Gresham's Law says that bad money drives out good: given two monies, people spend the one that is boring or slowly losing value, and keep the one that might appreciate. This is usually taught as a pathology. It is actually a design specification. The money that circulates is always, by revealed preference, the "bad" money – so the only interesting question is: which bad money is best?
Every traditional path to spendable liquidity costs you something dear. You can earn it: too slowly, in money that will not hold still. You can sell for it: surrendering the very asset you were keeping because it was worth keeping. You can pledge for it: money conjured against your wealth by counterparties the old stories warned you about, on terms with ancient teeth. Or – the fourth way – you can mint it. The Alberta Buck (BUCK) is liquidity drawn from wealth you keep: no payments, no schedule, a single gentle obligation that ends on your terms – or, given time, quietly ends itself. Deliberately, boundedly, honourably bad, the BUCK may be the best bad money there is: all of the spendability, none of the forfeiture. What follows is the menu, priced. (PDF, Text)
Gresham's Law Is a Design Spec
In 1560, Sir Thomas Gresham explained to Elizabeth I why her treasury kept filling up with clipped and debased coins while the full-weight silver vanished from circulation: given a choice, everyone pays with the worst money they can legally tender, and tucks the good stuff under the mattress. "Bad money drives out good."1
Four and a half centuries later, we teach this as a monetary disease. It isn't. It's a perfectly accurate description of rational people, and you obey it every day. Nobody buys groceries with the deed to the farm. You pay with airline points before cash, cash before shares, shares before the quarter section. Whatever might appreciate, you keep; whatever is boring or bleeding value, you spend. The medium of exchange in any economy is therefore always – by unanimous, revealed preference – the bad money.
Economists periodically rediscover this and, instead of fighting it, try to engineer it. Silvio Gesell designed money that was deliberately, mildly bad – Freigeld, carrying a small carrying charge so that it would circulate rather than hoard. The Austrian town of Wörgl tried it in 1932 and produced a small economic miracle in the middle of the Depression, before the central bank shut it down. Irving Fisher endorsed the idea; Keynes wrote that "the future will learn more from the spirit of Gesell than from that of Marx."2
So let us stop pretending we want to spend good money. We don't, and we shouldn't. The engineering question is the honest one:
You will spend bad money. What is the best bad money – the cheapest to obtain, the safest to owe, and the least tragic to let go of?
The Fourth Bad Money
The Alberta Buck adds the missing line to the menu: Claim money – liquidity minted against attested, insured wealth that you continue to own and use.
The mechanics are the same ones the bank uses, minus the bank. Your asset is attested (like a house
inspection), insured (premiums around 0.5%/yr – the same insurance the bank makes you buy anyway),
and a lien is registered – held by the insurer, the party actually carrying the risk, not by a
lender, because there is no lender. You receive a BUCK_CREDIT limit against the insured value,
mint BUCKs, and spend them. Same asset, same insurance, same lien. No interest, because there is
no one to pay it to.
Here is the part that matters for this article. Once you have spent your BUCKs, what exactly do you owe, and to whom?
You owe no payments. There is no schedule, no amortization table, no monthly tribute, no compounding meter running. Your entire obligation is this: maintain the wealth that backs them. Keep the asset yours, keep it insured. That's the whole covenant. And it ends in one of two ways, both on your terms:
- Recover and redeem. Whenever you like – next month, next decade – accumulate BUCKs (earn them, buy them on the market) and return them. Your credit resets toward zero, the lien lifts, your collateral is free. No penalty, no permission, no discharge fee.
- Or simply wait. Idle BUCKs pay a flat 2%/yr demurrage – and that fee is never burned. It flows into the Jubilee Fund, whose only job is to retire collateral liens. A full-term lien is extinguished by the Jubilee over 50 years: 2% per year, times fifty, is the whole face value.5 Do nothing at all, and the system amortizes your lien for you. Every lien ships with a fuse.
Compare the exits. The mortgage can never simply be waited out – interest compounds against you, and the discharge always requires finding principal plus tribute, somewhere, before the forfeiture clause finds you. The BUCK lien decays in your favour, funded by the parking fees of whoever is holding the money you spent. Time is on your side of the table for once.
