weird idea

I want to ask your opinion on a goofy idea I had today. I was thinking about feudal economies in the middle ages, where people would live on a noble's land and grow food for him, in exchange for some of the crop. I was kind of inspired towards a weird idea that maybe a government could back its currency with say, grain? (stop laughing and read this whole thing, then share your opinion after you've thought about it)

Lets say a government owns a set amount of farmland that grows rye, barley, or wheat (or whatever else) and the farmers that work these fields are considered government workers, and grow the food for a salary. As an incentive to do a good job, they would have to meet a quota every harvest to get a bonus. This grain is stored in warehouses all over the country, and the government sets an exact price on this grain, so any citizen can exchange cash for grain whenever they want.

Now people might normally consider this a horrible idea, but the reason for this is that in the event of a total economic collapse, and that the rest of the world, even that countries own businesses, consider their currency worthless, they would still be able to trade X amount of currency for X amount of grain at these government warehouses. The idea is that this system ignores hyperinflation, by setting their own standard. In this way, it keeps some kind of a system going in the event that a collapse happens, and since grain is used to back the currency, it keeps mass starvation at bay. Since in a economic collapse, these warehouses would probably be the last place left where their currency is meaningful (under law), and the countries citizens would need food.

So, to clarify, im saying that this government would try to keep a fair and open trade of currency for grain at set prices, should the rest of the economy collapse. I bet some people would be like, can they do that? But I don't see why not. It would help a new system get back on its feet, I think. Assuming the farmers would keep growing, then everyone else would still want to earn more money for food, thus possibly the system could be rebuilt.

I'm trying to keep it generalized, any country, any specific prices, or wages could be applicable. There of course would be some resistance to the idea because of philosophical/politcal ideologies, the effect it would have on farmers and their freedom to influence a free market, and just the general idea. I think its a better alternative to having a non-backed currency, as when such a country were to suffer an economic collapse, these citizens would be unable to buy or trade nothing with their currency, and only anarchy, chaos, and death would follow.

Unlike gold, grain is immediately useful in the event technology becomes useless and people have to barter for things. In a barter economy people would only want gold if they have a use for it, as it's just not very useful for survival. I think that under such a system the strength of the currency would ebb and tide, as every harvest the currency would become stronger, and as it is consumed, the currency would become weaker. Though the real purpose of this, in my mind, is purely to avert catastrophe in the event of a collapse, and not really stabilize the currency.

I thought it was interesting. Share any opinions about it if you like. I just want to say I don't advocate the idea of people actually becoming serfs, this is just to discuss a purely economic idea, backing currency with some type of food.

Do you think this constitutes socialism? Or is backing a currency with anything considered capitalist? Let me know.

Actually, for many hundreds of years the Japanese money system was backed by rice, so your idea is not as "goofy" as it sounds. During fedual Japan, the basic units of currency was were the masu (defined as enough rice to feed a person for one day) and the koku (defined as the amount of rice necessary to feed one person for one year). Gold and other precious metals were also used, but very rarely and basically only for what amounted to ceremonial transactions among the highest reaches of the nobility. But most people were taxed and paid in units of currency backed by rice, a grain.

See: en.wikipedia.org...

well thanks. That was pretty interesting. I knew feudal economies operated on food, but modern economies kind of phased that out. I wondered if a countries (or world) economy were to collapse, if going back to that would reduce damage and loss of life, and maybe bring some stability. However I don't know if any modern government would seriously consider that, at least not until it was too late.