The entire concept of currency is that there's a single shared medium of value used for exchange. "Competing currencies" is an oxymoron. Plus, once the government decides which currency is used to pay taxes or to pay damages after a civil suit, you're pretty much set.
Bimetallism was fundamentally unworkable because it presupposed a fixed ratio between gold and silver that didn't account for changes in their respective market values. In any case, both metals were pegged to the U.S. Dollar, which was the currency. There were no competing currencies, but rather the fiction of bimetallism.
If you are seriously proposing bimetallism as a workable system in the year 2012, you are a total and complete kook and have no business discussing the matter because you clearly have no fucking idea what you are talking about.
You made a blanket statement that multiple-basis currencies cannot and haven't existed.
I showed two counterexamples.
I'm not sufficiently versed in contemporary currency matters to discuss the feasibility or actuality of significant currency bases presently. But that wasn't the question.
With regards to governments deciding on currencies: it's not that alternate payment methods cannot be considered. It's that a payment in the legal tender for a debt cannot be refused (without prior arrangement) without voiding the debt. If you make a credible offer to pay in legal tender and the payee refuses, the debt is void. Doesn't mean you can't make payment in gold or cowrie shells, so long as you both agree to that. Including to the IRS (e.g.: property seizures to pay back taxes).
> You made a blanket statement that multiple-basis currencies cannot and haven't existed
No, I said that there's no such thing as competing currencies. Having a single currency with more than one base has obviously been tried, but it didn't work.
> it's not that alternate payment methods cannot be considered. It's that a payment in the legal tender for a debt cannot be refused (without prior arrangement) without voiding the debt
Right. It just so happens that this provides enough of a nudge for the entire currency base to switch over to the legal tender currency.
> e.g.: property seizures to pay back taxes
I never thought of that as an alternative form of payment. Heh. It's clearly a bit of a corner case, and at any rate, if I own a house, that's not really a commodity I can use as a medium of exchange, even if the IRS can seize it or my bank can foreclose on it.
>> You made a blanket statement that multiple-basis currencies cannot and haven't existed
> No, I said that there's no such thing as competing currencies. Having a single currency with more than one base has obviously been tried, but it didn't work.
I still say flat out that you're mistaken. We have (and have had) multiple currencies in the world, used within a single area (quite often, especially during wartime), regionally, and worldwide. How do you deal with multiple currencies? Via exchange rates. These may be floated or decreed, but they exist. Dollars, Euros, Yen, and gold are all commonly used for current-day international transactions (with a strong preference generally for US dollars, though this may change). The dollar also has special standing as the preferred reserve currency, but again, this is largely a matter of convention, liquidity, and stability.
Over historical time, there have been (usually local and smaller-scale, though not always) systems in which multiple currencies managed by multiple sovereigns circulated and were commonly used. Sometimes usage is specific to transaction types (e.g.: use currency A for large and multi-region transactions, use B generally for local/smaller transactions).
On England's tri-metalism, Adam Smith discusses this at length in On the Wealth of Nations. The standards date to Roman times (copper basis), with silver emerging from the Saxon tribes, and gold from mainland Europe.
I'm not saying there aren't alternative structures. I'm saying there is no one correct structure you can label "pure capitalism."
The monetary system is an engineering problem. The goal is to keep enough new money flowing into the system, but not too much, and make it robust in terms of political pressures, etc. Unfortunately, the debate over the issue is always reduced to ideological handwaving. That's not how engineering problems are solved.
I disagree that it's an engineering problem. How are you going to model the supply & demand, the wants and desires, and complex transactions occurring among hundreds of millions of people? It just seems like hubris to me, but I'm open to the possibilities.
The same way we predict how the trillions of trillions of air molecules behave when we predict the weather: we build models of aggregate behavior, try to understand relationships, run simulations and test our predictions. We're not 100% right all of the time, but we now have the ability to prepare for disasters days in advance and re-route airplanes around storms before they hit. Weather prediction and the activity around it was once an intractable problem but now is a huge, huge benefit to society.
The things you bring up are not even the hard part… The difficulty is that the system is dominated by feedback loops. I still think it's within the realm of 'engineering can improve this'.
The field of Economics has been attempting to answer that for a rather long time. I don't mean to be glib - it turns out to be a damnably hard problem that's been battled by thousands for centuries. There's easily enough modeling, math, and intellectual know-how going into it to make it a fine engineering discipline (albeit ununified). Heck, the quants basically weaponized it into a science.
Of couse, the real problem is which model(s) to use, since that affects the system. The answer to that is probably "all of them", picking whichever one seems more appropriate. I'm thinking like a physicist here: sometimes you ignore gravity, and sometimes you ignore wave-partical duality.
