Describe the historical evolution of the market-based economy in the US.

In Chapter 5, the authors describe the historical evolution of the market-based economy in the US. They note that the Federal Reserve system for central banking was not established until 1913. During the 19th century, many individual banks would issue their own paper currency (bank notes) that were exchangeable for gold or silver. The paper notes were more convenient to use than metal coins, so they were widely circulated in the economy. At the peak, more than 7,000 different institutions issued bank notes. The key disadvantage of this system was the potential for financial fraud and counterfeit notes. Accordingly, some people would not accept notes issued by unfamiliar banks, which hampered the pace of economic activity.

The Federal Reserve recently indicated they are not ready to issue digital currency yet, but they may do so in the future. There are different ways that a digital currency could be implemented, and one possible plan would provide holders of digital currency an account with the Federal Reserve. While a central bank digital currency may be more secure than private cryptocurrencies (e.g., stablecoins), some analysts note that the government could use these accounts to monitor your transactions. Would you consider using a digital currency issued by the Federal Reserve? Would you prefer to use a cryptocurrency issued by a private entity? Could this digital system have the same problems that hampered the paper money system used in the 1800’s?

Your post must be substantive and demonstrate insight gained from the course material. Postings must be in the student’s own words – do not provide quotes!

Requirements: 250 words | .doc file