Archive for March 30th, 2018

The best books on the history of mathematics

March 30, 2018

Robin Wilson (Emeritus Professor of Pure Mathematics at the Open University) recommends 5 books to understand history of mathematics.

He says if math was taught more historically, students would appreciate it more.

Why should we be interested in the history of mathematics?

Mathematics, like painting, music, literature, has a long history. Indeed, it’s longer than most, since the first writing is believed to be numerical. It’s also multicultural, with its historical origins in Africa, the Middle East and Asia. The history of mathematics also involves particular individuals who are part of our world culture. Perhaps more school children would be interested in maths if it were taught more from a historical point of view. For example, how often do they learn that quadratic equations have been solved for 4000 years, having their origins in clay tablets discovered in what is now Iraq, an area that features in our daily newspapers?

Couldn’t agree more!

Playing a money game: Fiat money or not…

March 30, 2018

JP Koning in his super blog plays a money game.

He starts with an initial setting and then asks whether we say we now have fiat money in the economy.

People bandy the term fiat currency around a lot, but what exactly does it mean? None of us wants to live in a Babel where people use fiat to indicate twenty different thing. So let’s try to zero in on what most people mean by playing a game called fiat-or-not. I will describe a monetary system as it evolves away from a pure commodity arrangement and you will tell me when it has slipped into being a fiat system. (The technique I am using in this post cribs from a classic Nick Rowe post).

So let’s start the game. 

There are 9 stages and not clear at which stage we can say fiat money has taken shape:

Here is a collection of unconnected thoughts on the fiat-or-not game.

A) My guess it that readers will have chosen different stages as their preferred debut for fiat money. This is a bit tragic, since with no commonly-accepted definition for the term, most debates about fiat money have been and will continue to be meaningless. 

B) We apply our definitions like cookie cutters to the real world. So if you chose step 7 (when banknotes became permanently irredeemable) as your flipping point, then 1971 would be a very important date in your scheme of the world since this is when the U.S. permanently removed gold convertibility. 

But if you chose step 9 as your transition point to fiat, then the global monetary system is not currently on a fiat standard, since central banks have neither closed their doors nor donated their assets to charity. So 1971 really isn’t an interesting date. I’m aware of only one country on a step 9 fiat standard: Somalia. Its central bank burned down yet Somali shilling banknotes continued to circulate. And ironically enough, if we choose to adopt a step 9 definition of fiat money, then bitcoin—which was designed to destroy central bank “fiat” money—is itself fiat, because it is unbacked, whereas most central bank money is not fiat.

What I’ve described is the Borges problem. Categories pre-digest the world for us. We get very different results depending on what definition we use and how we apply it to the world. 

C) I think many readers associate fiat with hyperinflatable.

D) Fiatness, fiatish? If we can’t agree on what constitutes fiat-or-not, maybe we can agree that there might be a fiat scale, from pure fiat to not fiat at all, with most monetary systems existing somewhere in between. I am already on record advocating moneyness over money, so this fits with the general them of the blog. On the other hand, fiatness seems a bit of a cop-out.

E) We don’t need gobbledygook like fiat. The term carries too much baggage. Let’s select a more precise set of words, then apply them to the real world in order to understand what our monetary systems were like, how they are now, and where we are going. Until we settle on these words, let’s avoid all conversations with the term fiat in them. 

How we just assume fiat money without really figuring what it means. JP’s post says there are several layers to the issue.

The world’s first central bank electronic money has come and gone: Ecuador (2014-2018)

March 30, 2018

Prof Larry White in this piece updates on the Ecuador e-money project.

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