Free banking is here. From Apple Pay, Google Wallet, Bitcount, the smart cards new magnetic loop technology; and now the mathematics of extending Black-Scholes option pricing to distributed counting systems. It's all here.
Take Citi Bank and their 70 trillion in derivative insurance. Why do they denominate each policy in government dollars? Why not convert the entire business to a digital currency of their own, and just keep one market window open for the conversion of government dollars? Each customer then keeps a balance of Citi currency on the books, and buys whatever insurance option they want, converting to and from taxable dollars at their convenience.
Each complete market can create their own currency, connected to versatile smart cards. Then a hierarchy of currencies can again connect these currencies to each other. The only time a user need convert to dollars is when he/she makes a taxable transaction.
The current monopoly based fiat model, with political hands stealing the fiat, is not going to be reformed. It is much easier for private groups of agents to just side step the fiat tax dollar.
There has barely been any new chartered banks since the crash, bankers do not want any part of the fiat monopoly, too risky. Banking is now dominated by the New York bond market and dealing with government debt is the only game in town. Small business lending is drying up. New banks are better off looking to the new technology currencies and focusing on specialized markets. Venture capital needs to stay up on this effort, and one of them should hire Professor Selgin to lead the charge.
Its a done deal, and economists who have hidden behind the failed monopoly fiat model need to change their views.
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