Thursday, May 28, 2009

Book Review: Carl Menger and the Evolution of Payments Systems

The Review of Austrian Economics published Neil Skaggs' excellent book review of Carl Menger and the Evolution of Payments Systems: From Barter to Electronic Money (2002). Michael Latzer and Stefan Schmitz edit a compilation of various papers that anticipate modern monetary systems in the Mengerian tradition. The book also includes the first ever English translation of Menger's long version of "Money" (1909).

An included article by George Selgin and Lawrence White cautions against accepting the forecasts of multiple private monetary standards, and that market forces related to wide acceptance portend a long-term role for government base money. While I disagree that private monetary standards will not emerge spontaneously, especially when it comes to the international providers of digital gold currency, I sympathize with the viewpoint that building upon government-provided base money will facilitate acceptance. Precisely, that is why it may be necessary to convince a renegade, non-U.S.-aligned central bank to launch anonymous digital currencies in an effort to garner early market share. It will be the cash-like attributes of anonymity, untraceability, and real convertibility that prevail in the marketplace of economic participants.

Another included article by Stefan Schmitz, "The Institutional Character of Electronic Money Schemes: Redeemability and the Unit of Account", is the first economic discussion that I have seen regarding the digital money transition from the existing dominant unit of account to alternative unit of account.

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