Double coinage

The article referred to is worthy a comment, since it’s not the first time we see this proposal in Italian politics. In reality, the dual coin project is a madness that only serves electoral purposes: similar projects have never worked in history, starting from the σεισαχθεια  of Solon the Athenian  (638-558 a.C.) to more recent examples.

Students of economics, since the first year, know the Gresham law, that in reality was previously explained by Nicolas d’Oresme  (1323-1382) . To avoid the effects of the Gresham law, in a double currency system, the only way is to stabilize the exchange ratio,  then the double coinage would not make sense anymore.

The alternative could be to use the second coinage for internal purpose only,  as it is the case, allowing it to devaluate freely in order to give impulse to the internal market. This  could work for a couple of years, maybe three, before collapsing.

What is not said is that the system needs a severe currency control that, besides being illegal, would push Italy out of the globalised world. In plain words, that proposal refers to a typical protectionist and autharchic way of thinking that could make sense in some developing country but is fully unacceptable in industrialized world.

The idea instead of treasury bills sold at a discounted price that could be used in full value for the payment of taxes is a complicated way to reduce the tax burden,  it may make sense, at least it is worth better understanding what it is.


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