A possible return of common sense
After the grandest of economic failures in recent years, some Irish people are now wondering about a possible escape from the Eurozone. One of the ideas, floated by David McWilliams, is that the country switches over to use Sterling instead. And amazingly, after 250+ votes on politics.ie, the Yes side are winning.
It may sound bizarre to some, but Hayek argued that government need not impose any currency on the territory under its control. The government could simply allow people to use whichever currency they choose. Most people would be likely to use the same one as everybody else in their everyday business (due to money’s network effects), which could be a foreign currency (Sterling, for example) or a new domestically produced currency (a Punt Nua issued by an Irish bank). This would then be the de facto, but crucially not the de jure national currency.
For it to work properly, the government would need to accept taxes in whichever form of money was being commonly used by the people. The government would also need to accept the loss of the ability to counterfeit and to devalue money (which it can be argued was the objective of nationalising money in the first place).
Imposing the Pound Sterling on Ireland would not represent a true liberalisation of the economy. However, by leaving the huge money-monopoly region called the Eurozone and using the currency of Ireland’s closest neighbour instead, with all of the implications which that has for a return to banking and fiscal sovereignty, it does appear to scream of common sense.