Healthy Money Healthy Planet - library.uniteddiversity.coop

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that are issued for a commodity. In ancient Egypt, for example, warehouses issued
ostraca (pottery tokens) as a receipt when farmers brought their corn in to be
stored (see page 000). These tokens circulated as money and were given value by
the people because they believed that the warehouse would redeem them for corn.
Similarly, gold miners in New Zealand in the 1880s used to take their gold into the
bank and receive receipts for it, which then circulated as money. With Bernard
Lietaer’s proposal for the terra, an international currency backed by a basket of
commodities (see page 000), the value of commodities is gradually declining, so
the value of the terra will decline too.
The ultimate fall in the value of commodity money is when the promise of
redeemability vanishes. Tokens issued by a firm are backed with real goods, but if
that firm then goes into receivership the tokens are valueless. New Zealanders
who held Levenes vouchers found this out to their distress in 1996 when the
company went bankrupt and their vouchers became worthless.
Some proposals for new systems suggest that currencies should be backed by
land. Because there is a finite amount of land, in the absence of adequate land
value taxation its value has always increased over time. So the value of the money
would increase too. This is why banks use land as the prime collateral for loans.
Velocity of Circulation
When thinking about stable currencies, we have to consider another, often
neglected, factor – the velocity of circulation. The speed at which money circulates
is very important, because faster circulation indicates an increased number of
transactions and hence brings greater benefits. In Wörgl, Austria, in 1932, for