Easy Money: American Puritans and the Invention of Modern Currency
My book was published by the University of Chicago Press in March 2023.
The book's webpage at the press is here .
Abstract
How is it that our currency is an object of no intrinsic utility, and it is not convertible into gold on demand? This property allows central banks to create and eliminate inflation at will. Our modern currency is only legal tender for debts, taxes, and other monetary obligations. This limited legal status is usually sufficient to guarantee the currency's circulation.
The book explores the invention of this currency in 1690s Massachusetts. This legal tender currency eventually took over the world, threw gold to the dustbin of monetary history, and had significant roles in some of the most important events of the modern era. This money’s expected digitization would not change its essential properties, while its private crypto competitors fail to make a dent in its complete dominance over everyday transactions.
Why and how did a semi-renegade colony at the edge of Western civilization make such a momentous invention? As there is no general theory of monetary innovation, the book uses analogies with technological innovation, which has been systematically analyzed. The most important driving force was regulation by England. Regulation of religion in England led to constitutional chaos throughout the seventeenth century, and its shockwaves rocked the American colonies in many ways. England’s regulation of the polity, land, trade, and currency of the colonies had an additional impact. Massachusetts was repeatedly pushed by these shocks to find new solutions to the currency shortage that plagued all colonies, and some of these shocks gave it new abilities to solve that problem. Massachusetts was uniquely equipped for monetary innovation, due to its high-quality lay and clerical elites, mercantile experience, mercantile connections throughout the Atlantic world, a partially representative and partially autonomous government, and Puritans’ unusual cultural characteristics such as low risk aversion and nonconformity.
Under peculiar political circumstances, Massachusetts cunningly devised a new type of money under England's regulatory nose, which later governments found extremely convenient to adopt, for better and for worse. Hence, Easy Money.
The book's findings are highly relevant to current affairs involving legal tender currency:
Central banks' ability to create and eliminate inflation at will
The political checks and balances of open market committees (Massachusetts invented one too!) and their resulting political resilience
The disappearance of gold in 1971 and the prospects of returning to it
Crypto "currencies" that are not legal tender and are not actually used as currencies in everyday trade in spite of all the hype
The presumptuously named "modern monetary theory" that relies on legal tender laws as its cornerstone but takes policies in an extremely risky direction, which is the opposite of the discipline of both 1690s Massachusetts and modern central banks
How and why do new forms of money appear?
The book is 271 pages long, net of references etc., in 17 relatively short, easily digestible chapters.
The text has no unexplained professional jargon of either economics, history, or law.
Table of Contents
Part I: Introductions
1. Introduction to the Book
2. Money and its Inventions: Theoretical Considerations
3. England in the Late Sixteenth Century
4. English Developments, 1584-1692
Part II: The Atlantic
5. Before 1630: Harvesters of Money
6. The Puritan Exodus, 1629-1640: General Features
7. Massachusetts takes the Monetary Lead, 1630-1640
8. A New Hope, 1640-1660
9. The Empire Strikes Back, 1660-1686
10. Governments and Paper Money Projects, 1685-1689
11. The Massachusetts Legislator: The Case of Elisha Hutchinson
12. The Return of the General Court, 1689-1690
Part III: A Monetary Revolution
13. The Legal Tender Law, 1690
14. Aftermath, 1691-1692
15. Back to England’s Financial Revolution, 1692-1700
16. Analysis
17. Conclusion