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By Norman Colton

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These network factors have a critical bearing on the choice of unit of account because they introduce elements of strategic interdependence into agents' decisions. My decision whether to use a particular unit of account might depend on how many others I expect to use that unit, but other agents are just like me and make the same calculations. Multiple equilibria can then arise, depending on what agents expect each other to do. If agents expect each other to use a particular unit of account, they might each individually decide to use it themselves, and so everyone uses it; but if they expect each other not to, then no-one might see any point in adopting it, and so no-one actually adopts it The outcome depends on agents' strategic expectations, but there is no way to 'tie down' those expectations to ensure that any particular outcome actually occurs.

We must also presume that they will exercise this power to further their own ends, whatever those ends might be. For what purposes is state power then used? As far as the financial system is concerned, one of the main reasons for state interference is to raise revenue. , when the government raises revenue by debasing the currency). Another attraction of taxing the financial system is that the public often fail to distinguish between nominal and effective tax burdens, and are therefore sometimes ready to acquiesce in taxes on financial institutions without realising that much of the burden will be passed back to them.

For what purposes is state power then used? As far as the financial system is concerned, one of the main reasons for state interference is to raise revenue. , when the government raises revenue by debasing the currency). Another attraction of taxing the financial system is that the public often fail to distinguish between nominal and effective tax burdens, and are therefore sometimes ready to acquiesce in taxes on financial institutions without realising that much of the burden will be passed back to them.

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