A West African Vodun altar. Voodoo is the process currently used in the fractional reserve banking system to create money.
Problems with the fractional banking system
Zeitgeist Addendum briefly explains the fractional reserve banking system. I'm not familiar with this particular system but a cursory glance at their source shows they neglected to portray what happens in the event of inflation (the Wikipedia page claims that their source is Modern Money Mechanics). I'm not sure how accurate their description is, but they take their description as representative of all monetary systems, and thereby apply their critique of fractional reserve banking to any given monetary system. They conclude that the world would be a better place if we did away with monetary systems entirely - including bartering - and everyone just lived in Cloud Cuckoo Land where AI robots gave us our daily bread. What did I say about Far-fetched Artificial Intelligence THeology (F.A.I.T.H)?
Fiat money. The only difference between this and toilet paper is the face. Toilet paper causes you to make a different face.
Fiat money: the real deal breaker
The real problem of money is that the value of currency is not allowed to fluctuate according to the laws of supply and demand for that currency, or that the value of currency is not pinned to that of a particular commodity (such as gold), depending on who you talk to. Both these are a result of fiat money, or currency with no intrinsic value.
Fiat money means that the only value difference between toilet paper and bank notes is that bank notes have faces printed on them. Conversely, the problem with currency that has intrinsic value - namely commodity money - is that it has intrinsic value so it tends to disappear for ulterior purposes other than buying goods. Control over the value of currency and monitoring supply and demand for currency is thus difficult, not to mention the fact that the sources of the commodities used for currency (such as gold or silver) may run dry.
The original design of the Panopticon, by Jeremy Bentham.
You may like to believe that the answer lies with the Venus Project, a Panopticon where there will be no government except the government run by spambots that ensures everyone gets dished their daily bread, that nobody trades or starts their own monetary system or that nobody digs their way out with a spoon (damages the commodities, you see). Or you may like my proposal:
A new world order banker hard at work in the new world order central bank.
Using beer as a currency solves the problems of the monetary system
- Beer solves the problem of having a currency that has no intrinsic value. As a product that obeys the laws of supply and demand (or the laws of whichever cartel currently controls liquor supply, depending on who you talk to), the price of beer may fluctuate from here to kingdom come but it will still have intrinsic value.
- Beer solves the problem of using a commodity which has a source that may become depleted. If you want to see people fix problems of a sustainable water supply quicker than Tiger Woods's whores climbing out of the Woodswork, see them run out of beer. The source for beer would never run dry.
- Beer solves the problems of fractional reserve banking. Because beer has intrinsic value and because beer may become spoilt if you are savage enough to let it become expired, there is no way a bank (or brewery) can supply more beer than the demand.
- Beer as a currency solves problems of inflation. Inflation is the rate at which money loses its value. According to monetarists, inflation is caused by more supply for a given demand. Thus, in our current fractional reserve banking system, inflation is largely a result of reserve banks printing too many faces on toilet paper. In a system using beer as currency, if our inflation is a result of supplying more beer than the current market demand for beer, we simply declare a public holiday and consume the excess supply until we're happy with our supply and demand equilibrium.
- Beer has use value and each beer contains a fair amount of labour hours, so even Marxists should be happy with its use as a currency. For once, Marxists are satisfied as they can have their cake and eat it too.
- Beer may be produced by anybody. How do you control the value of beer? The answer is that you taste it! If someone's beer tastes crap, you don't trade with them until they learn to make decent beer. Thus, beer as a currency would increase the average knowledge of science and the average level of skills in any given community. Even if people over produce, beer has built-in protection against inflation because it is perishable.
- Beer would solve the problems of fraud. It's hard enough to embezzle millions of a currency that consists primarily of electronic numbers or paper with faces printed on it, but it's damn near impossible to embezzle a couple of tonnes of beer. Besides, the beer is perishable and everyone could make their own beer so go ahead and try to steal gallons of currency and see how far you get before someone notices their beer missing.
- Beer would solve the problems of exchange rates. This is because everyone knows Americans can't make beer for shit. As we have seen, using beer as a currency would force America to outsource their federal bank in order to acquire decent currency and proper brewery skills to ensure that their currency - that is their beer - is on par with the rest of the world's currency. Similarly, since countries with the best breweries/central banks have incentive in trading with other countries of lesser brewing skills, they will be forced to impart some of their superior skills onto those lesser countries like America. Thus, international beer tasting would ensure that beer-making skills more or less even out, ensuring a world-wide standard for currency.
The new and improved process of creating currency, if beer were to be used as currency. As you can see the process is greatly simplified.
Did I mention that beer is perishable? It truly makes me sad. Nevertheless, I'm glad that I solved the world's financial crisis. You're welcome. Skål!