Why the “State Theory of Money” Doesn’t Explain the Coinage of Precious Metals

Cartalist, Chartalist, Menger, origins of money, debasement, lawrence h. white, mints, coinage
Lydian stater by Felixfox123, Wikimedia https://commons.wikimedia.org/wiki/File:%D0%9C%D0%BE%D0%BD%D0%B5%D1%82%D0%B0_%D0%9B%D0%B8%D0%B4%D0%B8%D0%B8._VI_%D0%B2._%D0%B4%D0%BE_%D0%BD.%D1%8D.jpg
A Lydian Stater. Image: Felixfox123/Wikimedia.

I’ve begun working on a new book on the gold standard. In the first chapter I plan to discuss the origin of money, as a preliminary to discussing how silver and gold became the world’s dominant commodity monies.

The topic of the origin of money has become controversial in recent years. The dominant view among economists (for good reason), suggested by Adam Smith in the eighteenth century and fleshed out by Carl Menger in the nineteenth, is that money is a market-born institution. Convergence on one or two commodities as the common media of payment emerged from the actions of barterers seeking more effective trading strategies, without anyone aiming at the final result. But this view has lately been challenged by a resurgence of the “state theory of money,” also known as Cartalism, which argues that governments played an essential role in the establishment of money.

Money's Origins: A Cartalist View

Cartalists have made the valid point that extensive specialization in production could not have preceded the development of commonly accepted media of exchange; rather, greater specialization and wider acceptance of media of exchange must have developed together. But this is a useful expositional caveat rather than a refutation of the Mengerian theory. While a lecturer spelling out the Mengerian theory (and I have done this myself) may ask the listener to imagine a highly specialized producer (say, an asparagus farmer) entering a moneyless market and meeting frustration in attempts to trade directly (say, for a plaid shirt) in order to dramatize the difficulty of direct barter, this should not be taken to suggest that, as a historical matter, societies developed extensive specialization and trade before the emergence of money. Indeed, because it starts from the premise that finding a well-matched trading partner (who “has what you want and wants what you have”) is very difficult, Menger’s theory implies the opposite. As Adam Smith himself emphasized, the division of labor is limited by the extent of the market, and the extent of the market is limited by the ease of trade.

The classic source of the Cartalist view is The State Theory of Money (1924) by the German economist George Friedrich Knapp. Knapp’s rejection of a market evolutionary account, it appears on close inspection, is more a matter of wordplay than of substance. Rather than regarding “money” in the conventional way as any medium of exchange commonly accepted in the market, and so viewing the explanatory challenge as how to account for a particular commodity coming to play that role, Knapp focuses his attention on what he calls public money. The test of a public money, in his words, is that “the money is accepted in payments made to the State’s offices,” namely in tax collections. Knapp (1924, p. 95) declares: “State acceptation delimits the monetary system.”

A market process cannot endow a payment medium with state acceptance; only the sovereign state can do that. Mengerians would reply: True enough, but this does nothing to contradict Menger’s logical evolutionary account of how a commonly accepted means of payment arises without state action.

The anti-Mengerians, in the words of sympathetic economist Charles Goodhart, “are those who argue that the use of currency was based essentially on the power of the issuing authority (Cartalists) — i.e., that currency becomes money primarily because the coins or monetary instruments more widely are struck with the insignia of sovereignty.” The claim that state power or sovereignty is essential or primary for any currency to become a commonly accepted medium of exchange, however, is plainly at odds with the historical fact that privately issued banknotes without sovereign backing were the dominant media of exchange in the eighteenth and nineteenth centuries where they were allowed. And with the fact that privately minted silver and gold coins were widely accepted when and where they were allowed (which was much rarer), as in gold-rush California.

While Knapp (1924, p. 134) recognized the fact of the widespread use of private banknotes, he simply classified them — by definition — as outside the system of public money. A note-issuing private bank and its customers “form, so to speak, a private pay community; the public pay community is the State.”

Why Did Precious Metals Become the Dominant Commodity Monies?

Turning from the question of origins to the question of why silver and gold became the most popular commodity monies, out of a large set of contenders that included salt, cowrie shells, and oxen, one naturally wonders what the Cartalists have to say on the second question. The answer turns out to be: nothing helpful.

