"However, they are also far more susceptible to market manipulation which makes me hesitant to see their value as a ‘lifeboat’ currency without heavy oversight."
The stamp scrip system
Turnbull would like to reopen the debates around Stamp Scrip.
Back in the 1930s, Turnbull says, the days of the Fed had looked numbered. During the Great Depression, when there were widespread cash shortages, a frequent response was to create a localised, substitute currency, known as scrip.
Turnbull quotes the economist John Maynard Keynes, who said in a 1923 paper: "The idea of stamp money is sound. Stamp Scrip is neither a store of value or unit of value. Today, official money has no defined value.
"Self-referential markets determine the value of official money on an unpredictable basis that feeds instability and doom loops."
Scrip has been issued off and on in the US by different kinds of entities, such as:
- City governments
- Civic organisations
- Credit unions
- Coal mines
- Post offices
- Railroads
- Steelworks.
According to a paper from the Federal Reserve Bank of Cleveland, more scrip was issued during the Great Depression in the 1930s than ever before (or since).
The FBC writes: "One particular variety tried during the time, stamp scrip, was unusual in that people actually had to pay a fee to use it. In other countries, people had tried stamp scrip schemes with success, but in the US, stamp scrip proved less useful.
"The one aspect of stamp scrip that might make it seem so unworkable to many people—the fee to use it—is not the naïve idea of a quaint era but one that surfaced again very recently, when ways of conducting monetary policy in times of extremely low nominal interest rates were a pressing concern."
Indeed, a bill to design a stamp scrip for the US government itself in the 1930s almost passed through the Senate (which would have meant an end to the Federal Reserve) but was ousted at the last minute by a New Deal bill read aloud to the house, and the rest is history.
Other ideas
Cryptocurrency has been touted as an alternative to fiat currency. Some dentists in Australia accept payment using digital currency. Some homeowners attribute their purchase to lenders who accepted bitcoin.
But it's not regulated and it cannot hold a steady value - consider the huge volatility in prices. As a result, it cannot hold the trust that fiat currencies do.
According to Pirrie: "When bitcoin was created, it was meant to be an alternative to central banking. However, it failed as a payment solution and as it’s borderless it was easily taken advantage of."
