On the subject, I see the fair currency as a law in the sense of hayek or an institution in relation to the North. What legal tender offers us is the confidence that the means of payment will be one and not the other, unless otherwise agreed with the other party. It allows us to evolve in a circle of trust and determine the consequences of our actions, in this case sales, loans, credits It is a very useful currency, as many coin-operated machines such as washers/dryers, candy machines, airport cars, and parking meters only accept rooms. Sweden, the first country without legal tender? When we talk about legal tender, we are referring to the nature of money, by which its use as a means of payment is reinforced by laws, so that no one can refuse to accept the national currency as a means of payment in the national territory. In my opinion, the problem is not that it is the state that imposes the forced legal tender, but that, with excessive spending of the money supply, this leads to a devaluation of the currency – the same as that which is imposed – which manifests itself in an increase in the prices of goods and services. that this price increase in turn leads to an increase in public spending, which in turn spends more money to reduce the resulting imbalances, thus creating an “inflationary spiral” (a situation in which inflation rises mainly due to the same propagation mechanisms) With the adoption of the “Legal Tender Act” in 1909, banknotes issued by both the Bank of France and the German Reichsbank became “legal tender”. Thus, any obstacle to financing the First World War by loans was removed and other nations followed suit. As the mathematician and monetary scientist Antal Fekete argues, banknotes were used to achieve consistent monetization of debt. Forced legal tender money, combined with excessive spending of the money supply, leads to the devaluation of money, which manifests itself in an increase in the prices of goods and services; And, in turn, this rise in prices leads to an increase in public spending, which in turn generates new issues to curb imbalances and thus an “inflationary spiral”. Today, the Scandinavian country is evaluating the possibility of being a pioneer again, although this time coins, banknotes and all physical expressions of money are completely eliminated and replaced by credit cards, subscriptions via mobile phones and payment gateways via the Internet.
As Professor Fekete argues, the expression “legal tender” would be an oxymoron, “since a promise to pay, which is also the last form of payment, cannot be a promise, but a decree with the force of law”. The Denationalization of Money – Friederich A. Hayek Ignacio Lagos, 860840 Abstract As the title of the article suggests, Hayek proposes the denationalization of money. That is, to free money, like any other commodity in the market, free competition between private lenders who strive to provide high-quality money to satisfy the needs of the public and not be excluded from the market. Thus, in the end, they would replace poor quality parts with better ones. Hayek admits that his position is radical and may even seem far-fetched, but this is because rulers throughout history have led us to believe that the issuance of money is an attribute that belongs exclusively to them, and have insisted so much on this point, for their own convenience, that it seems to us an indisputable fact today. But for the author of this text, if people could notice the price they pay for periodic inflation and instability because they only have to use one type of money, and consider the advantages of choosing between several currencies, they would certainly find the price excessive. The thesis of the text itself is really new.
The vast majority of countries with constitutions regard as exclusive the power of rulers to mint money and fix the value in relation to the rest. I am impressed by his concept of issuing money for the benefit of the leaders of the modern state, because Hayek does not claim at this stage that they spend money to keep it in their pockets, but alludes to the issuance of money as a method to satisfy the urgent needs of the population and thus monopolize the votes. But without taking into account that in the long run, this issuance of currencies will harm the currency and the economy in general. It is interesting, as the author points out, that leaders find themselves in a difficult situation, where they spend money at the expense of the long-term economic future or lose the support of the population. I think this can be seen in the history of Argentina, where the most popular leaders were those who made large tax expenditures supported by the inflation tax. But if that is the criticism, then the criticism is directed not only at those in power, but also at people who demand higher public spending and ignore the economic consequences that this would entail. I think Hayek`s analysis forgets that the existence of independent central banks theoretically limits the government of the day to issuing currencies for political purposes. That corruption and clientelism in some states mean that the theory is not put into practice does not necessarily mean that the theory fails.
I believe that Hayek is a trigger for rethinking the current system of issuing money, but it is undoubtedly an issue that should be discussed with great sensitivity, because we are talking nothing more and nothing less than seeing in whose hands lies the power to print banknotes.
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