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I doubt the baker's redeemable unit is going to be worth much outside of a small geographic area - in the same way that Scotland's redeemable energy units won't be of interest in Japan.

This may be a minor problem when gas is in one place and people who need it are in another, while grain and rice are in a different area again.

Dollars and euros, ugly as they are, are truly universal. Dollars can be exchanged for real stuff almost anywhere on the planet.

But let's say I turn up with my redeemable gas unit in Africa. What use is it to anyone if it's part of a confusing economy of thousands or even millions of different possible units, each of which - presumably - can only be traded electronically?

You have to have a single core currency, or you have nothing. And that currency has to be in a physically tradeable form to make it accessible for the majority of the world's population who don't have access to electronic banking.

Everyone else needs access to a single currency pool. If I have a wide investment portfolio of redeemable units in different goods and services, I'm hardly going to be willing or able to trade in each individually every time I go the store to buy some lettuce or shoes.

If there are interfaces between units and everyday currency, parasitic speculation, arbitrage and bubbles become at least as inevitable as they are today.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Feb 20th, 2009 at 10:07:17 PM EST
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