Economists like to say that there's no such thing as $20 bills lying on sidewalks. They just don't exist, because people pick them up. Put it this way - if you see a $20 bill lying on the sidewalk of a pretty busy street you at least stop and puzzle over its existence.
I feel like I muddied the waters in this post by mentioning free banking at all, which people got defensive about - so let's forget free banking. Forget I even mentioned the term. I really want to try to get the point out again and get an answer.
As far as I know, you're not allowed to counterfeit American currency, but there's no law preventing people from circulating competing currencies. In the current situation, where a wide swath of people agree there is considerable excess demand for a medium of exchange, why don't market forces introduce a competing currency? Like the $20 bill sitting on the sidewalk, explaining why this is not happening should interest us.
Bitcoin demonstrates there's some market recognition of money demand. But Bitcoin is like a person walking by, picking up the $20 bill, and then leaving $19.50 in change back on the sidewalk.
Forget free banking - what is going on here?
I have a good sense of Gary's answer - what do others think?
Procrastinating on January 23, 2017
8 hours ago