system. He seems very clear on bank capital, but not so on bank reserves. That's a puzzling combination. Suggests that free banking operates almost like an automatic stabilizer -- when velocity goes down, banks lend more. Hard to figure that out. "What other seriously counterproductive issues do private currencies have Warren?" Also, if creating the currency is based on profitability and not public purpose, or simply qty constrained as in a gold standard, then you can't handle even relatively simple payments systems crises. The history of these systems has demonstrated time and time again that gold standards and purely private payments systems likely couldn't have dealt with, say, the disruptions of Y2K or 9/11, both of which the Fed handled with relative ease. Curious .. . for the same reasons, since payment systems run throughout the day and often overnight via overdrafts. You need an entity with both the ability and the willingness (that is, essentially no concern about the entity's own profitability . . . recognizing that in a disruption the liquidity and default risk of counterpartys can skyrocket) to lend very large sums for the system to continue on a daily basis, and even more when there is a disruption. 1) Zimbabwe had obligations in foreign currencies, and thus was no longer operating on a fiat, floating-fx, non-convertible, no foreign obligation regime. Therefore it was not a "non-convertible monopoly currency". The country was also run like crap and destroyed 50% of its own output. Gold standards don't keep