The Future of Money

Money has been with us for over two thousand years, but its basic form has changed from gold coins in Ancient Rome, printed paper in ancient China to the crisp Banknotes and coins of today. The problem is, the way we value these banknotes and coins has changed, since ancient times, and this could change in the future.

Printed money is only really valued at a value we accept, or in the international Marketplace, Traders and Governments accept. The value of money technically is rather like Stocks and shares; they could have high values one day, and then like the Share prices of many large Corporations become worthless overnight.

This is the most worrying trend for many cash strapped Governments in this current crisis. As the value of their Nations property, and Stock Markets continue freefalling, and emergency cash is injected into an ailing economy, to stop the freefall. How are they going to raise money to fund this emergency treatment of our economy?.

Traditionally printing money by selling guaranteed Government bonds is the answer, failing this an emergency loan from the IMF. However the IMF itself is primarily funded with money from developed Countries, the same Countries today that are going to be short of money, if any bailout or stimulus packages fail to work.
Printing money may be an answer, but that leads to inflation and if the economy fails to recover, and even freefall again, a devalued and useless currency.

Already the British Government have seen the pound drop by as much as 35% to other currencies, before any stimulus packages have started to show positive results. Most British Banks are in reality broke and debt ridden, and now owned by the state. Previously the nations money supply was fed through these banks, in the form of credit and loans. Now these banks in real market terms should be closed down and declared bankrupt. But that would only lead to the real value of the pound decreasing, One reason toxic banks were bailed out.

The USA faces an even bigger crisis, American banks have more debts then their value, and continue to eat up precious public funds. Funds needed to stimulate the economy again, not prop up failed banks. The USA owes up to 80% of the nations estimated GDP as interest bearing debts.

The only way the Government can raise funds and prop up the dollar is by raising funds through selling interest bearing Government bonds, whilst printing new dollars based on the value of these bonds. If the current economic plans fail or even slightly succeed, the US Government may be forced to issue more bonds, that would lose value, as the dollar could naturally devalue against stronger currencies.

So what are the options if these plans fail to prop up or stimulate the old economy?

One idea comes from the realms of Science Fiction, Credits. Simply by replacing traditional currencies with credits, creating a cashless society could eliminate the need for a national currency.

Implementing Credits would be easy considering that many Nations today do own their banks, whether they have been nationalized or partly bought out by Governments. Credits are awarded to every citizen, who in turn have a national banking card issued by their governments.

Determining the value of these credits would be straightforward as banks are mainly public not private institutions. Therefore Citizens of a Country could see their savings or debts automatically changed into credits, without too much official legislation.

Abolishing cash money would change the economy overnight, as struggling Governments could save their economies from freefalling. It also cuts off the "informal economy," and allows Governments to 100% control the real money supply.

One drawback with credits would be determining the international value of them against a currency. Stronger Economies running well in times of recession, grow stronger and would probably disagree with trading with these countries, unless their still was an International Currency market.

One thing is certain, if bailouts and stimulus packages fail to stop a freefalling economy, then our Governments will be forced to seek more drastic and unconventional methods to save what's left of the old economy. Leading to a change in economics, that could mean the eventual abolition of money as we know it.