RidleyReport: Yet another alternate currency arises in New Hampshire

[John Edward Mercier]

If everyone went electronic, they wouldn't even need to print. If everyone dealt only in coin, they wouldn't need to print.

[mappchik]

}{ Two faces or a goblet?

[yonder]

I was watching this travel show the other day, it was on the island nations of Micronesia.

When they got to the island of Yap, I thought it was pretty f'ing cool.

They had these giant stones that were carved out into wheels.  The stone was not even from Yap, but from another island.  The stones were the basis for their monetary system.  The value of the stone was supposedly determined by the size of the stone, the quality of its composition, its cut, how difficult it was to transport to the island, etc.  The stones were held in escrow in an unguarded "bank" which was just a clearing really where the stones were standing for all to see.  Owners would hold title to their stones and everyone on the island pretty much knew how much wealth you had.

I don't know the details of how their system worked but apparently it's still working for them after many centuries of use.

[Pat McCotter]

Stone Money from Wikipedia
In 1874, an enterprising Irishman named David O'Keefe hit upon the idea of employing the Yapese to import more "money" in the form of shiploads of large stones, also from Palau. O'Keefe then traded these stones with the Yapese for other commodities such as sea cucumbers and copra. Although some of the O'Keefe stones are larger than the canoe-transported stones, they are less valuable than the earlier stones due to the comparative ease in which they were obtained.

[David]

Still thinking about this.  both the penny and the nickel are now worth more than their face value.  They are the only non fiat currency the US gov't authorizes.     They are actually making them at a loss.  While it is illegal to melt them down and sell the metal, it is not illegal to collect coins that the gov't makes at a loss to 'give to a good cause'.     I think I will start a savings account of nothing but pennies and nickels, I will spend the dimes and quarters. 

Relavant to this thread, the nickel achieves everything that the hampshire does, and it does not currently profit the gov't at all, if we use them.  Plastic bank rolled nickels are in packs of 2 dollars, heavy to carry around, but still worth something.  Pennies are also heavy, but only worth 50 cents a roll. 

Watch the video clip.
http://www.coinnews.net/2008/02/10/is-the-us-penny-and-nickel-worth-keeping-60-minutes-asks-3915/

Cross posted here.  http://nhunderground.com/forum/index.php?topic=13305.0

[Russell Kanning]

that is funny ..... for small change ... just use the stuff from the feds and cost them money

[John Edward Mercier]

If you use them, they go back in circulation and the government no longer needs to mint new ones.
By collecting them, you have a cheap way of forcing the government to do something that it does not wish to.

[dalebert]

If they weren't heavy and awkward to save, that would be tempting. If you think there's any chance they'll stop minting pennies, think that would make them more valuable? Prolly not so much. There's so many of them. $2 aren't worth crap even though they don't print them any more.

[Ron Helwig]

I still say we've been doing things backwards. The heavy stuff (coins, preferably of Cu, Ag, and Au) should be the big money items, and the light ones (paper) should be the little ones.

Imagine paper certificates in 5, 10, and 50 cents. Maybe go as high as a whole dollar! Anything higher, use metal.

The Hampshire could be used for this, and/or someone could start a real bank and issue warehouse receipts in various fractions of real metal that has been deposited. (Shire Silver does not want to be that bank, although some of its principal participants might want to be involved.)

[Dave Ridley]

i cant wait to own some hampshires...

also: nickels are easy to collect....just go to your bank and ask for a 100 dollar box...they almost always have one.   it's maybe 20 pounds but takes up limited space.  it is one of the few items that can be a hedge against both inflation and deflation

[Dave Ridley]

also the bank will take the nickels back no prob

it may have to be your own bank...but banks that are not your own will usually help out too

head to http://www.realcent.friendpages.com/ if you want to learn more about penny and nickel hoarding (it's not exactly hoarding but those guys call it hoarding and they do it by the ton)

[dalebert]

it is one of the few items that can be a hedge against both inflation and deflation

Interesting point.

[Puke]

also: nickels are easy to collect....just go to your bank and ask for a 100 dollar box...they almost always have one.   it's maybe 20 pounds but takes up limited space.  it is one of the few items that can be a hedge against both inflation and deflation

Interesting. I might try this.

Are the nickels still made of nickel?

[JJ]

I am going to have some Hampshires printed up in April.  Then we will see what transpires.

[David]

also: nickels are easy to collect....just go to your bank and ask for a 100 dollar box...they almost always have one.  it's maybe 20 pounds but takes up limited space.  it is one of the few items that can be a hedge against both inflation and deflation

Interesting. I might try this.

Are the nickels still made of nickel?

Not completely, 75% copper, 25% nickel. 
http://www.coinflation.com/coins/1946-2007-Jefferson-Nickel-Value.html
The biggest problem with the nickel and penny, is that they are directly tied to the value of the dollar, this of course depresses its value.  Until they become something people want, (hoarded) I doubt their will be a market for essentially a parallel currency. 
The notable problem I came up with the in the hampshires idea, is that of replacement.  Paper of course wears out fast.  It must be replaced.  Of course the cost of replacement must be built into the profit margin.  But as an open source currency, with many potential competitors, it is very possible for one or many of them to undersell me then refuse to replace old bills. 
Coinage lasts for a very long time.  This virtually eliminates the replacement issue. 
If we collected enough nickels, in Keene or in Manchester, is it possible to create enough of a mild shortage for us to break them from the dollar?  I doubt it as long as they are officially part of the dollar structure.  But if the mint were to change the appearance or metal content (and color), then there would be a clear difference in the double nickels.  This will create a very small collectors market for the 'old' nickels, one that we can use to effectively create a metals standard, with its value determined by its collector status, and metal content.  This has happened notably with the 'wheat' penny, and other coinage.  The nickel has been made in its current form, or same metal content for 62 years, and there are billions out there.  If the government changes the metal content, they would be the cause of the break.  We simply exploit it as a metals backed currency that is already in use.   
When could this 'break' from the dollar occur?  The mint is lobbying congress to change the metal content of the nickel and penny now, because they are losing money. 

Why would I waste time with a coin that is worth very little in the grand scheme of things?  Because I am interested in a super decentralized hedge against inflation.  I believe that the gov't will inflate the currency to complete worthlessness, far beyond its historical rate of inflation.  I believe there will be a day, when the nickel is the most valuable thing in a persons pocket. 
The LD guys had a great idea, to market the LD as a currency, not as an investment.  That meant people bought them with the idea that they would spend them, not save them.  That is important, because it attempted to create an infrastructure that was comfortable handling something other than fiat currency.  Checks, later credit cards, have all had to do the same thing.