What does real monetary theory tell us?
Real monetary theory tells us that when we use a nominal monetary system, the monetary unit on our currency violates the concept of whole numbers. As this occurs, we begin to lose the ability to account for the purchasing power of our capital over time. However, we now have the opportunity of resolving this problem, by implementing the use of private currencies that are indexed to the purchasing power of the nominal currency and backed with assets on a present value basis. Inasmuch as the private currencies will require the continued use of the nominal currency to measure inflation, and deflation; we can expect to see an evolution of our current nominal monetary system into a real monetary system; whereby, the private currencies will compete side-by-side with the government-issued nominal currency.
