MyCHIPs Digital Money
Current Barriers
The United States economy has been relatively friendly to the creation and enforcement of private debt. However, there are a number of existing regulations that could cause potential problems. For example, home mortgages are typically much more tightly regulated than are loans for commercial purposes. So questions arise about the extent to which you might be allowed to use your own home to create your own liquidity in a MyCHIPs network.
Historically, there have been exceptions to allow a private home seller to become a creditor on a home loan. One would expect there should be similar flexibility for the buyer, or new owner to create his own credit facility if he wants to. But the problem is whether the creditor can effectively collect on the debt created on an owner-occupied home. If the courts won’t support him, ultimately the credit of the borrower or issuer is what gets hurt.
Each state has its own unique rules meant to protect debtors from predatory creditors. This is a valid concern and should be thoughtfully considered in all jurisdictions. But a mistake too often made, is to simply prevent private or unlicensed parties from becoming rightful creditors. Another common error is to make it more difficult for creditors to collect or foreclose on certain kinds of debt.
Ironically, regulations like this are supposed to protect home owners and other debtors. But in the long run, they only restrict people from issuing their own private credit without going through a government sanctioned and licensed lender. It probably shouldn’t surprise us that these government regulations serve to protect the large, institutional providers of debt from smaller, would-be competitors.
Many countries have laws reserving the exclusive right to create currency for the government itself. But this is often misunderstood when considering the topic of new money. For example, in the United States, it would not be a good idea to mint a coin, or create a paper note which claims to be a dollar. The Constitution delegates that power exclusively to the federal government.
Interestingly, the Constitution also explicitly prohibits state governments from issuing their own debt. But nothing in the founding documents prohibits citizens, or groups of citizens, acting together as a corporation, from trading debts and obligations among themselves. These obligations can even be measured in dollars and cents. They just should not claim to be US currency, themselves.
Other current regulations we should consider have to do with employment law. Perhaps the most obvious case is a minimum wage requirement. If the law requires an employer to trade a specified number of dollars for each hour of work, this could certainly be interpreted to limit one’s ability to trade time credits instead. Furthermore, a number of increasingly onerous regulations define who can work by the hour, who can earn a salary or commission, and how these various types of pay are to be interpreted.
Clearly many believe these types of regulations protect working people from unfair practices by employers. More likely, they have evolved to facilitate and enhance the collection of taxes. And like lending regulations, they often end up hurting the very people who need protection the most.
For example, minimum wage laws effectively render certain people unemployable, such as those who are inexperienced, less productive, or mentally or physically challenged. They also create incentives for employers to use more automation such as robots and computers, rather than hiring people to do a job. They push companies to hire from cheaper foreign markets, rather than employing the citizens of their own country. And they make it difficult for new, emerging companies to hire at all, due to the complexity of complying with the intricate web of federal and state employment regulations.
In short, too many regulations on employment ultimately hurt employees and destroy jobs. They cost companies money, and that just means less money available to pay employees. And that is not a good thing whether you are working with old or new money.
Finally, legal tender laws are not helpful to the idea of a free, private money market. Such laws are intended as a way of forcing everyone to use the official, state-sanctioned currency.
But such force should not be necessary in a free economy. And it is even more objectionable when the issuer is not the government itself, but rather a private business, given the power to operate as a monopoly by the legal tender laws of a complicit government.
The only party that should be required to accept government notes is the government who issued the notes, itself. In other words, governments can and should issue their own money—just like everyone else. They can use it to buy the things they need. And their citizens can use it to pay their taxes, thus redeeming the original obligation.
If the government acts responsibly, its notes will become more valuable, and in demand. Likely, it will not have to pay any interest on its own debts because people will be willing to hold the money for free. But if the government spends beyond the ability of its citizens to redeem through taxation, the currency will fail—exactly as it should.
But with a healthy and robust MyCHIPs network in place, such failures do not have to harm the economy—even the economy of their own country! Rather, they will be more likely to stimulate a change in government, to a form more friendly to sound economic principles.
Certainly, if MyCHIPs is developed and begins to gain popularity, we can expect those with a vested interest in old money to resist the changes. We should expect to see a whole new set of laws and regulations meant to restrict the free exchange of private debt. But free people in free countries should ask themselves if they are really willing to let a big, government monopoly continue to dominate their economies by controlling their monetary policy.
They should consider whether they want to be free to engage in voluntary associations with people and companies of their own choosing—not only in their own country, but also other areas of the world.
And they should insist on the best kind of government action: the fair and objective enforcement of private contracts freely made between competent and informed parties.