Will Iceland’s Sovereign Money Proposal End Economic Crises?

Frosti Sigurjonsson

A recent proposal out of Iceland has been making the waves around economics blogosphere. In it, Frosti Sigurjonsson critiques the current fractional-reserve banking system and proposes instead a system he calls “Sovereign Money”. But what is “sovereign money”, how is it different from the current system, and how will it work? In this post I’ll first explain how the current system works and the problems it has from an Austrian perspective, then go through the sovereign money proposal to see how it solves any of the short-comings of the current system.

How is money created in the current system?

Before we can analyze the sovereign money proposal, we need to understand how the current system operates. This can be demonstrated in a 4 step process. But first understand that a central bank (like the Bank of Canada or the Federal Reserve) is a lot like any other bank: it offers deposit accounts and loans to clients. The difference is that you can only become a customer of the central bank by invitation only.

Here’s a step-by-step process:  Continue reading “Will Iceland’s Sovereign Money Proposal End Economic Crises?”


Against “A Capitalist Case for Health Reform”

Originally posted at mises.ca on September 25, 2013

Recently, John Green—one half of the Youtube duo “vlogbrothers”, along with his brother Hank—has embarked on a video series discussing health care reform in the United States in light of the dawning of the Obamacare era. The most recent instalment is titled “Bigger Pizza: A Capitalist Case for Health Care Reform”. Watch the video here:

Unfortunately, the only capitalist case to be found for health care reform is in the title of the video only.

The video starts off well enough with a general defense of capitalism, which led up to the cheeky line that “Free markets create free pizza” (although he made a couple of unnecessary caveats, namely that innovation usually comes at the expense of the increased destruction of the environment, but that’s another issue for another time), because if we imagine the wealth of society as a large pizza, free markets—through constant and unbridled innovation—increase wealth, and therefore increase the size of the pizza. John then says “the only way to get that free pizza is to make the world safe for innovation and competition.” This is very true. He follows this up with “Our current health care system sucks for facilitating this.” This is also very true. However, from this true point he dives into the unfortunate depths of absurdities. Continue reading “Against “A Capitalist Case for Health Reform””