OK: there are two fundamental problems that have to be solved in any monetary system: how to keep the records, and how to control the money supply. With regards to the latter, there are only two options:
1. Let the money supply be controlled by the laws of physics, e.g. use a scarce material as money.
2. Let the money supply be controlled by some policy.
The second option subdivides into two further sub-options:
2a. Let the free market produce money competitively like any other product.
2b. Let the government (or a private entity acting on behalf of the government) do it as an artificial monopoly.
That last option is a central bank.
Those are all the possibilities. All of them have been tried at one time or another in human history. Flawed as it may be, the one that has produced objectively the best results in terms of economic stability and prosperity has been 2b. And there isn't really much more that can be said about it.
Oh, almost forgot:
> > Arglebargle?
> Because I know what that word means.
Arglebargle is the name of an obscure author who wrote on all manner of topics, but whose work has been largely forgotten.
> Flawed as it may be, the one that has produced objectively the best results in terms of economic stability and prosperity has been 2b.
I'm certainly no expert, but I've read a bit into 2a (so called "free banking" eras) and they seemed overwhelmingly quite stable. On what do you base an objective dismissal of that approach?
Mainly my knowledge of the history of the financial system in the U.S. which was characterized by regular panics, crises, and bank runs before the Federal Reserve was founded. (Of course, the Fed bungled it badly in the Great Depression, but has done a pretty reasonable job since then.) Looking now at the history of free banking in other parts of the world it looks like it is not invariably catastrophic. Maybe it's a cultural thing. I suspect that free banking works better in a world where everyone knows everyone else, and the banker's customers know where the banker lives so if he screws things up too badly there's a real risk that people will literally show up on his doorstep with pitchforks.
The system in the US before the creation of the Fed wasn't free banking; after the civil war, the National Banking Acts of 1863-64 created a network of chartered national banks with a single currency backed by the US Treasury. Then in 1879, the US went back to the gold standard, so you're on (1), not (2a).
On that view there has never been a 2a system. No one would honor a private bank note that was not backed by some asset or government fiat. Such a note would, quite literally, be worth no more than the paper it was printed on.
There's a difference between people freely choosing what assets are acceptable to back a given currency and having many currencies floating in value against each other, or the government deciding what each currency can be backed against and at what value (the National Banks had to accept each other's currency at par value).
Yes, of course. But if you have currencies backed by too many different kinds of assets those currencies aren't money any more, they are tokens in a barter economy.
It seems like OP just thinks Jefferson has written some "extremely valid criticism" of central banking, from before the US had the system. Who knows? I think central banking is probably fine and cryptocurrencies are stupid and I don't see where the appeal to authority is.
Your thoughts are clear and interesting. It appears we've always had a ratio of 1, 2a and 2b with some collapses or perhaps even more illusive is the [slow] migration. Like paper gold, man-made diamonds or the private entity stops acting on behalf of the government and ends up owning it.
