Financial regulation always seems to be an issue. Some believe the financial industry is too heavily regulated and others see the need for greater regulation and control. The truth is it is not more or less regulation that is the problem. It is the underlying fundamental operating mechanism of the financial system: the currency. There is no regulation that can overcome the restrictions, controls, instability and resulting privilege and disadvantage that are created by a coercive currency.
Regardless of the lack of freedom that exists in other areas of the economy, the institution of a government controlled currency or medium of exchange is the primary factor that prevents a free market. An economy and the people within it can never be free unless they are allowed free exchange and control of the medium of exchange, the currency, is control of exchange.
All value originates within exchange. Even one individual deciding to devote his own labor to plant a garden or do some other productive activity for himself, is exchanging his time for the value of the product that results from his labor within that time frame.
Our economic freedom relies on our freedom to be able to place value on what we do and what others do. The medium of exchange is representative of that value. Currency control through legal tender laws and centralized money production, backed by the force of the state and the real threat of imprisonment, is the fundamental mechanism for control of the entire economy and elimination of individual freedom within it.
Rules and regulations within a controlled currency, such as those recently enacted, are instituted not to control the “extremes” of the marketplace but to try to rein in the unpredictability of a controlled currency. A currency that is not linked directly to value produced but whose value is instead determined by those who produce nothing other than the currency itself, obviously is extremely unstable.
If everyone is not allowed to value competing currencies by their selection and use of currencies they prefer, then the medium of exchange can never reflect real value. One person or a “commission” or agency cannot possible determine what every little product and every action is worth within an economy and this is exactly what controlled currency is: allowing the few to determine the value for all through direct manipulation of the medium of exchange.
But what is the connection between a coercive currency, fraud and regulation? It actually is more the lack of connection that is the problem.
Free currency as a medium of exchange is an extension of the barter system. When using any medium of exchange, one party to the transaction agrees to accept a representation of value in exchange for their product. Both parties have consensually come to the conclusion that the value exchanged justifies completing the transaction.
The party that receives the currency has a “vested” interest in the representation of value that they have received in exchange for their product. By accepting a specific currency in exchange for their product, they are expressing their faith in the value of that particular currency or form of money or whatever value they accept.
In a true free economy, the currency can represent virtually anything that someone else will accept as value. The success of the currency is dependent on the next party seeing the same approximate value in the currency and so on into the future. Its success is dependent upon how it holds its value and it must constantly compete with all other freely chosen forms of value.
The “scope” of free currency is the amount of actors within the economy that allow themselves to be under the influence or better put, take a vested interest in, that particular currency. The value of the currency is fully dependent upon all those who accept it and has absolutely no effect on those who don’t. This is ultimate freedom of choice. Value is solely dependent on choice, completely in line with the principles of barter.
Forced currency is the complete inverse. With a forced currency, all must accept the currency that is imposed upon it by those who are in a position of power backed by the force necessary to monopolize the currency; in other words, bombs and jails. All must accept whatever value is determined to be beneficial by those who issue the currency. The value can be beneficial to whoever or whatever the “directors” of the currency choose.
The economic problems due to unbridled speculation have an effect on all of us not because big investors have acted irresponsibly, but instead because we are forced to take a vested interest in their decisions through the use of the same currency. Prohibiting the choice of alternative currencies coerces us into “vesting” our interest with the heavy hitters. The use of only one dominant forced currency connects us to their decisions, good or bad, and our “value” is brought up or down by the soundness or ineptitude of their financial moves. This is compounded by the fact that the power players are in privileged positions in the first place due to their close connection with the producers of the forced currency. The concept “too big to fail” is inseparably linked to this condition.
Free choice of currency is free choice of what we choose to “vest” or invest in. When we accept a currency in lieu of direct barter, we accept and invest in the value inherent in that currency. When we no longer have that choice, we also lose the ability to “value” what medium or currency we choose and must accept a value imposed on the enforced currency by those who issue and those who control the currency. There is no regulation that can bring back that choice other than a “regulation” that ends all currency regulation and legal tender laws and brings the power to place value back to those who produce value, all of us.