My latest Macro Musings podcast is with Hugh Rockoff. Hugh is a professor of economics at Rutgers University and has done extensive work on U.S. economic history. He is the coauthor of the popular textbook “History of the American Economy” and has served on the editorial boards of the Journal of Economic History and Explorations in Economic History.
Hugh joined me for a fascinating conversation on U.S. monetary history. First, we discuss the idea of an optimal currency area (OCA) and consider how long it took the United States to become one. Hugh makes the case that it took about 150 years for the United States to become an OCA. As he notes, this does not bode well for the Eurozone.
Second, we talked about the first two central banks of the United States, the 'free-banking' period, the monetary developments during the Civil War, and the flawed National banking system that emerged after the war.
Third, we covered one of the more underappreciated developments in U.S. monetary history: the existence of two floating currencies over the period 1861-1879. There was the well known 'Greenback' in Eastern United States, but there was also the 'Yellowback' in the Western United States. This development is not only interesting, but relevant for current conversations about the Eurozone splitting into two separate currencies.
Finally, we concluded by talking about how some of the New Deal programs of the 1930s helped turn the United States into an optimal currency area. This was a great conversation throughout.
You can listen to the podcast on Soundcloud, iTunes, or your favorite podcast app. You can also listen via the embedded player above. And remember to subscribe since more shows are coming!
Hugh Rockoff's homepage
Hugh Rockoff's paper How Long Did It Take the U.S. to Become an Optimal Currency Area?
Hugh Rockoff's paper Yellowbaks out West and Greenbacks Back East