To make me their benevolent King and to have everybody worship me of course.  Utility maximized :-)

Trust me.  I know what you should do. 

 

Indeed, the problem with money creation is the seigniorage.  It is btw what we are all after if we hold bitcoin :-)
Seigniorage is unfair because it is value obtained for nothing (no production, and no investment or risk-taking in any production, no saving).

If you increase the money supply, there is of course seigniorage, and that is paid for by those already holding the money, but who are not allowed to make more of it.  The creators of the money supply tax those that hold the money (and money is always held !).  

Keynes made the fundamental error in thinking that the price of MONEY is the interest rate.  In fact, interest rate is the price of *holding value*.   Keynes' basic idea was that one can get the interest rate lower by increasing the money supply.  
 If you increase the money supply, you create inflation.   It means that to hold the same amount of value, you will need to hold MORE money.  So if the demand for holding value is the same, increasing the money supply to alleviate this won't help, because the inflation will make this correspond to holding MORE money.

You can see this as follows:
Suppose the market wants to hold 1/3 of the money market cap of value Q, and that this leads to an interest rate of 15% say.
Now you want to relieve this.  You print twice as much money (inflation a factor of 2).  Point is, the market cap in VALUE is still Q, but it corresponds to twice as much money.  If the market still wants to hold 1/3 of the market cap Q, this will now correspond to twice the amount of money that was demanded before.  So you've printed twice as much, but the demand is twice as much.  Keynesian printing shouldn't affect interest rates.

In reality that doesn't happen.  Keynesian printing does lower interest rates.  In fact, what happens is that if you start printing, that those wanting to hold value ESCAPE into other assets than your inflating money.  So yes, the DEMAND for money will lower, the interest rates will lower.... and you are inflating the demand for *other* stores of value (houses, dot com stock....).  You won't see this.  You are blowing a bubble somewhere else without noticing.  This initial rising first has positive effects on many indicators.  People start thinking that the economy takes off.   And then the bubble bursts.  And Keynesians are going to print even more to try to erase the damage from the burst bubble.  To blow another one.  And so on.

In the mean time, a lot of seigniorage has been produced, and those that are profiting from it get richer and richer.

Then the same amount of money will be able to buy more (deflation).

Infinite expansion is ridiculous.  But unlimited economic growth is not impossible.  If you understand what economics really is about: satisfying needs and wants.  Economic growth is hence finding ways to improve the satisfaction of needs and wants.  A simple way of obtaining economic growth is for instance, to learn to live happily with less !  Not many economists will consider that "economic growth", but if you think about it, being happy with less is in fact economic growth: the scarcity has been reduced, which is the goal of economics: to make the best choices in the face of scarcity.  If you are perfectly happy with what you have and there's nothing else that could still please you, you've reached in fact an infinite economic growth: scarcity has then been reduced to zero.  Nirvana, or heaven, or whatever.

Just a way to look at things. 

Economic growth is not "more stuff" and certainly not "more of the same".  It is more satisfaction and less frustration.

That is true.  However, there is some kind of self-fulfilling prophecy aspect to that.  If sufficient traders use the same intrinsically worthless techniques, and hence come to the same silly conclusions about buying or selling, then those initially worthless techniques DO become true predictions of the future (at least as long as there are no other demands and offers than those from traders).

It is funny, because "technical analysis" has the same "next fool" property as money in itself: technical analysis is only worth something if others think it is worth something concerning the prediction of prices.  The specific algorithms used in technical analysis can be totally arbitrary, as long as sufficient people use the *same* algorithms.  If there is a prediction algorithm which is as silly as "at full moon prices go up by 10%", and if sufficient people BELIEVE that, they will buy just before full moon, and have the prices rise up to 10%.  Not more, because then their algorithm tells them that the asset is somewhat overpriced as compared to their "prediction".
So, technical analysis algorithms behave as money: if sufficient people think it is worth something, then it IS worth something.  

It does.  Fool A, next fool B, next next fool A, next next next fool B....

I accept your token (money) because I think you will accept it back, and you accept it back because you think that after that, I will still accept it again from you because I think that after that, you will accept it back and so on.

That's why it is sustainable.  Greater fool doesn't work (or stops after 1 cycle if you're only 2):

Fool A -> greater fool B -> A is not greater greater fool, crash.

I am willing to get something because I think you are going to be willing to pay more for it because you will think that I will pay even more for it.... not !

