Fiat Currency

During the lead-up to the American election I was really excited by a Republican candidate named Ron Paul. He strictly supports the constitution and opposes the Federal Reserve. If I was American, these would be the pillars of my political beliefs. The constitution represents the rights and freedoms of each citizen, while the Federal Reserve represents the domination and subjugation of the elected government by banks and hyper-rich individuals. While I disagreed with Paul on certain social issues, he seemed to be the candidate who would present America and the world with the most optimistic and realistic leader. Alas, twas not to be. The Republican faithful have long abandoned the small-government, anti-war, true capitalism set of values that were the party's roots for so long.

Today, I'm posting two relevant pieces authored by Ron Paul. The first is a video in which Paul responds to the current 'bailout' of the mortgage industry (and the subsequent reporting of all credit card transactions to the IRS). The second is an article written by Paul about fiat currency. As I've grown older I've become more and more interested in economics. How do governments actually work? How does money actually work?

I'll leave you with a thought experiment I've been working on for a while. Imagine that there is a global, or at least North American economic collapse. Suppose that you live in an area where people still produce something with their labour (ie: food, merchandise, etc). How would you establish a new currency? How would you distribute the first notes? How would you increase or decrease your money supply? Who would control these things?