The contrast with what happened in Law’s native Scotland is acute. Both countries introduced paper currencies. The one that granted a bank a centralised monopoly backed by the state ruined everybody. The one that plumped for a decentralised, evolutionary system of competition worked beautifully. Central banks tend to behave pro-cyclically, pushing down the cost of borrowing as credit expands and slamming the door shut when it contracts – just as they did in the early 2000s. By contrast, decentralised money has a far better record.
