1. A free market requires that the government exercise a monopoly on force, using force. Only the government should be allowed to use force and it should be minimized. International politics will always be a state of nature but treaties and free trade agreements can be good.
2. If the sound money is very expensive to move, people will issue bank notes. I think you are right about that. However, if there are two equally good monies, except that one can be used directly instead of using an intermediary layer (like bank notes), the one that can be used directly will win out in the market and the other one will disappear from use. Because it's less risky when there is no intermediary layer. Then again, there may be use cases when you want reversibility, and then people would use an intermediary (like PayPal). Going through an intermediary some of the time doesn't really create a different currency. For instance, Tethers (which are nominally worth 1 US dollar each) aren't really a different currency (although that's not an ideal example since Tether is so shady; perhaps Gemini Dollars is better).
3. Imagine you have Greatcoin and Shitcoin and those are the two currencies. Merchants take Shitcoin but they immediately convert it to Greatcoin (which holds its value better, or perhaps is deflationary). Consumers don't want Shitcoin, so they also immediately convert it to Greatcoin. Everybody wants Greatcoin in their bank account/digital wallet; nobody wants Shitcoin. I think you can see where this is going. Next time I go to the merchant and try to pay with Shitcoin he's going to say "Come on man, I don't want that shit. Just keep all your money in Greatcoin, which you want to do anyway, and don't convert to Shitcoin before you pay me, and I won't have to convert your Shitcoin to Greatcoin." Then Shitcoin goes away.
1. OK so in your definition, a free market requires a monopoly on force, using force. In mine, a free market has NO monopoly on force, so international markets are an example. And I compare them with markets that have government intervening, like public stock markets. How are they better?
2 and 3. Well what if the seller says "Come on man, I don't want that shit" and the buyer says "Well your competitor will take my shitcoin, so I'm going to buy from them?"
You're only looking at possible trends in one direction, namely sellers "winning" the argument with buyers and phasing out acceptance of shitcoin. But why did they accept shitcoin in the first place? Why accept Visa, WeChat or a check when you have to trust a third party bank, rather than just cash? Because it's more convenient for the buyer. If sellers provide various options, the buyers will choose the ones they want to use. Do you think sellers LIKE to deal with VISA chargebacks disputes and other crap, when they can just take your cash and say kthanxbai? In Capitalism, the pressure is on the sellers to accomodate buyers, so what about the other way ... buyers want to get rid of shitcoins?
Not to mention that the government will want to do UBI or single payer programs like SNAP food stamps or medical insurance and guess what, most doctors will prefer to take that instead of ONLY accepting direct payments. And even when they accept direct payments they are OK with VISA and paying 3% transaction fee. Why? Because many buyers have trouble paying cash at the moment, but the government or a bank has supplied them with shitcoin money. And that's my point ... a lot of economic activity can get done that way, and both sellers and buyers prefer it. And sellers accommodate buyers because often the buyers don't have any other type of payment. They've paid into their insurance. Do you think doctors LIKE to negotiate with insurance companies? But they would rather get that, than lose a customer.
1. I'm not really sure what you are asking. If this helps, what I want (and what I call a free market) is a situation where people are free to make their own decisions because the use of non-preventative force is barred. The government uses preventative force to prevent other people from using force. This is a "domestic" issue. It doesn't really have anything to do with international relations.
2 and 3. If you go back to my example, customers don't want Shitcoin in the first place, so realistically, they would never seek to obtain it. So it isn't really the case that customers are trying to get merchants to take their Shitcoin. There just isn't any point in using it at all. The reason "bad money drives out the good" in Gresham's law is because the government puts the bad money into the economy. Absent something like that, bad money just isn't wanted and nobody keeps it. If they get it they immediately convert it to a good currency, so if it pops into existence somehow, it immediately goes out of existence. Visa and Paypal and whatnot are not different currencies. They are different payment mechanisms. I agree with you that customers and merchants would likely want to use multiple of these, and that merchants would be driven to accept all the common payment mechanisms.
This has been a worthwhile discussion and I'm sure we could keep going, but I really have to take a break from hacker news for a while. So let's call it a day. If you want to read about free markets, check out the book Capitalism: The Unknown Ideal by Ayn Rand if you haven't already.
2. If the sound money is very expensive to move, people will issue bank notes. I think you are right about that. However, if there are two equally good monies, except that one can be used directly instead of using an intermediary layer (like bank notes), the one that can be used directly will win out in the market and the other one will disappear from use. Because it's less risky when there is no intermediary layer. Then again, there may be use cases when you want reversibility, and then people would use an intermediary (like PayPal). Going through an intermediary some of the time doesn't really create a different currency. For instance, Tethers (which are nominally worth 1 US dollar each) aren't really a different currency (although that's not an ideal example since Tether is so shady; perhaps Gemini Dollars is better).
3. Imagine you have Greatcoin and Shitcoin and those are the two currencies. Merchants take Shitcoin but they immediately convert it to Greatcoin (which holds its value better, or perhaps is deflationary). Consumers don't want Shitcoin, so they also immediately convert it to Greatcoin. Everybody wants Greatcoin in their bank account/digital wallet; nobody wants Shitcoin. I think you can see where this is going. Next time I go to the merchant and try to pay with Shitcoin he's going to say "Come on man, I don't want that shit. Just keep all your money in Greatcoin, which you want to do anyway, and don't convert to Shitcoin before you pay me, and I won't have to convert your Shitcoin to Greatcoin." Then Shitcoin goes away.