"Smith is often treated as a conservative patron saint, and he did indeed make the original case for free markets. It’s less often mentioned, however, that he also argued strongly for bank regulation—and that he offered a classic paean to the virtues of paper currency. Money, he understood, was a way to facilitate commerce, not a source of national prosperity—and paper money, he argued, allowed commerce to proceed without tying up much of a nation’s wealth in a 'dead stock' of silver and gold.
"So why are we tearing up the highlands of Papua New Guinea to add to our dead stock of gold and, even more bizarrely, running powerful computers 24/7 to add to a dead stock of digits?"
In
The New York Times,
Paul Krugman takes on virtual currency.
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