Sieroń: Why Hayek Was Wrong On Concurrent Currencies?

12 lutego 2011 Konkurencja walut komentarze: 0

Autor: Arkadiusz Sieroń
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Teksty publikowane jako working papers wyrażają poglądy ich Autorów — nie są oficjalnym stanowiskiem Instytutu Misesa.

The purpose of this paper is to deal with the concept of concurrent currencies. We argue that Hayek’s proposal is Utopian, since only commodity money can emerge in the unhampered market. Moreover, we show that even—for the sake of the discussion—his idea would be realized, the competing fiat currencies could not be a solution to economic crises—quite the opposite, it could rather enhance the business cycles. We prove that Hayek does not fully understand the nature of money and its function. In particular, we criticize the concept of competition among freely fluctuating currencies, especially: fiat currencies—since, as long as people seek profits, the best situation occurs when in the market is only one money—and the idea of stabilizing the purchasing power of money, pointing out that it would be useless, or even destructive policy. We conclude that the monetary system proposed by 1974 Nobel Laureate would be inferior to the gold standard, for which we opt.

I. Introduction
More and more economists are perceiving that the current monetary and banking system is incompatible with the stable economic growth. Indeed, since we departed from the gold standard we have suffered continuous inflation, and since we accepted the fractional reserve banking instead of the 100 percent reserve banking we have been faced with recurring boom-bust cycles. As the money is the command post of each advanced economy, it becomes obvious why the monetary reform is so crucial. One of such a proposal is the concept of concurrent currencies, developed by Professor Hayek, presented in his book Denationalisation of Money (Hayek, 1990). In short, the 1974 Nobel Laureate is against a government’s monopoly of issuing money and claims that every person, or institution, should have a right to issue his own money (either commodity or fiat). However, the question is, if it would prevent the crises? Before we answer it, let’s analyze briefly what the crisis really means.

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O Autorze:

Arkadiusz Sieroń

Arkadiusz Sieroń jest doktorem habilitowanym nauk ekonomicznych. Pracuje jako adiunkt w Instytucie Nauk Ekonomicznych na Wydziale Prawa, Administracji i Ekonomii Uniwersytetu Wrocławskiego. Jest członkiem zarządu Instytutu Edukacji Ekonomicznej im. Ludwiga von Misesa oraz autorem książek Money, Inflation and Business Cycles: The Cantillon Effect and the Economy oraz Monetary Policy after the Great Recession: The Role of Interest Rates, a także autorem kilkudziesięciu publikacji naukowych. Jest stypendystą amerykańskiego The Ludwig von Mises Institute oraz zdobywcą 3. miejsca w The 6th International VERNON SMITH PRIZE for the Advancement of Austrian Economics.

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