Menger’s approach lends itself to a decentralized account of why silver and gold emerged as the most commonly accepted, pushing other candidates to the margins. Put yourself in the position of a trader in a market where there are a variety of commodity exchange media (the market has not yet converged). You sell your produce for a physical payment medium which you then carry around with you until you spend it away in purchases. In this situation it pays you not only to consider which media are most popular with other traders, but also which media involve the least cost or hassle in acquiring, carrying to the next transaction, and trading away.

As textbooks during the nineteenth century emphasized, the precious metals have a number of properties that make them superior media of exchange in such a setting. Compared to other commodities, silver and gold score high on (1) portability or preciousness, allowing you to carry around high purchasing power with little bulk; (2) durability, not spoiling between the date of acquisition and a later date of spending; (3) divisible and fusible, like any metal, allowing pieces to be made in a range of sizes to suit a range of transactions, and allowing small change to be given; (4) stable in value across the seasons, unlike foodstuffs that are cheap right after the harvest but dear six months later. These properties enhance their widespread acceptance.

An important technical advance came with the introduction and spread of coinage in Turkey and Greece during the 7th to 5th centuries BCE. Unlike raw nuggets straight from the mine or variously refined precious-metal bars, coined pieces of silver and gold gained a major additional advantage: they became (5) uniform in size and quality, so that traders need not incur the cost of testing (or the risk of not testing) each piece for its weight and its fineness (percentage of pure silver or gold content). Early coining entrepreneurs could have profited, as later mint masters in California did, by charging for the service of converting raw silver or gold into easier-to-spend uniform coins. With the spread of coinage to India, the Middle East, and Europe, merchants found silver and gold payments easier to make and to accept. The use of bulky commodity monies like shells and salt dwindled. Market convergence on the precious metals in coined form reflected a “survival of the fittest,” namely of the most convenient media for hand-to-hand exchange.

The Cartalist approach, by contrast, doesn’t provide a distinct theory as to how silver and gold came to dominate other commodity monies. In the Cartalist view the sovereigns of various lands must have chosen to preferentially accept silver and gold, of course, but why? It seems reasonable to suppose that sovereigns made the choice because they, like other transactors, were aware that coined pieces of silver and gold score high on the five useful properties listed above. If so, then sovereigns did not alter but merely reinforced the market process already underway.

Leading Cartalists have made other suggestions, however. Anthropologist David Graeber, author of Debt: The First 5000 Years, states in an interview that:

… coinage seems to be invented or at least widely popularized to pay soldiers — more or less simultaneously in China, India, and the Mediterranean, where governments find the easiest way to provision the troops is to issue them standard-issue bits of gold or silver and then demand everyone else in the kingdom give them one of those coins back again.

The economist L. Randall Wray (2000, p. 46) likewise states: “Coins appear to have originated as government ‘pay tokens’ (in Knapp’s colourful phrase), as nothing more than evidence of debt.” Silver and gold coins, in other words, should be understood as state-issued tax-anticipation tokens, their value resting on a state-imposed obligation to pay them back.

This account fails to explain, however, why governments chose bits of gold or silver as the material for these tokens, rather than something cheaper, say bits of iron or copper or paper impressed with sovereign emblems. In the market-evolutionary account, preciousness is advantageous in a medium of exchange by lowering the costs of transporting any given value. In a Cartalist pay-token account, preciousness is disadvantageous — it raises the costs of the fiscal operation — and therefore baffling. Issuing tokens made of something cheaper would accomplish the same end at lower cost to the sovereign. (By the way, note also Graeber’s equivocation “invented or.” Proposing that governments enlarged the acceptance of coins, after the market economy had already begun using them, is categorically different from proposing that governments invented coinage. Menger himself had no problem with the former proposition, but he rejected the latter as an unfounded prejudice.)

Wray offers in passing (p. 46) the conjecture that kings likely minted coins “in the form of precious metal to reduce counterfeiting.” But a sovereign imprint on silver or gold coins is not in any obvious way harder to counterfeit than the same imprint on iron or copper coins. So the bafflement remains.

The notion that full-weight silver and gold coins are mere tokens, deriving their value from the future tax liabilities they discharge, is in clear conflict with the historical experience that large-value silver and gold coins issued by (say) the Spanish national mint circulated well outside the set of Spanish taxpayers. (Small-value silver coins, which sovereigns debased and did treat as overvalued tokens, were another and more Cartalist story.) Large-value coins were used as media of exchange among participants in an international trade network that operated beyond any one nation’s boundaries. They were valued by holders who had no tax obligations to the state of the issuing mint. In the international market, coins issued by various national mints were valued against one another in proportion to their precious metal content, not in proportion to the nominal values at which national tax offices accepted them, where the two values differed. These facts indicate a market source of the moneyness of large-value silver and gold coins, not a tax-acceptance source.

