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Reasonable yes, but I don't think you can go as far as to say that it's ideal. The ideal state for an economy is one where the rate of inflation/deflation is d

Reasonable yes, but I don't think you can go as far as to say that it's ideal. The ideal state for an economy is one where the rate of inflation/deflation is determined by the market. This would happen if central banks were disbanded and the production/circulation of currency was left to a (regulated) private sector with a healthy number of competing companies innovating to have the best currency on the market. What we are seeing now is a natural adjustment to years of accumulating debt under an artificial, inflation-targeting central banking system. Central banks have tried their best to prevent deflation in order to support the debt-driven "fractional-reserve" system that has created an unsustainable network of debt that is no longer tied to the productivity of real assets. A system of competing private currencies would remove artificial signals manufactured by central bank monetary policy and gov. fiscal policy.

carsongross 12y ago
Sure. I'm saying, ceteris paribus, advances in technology should make the things we want less expensive. That's generally (though not always) why we bother to pursue them. In real life ceteris is never paribus, of course.
coderzach 12y ago
I'm curious how competing currencies would work in practice. Are businesses required to accept any currency? Can anyone create their own currency? How do you regulate private currencies?
- kansface 12y ago
  1. No. Businesses (by federal law), aren't even required to accept dollars now. 2. Yes, but would you use Honest Achmed's Used Cars and Dollars? 3. (Private) Ratings Agencies would rate currencies and maybe each other. The market picks the winner based on trust, convenience, or whatever else it cares about. In practice, I'd expect an 80/20 rule. Two currencies would make up 80% of all transactions in a given region, with a rather large tail (gold/silver/basket of commodities backing, fixed exchange rates, etc). Multiple currencies is nearly unworkable with paper money, but quite trivial with digital paper money.
- roymurdock 12y ago
  Kansface's reply is really good. Hayek also wrote a great paper on the subject in 1990. In it he quite presciently predicts the current conundrum of the euro zone and makes the case for competing physical currencies. He realized that this would never happen in his lifetime but went through the the intellectual steps nonetheless. Virtual currency could make his thesis possible. Check it out if you're interested: http://mises.org/library/denationalisation-money-argument-refined http://mises.org/library/denationalisation-money-argument-re...

carsongross 12y ago

Sure. I'm saying, ceteris paribus, advances in technology should make the things we want less expensive. That's generally (though not always) why we bother to pursue them. In real life ceteris is never paribus, of course.

coderzach 12y ago

I'm curious how competing currencies would work in practice. Are businesses required to accept any currency? Can anyone create their own currency? How do you regulate private currencies?

kansface 12y ago
1. No. Businesses (by federal law), aren't even required to accept dollars now. 2. Yes, but would you use Honest Achmed's Used Cars and Dollars? 3. (Private) Ratings Agencies would rate currencies and maybe each other. The market picks the winner based on trust, convenience, or whatever else it cares about. In practice, I'd expect an 80/20 rule. Two currencies would make up 80% of all transactions in a given region, with a rather large tail (gold/silver/basket of commodities backing, fixed exchange rates, etc). Multiple currencies is nearly unworkable with paper money, but quite trivial with digital paper money.
roymurdock 12y ago
Kansface's reply is really good. Hayek also wrote a great paper on the subject in 1990. In it he quite presciently predicts the current conundrum of the euro zone and makes the case for competing physical currencies. He realized that this would never happen in his lifetime but went through the the intellectual steps nonetheless. Virtual currency could make his thesis possible. Check it out if you're interested: http://mises.org/library/denationalisation-money-argument-refined http://mises.org/library/denationalisation-money-argument-re...