For a real-world example of how a system of market-chosen monetary policy would work in the absence of a central bank, one need not look to the past; the example exists in present-day Central America, in the Republic of Panama, a country that has lived without a central bank since its independence, with a very successful and stable macroeconomic environment....
This market-driven system has created an extremely stable macroeconomic environment. Panama is the only country in Latin America that has not experienced a financial collapse or a currency crisis since its independence.
Five years of unprecedented economic growth - and a continued projected growth rate of 8%-9% over the coming years - has turned Panama into a regional giant on wobbly legs.
Since 2007, 50 skyscrapers have been built or are being finished within the next year.
The size and scale of Panama's growth goes far beyond the rest of Central America.
But the growth spurt raises serious questions about overdevelopment.... it has grown as haphazardly and unregulated as a 19th Century gold-rush town.
So the future of Panama has wider implications, and could help us to improve our understanding of economics.