Forming a new monetary system

My question is this (framed in a potential real world scenario)

Lets say a group of about 100K people together purchased and island and became a soverign nation, they want to establish a gold/silver standard how would this be accomplished ?  Would this nation require a "buy-in" of gold and silver deposited into a national treasury by all the citizens ?

Framed another way assume YOU the reader had a clean slate, what would be step one in establishing this type of system to get it off the ground ?

Not looking for the legeslative answer (first form a constitution etc) but the practical answer assuming all legislation was passed and agreed upon ?

Hope this makes sense !

 

essentially trading in your worthless paper for amounts of silver or gold. Assuming everyone agreed, this should be fairly simple.

Or another way may be to sign a contract with a minting or mining company and exchange resources or labor( assuming the island has resources ) for future amounts. Or just advertising the fact that you want a metal standard would put minting companies at your service. This would dramatically lower the cost due to increased competition. Certain minting styles can be bid up or down by the like of the population.

Citizens could open private banks, or considering the size and population, need no bank at all but their house. private citizens could issue their own notes of redemption. This would create competition based on prior trust of certain people. This would consolidate a small number of banks that can be trustworthy. Foreign trade would be based on the integrity of the new banks. That's somewhat of a start.

However your idea of a national treasury is disturbing!

Thanks for the response...This is very educational for me !

In terms of a national treasury, I was thinking in terms of a secure location to store the precious metals and a universal auditing system of the reserves and an issuing body for the "notes".

Perhaps National Treasury is a bad term ?? Maybe as you stated it would be a public bank but serve the purpose a national treasury "should" ?

 

If your island was economically successful, you probably would be invaded.

Most islands are claimed by another country.  Even if you bought the island, another country may still claim sovereignty or the right to tax you.

I would not have a central bank or any law mandating something to be used as money.  People would be allowed to import/export gold and silver to/from the island.  Since this island will be economically productive, it should run a trade surplus with the rest of the world, allowing gold and silver to be imported.

As a practical matter, who needs a government at all?  Once you say "there will be a government", you're already on the wrong track.

 

The invasion part is certainly reality, so I guessmy question is mute... basically true economic freedom is Utopia

 

jakgaph:

The invasion part is certainly reality, so I guessmy question is mute... basically true economic freedom is Utopia

No, you have to take precautions against invasion.  Besides the obvious, and very difficult solutions of some kind of military, one very good first step is: don't have a central bank. 

Don't have any central point or institution that is a nexus of control for the whole place, because any invader that can occupy that central point will control the whole place.  Complete decentralization makes an invasion much harder, because it requires thorough occupation.  So it makes defending against invasion easier.

Of course, a small island against an established nation with a tax-funded military is still at an overwhelming disadvantage, but the priniciple still applies. And on that principle, a free economy is even safer when it does not have any concentrated geography at all.  In fact, it might even be best to have it distributed inside the potential invader's geopgraphy - because then what will he invade? Each individual might be more vulnerable in the short term (the long term being the time frame in which the island would have been invaded, and everyone is dead or enslaved), but the system as a whole is much safer.  You might even say it's unstoppable.

Then, when the free economy is bigger and more powerful than the state controlled one, then you start invading them.

 

fsk:

As a practical matter, who needs a government at all?  Once you say "there will be a government", you're already on the wrong track.

The question would be what he considers as "government" - In any society there will be a leading group of people, considered and esteemed as authority by others.

fsk:

I would not have a central bank or any law mandating something to be used as money.  People would be allowed to import/export gold and silver to/from the island.  Since this island will be economically productive, it should run a trade surplus with the rest of the world, allowing gold and silver to be imported.

... What do you mean by law. Possibly there will be a generally accepted means of exchange. Not because someone says it, but because people agree on it. Money (means of exchange) is of an institutional nature.

fsk:

Most islands are claimed by another country.  Even if you bought the island, another country may still claim sovereignty or the right to tax you.

.... But you can come to an agreement with that country. I'm pretty sure there will be a couple of states being favourable to a promissing neighbour. They'll enter into an agreement as long as they get paid. Of course you'd need some pretty skilled people to get such a project/concept running. Looking for an island? Here we go:

http://www.privateislandsonline.com/ 

Alternatively you can bargain for a territory with any poor country.

fsk:

If your island was economically successful, you probably would be invaded.

Not if the people residing there will be capable and willing of defending themselves. Remember you entered into an agreement with other claimants. 

 

Is it not plausible to start a bunch of private mints under the radar right here in the US? why should we use the greenback? If enough people get involved, we could decide on our own currency and create a whole new economic underground.  All we have to do is not report certain activity to the government...there was a nice piece on the mises blog the other day about businesses that take only cash...i forget what he called it...the Informal Sector <a href="http://blog.mises.org/archives/008241.asp">link</a>

wouldn't this just be the next step?

There's a better approach than moving to an island and setting up a free market there.  Start a free market trading group where you live now.  You'll be an island of freedom surrounded by a hostile State.  If you're stealthy, you may succeed.  That's the whole point of agorism.

If you're a small group of people on an island, that's too much of a honeypot/target to invaders.

fsk:

There's a better approach than moving to an island and setting up a free market there.  Start a free market trading group where you live now.  You'll be an island of freedom surrounded by a hostile State.  If you're stealthy, you may succeed.  That's the whole point of agorism.

The point of an island would be to get rid of any form of interventionism. However I wouldn't dismiss your option as well - There can be good reason for people to get organizes WITHIN a hostile regulated society. 

fsk:

If you're a small group of people on an island, that's too much of a honeypot/target to invaders.

 But that's visible and may demonstrate kind of a distance...

 

 

Im loving this thread so far. I read about a "LETS" system which seems flawed to a degree. As stated above a means of commerce and exchange of goods pretty much makes a monetary system a natural occurance. The same I believe holds true of some sort of government and law.  I am all for personal liberty and freedom, but at the same time believe that a certain level of law needs to be intact as well as a major level of trust and respect. 

Now, Moving forward as someone else mentioned perhaps purchase, or gain control of property within a foriegn state and bring wealth there.  I know that there are many Austrian theorists who believe in a gold standard, freedom, and liberty such I do. In turn the majority at this point in time most likely have gold and silver holdings in order to protect their wealth.

It would be intersting to put the theories to test and band together and form a new nation,

at minimum It would be an interesting topic to discuss theoretically.  Ron Paul recieved over 1MM votes, and raised millions of dollars, imagine if the donators had the opportunity to take part in the purchase of a new nation with different laws and economic freedom. A nation built on strong and steadfast economic principles.  a million people is not a few ? And their would possibly be many many more.

I have been reading alot about the American Experiment, and it is obvious how incredibly different the nation is today from when it was founded...IS it end game for the US, it seems the corruption and propaganda runs so deep that most just accept their fate or worse yet  don't even care. I have not given up on the US but I feel the US has given up on me and itself.

So theoreticaly can it be done ? Has it ever been done, the purchase of land with the intent from day one to form a nation ?

What if the nation was small enough that it could viably support itself, but would be essentially worthless to another nation ? No strategic airstrip, not natural resources such as oil, not enough people to make a dent even if taxed at 100% ?

 

Thanks to all who comment and post opinions in advance

 

 

Two things to consider - many people of greatly diverging political beliefs supported Ron Paul. Not all were libertarians, and I'd doubt that even most were. Another thing is, an area with a valuable resource also has a leverage of sorts - it can promise to trade it with individuals in other nations, provided they leave it alone. Of course, having nothing worth taking is also a good way to be left alone, I suppose.

-Jon