Labor-Backed Currency: Historical Curiosity or Viable Concept?


Imagine: Depositors in principle allowed to queue up at bank wickets to redeem their dollars for labor, rather than for gold, or at least to feel reassured knowing that something very valuable, viz., labor, is backing their money, instead of worrying that they are saving and being paid fiat money backed by nothing (physical) they can identify, save official assurances and common consent that it is money. Under this scheme—which, as will be detailed below, has been implemented more than once in world economic history and on a massive scale—money becomes what in principle, if not in daily practice, amounts to a labor voucher, receipt, invoice, bond, I.O.U., or coupon.

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Labor-Backed Currency: Historical Curiosity or Viable Concept?

What you will learn in this eBook

Backing up the Dollar's Backing

Is it not obviously, although unofficially the case that the modern U.S. dollar (no longer backed by or redeemable for gold) is clearly being backed by something—especially in light of its current strength? Whether that "something" is what remains of formerly universal "safe-haven" trust in the dollar, the dollar's privileged world reserve or refuge currency and petro-dollar status, or something else, the fact is that the dollar is currently strong in FOREX markets.

But suppose that drastically changes (for example, as other nations lobby for its replacement as the world's petro-currency) or the dollar otherwise collapses, perhaps triggering Weimar-type hyper-inflation. Against this backdrop, modern proponents of a labor-backed dollar may cite and have to evaluate historical and local experiments with it around the world, in order to state their case for an officially labor-based dollar (or other currencies).

About the author

Michael Moffa
Michael Moffa
Michael Moffa, writer for Recruiter.com, is a former editor and writer with China Daily News, Hong Kong edition and Editor-in-chief, Business Insight Japan Magazine, Tokyo; he has also been a columnist with one of Japan's national newspapers, The Daily Yomiuri, and a university lecturer (critical thinking and philosophy) in Canada, China and Japan.
Labor-Backed Currency: Historical Curiosity or Viable Concept?