Hong Kong has maintained the relatively free market instance of having private companies issue the currency. To this day in Hong Kong, in your wallet at any time there may be currencies from three to four competing firms. Seem strange? The legal fiction in the United States is you have nine competing currencies in your wallet. Anyone in government knows, anyone in banking knows, you NEVER allow a government to get involved in banking.
The USA monetary system is a private affair, in which the monopoly on violence of the state is lent to the bankers. Hence, when USA federal reserve notes say "This note is legal tender for all debts public and private" Americans are obliged to takes these in payments. Other laws forbid competition with this currency, an idea once thought obtuse. Nothing free market in this.
But Hong Kong can hardly be considered a model of free market banking. It has a Monetary Authority, the HKMA, itself a government agency managing the currency.
First, the HKMA changes rules occasionally, but they are directed at the above. In the USA, the job is to target an inflation rate that assures the rich get richer, and promote fullest employment, os the poor don't notice. That may sound cynical, but it is not in the least. This point is not disputed.
Hong Kong is after a simpler target, and that is stability. Now, a free market has no business attempting even that, but again, it ain't the hand you are dealt...
Given that the USA is the world's reserve currency, and given that USA policies affect the rest of the world, how best does a tiny entrepot play that hand? The HKMA is one answer, and all things considered, not a bad answer. Hong Kong's per capita income matches USA's and surpasses the UK. And the big test, when bad boy George Soros came a callin' in 1997 and sent Malaysia, Indonesia, Thailand and Korea to their knees, little Hong Kong could hold its own. Now of course, Hong Kong had China to help out, but China itself was getting battered, and it may very well have been Hong Kong advising China on how to defend the renminbi that saved them both.
The people who make up the HKMA are also bankers, lawyers, academics, industrialists as in the USA, but Hong Kong is a village. All of these people are accessible and in Hong Kong, that means answerable.
With so much free, prosperity, it would be a bit stupid to self-deal to the detriment of all other, because one one hand you have so many more options to doing well creatively, plus on the other hand, your victims are everywhere in Hong Kong. A nice carrot and stick.
Feel free to forward this by email to three of your friends.
The USA monetary system is a private affair, in which the monopoly on violence of the state is lent to the bankers. Hence, when USA federal reserve notes say "This note is legal tender for all debts public and private" Americans are obliged to takes these in payments. Other laws forbid competition with this currency, an idea once thought obtuse. Nothing free market in this.
But Hong Kong can hardly be considered a model of free market banking. It has a Monetary Authority, the HKMA, itself a government agency managing the currency.
The Exchange Fund's primary objective, as laid down in the Exchange Fund Ordinance, is to affect, either directly or indirectly, the exchange value of the currency of Hong Kong. The Fund may also be used to maintain the stability and integrity of Hong Kong's monetary and financial systems to help maintain Hong Kong as an international financial centre.So, how is that better than what we have in USA? It is in the differences. It ain't the hand you are dealt, it is how you play the cards.
First, the HKMA changes rules occasionally, but they are directed at the above. In the USA, the job is to target an inflation rate that assures the rich get richer, and promote fullest employment, os the poor don't notice. That may sound cynical, but it is not in the least. This point is not disputed.
Hong Kong is after a simpler target, and that is stability. Now, a free market has no business attempting even that, but again, it ain't the hand you are dealt...
Given that the USA is the world's reserve currency, and given that USA policies affect the rest of the world, how best does a tiny entrepot play that hand? The HKMA is one answer, and all things considered, not a bad answer. Hong Kong's per capita income matches USA's and surpasses the UK. And the big test, when bad boy George Soros came a callin' in 1997 and sent Malaysia, Indonesia, Thailand and Korea to their knees, little Hong Kong could hold its own. Now of course, Hong Kong had China to help out, but China itself was getting battered, and it may very well have been Hong Kong advising China on how to defend the renminbi that saved them both.
The people who make up the HKMA are also bankers, lawyers, academics, industrialists as in the USA, but Hong Kong is a village. All of these people are accessible and in Hong Kong, that means answerable.
With so much free, prosperity, it would be a bit stupid to self-deal to the detriment of all other, because one one hand you have so many more options to doing well creatively, plus on the other hand, your victims are everywhere in Hong Kong. A nice carrot and stick.
Feel free to forward this by email to three of your friends.
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