What Can Actually Go Wrong
"Lowest risk" is a claim, so let's inspect the failure modes honestly. You've minted BUCKs against the farm and spent them on the new venture. Now the world misbehaves.
Your venture fails
- If you had sold the farm to fund it: the farm is gone regardless of how the venture went. That was the price of admission.
- If you had borrowed: the payments don't care that the venture died. Miss enough of them and the lender – who conjured the principal from nothing – forecloses and takes the farm. Enterprise risk lands on the homestead. This is the bargain's ancient teeth.
- With BUCKs: nothing happens. There are no payments to miss, so there is no default, and there is no lender, so there is no foreclosure. Keep the insurance current and carry on. The lien sits there, slowly dissolving into the Jubilee. Your venture failed; your wealth didn't notice.
The market crashes
- Margin lending and DeFi liquidation (MakerDAO and kin): the price ticker dips, the protocol force-sells your collateral at the bottom. It feels like foreclosure because it is foreclosure, just algorithmic (Insurance vs. Liquidation).
- With BUCKs: your credit limit rides the insured value, not the market ticker. Volatility is
not an insurable event, so it cannot take your asset. If the whole system needs rebalancing, the
BUCK_Kfactor adjusts everyone's credit gradually – an invitation to redeem or top up over time, never a forced sale. There are no margin calls on a farm that stays a farm.
The asset actually burns down
- Under a mortgage: the insurance you paid for pays the bank. You still owe the balance, and the bank decides how – or whether – the rebuild proceeds. You can end up homeless and still indebted.
- With BUCKs: the insurer pays, your outstanding BUCK obligation is extinguished by the payout, the insurer takes the salvage it paid for, and any surplus is yours to rebuild with, or not, as you choose. You lose exactly the thing that burned – and nothing else. Not your financial position, not your other assets, not your future income.
The worst case, tabulated
| Event | Sold the asset | Borrowed against it | Minted BUCKs against it |
|---|---|---|---|
| Venture fails | Asset long gone | Foreclosure | Nothing – no payments exist |
| Market crashes | (already sold) | Margin call / underwater | No forced sale, ever |
| Asset destroyed | (already sold) | Insurer pays bank; you owe | Insurer pays; obligation ends |
| You do nothing, 50 yrs | – | Compounding ruin | Lien fully retired by Jubilee |
The BUCK is the only line on the menu whose worst case is you keep your stuff. It solves the liquidity constraint – wealth you can finally spend – at the lowest risk of that wealth ever being sold out from under you, seized by a creditor, or lost to a clause you signed in a hurry.
Boundedly, Honourably Bad
Now the cheerful confession: yes, the BUCK is built to be spent. Demurrage is Gesell's gentle pressure, tuned and bounded – a flat 2% per year, linear, no compounding, accruing only against idle balances. It is a parking fee on stationary liquidity, not a tax on your savings – and emphatically not inflation. The distinction deserves italics: /inflation is unbounded, compounding, and hidden, and falls on every dollar everywhere; demurrage is flat, bounded, published in the contract, and falls only on BUCKs sitting still/. And it is never burned or pocketed – every cent of it funds the Jubilee that is busy retiring liens, including yours. Your money's little badness is the sinking fund for your own collateral.
Run the numbers on "bad": an idle BUCK$5,000 float accrues about BUCK$100 a year – likely less than your chequing account's fee schedule – with zero inflation eating the principal on top. Held exactly like cash, the BUCK is already a better store of value than the dollar. It is the rare bad money that is bad at you only if you hoard it, and bad for you never.
And for value you genuinely mean to keep, the exits are better still: park BUCKs in the BuckBasket, whose mean-reversion harvest has historically out-earned the 2% fee; or fold them into BUCK Notes, which inherit only the Notes pool's average age and so cost a multi-year holder – even an inheritance – almost nothing. Hold it like cash and it beats the dollar; put it to work and it grows; store your wealth behind it and that holds value best of all.
Gresham, Perfected
Gresham's Law was never a bug report. It's a law of human nature: given two monies, we spend the bad and keep the good. Fiat systems fight this law and lose ugly – when the official money is bad in the unbounded way, people flee it into anything that holds value, and the "good money" everyone hoards becomes houses. Homes get priced like vaults, because that's what we made them.
