More than forty years ago, Nobel laureate Friedrich von Hayek published a small book in which he called for the “denationalization of money.” For him, high inflation rates in all countries were proof that states were abusing their monopoly on issuing banknotes, and that only private money in competition could guarantee stable money. Hayek was more concerned with the regulatory principle of competition than with the question of how a competitive monetary system could be concretely shaped.
The success of Bitcoin and other cryptocurrencies today shows that there is indeed a market for such a private issue of money. It is however more than questionable whether a system with private currencies can actually replace the state-organized monetary systems and whether in the end a stable monetary system will emerge....Denationalization of money would be the end of national sovereignty and thus the end of the modern national state and the Westphalian world order, replaced by a global market society. Whether this would be utopian or dystopian depends on one's assumptions and value system.
INET
The Mechanics of Cryptocurrency
Peter Bofinger | INET Global Commissioner
ht/ Yves Smith at Naked Capitalism
See also
NATIONAL CONFERENCE OF STATE LEGISLATURES BLOG | NCSL BLOG
CRYPTOCURRENCY: CURRENCY OF THE FUTURE OR JUST A FAD?
Heather Morton, program principal in Fiscal Affairs, covering financial services issues for NCSL
See also
NATIONAL CONFERENCE OF STATE LEGISLATURES BLOG | NCSL BLOG
CRYPTOCURRENCY: CURRENCY OF THE FUTURE OR JUST A FAD?
Heather Morton, program principal in Fiscal Affairs, covering financial services issues for NCSL
More than forty years ago, Nobel laureate Friedrich von Hayek published a small book in which he called for the “denationalization of money.” For him, high inflation rates in all countries were proof that states were abusing their monopoly on issuing banknotes, ...
ReplyDeleteIgnoring that the demand for fiat is artificially suppressed in that, except for physical fiat, aka "cash", only the banks and other depository institutions may use fiat?
And like all other Austrian Economists apparently, did Hayek ignore that theft by deflation is also possible, e.g. as the population grows but the money supply does not keep up?
"Friedrich von Hayek called for the 'denationalization of money.' For him, high inflation rates in all countries were proof that states were abusing their monopoly on issuing banknotes, and that only private money in competition could guarantee stable money."
ReplyDeleteHayek is one of those figures whose warped megalomania (like Ayn Rand) inspires many stupid young males. Once a young male joins a cult under his Hayek or Ayn-Rand guru, his trance becomes inpenetrable.
Let’s be clear: inflation is caused by shortages, combined with a surfeit of money and / or bank credit.
In the USA the big culprit is private bank credit -- i.e. banks lending higher and higher mortgage amounts (and HELOC amounts) on a limited supply of housing. This pushes up housing prices and rent prices, which in turn pushes up prices across the entire U.S. economy. However wages do not keep up. (More on that in a moment.)
Banks push up mortgage loan amounts in order to collect more profits in the form of interest payments. Runaway bank credit (and bank fraud) is why we need $25.46 today to buy what one dollar bought in 1913. In 1968 my mother was paid $600 a month in a minimum wage job. Today the equivalent would be $4,345, but today a full time minimum wage job in the USA pays only $1,160 per month.
Inflation (caused by runaway bank credit and bank fraud) is one reason why minimum wage American workers fall farther behind every day. Another reason is debt bondage, again caused by banks. Friedrich von Hayek would have loved it.
Hayek lived at a time when banks were not quite as out-of-control as banks are today, so in Hayek’s opinion, the big culprit was the ebil gubmint. This led Hayek to become one of the founders of the infamous “Chicago School,” which promotes neoliberalism even if it causes genocide (e.g. Chile under Pinochet).
"The success of Bitcoin and other cryptocurrencies today shows that there is indeed a market for such a private issue of money. It is however more than questionable whether a system with private currencies can actually replace the state-organized monetary systems and whether in the end a stable monetary system will emerge...."
Without federal laws, I don’t see how a currency can be anything more than a crypto-currency.
"Denationalization of money would be the end of national sovereignty and thus the end of the modern national state and the Westphalian world order, replaced by a global market society. Whether this would be utopian or dystopian depends on one's assumptions and value system."
BULLSEYE. National sovereignty is sustained not by armies, but by monetary sovereignty. This is the most important power that any central government can have (along with the power to tax). In Europe the politicians of nineteen nations have surrendered their monetary sovereignty to bankers. In Eurozone nations that have trade deficits, the result has been a horrendous and ever-worsening disaster for average people.
Again, Hayek would have loved it.
Denationalization of money would be the end of national sovereignty ... Tom Hickey
ReplyDeleteActually it would be the end of money with the possible exception of common stock, which shares wealth and power and requires no usury either.
Don't let the gold worshiping hypocrites fool you, Tom. It's been government that has given value to gold, not gold to fiat.
I.e. the true denationalization of money would require that no more taxes be collected in abstract form but concretely such as in so many tons of wheat, barrels of oil, etc.
ReplyDeleteTh maximum equity out of a house worth about £400,000 might be about £150,000. A person might live another 20 years so I do agree that is a long time to have a loan for without paying anything back. But a bank can create the money out of nothing, then lend £150,000 on a house worth £400,000 which in twenty years time might have quadrupled in value. A free lunch for the banker. What a rip off? And the banks will be driving house price inflation up because they can create near unlimited supply of money out of nothing.
ReplyDeleteThe nation doesn't realize how the bankers have ripped ripped them off and turned them into workaholics with very little spending money which killed the economy and crushed jobs.
taken into account.
Richard Murphy: “First, Let’s Kill All the Accountants” – On Accounting’s Systemic Failure
ReplyDeleteThe liabilities of the (government-privileged) banks toward the non-bank private sector are largely a sham, by design, to prevent bank runs - which would be a non-problem in an honest system except for the failed banks themselves and for their entirely voluntary depositors and other creditors.
Not surprisingly then, the assets are largely a sham too?
Then does "Honesty is the best policy" not apply to banks too?
"Denationalization of money would be the end of national sovereignty"
ReplyDeleteWell, cryptocurrency does not represent a denationalisation of money. It is just techo-anarchy enthusiasm and a lot of financial markets speculation desguised as something much more relevant than it really is.
Even if that was not the case and money was denationalized, I don't believe it would be the end of the national sovereign, if the sovereign still retains the power to enact and enforce laws, including taxes and many laws regarding finance and international transactions...