Steve Baker is the MP for Wycombe
But why are people not allowed to decide for themselves in which currency to transact their business and store their own wealth?
Today, Douglas Carswell introduces a Bill designed to make a range of different currencies legal tender in the UK. It would mean that, with the click of a mouse, people would be able to store wealth and pay taxes in a range of different currencies of their choice.
This is not only about giving consumers and citizens more freedom. Establishing currency competition would help the economy too.
As the Chancellor has told us, our economy needs more saving and investment. However, with inflation running at around 5%, cash will halve in value about every 14 years. Why save at present interest rates?
Currency competition would protect us against inflation. As I have indicated before, inflation has been the pattern of the past 40 years since the Bretton Woods currency system ended. A paper from the ONS, Consumer Price Inflation since 1750, shows the situation starkly:
Money is primarily the means of exchange; therefore, a crucial secondary purpose of money is to store value. For a generation, money has failed to fulfill that purpose. It has been deliberately debauched through the expansion of bank credit.
It's an old and miserable story which must sooner or later end in crisis. In his magnum Opus, Human Action, the economist Ludwig von Mises explained how economic boom and bust is the “unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion.”
“There is” he went on “no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
As Keynes explained in The Economic Consequences of the Peace, debauching the currency through monetary mismanagement robs savers, unjustly distributes wealth and undermines the free market.
For too long, state planners have mismanaged our money. Under governments of both parties, they have – as all planners tend to – got wrong what they were supposed to get right.
Competing currencies would allow families concerned about rising inflation in Britain to plan their financial future using a currency that was not halving in value every 14 years. Businesses concerned about rising prices could protect themselves.
I am proud to be supporting Douglas Carswell's Bill. It is an idea with a sound pedigree. In 1976, Hayek argued that competing currencies would be more practical than a "utopian" European currency. Indeed it was Conservative government policy in 1989. In November of that year, the Treasury published a paper titled An evolutionary approach to economic and monetary union which stated that;
The evolutionary approach maintains national monetary policies within the context of a strengthening ￼ERM, and allows currencies to compete to provide the non-inflationary anchor in the European Monetary System. This approach is centred upon national monetary authorities. It thus minimises problems of political accountability and harnesses the strengths of national monetary traditions to Community objectives. It permits an evolutionary and robust way forward which can develop with the grain of economic and financial integration in Europe.
As the Eurozone continues in crisis and as the Pound continues to lose value at a rate well above target, Douglas is wise to bring forward this measure which could deliver honest money: money which holds its value and serves as the basis for the Chancellor's economy built on save and invest.