(Cross-posted from the Bitcoin thread in the Trading Forum)For those who follow news of emerging currencies and monetary systems, the author of this book gave an interesting talk recently: The Monetary System: Analysis and New Approaches to RegulationJean-François Serval (Author), (Co-author Jean-Pascal Tranié)This could be good reading for anyone who is looking for fresh ideas on macroeconomics, monetary policy, and how to analyze the flows more accurately.

Interesting.Yet I'm wondering if the entire concept of a "flow" is wrong because it implies that capital starts in one place, leaves that place, and ends up in another. This seems wrong on two levels.First, if an entity in country A lends money to someone in country B, it's certainly true that cash moves from A to B. Yet, at the same time, the entity in country A still has their money in the form of an asset. Moreover, in a world of transparent balance sheets and liquid markets, the entity in country A might readily treat that new asset as a cash-like item either by borrowing against the asset or selling the asset.The distinction between cash and non-cash is in the optionality of cash -- cash is the most flexible asset and can be readily used for anything. Yet the history of financial systems and markets seems to be one in which non-cash assets are steadily attaining cash-like levels of optionality via liquid markets, securitization, and the like.In a healthy modern economies, does cash flow or does cash replicate? (Of course, if the financial system has a crisis, then the dichotomy between cash and non-cash becomes quite stark)Second, the borrower in country B may have new cash but they also have a liability that obligates sending cash back to country A. The flow is not the unfettered shift of cash from one place to another but is more like a ball on the end of a rubber band. In fact, if the entity is a bank or fund then each return of cash will trigger new lending of cash -- the figurative ball will bounce repeatedly with a frequency equal to the duration of the lending.