Using Euro coins as weights (2004)

That is, traditional specie coin currency is standardised for quantity and quality, or at least is initially. Most states have found a need to devalue specie coin, and virtually any state with a sufficiently advanced financial system and institutional trust either settles on a fiat currency or adopts another country's fiat currency as its own standard. kragen is making a similar point here: <https://news.ycombinator.com/item?id=41895405>.

For the latter, see the U.S. dollar which is either the or an officially accepted currency: Turks and Caicos and British Virgin Islands (both British overseas territories); Bonaire, Sint Eustatius, and Saba (all Dutch municipalities); the independent states of Ecuador, El Salvador, Timor-Leste, Federated States of Micronesia, Republic of Palau, and the Marshall Islands; and quasi-official or widespread use in the Bahamas, Barbados, Belize, Costa Rica, Panama, Bermuda, Myanmar, Cambodia, Cayman Islands, Honduras, Nicaragua, Somalia, and Zimbabwe.

I've developed the view that seignorage, that is, the exchange value in excess of specie value of coinage, is effectively a measure of trust in a currency system, and that fiat currency in paper or even more so as ledger entries (written or electronic) express an extraordinary level of trust in a currency, the more so if that currency is widely accepted internationally.

Another interpretation is that money in a given economic region is the most widely accepted commodity, that is to say, the exchange medium which is accepted preferentially to any other. This need not be a conventional currency (e.g., commodity or symbolic exchange of shells, hides, cattle, cigarettes, alcohol, laundry detergent, etc.), or the official currency of a region (though legal sanction and sanction of discharge of debt go a long way to establishing a currency within a given region). Multiple currencies may trade simultaneously, possibly in slightly differing contexts, and through much of history there has been at least some distinction between retail trade (often copper), wholesale (silver), and capital / government financing (gold). Adam Smith discusses this at great length in Wealth of Nations. Multi-metallic systems often involve variable exchange rates between different classes of money, and I've mused that this might be something worth reintroducing to modern financial systems.

One of the biggest problems with contemporary monetary theory is that issues at the retail level (wages and household spending) are difficult to address without creating inflationary asset spirals, including most notably of real estate, but also of stocks, other financial assets, and collectables (wines, art masterworks, memorabilia, etc.). One can in fact look to markets and auctions for such assets as one of several signs that monetary policy is in fact misfiring, in my opinion.

Matt Ridley isn't someone whose views I generally subscribe to, but in a Feb 2019 Intelligence Squared (UK) debate with Johan Norberg and David Runciman, Ridley made a throwaway comment that whilst "[m]arkets in goods and services for immediate consumption such as 'haircuts and hamburgers'work very well and efficiently in delivering innovation and efficiency ... markets in assets (goods for hoarding and resale) are 'so automatically prone to bubbles and crashes that it is hard to design them so they work at all'".

This apparently appears in his book The Rational Optimist, I'm finding via a FastGPT query:

<https://www.goodreads.com/book/show/7776209-the-rational-opt...>

<https://www.goodreads.com/work/quotes/10684114-the-rational-...>

I strongly suspect Ridley was citing his own work in that debate, so thanks for prompting me to look that up.

There are various ways in which such iniquities might be addressed. Among the traditional approaches are various income supports, minimum wage, universal basic or guaranteed minimum incomes (UBI/GMI), on the wage side, a land value tax (tax on the unimproved value of land), an asset or wealth tax, and/or a transaction tax (particularly aimed at HFT).

Another possibility though suggests itself in my comment above about status as legal tender. That is, different currencies might be recognised as legal tender (discharging debt) only for a specific set of transactions. Normally we shy from this on efficiency grounds, but it seems to me that there might be a role that could be played especially in separating financial transactions markets from those in quotidian consumption. There are some early variants of this, largely in the form of expiring financial assistance, e.g., a debit card whose balance expires after a given time (1--5 years or so. In the US I believe SNAP benefits (grocery assistance) works this way, and I've heard of similar projects elsewhere. A health savings account in the US (a tax-deferred put-away plan for healthcare expenses not otherwise covered by insurance) is a similar mechanism.

And keep in mind: we're not limited to specific classes of specie (e.g., copper, silver, gold, iron, etc.), but could create and retire entire sets of currencies at will, though I'd suggest at the very least starting with a limited set, and targeting general areas of financial activity, again, wage/retail, wholesale, fiance, government spending (possibly at multiple levels), and international exchange being more obvious candidates.

Related concepts are of insurance or financing of specific assets or transactions. We're in the midst of finding out what uninsurability will mean for real estate markets in disaster-prone areas (wildfires in the US West, hurricanes along the US Gulf Coast and Southestern Seaboard). Paul Baran, co-inventor of packet-switched networks mentioned insurance redlining and its effects on inner-city homeowners and small businesses in a 1968 monograph, "On the Future Computer Era: Modification of the American Character and the Role of the Engineer, or, A Little Caution in the Haste to Number":

<file:///Users/karsten/Downloads/P3780-2.pdf> (PDF) (p. 6)

James Burke discussed a similar situation (reluctance of funding syndicates to underwrite fancy "new unprooved" technology) in severely retarding adoption of lateen-rigged sailing ships, in the TV series / book Connections. (These had been used for about a thousand years by Arabic and Indian sailors, but weren't adopted in Europe until the 1500s or so.) For specific types of transactions, mandating payment in the appropriate monetary type in order to qualify for insurance or certification might work.

The net effect would still be porous, but even porous systems can be managed so long as they impose sufficient frictions. And yes there might be exchanges between currency systems, but so long as those are also somewhat managed (e.g., with reporting, taxes/fees, etc.) this need not be a free-for-all.

And in the meantime, it would be possible for central banks to inject money into specific sectors of the economy, at least distinguishing between, say, wage/retail, wholesale, and finance, and quite possibly even more finely.