John Law (1671-1729): the financial engineer as social engineer

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Chapter 4 in The Political Economy and Feasibility of Bitcoin and Cryptocurrencies, 2022, pp 35-74 from Edward Elgar Publishing

Abstract: The brilliant Law revived the ancient theory that money is essentially a convention; fractional reserve banks may be backed by land, the value of which is its discounted expected future earnings; or a financial enterprise such as the Mississippi company; or be pure sovereign fiat money. Credit itself may be used as money. Expansionary monetary and fiscal policy may increase a nation's economy, population, and military power; contractionary austerity policies the opposite. His work suggests the need to clearly separate out the categories of rental, sale, and financial asset pricing; the value of money based upon financial asset prices will be extremely unstable. It supports bitcoin and cryptocurrencies by suggesting the possibility of new forms of money such as private fiat money; yet, it suggests that the supply of money is much too important to be left to private entrepreneurs.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2022
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