“Synthesizing State and Spontaneous Order Theories of Money”

I have been traveling quite a bit recently and have had a bit of a hard time finding time for blogging. I really wanted to blog about why I think that there is a very serious risk that the Swedish Riksbank might hit the Zero Lower Bound soon and is totally unprepared for this.

I also want to blog more about the recent major changes in Czech monetary policy and finally I want to blog about development economics and particularly about my view of Nina Munk’s fantastic new book – “The Idealist” – about Jeffrey Sachs and why all kinds of central planing is insane (some thing Sachs apparently has failed to understand).

But I have no time or energy for all that now. Instead I think you should read this paper “Synthesizing State and Spontaneous Order Theories of Money” – by the two young and clever economists Will Luther and Alex Salter. Here is the abstract:

What role does government play in determining the medium of exchange? Economists weighing in on the issue typically espouse one of two views. State theorists credit government with the emergence and continued acceptance of commonly accepted media of exchange. In contrast, spontaneous order theorists find little need for government, maintaining that money emerges and continues to circulate as a result of a decentralized market process. History suggests a more subtle theory is required. We provide a generalized theory of the emergence and perpetuation of money, informed by both approaches and consistent with recent theoretical and empirical advances in the literature.

Enjoy!

Hopefully I will get back to blogging in the coming days…

PS Will and Alex you are both very clever economists, but you need to work on your marketing credentials - “Synthesizing State and Spontaneous Order Theories of Money” is not a sexy title for a paper. I am happy I know your qualities so I will read your paper anyway and I am sure my readers will do so as well.

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“Bitcoin is Memory”

Bitcoin has been one of the most talked about talked topics over the past year. Despite of this there is relatively little economic research that has been done on the topic so far. However, a new working paper by William Luther and Josiah Olson add important insight to the economics of bitcoin.

This is the abstract for Luther and Olson’s paper “Bitcoin is Memory”:

“We maintain that the crypto-currency bitcoin is a practical application of what is termed “memory” in the monetary economics literature. After reviewing the theoretical literature on money and memory, we offer a brief overview of the bitcoin protocol and argue that, like memory, bitcoin functions as a public record-keeping device. Finally, we provide evidence that — in line with the standard theoretical account of memory — bitcoin use has soared as the expected cost of storing traditional monies increased.”

Have a look and let me hear what you think of Will and Josiah’s paper.

Will is telling me that he and Josiah have more in the pipeline. I will look forward to that – Will never disappoints writing interesting stuff.

“Synthesizing State and Spontaneous Order Theories of Money”

I have long been impressed with the young guard at George Mason University. Now two of them – Alex Salter and Will Luther – is out with a new Working Paper – “Synthesizing State and Spontaneous Order Theories of Money”. It is very interesting stuff and I highly recommend it to anyone who is interested in monetary theory. Here is the abstract:

“What role does government play in determining the medium of exchange? Economists weighing in on the issue typically espouse one of two views. State theorists credit government with the emergence and continued acceptance of commonly accepted media of exchange. In contrast, spontaneous order theorists find little need for government, maintaining that money emerges and continues to circulate as a result of a decentralized market process. History suggests a more subtle theory is required. We provide a generalized theory of the emergence and perpetuation of money, informed by both approaches and consistent with recent theoretical and empirical advances in the literature.”

PS Will is now an Assistant Professor at Kenyon College, while Alex is a PhD fellow at GMU.

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