 

Absolutely.  Taxes required in a certain asset is a strong incentive to create a demand for that asset as a monetary item, and hence to "kick in the monetary speculation cycle" for that asset as a monetary item (that is, to turn something into money).

After all, something is money because there is an "infinite Ponzi scheme" behind it:
you accept it in exchange for something of value, because you think that Joe will accept it in exchange for something of value because you think that Joe thinks that Bill wil accept it in exchange for something of value because you think that Joe thinks that Bill thinks that Jack will....

It is the "next fool" hypothesis (a real bubble or a Ponzi is based on a "greater fool" hypothesis).  In contrast to the "greater fool" hypothesis of which you end up running out of, the next fool hypothesis is indefinitely sustainable.  That's money.

Taxes are a strong way to make you believe that Joe, Bill and Jack will accept it, because you know they have an ENFORCED demand for it.

However, I'm not sure that taxes are the sole generator of demand for money.  After all, once the cycle is kicked in, the monetary usage is started, and unless a "better" kind of money comes along, I don't see why people should stop use it as money.

There is namely also the opposite.  The state collects taxes to be able to obtain (unless it is a very dictatorial state and can force you into slavery) stuff from people for the state to enjoy (after all, the state is for a part just the state to be able to profit from people's production).  Now, in as much as people would value their casino chips much more than the state issued fiat, you could imagine that the state cannot obtain much *value* for its collected taxes.  It depends how taxes are collected.
Imagine that the tax rate is 1/3.  That is, you (and everybody else) owe 1/3 of your value production to the state as a form of taxes.  You have to pay them into state money.  All the rest, you prefer to buy with chips - especially foreign stuff where people don't accept state money.
In principle, you could then trade stuff that is paid 1/3 in state money, and 2/3 in casino chips.
Now, if the state wants to BUY stuff at your place, you may require the state to pay you in casino chips for 2/3, otherwise you don't do the deal with the state.  But the state doesn't have any casino chips !
So the state is obliged to exchange state money for casino chips.  It has to exchange 2/3 of the collected taxes into casino chips (so only 1/2 of the original collected taxes go directly into buying stuff for the state to enjoy).  Otherwise it cannot buy your production (you refuse).

So in the end, the circulation of state money will carry 1/3 of the economic value, and the casino chips, the 2/3.

That would be the normal issue if the sole demand for state money is to satisfy the obliged tax paying duty in state money: the state money would then ONLY be used to pay taxes, and can then ONLY carry the value that is taken by taxes.

I think we are just having a discussion about semantics, about exactly what we assign the word "money" to.

To me, money is an asset (not necessarily a commodity - it can be an abstract asset), with the particular property that you mainly want the asset, and use the asset, to exchange it against things, and that you are not interested in the asset for its consumption usage or its capital (production) usage.  Anything you hence want to acquire with the sole or main purpose to exchange it again later against something else, is to me a monetary asset.
It is, in other words, a "store of value", in the short term (you do something for Joe and you get it, and you want to buy groceries with it tomorrow), or in the long term (you buy houses with the sole idea of selling them later when you retire: houses are money then).

Money gets its monetary value by the demand for it for monetary usage.  It can already have other value for consumption usage or for capital usage, but if it is also used as a monetary asset, there's an extra demand for it, and hence extra price.

State-issued assets can also have this monetary function.  If of course you only consider the state-issued coins as "money" then you mustn't be surprised to find that money is state-issued.

On the other hand, debt is in my book not "money".  Debt is a contract, an agreement, of which the debtor is obliged to honor it.  If there is no obligation and precision, I don't call it a debt.  Money is by definition not an agreement, but it is a speculation on the behavior of others in the future.  If it is an agreement, then it is not money, by definition.  However, IOUs by themselves are of course also assets that can have a monetary usage.  But not because they are debt assets.

But that's a matter of definition.  If you call IOU's which have no strict obligation, debt (so that they are in fact speculative items such as money), and if you call strict obligations which are debt, money, then of course we can confuse the discussion enough so as to equal them.

But as I said, I'll buy Graeber's book and give it a read if I have time.

