Penny candy

Do any of you remember when you could go to the store and buy penny candy? How about nickel candy? Dime candy? How about when the candy in the vending machine was 40 cents? Yes, for all you youngins' (I guess you could say, look who's talkin'), there was a time of which I speak.

What has happened to the prices? If any of you have learned from the Austrian School of Economics (or have talked a person schooled in that school of thought), you will know that devaluation of the currency happened. Inflation also happened.

Here's how it goes. The government wants to buy or pay for something (a subsidy for pineapple growers in California, for instance). Because the government doesn't have any savings or surplus, it borrows the money. The government creates bonds (promises to pay) and lenders buy the bonds (i.e. lend the government money with the understanding that the lender will get paid back; this lent money has interest attached to it). The lender gives money to the government (either money the lender saved, or in the case of the Federal Reserve, the money it prints/creates out of thin air). The government spends the money into the economy. The groups that get the easy money experience a "bubble."  As time passes, the market (anthropomorphized of course) realizes there are more dollars (increased supply) now than products, and so the value of the dollar (i.e. Federal Reserve note) is less and it takes more dollars to buy the same products. Thus, inflation, better understood as devaluation of the currency, occurs.

The problem is that the whole system (not just the government) is a debt w/ interest based system and so all the loans must be paid back with interest. There is no interest created by the lenders and so there is never enough money for everyone (the principal paid back to the bank no longer exists once it is paid back).

So, I think competing currencies (including commodity currencies, LETS, and interest-free money created by the government itself) would help to alleviate our economic and social problems. Most of us use money (I can't think of anyone that doesn't) and so our current system affects everyone.

Here are some great sources of information about money and monetary policy:
http://www.youtube.com/watch?v=Dc3sKwwAaCU
http://www.amazon.com/Whatever-Happened-Penny-Richard-Maybury/dp/0942617312 (great book)
http://en.wikipedia.org/wiki/Alternative_currency
if you have 4 hours, this is an interesting one - http://video.google.com/videoplay?docid=-515319560256183936