Where would we turn to if the known currencies of the world suddenly devalued and became worthless in real terms?
Throughout history there have been instances when all faith has been lost in the official currency usually because it has become worthless and therefore all confidence has been lost. However, people have always looked for an alternative to maintain commerce and everyday survival. This has sometimes taken the form of bartering but its limitations are often in the assignement of some recognisable value to a wide range of goods and services. There has to be some common denominator and unit value that is commonly recognised and therefore allows the cycle of trade to turn.
During the French revolution the state coffers were completely empty and so the emerging Constitutuional Assembly created a system based on “assignats” which gained their value through selling off assets of the church. These “assignats” would be guarenteed by the state and the objective was to reconstruct a functioning economy. However, they became greatly over subscribed to the tune of 47 billion causing inflation, zero rates of interest and ultimately ended in collapse.

Alternative Currencies are not new!

Around the world there are numerous examples of local currencies which have been introduced to promote local business, local produce, customer loyalty and awareness to trade issues and climate control. They all tend to be run in parallel to the national currency but are based on creating a thriving local, fully functioning economy incentivised by promotions and discounts. In recent years they have been launched in the UK as part of the Transitions Towns initiative and these include the Totnes Pound, The Brixton Pound, The Stroud Pound and the Lewes Pound. Lewes had previously had introduced its own currency in 1789 which lasted until 1895. These pounds are obtained by exchanging pounds sterling for equivalent face value “local” pounds. Various denominations have evolved such as th 5, 10 and 21 Lewes pounds issued in 2009. There have also been schemes in the US such as the BerksShares in Massachusets which are bought for 95 cents yet worth $1. These are available in 1,5,10,20 &50 denominations. Similarly there have been examples in Canada with the Toronto Dollar, the Calgary Dollar and also in Australia with the Baroon Dollar. Most of these initiatives have been launched since 2006 or later and may well be a local solution in the fightback against the worldwide economic problems. They are viewed as trustworthy currency with real value to the local economy and in certain cases well-meaning because of the positive impact they have on local services and properity. Although these models function locally they do demonstrate a widening appeal for taking control of currency and introducing stability to the functioning of an economy.

Are National Economies really functioning?

If they are then for who are they functioning- surely not the majority?
What’s happened to the Utopia of Globalisation?
One has to ask where we are heading with the daily drivel of mixed messages to suit the medias demand for sound bites and politicians short term ambitions for themselves far outweighing the long term requirements of the National interest (daily or decades of proof – take your pick!).

What can be said of today’s global currencies which are currently being prostituted by their governments in a global exchange war to meet their “protectionism” objectives by stealth. Who is controlling their value and to what end?

The “trust” in these currencies is gradually being eroded to the point that Central Banks and the big ”clever” money of investors are seeking sanctuary in what may be the only true trustworthy currency – physical gold.
This is fine for the multi-billionaires of this world like George Soros who can afford vaults of the stuff but what about the smaller investor.
A clue may be in Switzerland where Faude & Hauguenin, celebrated goldsmiths, have recently produced 2,000 Goldhans for a private customer who is a swiss businessman with specialist expertise in the gold market. These beautiful pîeces are 99.99%, 31.1g of pure gold with an individual value of 1,400 swiss francs ( £915 ). Was this really his own idea? He is in negotiations with several banks about the purchase of Goldhans and he’s even considering a move to make them official currency and legal tender. Is this a statement of intent regarding the lack of confidence in the Euros, Dollars or Swiss Francs he would normally use – obviously for him the value of Gold is a sure one. Is it a statement of intent regarding the destiny of any paper currency that has lost the market confidence its value is based on?

Is it time to think that Gold may well become the only currency we can truly rely on?

It may also be time to consider exactly what is a trustworthy currency for the future and will it be issued by central banks or entrepeneurs we can trust?
For the moment it’s not possible and the Swiss National Bank forbids the circulation of all “new” money. These Goldhans are not yet ready to take the place of the Vreneli and in legal terms they are merely round ingots with serial numbers in a limited edition.
So why raise this example? Well it demonstrates the interest that some may have in creating a “private” money or currency of confidence at a time when traditional currency is losing its appeal on a daily basis in the unpredictability of ever fluctuating foreign exchanges around the world.

So, could this Swiss busineesman’s Goldhans one day become a type of alternative to the so called real currencies? A Currency of Confidence with ongoing real lasting and meaningful value? A dream or reality? We shall see……. when the austerity measures around Europe are judged, deficits reduced or not and belief in the status quo of currency and its current custodians is ultimately maintained or evaporated.

Paul McGOWAN

This entry was posted on Monday, October 18th, 2010 at 12:06 pm and is filed under Economy, Gold, Gold coins, Money, Numismatics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.