Quote from: dulldog on May 05, 2015, 12:13:24 PM

I guess we're talking a brand new theory here. I agree, any economic theory is in fact a political economy, still I can't recall any well-grounded theory (at least originated in medieval Europe and till today) that has a decentralization at its very heart.

The "political" part is true at the current level of public awareness. When public awareness improves, hopefully, people will want the state out of money, the same as for-profit business.

There actually is precedent for a decentralized system during this period. China went back to commodity money some time during the 15th or 16th centuries after a few hundred years of paper money (with all the issues of inflation and progressive financial repression.) The system was so "decentralized" that the sovereign didn't mint coins. People just used chunks of silver.

This system worked fine until financial pollution (ie proliferation of paper assets) arrived from the Bank of England in the mid-19th century. But Britain had to use war to force China to open itself for trade, and thus be subject to financial pollution. Basically, a country with sound (or sounder) money which is not the dominant global power doesn't do well in a free trading system. It will find itself priced out of markets by its strong currency, and eventually be forced to issue paper assets of its own. Either that, and/or it's a long-term threat to the current system if it's big enough. Either by trade or by war, it'll suffer at the hands of the dominant power. (Just ask late 19th, early 20th century Germany.) Switzerland held out for a while, but even with a highly skilled workforce, it is giving in to financial pollution now.