Goods warrants and scrip lie ahead

The Fed may or may not succeed in reviving the credit system. In the immediate future, 6-18 months, it appears unlikely it can. The situation is like that of 1930-32 when many banks failed and credit disappeared. In this case, the banks are there but not functioning. There is not much difference.

In the 1930s and at other depressions in the past, the free market revived credit outside the banking system by using goods warrants, certificates, railway money, tickets, vouchers, and scrip. In international trade, shipping is now stalling and letters of credit from banks slowing down to a crawl. They need to be replaced in a hurry by other forms of credit to avoid the depression. If not, businesses will slow down and layoffs will increase sharply. The legal tender law needs to be repealed immediately. Ron Paul introduced a bill to that effect years ago. Then the market can begin devising its own currencies without legal restiction.

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8:17 am on October 12, 2008