Monetary Reform

If you hear a call for “monetary reform,” we’re talking big news and a major overhaul. Monetary reform refers to changing our current system of how “money” is supplied to the economy.

We say “money” because some monetary reformers argue that the U.S. dollar isn’t worth anything.

Why? Because it isn’t backed by anything.

In ye olden days, the USD was “on the gold standard”—ever heard of it? That tied paper bills to actual gold. You could walk into a bank and redeem your cash for gold. This made people feel better about using little bits of paper to trade for things. Today, however, we’re off the gold standard, and the U.S. dollar isn’t backed by anything tangible.

Another major way that the monetary system could change is by changing (or getting rid of) the central bank, which was made to support the economy when, um...stuff hit the fan (crisis time). Some economists argue that things would be better off without a central bank. For instance, some economists argue that, if the banks weren’t bailed out during the 2008 financial crisis, it would be better, since now that bad behavior is incentivized. Now, banks have no reason not to be irresponsible with consumer money, because they know the central bank will step in to save them.

Less familiar (to Americans, anyway) proposals for monetary reform include government-issued credit, free (no interest), and government-issued social credit, which would theoretically disperse economic and political power to individuals.

Welcome to the Pandora’s Box of monetary reform.