Land monetary theory

Economics Economics Questions
1

I was thinking about how the world could operate on a standard money that could never inflate or deflate. But even though competing currencies would be somewhat stable, a standard would be good for fixed income groups. I came to the idea of Land Notes.( this is not an established theory as far as I know,).

The basic premise would be that land would be traded as money for goods. NOT THE ACTUAL LAND ITSELF, but a title to one to be traded. Private property will still exist. If it would be possible to chart the entire land surface of earth, and then use a denomination of distance( cm square, etc.) as the measurement.

Private companies or banks can measure your land that you own, and make a certain number of notes that correspond to your property. However this WILL NOT BE YOUR MONEY. These banks could somehow give you an ability to make sure that your money is not going to be inflated. I will discuss this later.

So now there are as many coins/notes as there are chartered lands. The people( assuming all land is private) will always know the total amount of the money supply, the total amount of land on Earth. Now a check on inflation would be the fact that (a Companies could mint a different type of coin for every property surveyed and give the owner the cast. (b Competition would decrease chances of fraud among different banks. (c Consumers will have a direct loss of value they can recognize. (d Land is not transferable by movement, so banks would have to be decentralized.

The difficulty of this is how consumers can have certainty that their money will not inflate. Would the banks have a database of all the notes in circulation, even with decentralized banks? How would banks recognize each others notes as legitimate? How do you stop the sale of casts given to land owners to others who would then inflate them, making each other “richer”.

So my question is if this sounds logical, possible and if this has been theorized before by others ( Proudhoun, Tucker, Col. Green). Or is it too impractical for shear reasons such as economic calculation and money to goods ratio, or just insane. Please offer any ideas, information and criticisms.

If this were possible, than a real increase in incentives to discover new lands and search in space would expand, creating more discoveries,wealth and property for man. That was another reason I was thinking this would be good, if possible.

2

There’s no such thing as land the way you are defining it.

And it’s also not a fungible commodity.

3

Pardon my ignorance, but what is a fungible commodity

4

I do not find the idea very logical or practical. First, are all land valued equally or does it not matter in your theory? If it is not, how would it be dealt with (land is very hard to value because of it’s uses and location in relation to the possible owner)? Can someone exercise their “claim” on the land with the “landnotes”? If not, why would anyone accept them. And wouldn’t it be necessary for it to be a great amount of land which people aren’t dependent on that would give landnotes able to be traded away? If the land is able to be claimed you wouldn’t trade away the landnotes of the land on which your house stands?

Maybe I simply missunderstod your post, but I find it hard to see “land” as money because of it’s diversity. Even if you mean as just symbolically I find it impractical because it then must ignore the principal that it just represents true wealth which it whenever could be converted to.

About the increased incentives to explore new lands and even space if the theory would be implemented, I find it to be very unlikely because of what I mentioned above.

5
6

Padon me, but I just find it charming how people all the time try to outsmart the market about itself.

7

It is not the OWNERSHIP of land but the title to it. Land value would have nothing to do with it. It is the amount of land that you own.

Credit is nothing more than human trust in the form in numbers. Dollar bills are worthless because they do not represent anything by themselves. So a dollar is just a title to assets which the bank really doesn’t have. Nobody owns “gold” on the gold standard, they own things the gold represents. My idea was that gold can be increased, but the amount of land on Earth would not. Land is the most valuable thing to man, hence its value would be high. Notes or coins would only represent an amount of land. Stock market trades are pieces of paper, you don’t really own a part of the company, but only represent one of its owners by paper. Because land is not able to be traded itself as a commodity and it is fixed( you can use it, but the amount of land on earth stays the same. I’ll ignore the oceans for now) it can be used as both money and a physical object. That object is only represented by paper, just as gold would be, when stored in a bank.

If that clears up a little bit? probably not. Just needed to say something to somebody about it. its been driving me insane thinking about it.

8

Land is not amountable.

9

You do own the gold you deposit in the bank, just so you’re aware. Bank notes are claims to it.

-Jon

10

what do you mean. 2sq ft is not an amount. Not of normal money in weight, but if calculation was measured in distance. Just theoretical

11

You can’t just divide land up into equal sized chunks and deem them to have the same value. You have to solve the fungibility issue somehow.

Suppose that no one actually owns land, but just rents it. The title is held by some enormous landbank. The landbank issues banknotes backed by its properties. It also collects rents on its properties, and pays interest on its banknotes and demand deposits.

It is like using shares in a REIT as money, except that this REIT includes all real estate in the country.

It’s not that different from the system that we have now, except that the Fed buys government bonds instead of private real estate. But it would be less inflationary - in fact, the value of your money would steadily increase over time.

The problem of having multiple banks is that the relative value of each one’s holdings would be constantly fluctuating. Therefore each one would be issuing different currencies.

There are many other problems too. But it’s an interesting speculation.

12

How would it be valued?

13

It’s an absolutely terrible idea. A commodity used for money has to be:

Fungible - every instance of it is indistinguishable from any other instance - and so would be valued the same by any given person at any given time - and the composition, purity, etc of any sample can be objectively measured

Divisible - It can be divided into arbitrarily small amounts without affecting the value

Portable - It can be physically possessed and carried, or at least transported at a cost that is a miniscule fraction of its value

Durable - It will not deteriorate or dissipate over time

Scarce - It’s total supply is limited and not subject to arbitrary (fiat) fluctuations.

Malleable - meaning it can be formed into a variety of shapes - also helps, but is not as vital. A supply that can be gradually increased in times of high demand (as signalled by high prices) is also helpful, so long as that capacity to increase is objective - limited by real resource contraints. Additionally, it should be as free from competing non-monetary uses as possible.

Nothing is perfect in all these criteria, but gold and silver are very high in all of them. Even the predominant non-monetary uses for them (jewelry, decorative or non-mechanical household goods), are primarily sought due to their value storage qualities. And the relatively minor industrial uses are largely non-consumptive - they don’t “use up” the metal. (Silver’s use in photography was an exception to this, since the cost of recovering it was higher than, or at least close to, its value. That is no longer true at current prices.)

Land meets none of these criteria well, if at all, except for scarcity. Even it’s durability, while relatively high, is not as high as precious metals. Think floods, volcanoes, earthquakes, sinkholes, etc.

Your comment that land value would have nothing to do with it renders your proposal moot. Money is a marker of value.

14

The Republic of Texas tried selling land scrip - the right to select land in denominated sizes from the public lands. The certificates circulated as currency for a while, but the value collapsed when land values declined.

The demand for land is more volitile than the demand for specie and you cannot take land from one market to another. And though the government cannot print more land, they can certainly redenominate (dilute) the certificates and put restrictions on the buying, selling, and use of land. It’s also very easy to tax land.

I’m pretty sure Massachusetts once tried a land backed currency too. Let’s see if that comes up in the C.I.L. recordings.