Thorsten Polleit’s recent essay, The Road to a Single Fiat World Currency, explains the dangers of the current trend in the West to eliminate cash and create a world fiat currency in the place of national fiat currencies. The process is well underway, with the formation of the euro as the most notable example. Polleit explains the benefits to government at the expense of the people and why a world central bank would lead to totalitarianism.
Polleit speculates that Bitcoin and similar cryptocurrencies have the potential to compete successfully with fiat currencies, but that they have a long way to go. Of course, Polleit considers commodity currencies, such as gold and silver, to be the ideal money. However, I think he does not give sufficient consideration to the effort of Russia to break away from dependency on the Western currency regime, whatever form it may take, and develop an alternative international settlement system based on gold. The gold-based system has the promise to move from international settlements to true gold backed domestic currencies.
We in the West may look with envy at the rapidity with which such a gold-backed system will provide the foundation for the rapid industrialization of what we will simply call the “East”: Russia, China, India, the Middle Eastern nations, Brazil, South Africa, etc.
There’s nothing like real competition to reveal one’s own limitations. The West may decry the lack of political rights in the East, but that does not mean that we should shun a better currency system that is developed there. Alasdair Macleod has written extensively and with deep insight into this alternative currency system on GoldMoney.com. It may be the case that while the West’s leaders are distracted by relentlessly chasing a world fiat currency, the East will pass them by with one that has the benefits of being honest and simple. Rather than chain the West to a world fiat currency, we may see some Western nations breaking away from the Keynesian inspired fiat system to join the East’s Misesian-inspired gold system.