20.4 – Micro Monetary Systems: A Comparison of Design Features
20.4 – Micro Monetary Systems: A Comparison of Design Features
Learning Objectives
By the end of this section, you will be able to:
- Compare different monetary systems
- Develop your own understanding of money creation and how money can be utilized to mobilize resources and create value
The previous two sections have outlined two competing narratives about money’s origin, use, and value. In this section, we explore a series of case studies to evaluate different examples of monetary system design and execution. The examples commence in settler colonial America, then progress through the Revolutionary and Civil Wars. This historical examination of money reveals a genealogical model of today’s U.S. monetary system.
Next, we take our examination international. Across the globe, communities are experimenting with monetary design. Numerous local currency experiments arise to address resource constraints akin to those faced by U.S. colonists and the Lincoln Administration identified in our historical analysis of U.S. monetary systems. However, despite circumstantial resemblance, their designs frequently reflect philosophical connections to the orthodox commodity money story. Therefore, our final case study exemplifies commodity money design. In this regard, Bitcoin provides an opportunity to contemplate the implications of digital money and the significance of the philosophical underpinnings of monetary system design.
The comparison of these monetary system case studies is framed by four questions.
- How does money enter circulation, i.e. how is it issued or created?
- Which groups have access to the currency and under what conditions?
- How much currency needs to be created?
- How do you generate acceptance or demand for your currency?
These questions and our historical analysis of monetary systems in the United States are inspired and documented by Jakob Feinig. Feinig’s (2020) Moral Economies of Money: Politics and the Monetary Constitution of Society, provides the historical context for this inquiry and represents a contemporary example of monetary analysis. As a work of monetary analysis, Feinig’s book utilizes a wide variety of data to develop new knowledge about money and monetary systems. Public records of government activity, newspaper articles, transcripts from political speeches, letters of correspondence between monetary system participants, and a host of other references, allow us to see how populations have thought about how and why money should be created and valued. Moreover, Feinig demonstrates, as Keynes’ and Marx’s theoretical models propose, that money functions as a mobilizer of resources.
Settler Colonial American Monies
The first of our case studies comes from settler colonial America. To begin building their lives in a new land, the colonists faced many challenges. One of their challenges was their status as a colony of the British Empire. A consequence of being a colony was their reliance on a global monetary system to which th