The Fable of the Cats

George SelginThe comparison has by now been made so often that it may qualify as a  platitude. I mean that between stablecoin issuers and “wildcat” banks, the fly‐​by‐​night scams that supposedly flooded the antebellum United States with notes nominally worth some stated amount of gold or silver, but actually worth little more than the rag paper they were made of.Such disreputable stuff, we keep hearing, is what “private” currency always tends to be like. The paper sort survived until federal authorities nationalized the nation’s paper money during the Civil War. And (we are told), digital currency will be just as bad, unless the Feds take control of it as well.In his recent contribution to your favorite online source for insightful money and banking commentary,Larry White has already explained how stablecoins differ from old ‐​fashioned banknotes, wildcat or otherwise, and not just because they’re digital. Anddifferent stablecoins operate very differently. For these reasons, it ’s unwise to draw conclusions about stablecoins from past experience with banknotes.But as I  plan to show here, it’s also unwise to generalize about privately‐​issued banknotes; and no generalization could be more misleading than the claim that “wildcat” banknotes were typical of the lot. In truth, wildcat banks were far from common even in the antebellum United States. And hist ory offers many examples of commercial banknotes that were literally “as good as g...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs