This is a "fair use" excerpt (I hope) but please go out and buy the current issue of Barron's, which will be on sale until the new issue comes out on Saturday. The article is titled "Making New Money" and it's by Jack White and Doug Ramsey. Any typos are mine. It's on page 59 of the current (April 23, 2001) issue in the Editorial Commentary section. ... ...Financial innovators will create new stores of value and new legal tender for e-commerce. Ultimately, those digital currencies that offer the best combination of tech- nology, utility, liquidity, transparency and long-term value will outshine the euro, the dollar, and the yen. The surprising thing is that it's taking so long. The decline of the gold standard, competitive devaluations and tariff hikes dried up international trade in the 1930s and should have destroyed the world's faith in fiat money. Instead, after World War II, the major economic powers devised an international monetary system at Bretton Woods that left central banks with the discretion to print money--a discretion most countries abused frequently, even after the collapse of that system in the 1970s. Since the 1940s, the dollar has lost 90% of its value. There are dozens of current experiments in online currency: DigiCash, e-money, iDollars, cybermoney, e-cash, eBucks, virtual cash, cyberbucks, CyberCoin, cybercash and more. Their sponsors, however, have put more thought into the brand names than the prod- ucts. They have attempted to create e-commerce pay- ment systems that are easy and secure but based on the dollar. They have created proxies for a traditional currency, rather than a new currency in its own right. But it may be only a short distance from virtual money to a full-fledged electronic currency, which we might call Electronic Trading Units, or ETUs for short. Good as gold ETUs would have to be immune to political pres- sure, and either fully or largely backed by tangible assets. E-currencies of the future will be only as strong as the groups issuing them. The ideal e-cur- rency might even be backed by gold. Encrypted digital units of the precious metal, even in tiny quantities, could in principle be used to pay for anything from a soft drink to a jet plane. One company, E-gold, already allows online users to settle payments using its currency, which is 100% backed by gold. Ownership of the gold changes, but the physical bullion stays put with the company, which is based on the Caribbean island of Nevis. The system also is transparent: Holders have real-time access to the total amount of e-gold in circulation, and the compa- ny's total bullion reserves. If gold remains a "barbarous relic," there still are other sources of strength for e-currencies. International trading companies such as Cargill, Mitsubishi and Jar- dine Matheson handle large shares of international trade, so they could give an e-currency the strength it needs to get off the ground. After-hours trading systems and electronic communication networks such as Instinet and Optimark have already created virtual markets that could easily match buy and sell orders for e-currency as they do for stocks. .... Remember, folks, please go out and buy the dead-trees version of this whole issue of Barron's if you can. The rest of the article is also well-done (the authors 'get' frequent-flyer miles as a privately-issued currency, for example) so it's worth buying the issue. Thanks. JMR --- You are currently subscribed to e-gold-list as: archive@jab.org To unsubscribe send a blank email to [EMAIL PROTECTED]