Allow me to elaborate. Gov. Brainard says that "the period in the nineteenth century when there was active competition among issuers of private paper banknotes in the United States is now notorious for inefficiency, fraud, and instability in the payments system." and that
"It led to the need for a uniform form of money backed by the national government." The clear implication, given the context, is that competitive, private currency provision was inherently subject to all the mentioned problems.
As I said, this is a myth. Antebellum banks were often weak, and their notes weren't uniform, but bad regulatory regimes, not private currency issuance per se, were to blame. As @lawrencehwhite1 pointed out, my critique of Greenberg touches on this: alt-m.org/2021/03/31/jos…
And here is another essay of mine specifically on antebellum "free banking" (which wasn't really all that free at all): alt-m.org/2015/07/23/rea…
History also offers plenty of successful examples of competitive private currency systems. The best are the Scottish and Canadian systems. Here's a little on Canada: alt-m.org/2015/07/29/the…
Yet regulators find it convenient to ignore such successful episodes altogether while distorting the U.S. record by suggesting it is representative of competitive private currency experience in general. Talk about cherry picking!
Despite their own past success with privately-issued banknotes, Bank of Canada experts have played the same game, twisting the record to make a case against private digital currency and for having central banks do what they do best: monopolize! alt-m.org/2017/03/16/wro…
Larry and I and others have now been beating these drums for decades, only to have the same old misinformation repeated again and again. I like having history inform public policy. But the history has to be sound. Bad history is only good for justifying bad current policies.
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I am _not_ saying that today's private digital currencies are just dandy. In fact, many have very serious serious shortcomings.
I'm saying that that isn't a lesson one can even begin to draw from US experience with private banknotes. That's so not only because of what I've said about that experience. Nor is it so just because conditions have dramatically changed.
Another thread, this time just dealing with Gov. Brainard's claim that competitive banknote issuance "led to the need for a uniform form of money backed by the national government." There are more myths here than you can shake a stick at.
(1) Most antebellum notes weren't discounted because their backing varied from bank to bank. Discounts often reflected transport and other costs of returning notes to their sources for specie. Laws against branching and poor transport were the main cause of such discounts.
(There were of course also plenty of bad banks. But laws were to blame for those, too! Notes of doubtful banks were not generally accepted: brokers would by them, and notes of failed banks, at heavier discounts.)
Thanks for the feedback, Claudia! Allow me to give a few examples of what I had in mind in complaining that the Fed's Covid-crisis forward guidance was inconsistent with its supposed move to more strictly data-driven AIT.
Thread: I don't think I've been at all coy when it comes explaining why I doubt that Bitcoin will ever become a generally-accepted and widely-used medium for everyday payments, that is, "money." Misunderstood; but not coy.
Still, for @allenf32's sake I will sum-up my view here.
But first I note that those reasons are irrelevant to the point I made in a tweet to which Allen responds. There I answered someone who, having found an instance of my claiming that BTC was unlikely to become money, or "currency," offered it as proof that I was "bearish" on BTC.
But to be "bearish" is to believe, not that an asset isn't about to become money (very few assets ever will), but that it's value will decline. And I have never taken any stand on the future course of BTC's price. BTC can continue to appreciate without becoming money.
In _Denationalisation of Money_, Hayek supposed that competing private fiat-like monies would vie for market share by demonstrating their stable purchasing power. But, as I observed many years ago, Hayek overlooked something of fundamental importance.
He assumed that private individuals, in deciding which monies to prefer, would judge them by their _macroeconomic_ merits. In that case, the macroeconomically best would win. Hayek assumed this would mean those with the most stable purchasing power.
Granting Hayek's assumption for the sake of argument, his conclusion was a non-sequitur. In choosing what money to prefer, why would people act differently than they do in choosing other goods or assets? Why not pick the fiat-like money promising the greatest _private_ gains?
The Fed has a ways to go to get its Fintech access rules in good order. Fortunately, the ones I've posted are preliminary only. The Fed is now seeking comments for their improvement: federalreserve.gov/newsevents/pre…: