In 1992, economist and Washington Times columnist Richard Rahn was in the former Soviet Union. He was there in an advisory role as Russia emerged from decades of brutal, spirit-wrecking, and life-exterminating command-and-control.
Rahn quickly found that waving a dollar had quite the impact. Cars were cabs at the time, and if you needed a cab it was as simple as holding a dollar out. While the official currency in Russia was the ruble, commerce was conducted in dollars. The lessons from this truth are too many to count, but arguably the most crucial one is that central banks can’t “gun” so-called “money supply” on their very best day. Such a belief signals a delusion that producers would offer goods and services for anything. No, money doesn’t just circulate because it’s created. In the real world, trusted money referees product-for-product exchange. Russia vivified this via its peoples’ excitement about the dollar. That which isn’t money quickly ceases to be “money” in a traditional sense.
What Rahn witnessed in Russia came to mind while reading University of Southern California professor Nik Bhatia’s 2021 book, Layered Money: From Gold and Dollars to Bitcoin and Central Bank Digital Currencies. While the second half of the short book strays a bit too much into fallacy (for instance, Bhatia is the latest convert to the narrative about the “eurodollar” crushing the global economy…), there’s a great deal of useful information in what will now be referred to as Layered. The excellent George Gilder recommended Layered to your reviewer, and I’m glad he did.
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