Wray denies that coins were valued according to their precious metal content, as it conflicts with his maintained view that even full-weight precious metal coins were merely tokens. He even denies (p. 47), rather surprisingly, that kings debased their coins, i.e. reduced their precious metallic content below the standard, since “it would make no sense” when they are mere tax-discharging tokens to begin with. The histories of state-issued Roman and medieval silver coins, however, shows repeated debasements.

Once sovereigns monopolized the mints they took advantage of the propaganda value of stamping their own faces on the coins, of course. But as far as we know coins were already in use among merchants before that happened. Very early coins from ancient Lydia, in what is now Turkey, were not inscribed with human faces but rather animal figures. The Ancient History Encyclopedia states: “It appears that many early Lydian coins were minted by merchants as tokens to be used in trade transactions. The Lydian state also minted coins.” Regarding Lydian coins inscribed with the names Walwel and Kalil, the British Museum comments: “It is unclear whether these are names of kings or just rich men who produced the earliest coins.” Regarding a nearly contemporary ancient Greek coin bearing the legend “I am the badge of Phanes,” the Museum comments: “We cannot be certain who this Phanes was, but it seems that he was placing his badge on coins as a guarantee of their quality.”

It is possible, of course, that in surveying the literature I have overlooked a more plausible Cartalist account of why sovereigns chose very expensive materials, silver and gold, for their tax-anticipation tokens. If anyone can point me to such an account, I would be grateful.


  1. Interesting article. I’m probably talking nonsense here, but is Larry White over-estimating the extent to which gold and silver dominated? After all, the Chinese had successful paper money system up and running – was that about 2,000 years ago? And I think King Henry I of England, who came to the throne in 1100AD, introduced tally sticks in a big way.

    1. Yes, Ralph. He is over-selling gold and other metal domination as exchange media.
      It was favored by merchants collecting for international trade, for sure …. but not for achieving the prosperity of the nation-states themselves..
      But, then again, Larry's plan is to advance once again the long-abandoned, partial efforts of both Rothbard and Huerta de Silva to make the gold standard somehow look more historical, by making Knapp's State Theory the lesser narrative.

      1. The prosperity of the last 250 years, unmatched in world history, had little to do with the means of exchange which was virtually the same as used for 1,000 years…

      2. [It was favored by merchants collecting for international trade, for sure…. but not for achieving the prosperity of the nation-states themselves..]

        Well, the "prosperity of the nation-states" should be a secondary concern (if even that). So well done and kudos to the merchants!! I suggest they and society in general reaped the rewards.

        [But, then again, Larry's plan is to advance once again the long-abandoned, partial efforts of both Rothbard and Huerta de Silva to make the gold standard somehow look more historical, by making Knapp's State Theory the lesser narrative.]

        Oh my, the rhetoric just hits one in the face. Alleged "long-abandoned, partial efforts" followed by an alleged attempt to make the gold standard somehow look "more historical," but firstly zero, zip, zilch, nada to actually demonstrate Knapp's State Theory is not in actuality the lesser narrative and secondly, sneakily painting objective demonstration of the gold standard as historical fact as somehow (against academic honesty) trying for "more historical" (i.e. essentially accusing White of not giving a true reflection, and even with alleged intent).

        In other words: High on allegation and insinuation. Low on evidence.

        1. LOL
          The State Theory of Money is the 'secondary narrative, when EVERY country on the Planet is founded upon that State System of government sovereignty over money.
          Only FROM that State-Money construct CAN the national money power be LEGALLY(?) delegated to the private bankers to use THEIR money system of FR banking/lending.

          1. No one is denying that governments have taken control of money, at least in its most fundamental sense, joebhed. So by pointing this out, you merely belabor the obvious, without otherwise contributing to the debate, which is about, not the actual role of the state, but the extent of its ancient and essential contributions to money's development.

          2. Talk about – 'without otherwise contributing to the debate' ?

            National sovereignty over laws and resources that determine citizens' well-being commands governmental authority over money. We agree on that.
            But that supreme authority over money has long been abdicated,by government, and usurped into completely private national money powers, with absolute control in the hands of international banking cartels.
            Those are the very problematic facts of our modern monetary conundrum.
            Facts that Alt-M and Austrians, generally, deny, thus removing from, rather than 'otherwise contributing' to the money debate 'solutions'.

