From gold to Euro : on monetary theory and the history of currency systems ; with 16 tables

This book deals with the evolution of monetary systems. Firstly, it argues that money forms a constitutional element in any private-ownership economy, estab­ lishing a nominal-standard order for the market behaviour of individual agents. The market economy is basically a payment society where money structures and values economic activities, and performs itself as a market asset. The use of re­ sources and the production of commodities are governed by calculations in mone­ tary values which subordinate production and employment to the logic of asset markets. The "veil" of money cannot be withdrawn, as a matter of fact and in theoretical analysis, without changing the economic order of society. Money originates from a credit relation between market agents, thus spot payments re­ place intertemporal exchange. Problems of low trust and information in mutual economic relations are projected onto the money medium in a monetary economy, thereby enhancing its efficiency and dynamics. The rate of interest is not related to time; it is the price for maintaining the agents' solvency in the current period, and it determines a positive rate of return on capital and production. Secondly, the book shows that network externalities in the use of money led to monopoly solutions in the national and hegemonic leader-follower relations in the international economy.

This book shows that the use of money transforms a market economy into a payment society where production and employment are subordinated to the logic of asset markets. Monetary policy emerged out of private banking business and was always exposed to the risk of losing credibility and reputation. The stability of key currency systems was based on different policy preferences. A simple game-theoretic macro model explains the working and the downfall of the gold standard, Bretton Woods and the European Monetary System. It is shown that waning willingness to accept foreign leadership in monetary policy affairs propelled the creation of the euro.

Front Matter....Pages i-ix Introduction....Pages 1-6 Market Organization and Monetary Contracts....Pages 7-17 Money, Interest and Capital....Pages 18-43 Banks as Creators of Money....Pages 47-68 The Emergence of Central Banking in England....Pages 69-93 The Hegemony of Pound Sterling in the Gold Standard....Pages 97-125 The Loss of Credibility and Stability in the Bretton Woods System....Pages 126-143 The European Paper Money Standard: A “DM Club”....Pages 144-163 A Monetary Union With a Denationalized Currency....Pages 169-178 The Multiple International Monetary Standard....Pages 179-186 Back Matter....Pages 191-220