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Sunday, October 19, 2008

The Tally Stick Monetary System

One of the most successful fiat monetary systems was the tally stick system used by the king of England. It lasted a long time and was used by the king to finance his empire.

A tally stick was broken into two pieces. On both sides, an amount of gold was notched into the stick. The king spent the tally sticks as if they were gold. When it was time to pay taxes, the king accepted tally sticks as equivalent to gold. This ensured that tally sticks traded at parity with gold.

The tally sticks were practically uncounterfeitable. The wood grain had to match, the crack in the wood had to match, and the inscription on both sides had to match.

The tally stick system is credit-based money and not debt-based money. The king spent the tally sticks into circulation when he needed to buy something. The tally sticks were retired from circulation as they were used to pay taxes. If "money spent into circulation by king" is approximately equal to "taxes collected", then the system works and the money supply is stable.

Even though tally sticks were intrinsically worthless, taxation created a demand for them. That's the same reason that Federal Reserve Notes are really slave points. Even though Federal Reserve Notes are intrinsically worthless, the income tax creates a demand for them. The government could, in theory, repeal the income tax and finance its activities solely by printing new money. However, without income taxes, people would realize that the dollar is worthless and start using something else as money. Using gold as money accomplishes nothing, because income taxes must be paid in Federal Reserve Notes. According to the IRS, all economic activity is subject to taxation.

The income tax and Federal Reserve are two sides of the same evil. You can't boycott the Federal Reserve unless you also boycott income taxes.

The tally stick system ended when the Bank of England was created. By delegating his money creation power to a central bank, the king effectively ceded his sovereignty to the bank.


Anonymous said...

FSK, your income tax comments are correct on a very basic level, but they would be more in line with your agorist sensibilities if you would inform yourself at, and study the book "Cracking the Code". Best $25 I ever spent for any book about any subject.

S. C. Mooney said...

FSK, I only recently have discovered your blog, and am impressed by most of what I read here. However, I must differ with you concerning tally sticks. The tally-sticks-as-money story is a hoax. I have documentation to back up my claim, and will send if you like, or will post on my blog. May I ask - what are your sources for your view?

Kade Lisenby said...

It is not about being right or wrong at this point. It is about making people aware of what is wrong with our monetary system right now and that we have the option to think outside the box to offer alternative solutions to better our economy and country!!

rodney rondeau jr said...

income taxes are very neccesary. when the king spends his tallys, he gets stuff in exchange. the tallys he paid will circulate around until all goods and services are consumed. He must tax and equivelent amount or sell bonds to soak up the tally sticks worth or prices will rise. our moneys system is the tally system. you can see that spending comes before taxes. on the first year could the king tax more than he spent. no.

George Nathanial Curzon said...

As I believe the concept to be; a tally stick (half) may be purchased by the tax payer in exchange for one of a number of commodities from a basket, such as gold or labour.
Only tally sticks may be used for payment of tax.
The issuer of the tally sticks is the director of the monopoly of force through military, Justice,(police), and special intelligence powers.
The payment of tax, made for fear of reprisal by force, creates demand for the medium of payment, the notched stick, which must be managed by the king not to exceed the value of the basket.
If the basket has an estimated worth of 200 000 notches, sticks with a total of 200 000 notches in them may be issued.

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