Re: Atlanta Fed on a Theory of Financial Privacy

No, it doesn't use the "B" word, but it is fun to see someone _define_ money as "a technology that allows consumer A to anonymously conduct a transaction with firm B." I am stirred to view the referenced literature in which record-keeping and credit are related to currency. One of the most common counter-arguments to bearer transactions has been to point out that the cost of centralized bookkeeping is falling and our ability to scale it is rising (e.g. DTC, FederalReserve, NSCC, CREST. These, the argument goes, handle huge centralized bookkeeping and credit scorekeeping chores with a very low per item cost.) In fact this argument is mentioned in this tract. The insight here is to note that transactions carry a "privacy right" with them, iff they can be conducted anonymously, and this can affect the bargaining process. For the time being, it remains an intellectual/academic exercise whether anonymous e-money is the most cost effective solution, or whether privacy can be economically grafted onto huge bookkeeping data processing systems. To some of us the answer is intuitive, but I'm sure it will come down to "bits on the wire" before we have very many believers. "R. A. Hettinga" wrote:

Lions and Tigers and Coasian Microeconomics, oh, my...

http://www.frbatlanta.org/publica/work_papers/wp00/wp0022.pdf

No mention of the "B" word, but, then, they're not supposed to, yet, right?

:-)

Cheers, RAH

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------------------------------------------------------------------------ -- ----------------- R. A. Hettinga The Internet Bearer Underwriting Corporation http://www.ibuc.com/ 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

--- end forwarded text -- ----------------- R. A. Hettinga The Internet Bearer Underwriting Corporation http://www.ibuc.com/ 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'