Doomstead Diner Menu => Economics => Topic started by: RE on July 07, 2016, 04:28:57 PM

Title: Interim International Banking Lockup Solutions
Post by: RE on July 07, 2016, 04:28:57 PM
I was thinking about how States & Localities in connection with local bank branches and credit unions might provide a temporary solution if the grand international banking system goes into lockup.

Remember when CA ran out of money to pay its bills and started issuing IOUs?  Other states could do the same thing, as well as local banks.  Instead of paying you in Dollars, they give you an IOU equivalent to $1 for when (hopefully) the banking system is somehow brought back online after maybe a week long to month long Bank Holiday.  You would then use these IOUs as money to buy stuff in the local stores, and then they could redeem them later for dollars when the banking system is operational again.

This is obviously a temporary solution, but it might last a couple of months as long as people have faith that the banking system will be brought back online.  In the interim, in case the Global system doesn't come back, States can set up their own Currency to use for local trade, and then direct barter with other states depending what things they produce.  So Alaska could send Oil down to Washington State or California in return for produce.  Then an exchange rate between WA currency and AK currency can be set.

Other things to keep the system from locking up that could be done is to suspend all rent and mortgage payments, all utilities payments etc and then pay utilities workers with the state IOUs to keep them on the job.  Same with teachers and all public servants.  Problem for the electric power plants is if they don't have an in-state source of fuel, they may have trouble getting fuel from states that do, so there would probably be extensive power cutbacks after initial supplies ran out.  However, they can do mandatory rationing to extend this, rolling blackouts and brownouts.

Similarly with gasoline shortages, mandatory rationing and carpooling can be instituted immediately to extend the current available supply.

I don't think the local Goobermints will do NOTHING and let it all go Mad Max INSTANTLY.  Some bridging solutions will be put in place.  How long they can last, I don't know.

Anybody with other thoughts or ideas on this?