will provide a diverse array of currencies to fit the needs and preferences of all consumers, and the Liberland economy will thrive with the competing monies.

 

Written by 

Elijah J. Henry is a libertarian freelance writer and U.S. Army SOF Veteran who grew up mainly in the midwest, but who has spent his entire adult life in various southern States. He aspires to promote Freedom while living free in a yet unfree world. Feel free to reach out to him with writing opportunities through his LinkedIn account at www.linkedin.com/in/elijahjhenry.

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