When you water your brain good thoughts grow, that is why people have shower thoughts. Such is the inception of the subject of this post: The Bread Standard.
The root of the thought was this: I recalled my introductory accounting classes where the question of “what is money” was brushed aside in favor of “how is money used”–the answer being ‘as the means of exchange’. What money is, is very important because it reveals the philosophical underpinnings of the economy. Zippy famously tried to answer this question by saying that money is tax vouchers. I disagree, and as an alternative I suggested that money is a unit of the delegated authority of the sovereign.
What follows from this is that I wanted to think of a simple analogy or otherwise how to explain my model of currency to a child, or someone uninterested in finance. I began by suggesting the starting point is that the Sovereign is responsible for providing all the needs for his subjects, but because that is impractical he issues vouchers redeemable for some unit of value. Issuing a token that says “One Dollar” on it doesn’t mean much in a vacuum, this is why proponents of the gold standard try to substitute Gold. It makes the logic go something like this: This slip of paper that says “one dollar” is tradeable for one ounce (lets say) of Gold. So now you are not trading “dollars” but you are trading gold by proxy. But what the Sovereign is really concerned about is the necessities of his subjects, so what if he made the slip of paper that says “one dollar” tradable for one loaf of bread?
The great thing about a Bread standard is that it lines up with the idea of “purchasing power parity“, which compares world currencies by comparing how many local bucks it costs to buy some standard commodity–bread being a common comparison. If it costs $5USD to buy a loaf of bread in America, and it costs ₱500PHP to buy a loaf of bread in the Philippines, then $5=₱500, and a ‘colloquial’ exchange rate can be reasoned. If we had a Bread Standard, then 1 Bread Buck would always buy one loaf of bread, so that would make comparing bread bucks to other countries relatively simple.
Within a country like, for example, Scootland, Bread Bucks could be valid stand-ins for bartering with loaves of bread. If you need a wagon, if you need a mule, if you need a car, if you need gas–how much current or future bread would it be worth to you to trade for it?
This calculation makes the economy begin to make a lot more sense. It explicitly refers to the Sovereign providing necessities for subjects, it expresses what the basic necessity of the subjects is (bread) and it facilitates trade so that you aren’t just trading hypothetical “Scootbux”–how do you value that?–but you are trading the authority to buy for yourself one loaf of bread.
I don’t know that I have succeeding in creating a simple explanation, but I really like the idea of a Bread standard.
What follows is just a fun (for me) breakdown of Bread based currency:
฿1 Sovereign, colloquially known as a Loafer
߿1 Tenth, colloquially known as a Slice
10߿ make ฿1, or 10 Slices to the Loaf
2߿ are known colloquially as a Sammy
AMDG
Times-Dispatch of Vichy Earth 