In my last post I introduced the idea of solvent land. This is a place where you cannot borrow. The economy uses dough which you carry in your wallet or purseand doubloons which are looked after in vaults by vault-minders. Plastic doubloons allow people to move money from their vault to someone else’s vault using electronic systems which can also be used for example by employers to pay employees and customers to pay suppliers.
Governments will also use doubloons which can come in lots of different varieties. So there could be dollar-doubloons and euro-doubloons and sterling-doubloons; even scottish-doubloons. These could have different values and their values may vary over time. So a sterling-doubloon might have bought you 2 dollar-doubloons last month but only 1½ today.
Governments, like people, will have vaults looked after by vault-minders. And like people, they can only use what is in their vault – they cannot spend doubloons they don’t have.
This could make governing quite difficult, because it would mean that the government would have to collect taxes and put them in its vault, before it could pay its employees. So even if a government knows that a lot of doubloons are coming in when the next VAT bills are paid, they will have to wait for the bills to be paid. This means there will probably be a lot of doubloons sitting in the government’s vault to make sure that bills can be paid for the next few months.
Perhaps the difficulty of managing doubloon-flow will mean that governments cut back on what they try to do and let people organise their own affairs. For example pensions might all be dealt with by private providers rather than by a government scheme.
Businesses will have a similar problem to government. If a business wants to grow it will have to think of ways in which it can get enough doubloons in its vault to pay for all the materials it needs to make all the things it sells, before it gets the doubloons in from selling them. It may need to find investors who are willing to put their doubloons into the business in return for a share of the profit.
And housing will be different. In solvent land, people cannot borrow, they can only use the doubloons they have in their vault. Will they be able to find somewhere to live? Yes, because they can rent now and perhaps save up their doubloons to buy property later.
There may be arrangements which allow some people to do both – part own a property, paying rent for the bit they don’t own and gradually buying more of the property over the years. But it is difficult to see why a property owner would do this (unless there is a problem with the property and the owner wants to get rid of it).
In solvent land, most people will be able to move where they can find work, because they will be able to stop renting one property quite easily and start renting a new one where they are moving to .
Will houses look different in solvent land? For the most part they will be built for landlords and not owner-occupiers, so they may well have small gardens or be multiple occupancy (blocks of flats). Or perhaps there will be variety as landlords can charge premium rents to people who want to spend the weekend tending their flower beds or rebuilding the family car in a garage.
And a major landlord may well be government as few people will have the resources to buy and rent out houses.