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Why Hayek Was Wrong On Concurrent Currencies?

By Arkadiusz Sieroń


The purpose of this paper 1 is to deal with the concept of concurrent currencies. We argue that Hayek‟s proposal is Utopian, since only commodity money can emerge in the unhampered market. Moreover, we show that even—for the sake of the discussion—his idea would be realized, the competing fiat currencies could not be a solution to economic crises—quite the opposite, it could rather enhance the business cycles. We prove that Hayek does not fully understand the nature of money and its function. In particular, we criticize the concept of competition among freely fluctuating currencies, especially: fiat currencies—since, as long as people seek profits, the best situation occurs when in the market is only one money—and the idea of stabilizing the purchasing power of money, pointing out that it would be useless, or even destructive policy. We conclude that the monetary system proposed by 1974 Nobel Laureate would be inferior to the gold standard, for which we opt. I

Year: 2011
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