Crypto won’t solve our problems – we need to democratize money



It takes some time for this image to emerge. It’s a really messy experimental process on the part of many of the agents involved, including Paul Volcker at the Fed, but also some of the intellectuals who were actually trying to position themselves and respond to this rapidly evolving situation, in which the Fed was dramatically increasing interest rates during 1981 and 1982. They entered a world where capital circulated more and more freely. There was a global financialization going on.

There is no one with a plan to win the day and implement it. My writing is very influenced by the work of Quinn and by the work of Greta Krippner, who wrote a fantastic book called Capitalize on the crisis, articulate the experimental responses that somehow produced some of the more neoliberal aspects of financialization through politicians abrogating certain responsibilities and through actors like the Federal Reserve under Volcker coming up with various tactics to protect against pressure democratic politics.

To bring it back to neoliberalism, it’s really interesting to see a split emerge between people like Milton Friedman and Hayek. Friedman seems to fit much more with your story of what’s going on here. Friedman is actually quite happy for the Federal Reserve to intervene through various forms of monetarism or other tools – some of them quite deceptive and manipulative – as long as they are able to use the state to reintroduce the discipline of Marlet. He believed the problem was that the 1970s were shaped by bad monetary policy, and what we needed now was good monetary policy. Friedman was essentially comfortable with the experimental use of state and Federal Reserve power to reduce inflation and reintroduce economic discipline.

Hayek was much more interesting in the 1980s. I have gone through some of his material which is in his papers at Stanford University’s Hoover Institution, his correspondence from the 1980s and some speeches he gave . The first thing that we notice is that from 1981, perhaps already in 1980, he very frankly qualifies his proposal for the denationalization of money as hopelessly utopian. He is perfectly aware that this will never be politically possible. In fact, there’s a speech he gave to a group of Visa card executives in Athens, Greece, in 1981, where he opened by describing the proposal as essentially a bitter joke born out of frustration and a certain type of radicalization that he should just throw away. .

But he also doesn’t backtrack on the earlier position he held that all we need is just better monetary policy. He claims that monetary policy has never done any good, so there is no need for monetary policy. It is not a question of good or bad monetary policy. We have to get rid of monetary policy. At the same time, he now considers the denationalization of money politically impossible.

What he does instead, from 1981 to 1985 or 1986, is update his ideas about competing currencies by adapting them to this rapidly changing reality. The proposal he presents to Visa executives — and this is a speech he made several times in the 1980s to various groups of banking executives in London who listened to him — is essentially a system of units competing accounts in the form of bank overdrafts.

So, the state can prohibit you from printing your own currency and, in this sense, the state will never give up this prerogative. If you’ve tried to issue your own banknotes, good luck, it probably won’t be possible. But the state cannot control what exactly a bank does in the accounts it manages. Just as banks are able to essentially create credit and benefit from the privatization of this ultimate public prerogative, Hayek thinks they should be able to create accounts denominated not in dollars or pounds, but essentially in new currency units.

It tells you that it is the fees that prevent you from opening accounts not denominated in existing currencies but in your own currency. He rejects this idea and he proposes a solution, and he asks for comments. He claims he already has an idea of ​​how it should be branded, but it would cost millions of dollars – he can’t tell them what the name would be because he was advised by property rights lawyers intellectual to protect it.

He’s doing this scheme of how to deliver on the promise of the denationalization of money, no longer in the form of actual banks printing their own money, but rather using some of the tools of financialization, using some of the card companies of proliferating credit to which he gives lectures and uses some of the tools that banks already use in the 1980s.


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