A free society needs rules to make any shelter interference of political power. At the core of a market economy is an important right of private property, together with the rules that guarantee this right. Currency, as a universal means to trade plays an essential role in the functioning of the market. It's hard to stress enough how important is the role played by currency. So big, that the monetary system cannot be left in the sphere of influence of the political authority.
A healthy currency, Mises ' Theory of money and credit ', it should be framed in the same category with constitutional arrangements, to ensure that it protects civil liberties against despotic government intrusion. Once accepted, the institutional reform coinage could be guaranteed in a written Constitution.
An essential step that must be undertaken for economic liberalization is the privatization of currency-monetary production based on private ownership and competition between various manufacturers, as happens in the case of most goods. In other words, the abolition of the monopoly issue is currently exercised by the currency the Central Bank and the passage of money into private property.
To see why, we need to understand that inflation is not just a type of "hidden tax". Together with Maccoll and other colleagues, I tried to explain, in a market Economy. Institutional foundations of prosperity, as inflation allows political authority to intervene in favour of privileged interest groups, shifting the wealth of the society. The privatization of currency would intensify efforts to reduce the State to a minimal role in society, to the extent that it would considerably aggravate this tendency of hidden potlatch. With the disappearance of the Central Bank, splitting the gold reserve and termination of legal restraint to make payments in one currency, inflation would be quickly eradicated, since nobody is happy to keep a coin whose value depreciates gradually. The reform would also lead to "endogenizarea" the money supply in relation to the economic circumstances and the impossibility of economic calculation forgery. Direct consequence of this would be to improve economic activity while placing overall more faithful and coupling and faster production structure to the needs of individuals. In a system of freedom of currency production, the public is free to choose what currency uses, just as you can choose what car to circulate. Market entry is open to anyone who believes he can better satisfy users ' desires for money by providing a more appropriate coins.
As a result of this reform, not only in the territory of a country will be able to freely circulate the coins issued by other countries, but will be created new tools that respond better to the needs of the population. Banks or other financial institutions, which are concerned, must be free to issue banknotes denominated in any currency considered as can be successful on the market, whether the dollar, euro, gold, silver, currency basket or basket of goods. The State will not have to encourage or prevent the use of any specific type of money, for example through specific requirements relating to the method of payment of taxes.
Because reputation represents the most precious assets of the issuer of currency, money makers would be stimulated to keep their credibility. The situation created would differ from the current total, when competition among financial institutions is pervertita by the existence of "the creditor ultimately" (the Central Bank) and regulations (e.g., deposit insurance to the public), a phenomenon known as "moral hazard"-concept so often cited in explaining the current financial crisis. The money provided by private institutions would attract more respect than money officials present, even for the simple fact that, according to the General rules of law, the producer can be acted in court for any attempt to defraud clients, while the Central Bank stand at this shelter.
Competition between manufacturers of coin will work for the benefit of the public, making sure that their preferences, manifested by the demand for various currencies, will be satisfied with timeliness. If in the past the competition led to the rule of coin of gold or silver, the result can be repeated after the introduction of monetary reform: it is undeniable that the commodity currencies shows an advantage in front of those paper. While the coins and paper shows the user the risk to confront, to the limit, with the total value has evaporated along with the dramatic decrease in demand, commodity currencies owners are "coated" with a real resource.
In any case, freedom of action in the field of currency will be able to show us what users prefer. Only then current regular discussions about setting up monetary system will show the futility. Because, today, all assume that the only type of monetary organization that deserves attention is the one based on the monopolisation of the currency by the States. Then you will understand the many and how damaging has been the treatment of the issues from the perspective of benefits and costs of individuals, not States.
