Instant Runoff Voting

Ever wonder why we have a two party system? It is because of the way we choose our leaders: If you vote for who you really think is best, you may be throwing your vote away. Instant Runoff Voting is a good way of having the winner at least be the most representative of the views that the citizens hold.

The Value of Fiat Currency

It is widely believed that fiat currencies derive their value from their legal status and that if their legal status were removed they would cease to have value.

"Of course, people value the dollar; however, that is only because of The State's backing and mandate that the dollars be used as currency...If we went to free-market banking, dollars would quickly lose all value as currency. People do not place much subjective value on a cheap piece of paper with a dead man's face on it. Not everyone places subjective value on gold; however, there are so many people who do place high subjective value on it that it is useful as a medium of indirect exchange (currency)." -David Heinrich

I will argue that this is not the case; people would continue to value the
dollar without State backing because it is entrenched as a medium of
exchange. Established (widely accepted) currencies, such as the US dollar, take on a life of their own, and maintain their indirect value, with or without government fiat guaranteeing
their value, unless severely devalued by overproduction.

To argue this, I first need to define a couple of terms:

• Direct value is the highest price that I would pay for something that I expect to retain.
  
• Indirect (tradeable) value is the highest price that I would pay for something that I expect to trade. If I have done my homework correctly, indirect value is also equal to the maximum price that I can obtain for the object through exchange.


• Gift value is a special case of indirect value in which the value is equal to the highest price that I would pay for something that I expect to give away. The direct value that I receive from giving would be the gratitude that I expect to receive in return for the gift.


• An end user or consumer of an item is someone who directly
  values an object.

Because I have little interest in trading cards, women's shoes, and 'precious' metals, they have higher indirect values than direct values . If I owned these items, I would try to sell them to someone who values them more, or possibly to a reseller, consigner, or broker who could find someone who valued it directly (a "consumer"). Objects will tend to be produced, marketed, distributed, and sold to those for whom the direct value exceeds the indirect value and get stuck there until the direct value of possessing the item is less than the direct value of not possessing the item.

Established unconvertible currency has an indirect value based on an indirect value. When I work for dollars it is only because of what they can buy, not because of what others do.

In other words, even though no one values established currencies for their paper or artwork, they value them indirectly because others value them (indirectly). Yes, the logic of the fiat currency exchange is circular, but exchange is simplified and the currency will remain a currency until it is abused by a rapid increase in its supply. Once an indirect value exchange loop is entered, it will persist until the indirect value of the currency is diminished by rapid generation of new currency.

Commodity-backed currencies also make exchange easier, but why demand de jure convertibility with any particular commodity or small set of commodities?
No real advantage is gained by commodity-backing an established currency because
it is unrealistic to expect exchangers to faithfully visit currency clearing houses to verify the claimed de jure interconvertability. De facto convertibility with other directly-valued objects is all that is required of a currency and is pragmatically equivalent.

Commodity-backing of a currency is no longer even necessary to get a currency started: Both the Euro and the Iraqi Dinar were born not out of direct convertibility to any commodity or finite set of commodities, but by de jure convertibility to previous currencies via de jure exchange rates.

I predict that if the Fed would stop printing dollars tomorrow and eliminate all legal backing for the dollar, people would continue to use them and that their buying power would remain approximately constant because they would retain their indirect value.