[rangerone314]

I have an idea: instead of fiat currency, and instead of basing a currency on gold or silver which are limited, how about fixing a currency to the value of a ratio of a group staple foods, like corn, rice, wheat and potatoes?

Thus you would never pay $1,000,000 for a pound of potatoes, due to hyperinflation.

[Cloud9]

Interesting idea. Sort of a barter system but using paper. How you you peg the currency to the supply. I think even in a crash, paper money which some have said is only 3% will retain some value. I read some where that even during the Russian Revoluton old Romanoff paper was still honered because there was so little real currency in circulation.

[rangerone314]

Interesting idea. Sort of a barter system but using paper. How you you peg the currency to the supply. I think even in a crash, paper money which some have said is only 3% will retain some value. I read some where that even during the Russian Revoluton old Romanoff paper was still honered because there was so little real currency in circulation.

I was envisioning something like the SDR
http://en.wikipedia.org/wiki/Special_Drawing_Rights

but instead of using basket of currencies, have the values pegged...
like 1 credit gets you:
1 lb of potatoes + 1/4 lb of wheat + 1/2 lb of rice + 1/4 lb of soybeans.

[Chuckmak]

Sounds like an interesting proposition.

[mattduke]

The market did not select those items for use as money because they are consumed and they rot. Tip: never use the term "value" when discussing money.

[Tyler_JC]

I don't think you want to try backing a currency with something that fluctuates that dramatically.

There are 3 purposes of money.

1. A medium of exchange.
2. A unit of accounts.
3. A store of value.

Yes, you can use food as a medium of exchange. But it's a pretty lousy medium. My bike for your barrel of flour?

Unit of account stems from the store of value. If the store of value function breaks down, measuring your balance sheet in WheatDollars is foolhardy.

So it comes down to number 3. Is food a good store of value?

The answer is obviously no.

[rangerone314]

I don't think you want to try backing a currency with something that fluctuates that dramatically.

There are 3 purposes of money.

1. A medium of exchange.
2. A unit of accounts.
3. A store of value.

Yes, you can use food as a medium of exchange. But it's a pretty lousy medium. My bike for your barrel of flour?

Unit of account stems from the store of value. If the store of value function breaks down, measuring your balance sheet in WheatDollars is foolhardy.

So it comes down to number 3. Is food a good store of value?

The answer is obviously no.

The market did not select those items for use as money because they are consumed and they rot. Tip: never use the term "value" when discussing money.

The PRICE of food has fluctuated but has PRODUCTION declined dramatically? I'm assuming are producing enough food for people to consume. I suggested using a basket of staples whose internal composition can be changed (just like the composition of the SDR basket changes) if there is a major failure of a certain crop.

One would not want to use food as the actual medium... just paper currency.

Even when currency was backed by gold, I don't think you saw too many people trying to purchase bread with gold bars. There is not enough gold to go around to back a currency, but there is enough food.

If there are people there is food, unless you have starvation. And if you have mass starvation, being able to redeem your food-backed dollar is rather academic. There is not enough gold to go around to practically back currency, so it doesn't matter that gold doesn't rot.

I also find it amusing if a rich person tried to redeem the dollars for a few tons of food. It might be practical for middle class or poor household. A Federal strategic food reserve of staples is not a bad idea, and would obviously be-rotated to keep it edible. Pegging the value of a dollar to a basket of foods is not unimplementable.

It would have the advantage of stabilizing agricultural prices (by definition) and would probably help smaller farmers more than large agri-corps...

[rangerone314]

Sounds like an interesting proposition.

Another possibility would be to peg currency values to a basket consisting of energy or energy commodities, like a mix of electricity, gasoline & coal. But I'm not sure I like that idea as much as food.

[nobodypanic]

Sounds like an interesting proposition.

Another possibility would be to peg currency values to a basket consisting of energy or energy commodities, like a mix of electricity, gasoline & coal. But I'm not sure I like that idea as much as food.

i think that's a better idea, since imo that's what money really represents.

[rangerone314]

Sounds like an interesting proposition.

Another possibility would be to peg currency values to a basket consisting of energy or energy commodities, like a mix of electricity, gasoline & coal. But I'm not sure I like that idea as much as food.

i think that's a better idea, since imo that's what money really represents.

It does represent money better... although...
There are 3 purposes of money.

1. A medium of exchange.
2. A unit of accounts.
3. A store of value

Depending on the energy, it may or may not be used as a store of value... on the other hand isn't #3 at least part of what has gotten us in to trouble?

If we are indeed looking towards a sustainable future...

[PrestonSturges]

You're on the right track, but if you rely on a commodity like wheat, the more you have, the less it is worth. In a drought year, the value of your currency would go up, even though you'd have less.

Even with government price supports, commodities go up and down 50% in value.

However, we might just be able to pay our debts in commodities, swapping them for a currency or basket of currencies that will be more stable and valuable than the dollar.

That raises the unpleasant prospect of domestic rationing, but that's where we were in ww2. Sacarfice on a similar scale may be needed to pay down our misadventures in Iran and Afghanistan.

[nobodypanic]

Sounds like an interesting proposition.

Another possibility would be to peg currency values to a basket consisting of energy or energy commodities, like a mix of electricity, gasoline & coal. But I'm not sure I like that idea as much as food.

i think that's a better idea, since imo that's what money really represents.

It does represent money better... although...
There are 3 purposes of money.

1. A medium of exchange.
2. A unit of accounts.
3. A store of value

Depending on the energy, it may or may not be used as a store of value... on the other hand isn't #3 at least part of what has gotten us in to trouble?

If we are indeed looking towards a sustainable future...

i think you can cover #3. e.g., take that barrel of oil your savings represents and bury the sucker--SPR style.

[3aidlillahi]

Sacarfice on a similar scale may be needed to pay down our misadventures in Iran and Afghanistan.

I have a job interview this Thurs., can I borrow your crystal ball?

[PrestonSturges]

Sacarfice on a similar scale may be needed to pay down our misadventures in Iran and Afghanistan.

I have a job interview this Thurs., can I borrow your crystal ball?

Oooopsies, I let that one slip. I am going to be in so much trouble with the Illuminauti.

[Caffeine]

The PRICE of food has fluctuated but has PRODUCTION declined dramatically?

Time for me to link this article:

Catastrophic Fall in 2009 Food Production

The world is heading for a drop in agricultural production of 20 to 40 percent, depending on the severity and length of the current global droughts. Food producing nations are imposing food export restrictions. Food prices will soar, and, in poor countries with food deficits, millions will starve.

[Pretorian]

The market did not select those items for use as money because they are consumed and they rot. Tip: never use the term "value" when discussing money.

well they were used as money for millenia neverthless. Cocoa beans in central America, cattle everywhere, vodka in Russia.