The big one, though, was financial instability. Far from achieving a "stable means of exchange," the Civil War interventions set the stage for the great currency panics of 1884, 1893, and 1907. It was owing to these that the gov't went about reforming the currency all over again.
Robert glides over this inconvenient part of history, saying only that "In time – after a half-century, more or less – we ended up migrating the Greenback to a new central bank, hence today’s still-green Federal Reserve Notes." (For "greenback" again read "national banknotes.")
Of course his limited space but also, one supposes, his aims, wouldn't let him mention the politics behind the FRA"solution" to the problem of financial instability, including the way better options were passe up to please the big NYC banks. cato.org/publications/p…
As for the Fed's success in ushering in financial stability, well, here are some facts about that up to two crises ago: cato.org/publications/w…
Having reviewed Robert's account of U.S. currency history, let's consider the lessons he draws from it. These are (1) that "we’re in need of a uniform digital currency"; that (2) it has to be publicly rather than privately provided; and (3) that the only remaining question is...
...whether the "Fed or our Treasury will be the best issuer, manager, and modulator of this currency."
Just how well to these conclusions stand up against the actual story of antebellum private currencies and the government-supplied alternatives? I'd say not all well at all.
Just how well to these conclusions stand up against the actual story of antebellum private currencies and the government-supplied alternatives? I'd say not all well at all.
Don't get me wrong. I'm not arguing that stablecoins or other modern private digital currencies are in no need of regulation or that even that they can't possibly "go wildcat." I'm only saying that the parallels upon which Robert's own conclusions rest simply aren't valid.
They aren't valid because he gets the inherent shortcomings of private banknotes wrong (and this is clear even without considering the many amazing private banknote success stories of Scotland, Canada, and elsewhere).
They also aren't valid because stablecoins are really not all that much like old-fashioned banknotes. alt-m.org/2021/06/24/sho…
In sort, to conclude, if there's a good case to be made for CBDC, it isn't one that can be made easily by appeal to U.S. experience, provided of course that that experience is accurately portrayed.
Att'n: @dandolfa @DanAwrey @DavidBeckworth @MehrsaBaradaran @LevMenand @Frances_Coppola @PeterContiBrown @michaelsderby @MorganRicks1 @dgwbirch @DanEricRohde @WilliamJLuther @ZaringDavid
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