Updated: 5 days ago
Rural areas face poverty because they have fewer economic activities. They can't sell much, because no one has much disposable income. They also can't avail many products and services, because businesses prefer to establish themselves in urban areas. Thus, it appears as if the rural economic engine lacks oil. They have means of production, land, and labor. Yet they can neither sell nor buy.
Why do businesses prefer to set up in urban areas? Because that's where government offices are, where taxed money is dumped. They have money by law. The same taxation that erodes rural areas of liquidity enriches cities with it. Government expenditure and the markets it creates create a reliable money supply. Furthermore, governments can simply introduce new money top-down via corporations (corporate welfare), financial markets, and government spending. Thus, economic activities trail the printer. People are slaves to the printer.
This dependency on money has caused poverty in rural areas and has forced people to move to cities, which are getting more and more crowded. This has also produced homelessness in both India and the USA (two nations that I have observed myself).
Central planners and governments think that rural economies need access to credit. But they are only making the problem worse by perpetuating the dependence on centralized currency, which is really just a tool for control.
The real solution is to adopt locally available oils to oil the rural economy. Suppose I provide a farmer 2 hours of farm work. He agrees to return a 1kg bag of rice. He can write that on a piece of paper. "I promise to pay the bearer 1kg of rice". Now, this bill can serve as money. I can use it to buy what I need. Such bills can be created whenever productive work is done. This way, we can put money where it belongs -- posterior to production. People would do productive work without worrying about money. Productivity would become prior to money, as it should. Highly productive people would collect the most bills. The economic engine wouldn't wait for paper money. There would be no problems of liquidity. This is how a normal economy is supposed to function. People are not meant to be slaves to centrally managed currencies. In fact, illiquidity (and hence, dependency) is produced by establishing one centrally managed currency.
The only requirement is trust and morality. Everyone must honor his/her debt for this system to work. But it is still better than fiat currencies. They are printed and debauched every year. At least, the weight of 1 kg of rice stays consistent.