Wednesday, May 25, 2016

Money In Hong Kong

That title is a little misleading, for I will be talking mostly about currency in Hong Kong, which is not money.

What most people call money, the folding stuff used when "paying cash" is really currency, that is the stuff flowing around from wallet to till and banks and back out again on any given day.

In USA in essence the government controls all that, although even in the USA the legal fiction is all that is in private companies hands.  In some ways a larger fight in USA than slavery, the government involvement in that legal fiction has been with us all along.

In Hong Kong they do it as we used to do it in USA, and that is private companies issue competing currencies circulation in Hong Kong at the same time.  So when you pull a twenty out of your wallet in Hong Kong, it could be from any of several companies. it's all good.

Now it gets even more interesting.  You can pull out any other major currency in Hong Kong, say a US$, C$, JPY, EU, and use that as well.  Just about every place will take them, since just about everyone knows all exchagne rates at any given time.  I've paid US$ in shops, to cabbies, etc.  Yes, there are money exchangers on every corner, but they rip you off, and any local can do much better than the corner rate.

Now in Hong Kong they know the difference between money and currency, gold & silver and folding paper notes.  So one day I went looking for money, looking to buy gold coins.  Now my job is to find out sources, indeed the best sources, and I cut my teeth in Hong Kong.  So I was astonished when I could not find a source in Hong Kong for gold and silver coins.

What a few banks will do is sell Chinese minted gold and silver coins, and usually on some sort of program. So of course you can get them, in Hong Kong you can get anything, but as the most free market place on earth there was little demand for money, gold and silver?  The mind boggles.

Upon reflection, a couple of real world free market realities:

1. As long as people are willing to accept currency to cancel debt, why would you ever pay with money, gold and silver?

2. Vendor financing is rampant in a free market.  The retailer extends credit to the end user.  The wholesaler extends credit to the retailer; the manufacturer to the wholesaler, the materials processor to the manufacturer, and so on. Who needs currency, let alone money?

3. Gold and silver is for end-of-relationship deals, when the seller cannot trust the payment of the buyer.   This is why countries buy and sell using gold, as when the Germans paid in gold in Switzerland across the table form the Americans and British who were selling the nazis war material.  Extreme circumstances.

4. Yes, gold is a store of value, but why store value?  Since the Hong Kong market is so dynamic there are endless opportunities in which to invest and grow any value, why sit on any value?

Yes, we need to be on a gold standard for peace, justice and prosperity, but that does not mean we need  the hegemon to enforce it.  It enforces itself if the hegemon does not legitimize fractional reserve banking or usury, or both.

People imagine a free market means everyone is paying in fold and silver coins.  No.  In fact, the freer the market, the less of either you see.  As Spooner noted, ore is minted into coin, and as the price goes down it is melted to be used as plate, decoration and jewelry.  As the price goes up, the plate, decoration and jewelry is melted into coins.  This assures the amount of money is always exactly right.  At teh same time, since credit is extended by private parties to private parties given their own risk analysis, the amount of credit open is also always exactly right.

We live in war, poverty and injustice because we let a couple dozen people in Capitals decide what the right amount of money, currency is out there, with usury and fractional reserve as the levers.

The answer is anarchy, and the closest you can get to anarchy is self-employment.

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