Colonial-era debt and free banking

money | Support this author on Patreon

The injustice of developing countries having to pay back extortionate rates of interest that emanate from sovereign debt with colonial-era roots is often rightly made due to the oppressive nature of imperialistic regimes of the time. However, one may wonder why such colonial-era debt cannot be feasibly defaulted upon? The standard argument suggests that this would ruin the country’s credit rating, lead to capital flight, devastate the country’s currency and, thereby, lead to economic and financial ruin. I argue, however, that this scenario only applies in the context of the monetary monopoly that is coercively imposed by most governments the world over through taxation laws, legal tender legislation, trade laws and financial market legislation. Under a Free Banking regime where agents would have an authentic choice of multiple monies, it may even be feasible to default on such unjust debt.

Let us consider the scenario under which a developing country was to default in its colonial-era debt. Standard arguments go along the lines of it ruining the country’s credit rating and thereby making it infeasible for them to borrow from international financial markets for the foreseeable future. This would most likely precipitate capital flight, make the country’s money (relatively) worthless for repaying debts or even internal trade and, thereby, lead to a devastating socio-economic calamity for the country’s inhabitants. Therefore, developing countries’ governments who are subject to such debts are presumed to have ‘no control’ over the status quo. This is nonsense, when examined more closely.

Firstly, these developing countries still often only accept taxes paid in their own monies that are issued by their central banks (thereby imposing a monetary monopoly). This means that the benefits of having access to and utilising multiple monies (whether they be trade benefits through having an access to a variety of exchange rates or credit market benefits through improving creditworthiness, for example) cannot be realised. This is often also reinforced through legal tender legislation (which varies from jurisdiction to jurisdiction in its rigidity and meaning) that can act to inhibit or even prevent the feasibility of conducting trade in multiple monies.

Imagine a system where agents actually had access to multiple monies; where they could trade, borrow, save, invest and so on in order to optimise the specificity of their individual, heterogeneous preferences accordingly. In such a scenario, developing countries’ governments could feasibly default on debt payments that have colonialist roots and, though the governments’ creditworthiness would be called into question by international financial markets, the inhabitants of that country could simply switch to other monies and continue with life rather normally even in the event of the collapse of that government’s own, issued money. Since the inhabitants would also be able to conduct trade normally and reap the trade and credit market benefits associated with having multiple monies, indigenous currencies could also be feasibly issued. Thus, it is not just in the interest of the creditor nation-states that these debt repayments are made but also in the interest of the debtor nation-states since these governments have an interest in maintaining their coercively imposed monetary monopoly regimes.

Thus, in brief, truly Free Banking that enables a genuine choice of multiple monies could feasibly allow peoples to overcome historical injustices and thereby alleviate poverty, inequality and the socially-divisive animosity that the colonialist-era plays, to this day, in perpetuating. In this sense, the historical institution of state-imposed, legally-enforced, Central Banking as opposed to freely-chosen Free Banking works to perpetuate the injustices that linger from colonialist eras. The fault lies not just with developed countries’ governments but also with developing countries’ ones, leading to animosity between various peoples and acting as a major obstacle to securing peace, prosperity and cooperation.



augusta free press
augusta free press news

UVA Basketball Fans!

uva basketball team of destiny
Team of Destiny: Inside Virginia Basketball’s Run to the 2019 National Championship, by Jerry Ratcliffe and Chris Graham, is available for $25. The book, with additional reporting by Zach Pereles, Scott Ratcliffe, and Scott German, will take you from the aftermath of the stunning first-round loss to UMBC in 2018 through to the thrilling overtime win over Texas Tech to win the 2019 national title, the first in school history.

Dick Vitale on Team of Destiny: “This is a hoops story you will LOVE! Jerry and Chris capture the sensational and dramatic championship journey by Tony Bennett and his tenacious Cavalier team. UVA was Awesome Baby and so is this book!”

Ralph Sampson on Team of Destiny: “Jerry and Chris have lived and seen it all, even before my time. I highly recommend this book to every basketball fan across the globe. This story translates to all who know defeat and how to overcome it!”

Buy here.

AFP Business

As professional consultants, Augusta Free Press LLC provides clients in the Shenandoah Valley and Central Virginia and beyond with marketing and PR solutions including website design, SEO, TV/radio, video work, branding and logos, social media and overall marketing campaign design and implementation. Augusta Free Press LLC was founded in 2002.

Web Design

Augusta Free Press has designed more than 800 websites for clients in the Shenandoah Valley and Central Virginia. We take care of all facets of web design – visual design, layout design, content development and SEO. Short on staff? We’ll work with you to update your AFP-designed website in a timely manner or train your staff to make changes.

Marketing/Social Media Management

Augusta Free Press manages advertising campaigns for small- and medium-sized businesses across Virginia. You don’t need to hire a full-time marketing coordinator. Bring the experience of the Augusta Free Press team to work for you – for a fraction of the cost.

Graphic Design

Augusta Free Press will help you take your vision to the next level. From branding and logos to print materials, our team will work with you to develop products to showcase your business. From brochures and rack cards to full-color magazines or print/digital ads, we’ve got you covered.

Event Planning/Fundraising

Augusta Free Press will help you plan the best event for your organization. From an open house or anniversary to a 5K or Pay Per View, we can handle it all. Looking for training for your sales staff? We can help energize your employees or board. Need ideas to raise more money? Let us help you plan a successful event. Want to hold a news conference or need help with a press release? We can do that too.

Click here for more.