Now then my question to you: why would the state make its own life difficult, and issue a fiat money with a hard-to-obtain metal of which its own supply was limited ?  Why not just issue copper coins ?  Or paper banknotes ?  (like now ?)
Because if gold didn't have any mercantile value except for a few jewel makers and if gold wasn't seen as something with a monetary function at all, why go through the hassle to make golden coins and limit yourself in your abilities to issue them ?
If the value of the fiat money came from the tax collection, then ANY fiat would have been good enough.  Papyrus "banknotes" would do.  Why would they use gold and silver and make their own way of doing difficult ?  And why was gold and silver used by so many states ?
After all, if it was just a matter of issuing a state-specific token which gets value from tax collection, how could it turn out that:
- most if not all states chose gold and silver ?
- most if not all coined pieces of money had an AMOUNT OF GOLD OR SILVER that corresponded to their value ?
- the exchange rates of coins between different coins is determined by their alloy composition ? (in other words, the value carriers are the metals themselves, and not the stamps).

No, the theory that fiat money was issued first, got its value from tax collection, and that kings happened to have gold lying around, and decided to make their fiat money out of gold, and that it was THIS that started giving value to gold seems to me untenable.

The "stability of a currency" is in fact very problematic.  Of course, a currency that is used a lot gains stability, because of the "stickyness of prices".  People get used to prices, and if prices are suddenly very different, they tend to adapt their buying habits as a function of this differential, rather than doing an updated full market study each time.
That is, if you think a bread should cost about $1.-, and you suddenly see a bread at $5.-, you will probably not buy it (and you will think of the bakery as a thief).  If you think that a modest car should cost about $ 15 000.-, then if one presents you a modest car for $ 50 000.- you will not buy it.  On the other hand, if you see an "opportunity" to buy a modest car for $ 6000.-, you may "jump on the occasion" even though you were not considering buying a new car any soon.

The more people have prices in mind, the less daily volatility is possible, because people would buy more at lower prices, and buy less at higher prices.  Wages are also such a thing.  They are contractually established.  Your boss cannot just walk in and tell you that this month, he will only pay half of your usual salary.  He won't walk in, and you will not get nervous, because next month, he's not paying the double.

So usage, and psychological stickyness of prices, stabilise money on the short term.

On the longer term, central banks try to stabilise (well, to inflate slightly) the *consumer price index*.  However, in doing so, these central banks forget that prices are market signals.  There can very well be market forces that would change the consumer price index basket value with respect to other assets.  By trying to stabilise/inflate the consumer price index, central banks are sometimes obliged to inflate LARGELY other assets, like stock, housing prices, and other things.

Moreover, as increased economic productivity should normally DEFLATE the consumer price index, the slight inflation that central banks want to establish can be hugely inflationary without people noticing.  

It is interesting to see that http://en.wikipedia.org/wiki/Inflation#mediaviewer/File:US_Historical_Inflation_Ancient.svg average inflation was compensated with deflation historically, as long as there was a sound money principle (essentially a precious metal standard).  When central banks really kicked in, we only got inflation.

As central banks, just like any other human endeavour, is ill informed, based upon human action, and must guess what will happen, in fact, central banks are usually *just as wrong* as any other economic agent in knowing where the economy is heading.  By giving them more power, they are then just as well causing cycles.  They are causing OTHER cycles than the "free running dynamics", but they cause cycles by their misconceptions just as well as the "natural" business cycles. 

A currency doesn't get its price from speculators (alone).  It gets its price ESSENTIALLY from the demand for the currency to be able to buy stuff with. 
Most fiat money is worth what it is, not because of FX traders, but because people use it every day to get paid in, and to buy their groceries with.  That installs a demand for the currency, which determines its scarcity and hence its price.

Standard economic vision does NOT claim (on the contrary) that money came before barter.  On the contrary.  Standard economic vision makes precious goods with a monetary function emerge FROM barter.  
Of course debt is also very old.  

In fact, debt and money are *two different ways* to trade indirectly over time and to "get the balance right".

The fundamental problem is this:
In the interaction between agents A, B and C, A does something for B at time t0 with the idea of getting something back from agent C at time t1.  In order to get this right, B will have to do something for C at time t2.

It is the principle of indirect trade in its most elementary form.

The simplest way of doing that is with trust.  That's what you get in close social circles (within a family, say).
If trust isn't that high, you need a more formal way to do so.  The most obvious system is with debt:

When A does something for B at time t0, B gives an IOU(B) to A.  The IOU(B) is a token, or a written piece of paper, where B *engages himself* to do something against the token.  If A wants C to do something for him at time t1, he could write an IOU(A) and give it to C, but he can also negociate with C that he gives him his IOU(B) instead.  Now C can require from B to do whatever B engaged himself to.

