From: "Perry E. Metzger" <pmetzger@lehman.com>
Date: Tue, 10 Aug 93 15:36:53 PDT
To: tcmay@netcom.com (Timothy C. May)
Subject: Re: ADICO: Anarchist FDIC
In-Reply-To: <9308102050.AA04016@netcom5.netcom.com>
Message-ID: <9308102234.AA23328@snark.shearson.com>
MIME-Version: 1.0
Content-Type: text/plain



Timothy C. May says:
> I suspect that verification that a physical quantity of gold is held
> is much less important than that depositors can freely get back their
> deposits. I suppose this means I don't see a real need for gold-backed
> money. (At the national monetary system level, hard assets may be a
> good idea, but at Joe's Bank I don't see any rationale for it having,
> say, 132.74 kilos of gold in its vaults!)

Although this is not the right place for discussing this topic, I can
suggest a reading of "The Theory Of Free Banking" by George Selgin,
which is an excellent economic treatise on why a bank might want to
hold a particular physical commodity as backing for bank issued notes
instead of relying on a central banking system. The book is an
expansion of Selgin's PhD thesis at NYU -- its pretty good.

Even barring this, however, a protocol to determine if claimed
deposits correspond with what depositors think their deposits are,
i.e. an audit protocol, has many uses and would be valuable. Its a
genuinely good problem.

Perry