The hard-money camp fights the same law from the opposite bank, and loses just as surely. The hyperbitcoinization thesis – that Bitcoin, now that Lightning has made it fast and nearly free to spend, will drive out other money – has Gresham precisely backwards: it is the bad money that drives out the good, and Bitcoin is the best good money ever engineered. Twenty-one million coins, mathematically incapable of debasement, priced for appreciation – of course nobody spends it. Lightning solved the fees; it cannot solve human nature. This is a community whose founding parable is a warning against spending (ten thousand coins for two pizzas) and whose first commandment is HODL. A money that its own faithful hold it a mistake to spend is not a failed currency. It is a magnificent vault – the good money, behaving exactly as Gresham said good money must.
And here the BUCK makes the maximalist an offer no payment rail ever could: the wealth-backed economy, actually delivered. Attest and insure the stack, mint BUCKs against it, and spend those – Bitcoin in the vault backing the system, BUCKs in the till running it.6 The maxi finally gets to do what the thesis claims to want – accumulate hard wealth and back a monetary system with it – without ever committing the one act the whole creed forbids: spending the coin.
The BUCK stops fighting the law and enlists it. Spend the bad money: it's cheap to mint, costs nothing to owe, and its small decay pays down your own lien. Keep the good money: the land, the house, the shop – attested, insured, still yours, still appreciating, and now emitting liquidity instead of merely sitting there. The bad money circulates because everyone prefers it to; the good money stays home because everyone prefers that too. For the first time, both preferences point the same direction, and nobody has to lose the farm to fund the future.7
Bad money drives out good – and for once, the good money never leaves your yard.
Footnotes
Gresham's Law states that "bad money drives out good" when both circulate at a fixed exchange rate – the depreciating currency is spent while the superior is hoarded. See Selgin, G. (1996) Salvaging Gresham's Law for the modern restatement and its conditions. The transition analysis notes the complementary dynamic: when the better money is also the cheaper money to use, it is preferred for transactions as well. The BUCK wins from both directions.
Gesell, Silvio. The Natural Economic Order (1916), proposing Freigeld – money bearing a small periodic carrying charge so that it circulates rather than hoards. The Wörgl, Austria "stamp scrip" experiment (1932-33) applied it during the Depression with striking local results until the Austrian National Bank asserted its monopoly and ended it. Fisher, Irving. Stamp Scrip (1933). Keynes, J.M. The General Theory of Employment, Interest and Money (1936), ch. 23. The BUCK's demurrage is Gesell's insight with the sharp edges engineered off: flat, linear, bounded, never burned, and recycled into lien retirement via the Jubilee Fund.
Werner, Richard A. (2014). "How do banks create money, and why can other firms not do the same?" International Review of Financial Analysis; confirmed in McLeay, Radia and Thomas, "Money in the Modern Economy," Bank of England Quarterly Bulletin (2014). See The Missing Monetary Element for why this bank privilege is, precisely, Claim money – created from the borrower's own wealth, with the borrower billed for the service.
$800,000 at 5% amortized over 25 years: $4,676 monthly, $1,403,016 total, $603,016 of it interest – a bond manufactured from your signature, which the bank keeps. See The Alberta Buck, "The Two Claims Behind Every Mortgage."
Mechanically: the Jubilee Fund accrues BASE_RATE × totalSupply continuously (2%/yr, linear,
no compounding), mirroring the demurrage locked in idle accounts; at lien redemption it contributes
F × elapsed/lifetime of the face value F, the holder the remainder – so a lien that ages its
full 50-year lifetime is retired entirely by the Jubilee. Full mechanics in Demurrage and the
Jubilee Fund.
Bitcoin is commodity money in the Commodity / Credit / Claim triad: to acquire it you give something up, and you hold the coin instead of the wealth (The Missing Monetary Element). The BUCK is not its rival but its on-ramp – mint BUCKs against the farm (or the stack) and buy all the Bitcoin you want without selling anything. See "Why Not Just Bitcoin?" in the Objections paper.
And the exercise is constitutional: liquidity from your own property, under provincial property and civil rights jurisdiction – fiscal autonomy, not monetary rebellion. The BUCK replaces borrowing, not the Canadian dollar. See the Legal Foundation.