About the Author

John McCallie, PhD is an economist whose teaching and research interests focus on monetary theory and international economics. He holds an M.A. degree in Agricultural Economics from the University of Tennessee and received his Ph.D. in Economics from Auburn University in 1990.

Prof. McCallie has taught economics at the University of North Carolina, Michigan State University, University of Maine, and Auburn University.

Through his work on the Market of Concurrent Trading (MCT), Prof. McCallie offers a fresh perspective on how money functions in modern economies, challenging conventional views about the role of central banks and the nature of monetary instruments.

The Framework

The Market of Concurrent Trading (MCT) provides a market-oriented approach to understanding money. Unlike conventional theories that treat all “money-like” instruments as equivalent, MCT distinguishes between base money and money substitutes, recognizing that competitive forces and arbitrage discipline the creation and value of substitutes.

This framework draws on classical economic insights about how markets coordinate through price signals and competitive forces, while incorporating modern understanding of financial systems and monetary instruments. It represents a return to market-based analysis of money, building on the tradition of economists who emphasized spontaneous order and the self-regulating properties of competitive markets.

Core Insights

The framework demonstrates that:

• Base money serves as the anchor for the monetary system, enabling concurrent trading across time and space
• Money substitutes derive their value through credible convertibility to base money
• Market forces, not just central bank policy, constrain the creation of money substitutes
• Monetary coordination can emerge through competitive markets rather than requiring centralized control

Implications

These insights have significant implications for:

• Monetary policy - Understanding the limits of central bank control when market forces discipline substitute creation
• Financial innovation - Evaluating new payment systems and digital currencies through their relationship to base money
• Economic theory - Rethinking how money emerges and maintains value through market coordination

The Paper

Money and Its Derivatives: The ‘House Money’ of Banks provides the complete mathematical foundation and policy analysis for the Market of Concurrent Trading (MCT) model. The paper includes formal proofs, historical context, and detailed examination of how this framework relates to and challenges existing monetary theories.