Nothing stops you from "standardising" these IOU(X) tokens: if the IOU(B) consisted in "I owe you 10 amphora of wine" and the standard is "one bag of grain" then nothing stops B from issuing an "equivalent" IOU(B) in 50 bags of grain.  These tokens are DEBT ASSETS.
The point is that they are FORCIBLY exchangeable against whatever the debt is.  If you hold an IOU(B) for 50 bags of grain, then B has no choice but to give 50 bags of grain against the IOU(B), which he can then destroy.  You have to trust B that he will honor his engagement when he took on the debt.

If there is still less trust, then you go for money.  Money is any asset of which you EXPECT (speculate) that others will be WILLING to exchange stuff against.  That asset must hence be a very tradable asset that many people want.  This desire can come initially from something that has important use (such as food), or something that is trusted to be an intermediate medium of exchange.

In this case, when A does something for B, he TRADES it against another asset of which he speculates that C will want it too.  A does something for B, and B gives an amount of monetary asset to A.  A can forget B now, and whether B is trustworthy or not, doesn't matter: A now possesses something of which he thinks that *C* will value it.  Whatever B does, now.
When A goes to C, he can PERHAPS obtain that C does something for him, against this monetary asset, simply because C now believes he will get stuff from B (or from anyone else).  A makes a bet that C will accept it, and C makes a bet that B will accept it.
This is money.

As you say, in your quote: money emerges essentially in international trade, because there, honouring debt cannot be enforced, trust is absent and you need to have something you expect to be of value.

The Egyptians already used gold bars in the same way as the Sumerians used silver bars for international trade.  *that* is a monetary function that has nothing to do with IOU or with debt.  We are 3000 years BC here.

Money is used when tight social bands are absent (such as in a family or a tribe) where everybody works according to social rules, for one another, and when trust or enforcement of trust is absent to be able to count on the honouring of debt.

I know that that is a vision.  It is as old as John Law's vision in the 17th-18th century.  It is the erroneous view of "stable money".  Every century, there is an economist independently "discovering" that idea.  Keynes was one of them up to a point, but Keynes is actually much less stupid than the neo-Keynesians and also made a lot of sense.

You are perfectly right that IOU is the way to work together in *tight social cercles* and then *money is not necessary*.  Money is necessary when the other is an unknown, indirect trade is wanted, and the other and his tribe is essentially untrusted.

You must not confuse the state (the king) wanting to exercise control, and the state (the king) wanting to invent something.


Exactly.  And when you were holding gold, not to use it as a consumption good, or as a capital good, but for the sheer reason to trade it for something else, *by definition* gold got a monetary function AND the demand for gold (and hence its price) was higher than the demand for gold for usage.  That EXTRA price is exactly its "money" price.  Things can get value because they are in demand for indirect trade.  THAT value is their monetary value.  Monetary value comes from the demand to hold (for a while) an asset for the sole reason to trade it again against something else.  Whether there are competing demands for usage is in fact not necessary (but it makes it easier to kick in the speculative cycle).


Because this historical vision is the standard vision in economy.  So even if you put von Mises and Hayek on doubt, even Keynes, who is all in for state control and state money and so on, acknowledges this vision, it is a proof that this is not the product of an "emotional mind".  It is standard economic theory. 


The nice thing about threads in a forum is that you can scroll back :-)

I guess this is why paper is expensive these days :-)
Taxes were very often collected not as money, but as commodities.  1/10 of the harvest and things like that.


Keynes was wrong, von Mises was wrong, Hayek was wrong, Rothbard was wrong, but one contested book writer is of course right :-)


You have to understand that debt and money are two different concepts.  Thinking they are the same is a fundamental error in reasoning.  
The fact that debt existed (which is most probably right, I have never studied that, but it sounds perfectly reasonable) is no proof that money rose from debt.


Sure :-)

But OK, if I have time I will give it a read.

The point is however, that in "international" trade, the concept of "IOU" doesn't mean much.  IOU is perfect in tight social circles.  Social control balances informal IOU.  But if you come with a ship full of amphora of wine for more than 1000 miles, you don't care about any IOU from the guy buying the wine.  You'll maybe never see him or his countrymen again.  You want something in return that is also accepted by people that have nothing to do with the countrymen of the wine merchant.  So his country, his king, his state, you don't care about.  You want something of value independent of that king and country, that you can trade for something in *your* country.  An IOU from a distant king and country, your fellow countrymen don't care about !

