Money
| Lecture handout: Money* |
Textbook Reading: Chapter 7 (Section 7.3; pp. 216-225)
“Most money is purely theoretical. It’s all in computers, backed by trust and confidence.” Jack Reacher (Child, L., 2012, A Wanted Man, Bantam Books, p.520
“I’m very interested to watch the crypto community relearn centuries of monetary economics” John Cochrane (Conversations with Tyler, March 10th 2021)
Can someone really understand crypto currencies and the future of digital money without having a solid grasp of why money even exists? This topic is a great example of why historic knowledge and theoretical clarity are crucial when involved in fast changing industries – it provides a benchmark to verify the bold claims made by industry practitioners. The purpose of this lecture is to gain a deep understanding of what money is and how it has evolved.
Extra activity: The Bank of England Museum
To learn most about the gold content of smartphones see here and here. For a video showing the extraction of gold from iphones see here.
- How 1990s Libertarians Laid the Groundwork for Cryptocurrency, by Aaron von Wirdum, Reason, April 2024 – a good article exploring the links between free banking academics and the early history of crypto
Interactive practice:
Background readings:
- Menger, C., 1892, “On the Origins of Money” Economic Journal, 2:239-55
- Radford, R.A., 1945, “The Economic Organization of a P.O.W. Camp”, Economica, 12(48):189-201
Recommended articles:
- Bitcoin: A Primer for Policymakers, Mercatus Center
- The Bullish Case for Bitcoin, Vijay Boyapati, March 2nd 2018 (for a printable pdf see here)
- Cowen, T., and Tabarrok, A., Cryptoeconomics (Chapter 8 in Modern Principles)
Recommended slide deck:
- The Hyperledger Vision – A comprehensive presentation on blockchain and opportunities for business
Recommended book:
- Narayanan et al. (2016) Bitcoin and Cryptocurrency Technologies, Princeton University Press (see the website for videos, and an online draft version is here)
Recommended podcasts:
- How fake money saved Brazil, Planet Money, October 5th 2010
- “Pierpaolo Barbieri on Latin American FinTech“, Conversations with Tyler, May 19th 2021 – in particular this shows the importance of knowing financial and economic history for tech founders.
- “Brian Armstrong”, Conversations with Tyler, February 2021 – a great overview of how the CEO of Coinbase sees the crypto industry.
- Hashpower – Part 1, Investors Field Guide – a fantastic early introduction to blockchain technology and potential of crypto assets.
Recommended video:
This video is very long, but if you are totally new to concepts like blockchain, bitcoin and NFTs and want a thorough account of the history and development, in a well produced an informative documentary that takes a highly skeptical and cynical approach, I recommend this highly.
For a more positive view of NFTs, an identification of the context in which they’ve emerged (post global financial crisis and great stagnation), and subjectivist approach to value, see this X/Twitter thread.
Finally, for an overview of agentic commerce see: ACP vs AP2: Defining the future of agentic commerce
| Learning Objectives: Understand the origins of money and how this can be used to understand the role of central banks in a fiat money system, as well as to navigate the crypto landscape.
Cutting edge theory: Making assessments of digital and crypto currencies. |