Saturday, October 26, 2013

The Art of Finance

Numismatics is the art and science that studies for the forms and uses of money. Numismatists tend to consider government coins as "coins" and all others as "tokens."  Government banknotes are "currency." All other fiduciary instruments are "scrip." Austrian economist Friedrich A. von Hayek argued otherwise.

In The Denationalisation of Money, Hayek suggests that in a truly free market banking system, one bank might issue currency backed by one or more currencies of other banks. 



Gold bug conservatives remain discordant with that proposal; but that is how the stock market works: the corporation's future is evaluated in real time.




While sharing a Libertarian Party tent at the Ann Arbor Art Fair with Ron Paul supporters, one young patriot told me that the Federal Reserve notes are unconstitutional because only Congress has the right to issue money. 

Indeed, the Constitution does give that power to Congress. 




That only Congress should have this power remains an unresolved contradiction from the philosophy of law.  

(Similarly, Congress is empowered to keep a journal; but no one else is forbidden from sitting in the gallery and reporting.)
  

In fact, private coinage is well-known and highly regarded by American numismatists.  The Red Book (A Guide Book of United States Coins by Yeoman and Bressett) is the standard handbook of every knowledgeable American collector; and it includes several kinds of private coinages.



In the 1830s through the Civil War, American banks were overwhelmingly private businesses. (Some state banks were tried.) The demise of the Bank of the United States opened up the "wildcat" banking era.  

Most of these banks were not successful.  But most frontier businesses also came and went. 

 Among the businesses known to New Yorkers of the Jacksonian Era, perhaps the Van Nostrand bookstore - which issued its own copper coins -  stands out as a name we still recognize.

PREVIOUSLY ON NECESSARY FACTS
Money is Speech
Valentines Day: Love and Money
Numismatics Informs Economics
Debt: the Seed of Civilization
Gresham's Conjecture
Supplies and Demands
Murray Rothbard: Fraud or Faker?

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