That's a way of saying that you've lost the argument I guess :-)

What I've shown you is some examples where states *used* the fact that precious metals were generally seen as value-carriers to base their state-decreed money on.  There were two simple ways to do that:
- make coins of the precious metal, of which the denomination corresponded in fact to the amount of metal (such as the Joachimsthaler, and the Spanish dollar).  The state stamp then simply certified the veracity of the amount and kind of metal.
- give out paper bills that are exchangeable for the precious metal (or at least are decreed to be potentially exchangeable).

MOST of the monetary history consists of *this* kind of state money.  As such, the state doesn't "impose value by authority" but *uses* market-determined value to base its state-based money on.

My argument was simple and straight-forward: if it were true that money got its value *solely* from the authority of the state (which is your statement) then no state would have gone through the difficulty of issuing money which is based upon precious metals.  They could have issued money by printing paper.   But historically, that didn't happen.  I was going to write, that never happened, but I'm in fact not sure that it didn't happen anywhere.

It is true that *today* fiat money is exactly that.  But fiat money usually (again, I was going to write always, but there may be exceptions) started out as precious-metal backed money and derived its value from the precious metal value that was of course solely given by the market.  It is after a century of "scam" that fiat lost his link to precious metals.  In many cases, the states intervened to FORBID other money.  The USA went as far as to forbid the holding of monetary gold !

But be careful to what I'm saying: I'm talking about the *historical* path, the one you claimed was mostly or always state-authority based.

I'm NOT saying that money HAS TO BE precious-metal based.  It doesn't have to.  State authority CAN introduce pure fiat money.  Only, I'm not aware of any fiat money that was historically issued that way (historically is "more than a century ago").  I'm not excluding that there were examples.  But all examples I know of, have an initial link to precious metals.

In fact, state money can indeed be issued, and can have value.  The state simply has to guarantee scarcity of the money.  Then it can, or cannot, be adopted by the market.   If moreover, the state makes laws that make it difficult or illegal to use free market money, such as precious metals, this can kick in the speculative cycle which turns an asset into money. 


I think you should get your historical facts right before claiming such statements.

BTW, here's an interesting piece of the Great Keynes himself about money:

http://encyclopedia-of-money.blogspot.fr/2012/10/phoenician-weight-standard.html

Money doesn't come from the authority of the state, but the state wants to limit the use of money on its territory to the legally allowed tender in order to be able to control and profit from it (mainly through seigniorage).

The authority of the state was "used" some times to "certify" the metallic contents of the coins (as were some *private* certifications like the Joachimsthaler).  It turns out that states often scammed people with fake certifications, while private certifications were usually more trustworthy.

The best proof of the error in your proposition is that most state fiat money has been (fakely because the states scam people) backed by metallic amounts for a long time.   If it were true that it was the state's authority that was solely sufficient to give value to state-controlled money, then non-backed fiat money would have been the norm.  After all, the state's authority wouldn't need any backing-up by any metallic or whatever commodity according to your claims.  Pieces of paper with a stamp from the state would do.

It took more than a century to get loose from metal-backed fiat money (and from the moment it did, fiat money plummeted in value like a stone).

Fiat money has been possible because of a century-long scam, where people were made to believe that they were *actually* handling a state-certified amount of metal with the fiat.  When the habit of not handling the physical value carrier which was the metal was so generalized, and people got used to pay with pieces of state-stamped paper (believing it was worth metal), only then the state scam of fiat money could be carried through.

So much for "state authority gives value".

The historical dollar was the Spanish dollar which was nothing else but a calibrated piece of silver, to be identical to the very trustworthy Joachimsthaler pieces of silver:

http://en.wikipedia.org/wiki/Spanish_dollar

The first US dollar was supposed to be a state-issued equivalent of the Spanish piece of silver.

http://en.wikipedia.org/wiki/History_of_the_United_States_dollar

The continental currency, which was an attempt at "fiat" which was not backed but "declared equivalent" to a piece of silver (which is by itself ridiculous) failed miserably.

The US money was saved for a while with the Contract Clause, allowing only gold and silver as legal tender.
http://en.wikipedia.org/wiki/Contract_Clause


I could go on...

I partly agree with you, especially with the idea that history doesn't repeat itself (and if it does, it doesn't in the same way).  I agree with you also that the situation now has nothing to do with 2011, for exactly the reasons you give.

However, where I don't agree with you is that cryptocurrencies were just a new mania.  In fact, there are not many ways beside a blockchain technology to have private computer money that is independent of a state or a private company, and that you can deal with on your own.

It seems like a natural evolution: from barter to gold to fiat to cryptocurrencies.  These are, however, social revolutions, not just technological inventions.  Cryptocurrencies are not just technological inventions like the internet or video tapes: they support a social change.

