Mike Hampton and Dominic Frisby on sound money and currency competitionGoldMoney host Dominic Frisby interviews trader and author Michael Hampton.
Frisby: The other beauty of global metallic money is that it is hard for people to print. That would be one independent currency.
Frisby: I have never bought a bitcoin. It is one of those things I keep meaning to do so, just on principle really. I don't understand the algorithm whereby bitcoin is created but I'm assured it is legitimate. So Bitcoin is another independent currency.
Hampton: But I think whatever currency you have you need some backing for it. Because, partly it's a question of confidence. The other is if the currency starts to get wobbly as we are seeing in various currencies now there is a way of taking that wobbly currency and transforming it into something else, whatever is backing it. So if you have gold backing, then you can convert it into gold and take it to another country which is less wobbly and spend it there. So you probably need backing for the currency of the future.
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http://www.youtube.com/watch?feature=player_detailpage&v=FcixJcObCFc#t=861sFrisby: One form of independent money is metal. Another form is Bitcoin. If some institution were to follow Hayek's book on competing currencies, the denationalization of money, any old institution can issue any old paper. But if the marketplace decides that their happy to use that as money [interrupted...]
Hampton: Do you mean like Ron Paul's idea of competiting currencies?
Frisby: I suppose I do. I'm a big believer in the power of the free market and the free market comes up with natural, organic solutions to things rather than having it imposed on you.
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Frisby: Why don't you outline Ron Paul's competing currencies idea.
Hampton: At its most basic level, he'ld like to allow people to use not only dollars in settling transactions in commerce in the U.S., but also gold and even other currencies as well. The idea is that for some reason people don't want to store their wealth in dollars they can store it in gold and use that currency for their businesses for their economic transactions.
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Frisby: We need currencies that are international and non-national. The big issue comes, with competing currencies, in tax. Government wants payment in its national currency.
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http://www.youtube.com/watch?feature=player_detailpage&v=FcixJcObCFc#t=931sHere's was the most interesting comment, in my opinion:
Hampton: The idea of backing up the currency with something other than a dead asset like gold.
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Hampton: One idea that I've seen kicked around [..] would be to actually store wealth in equities. So you might have for example a currency whose value is linked to the S&P 500 or the FTSE 1000 and then people who are putting money into that asset effectively are putting more money into the stock market where it can help generate wealth for the country.
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Frisby: A problem with that is that it might encourage malinvestment and excess speculation.
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http://www.youtube.com/watch?feature=player_detailpage&v=FcixJcObCFc#t=1285sThe entire interview is well worth the time to listen!
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http://www.youtube.com/watch?v=FcixJcObCFcFrisby is crowdfunding his book, Life After The State:
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http://unbound.co.uk/books/life-after-the-state