In a globalised economy, it is pretty clear that national state-backed currencies are going to be outdated.  We already had a private world currency, which was gold.  However, states, wanting to control this, and wanting to manipulate this powerful economic tool, did everything which was in their power to undo the universal and private money that was gold.  And yes, gold had many *practical* problems, like theft, the irreversibility of a gold transaction and so on.   The practical advantage of (initially gold-backed) government fiat money made that there was a social revolution in the payments.  The states used this to scam people and print more fiat than they could back up, and ended up using their government power to make gold illegal as an exchange medium (simply to cover their scam).  As long as economies were largely domestic, national fiat currencies were doing OK, and the state was the master of the game.
The military hegemony of the USA after WWII made that it could impose its fiat money as a kind of world currency for a good part of a century.
However, this is now put into question with other economic blocks competing.  The US dollar is still a world-recognized currency and this will not disappear soon.  The demise of the dollar is not for tomorrow.

However, the banking crisis of 2008, the problem with the Japanese, and the future problems that monetary state intervention is programming, will wear out the trust that people put in state backed fiat - especially when the USA will be just an economic power like others, and not have a world hegonomy anymore.  The Euro, which was initially planned to be a non-national and hence much less scammed fiat currency, is having problems exactly because of this with some member states who cannot get rid of the habit of scamming with money.  Greece being the prototype example (but that's small beer), but France not playing according to the rules either.  The Euro will become a scammed piece of fiat like any other if the southern-Europe states have it their way.  Which is a pity, because the Euro was a non-national fiat currency as was never seen anywhere.  Giving up national currencies and national fiat hence HAS already happened in Europe.  The next step to free private money isn't so far away as one might think.

Gold has become impractical for personal global trade.  If states are not to be trusted, and private companies (like banks) are not to be trusted, then it will be time to have the next social change in the means of exchange.  From barter to gold to fiat, the next step can hardly be anything else than a cryptocurrency.  Will the historical cryptocurrency, being bitcoin, have the advantage of being the first ?

It will not happen overnight, that is for sure.  It will take at least decades.

But there aren't many alternatives besides cryptocurrencies if one wants to have a private company and state free global means of exchange.  That's the point.  I have a hard time imagining that tomorrow, *other* technologies besides a block-chain technology will emerge on which to base a company-free and state free currency.  This is why this is not just a hype.  Or we will forget for the next century or so any kind of money besides state-based fiat, or it will be a cryptocurrency.

Also, things used as money, need a build-up of trust.  It must be around for a long time before it can be used that way seriously.  It is why I think that bitcoin is still a major player even though being the first, it has many technological non-idealities.  Of all cryptocurrencies, bitcoin being the first, will have still the most trust.  Which will not stop other cryptocurrencies from being around and which may have better usage in specific domains.  But they will be "backed" by bitcoin I would think, for its historical prevalence.

This is strange.  Bitcoin is more a libertarian concept than a technology.  The blockchain is a technology invention that made the libertarian concept of a cryptocurrency possible.

What we are seeing (and I applaud it being a libertarian myself) is exactly the freedom we are longing for.  Predator and prey, greed and scam, the powerful and the weak, hopes and deception, wild swings, ups and downs: that IS liberty.  The "human element" is exactly what we want to liberate, and what you call the destructive powers is exactly the freedom we are longing for.  So what's the problem

Bitcoin is an element of libertarian freedom, and is behaving also in that way.

To me, this is all just great !  What did you expect, maybe ?  Freedom means also that you shouldn't count on any specific behavior of others to achieve something.  Freedom means exactly that: freedom.  

I would even think that high gains and high losses, despair and so on, are a very good way to distribute seigniorage well amongst people.  The early adopters will have taken profit, or will have made huge losses, and the seigniorage that would have been theirs will not be theirs as they will have gone through many periods of despair, having handed over their coins to others, with profit or with loss.  This cycle may repeat itself several times, to shake out the early coins several times, and randomly distribute it.

There always has to remain the doubt of bitcoin failing.  If it weren't, coins wouldn't get redistributed, but would simply be held indefinitely.  The genuine possibility of bitcoin failing is part of the distribution scheme.  But then, it also has a genuine probability to fail !

It's not about his "authority", but about his arguments.
I guess that Nobel Prize Hayek is also not taken seriously then ?


Of course gold and silver was used as money ! 

The "authority" you talk about was just a certification of the amount and purity of the coins.

http://www.jmbullion.com/guide/history/