            I will drop out of this conversation for the simple reason that I am more interested in proposing and debating solutions to these very real present money problems than in establishing some kind of quasi-intellectual superiority on the chicken.vs.egg argument over money's origins, for which Zarlenga's 'The Lost Science of Money' provides far more accurate historic scholarship than anything else here discussed.

            Have a nice debate,

    2. [After all, the Chinese had successful paper money system up and running – was that about 2,000 years ago?]

      I had read about it recently, and 2000 years ago seemed on the long side, but on a web search this is the quickest I could find:

      "For much of its history, China used gold, silver and silk for large sums, and bronze for everyday transactions. The notion of using paper as money is almost as old as paper itself. The first paper banknotes appeared in China about 806 AD. An early use of paper was for letters of credit transferred over large distances, a practice which the government quickly took over from private concerns." (http://www.computersmiths.com/chineseinvention/papermoney.htm with references at the bottom of the page)

      As to the tally sticks, they have also intrigued me. I wasn't aware of the role King Henry I allegedly played.

  2. To Larry.
    The Globe is populated. With nations.
    And nations HAVE the State Power of Money – public money, as you say was first referenced by Knapp.
    Having been delegated to private interests who control our national economies, we are all dealing with the secularizing stagnation of the global economy, for the simple reason that you can't have any more money without having more debt.
    And nobody wants more debt.
    Is there a 'debt-overhang' or not?

    But the change that must come to overtake this institutional inertia will never be a going back to any gold or commodity based currency standard.
    it loses out in spades to that of actual public issuance of the money –
    directly into circulation – as proposed by Simons, Fisher and Friedman –
    yes, Friedman, that free market rascal. Direct public issuance of money
    without any associated debt was the favorite of over 400 academic
    economists in 1939 who publicly supported such a proposal.

    Let's push this discussion to a National Monetary Commission for the essential public discourse needed to inform sound public money policy outcomes.
    For the Money System Common.

    1. If Narrow Banking (the Chicago Plan) 'loses out in spades' to gold money, why hasn't anybody adopted it? By contrast gold is 1000s if not 5000 years old as a suitable medium of exchange. And narrow banking is simply non-fractional reserve banking, which is largely what a stock market is, and, if you follow the stock market, you know it has ups and downs and prone to panics and crashes. So the Chicago Plan will NOT stop bank runs. Google also "dollar auction" and how rational people end up bidding more than one dollar to win a mere dollar at an auction.

      1. Bank runs can only happen in a fractional reserve system. A 100% reserve system by its nature guaratees 100% liquidity to all demand depositors, even if the bank is insolvent and ultimately goes under…

        1. True. But it is a very costly solution to a problem that has been effectively addressed at far lower cost by properly-regulated fractional systems. In those systems runs have been very rare, and afflicted only pre-run insolvent (and often corrupt) banks.

          1. Agree, but the cost has been the tolerance of a central bank to backstop fractional systems. If central banks acted solely as that back stop and lent at "haircut" rates, supporters of 100% reserve systems would have even less ground to argue from.

            But central bankers cannot resist the power they (believe they) have to "run" the economy, "fix" unemployment and bail out their friends on Wall St. as needed. I would say that the mischief (and the business cycles) those inflationists cause is far more destructive than a system devoid of the business cycle and all but direct, open inflation of the money supply. Yes, the cost would be less growth, but the growth would be backed by real savings, not a manipulated money stock.

            Which brings us back to the need for a money supply not susceptible to political manipulation…

          2. Your proposal wouldn't prevent government from manipulating money. It would only make the government's control more absolute by eliminating private participation in the money supply process. Also, the claim that 100%-reserve money is the only sort "backed by real savings" is untrue.

          3. [Your proposal wouldn't prevent government from manipulating money.]

            As per Weber's definition of the state (as proxy for government) as (and I paraphrase) "any human community that (successfully) claims the monopoly of the legitimate use of physical force within a given territory," not much can prevent it from doing whatever it wishes – so the point as one of differentiation is kind of moot either way.

            [It would only make the government's control more absolute by eliminating private participation in the money supply process.]

            How so? 100% reserve in gold (or other precious metal or commodity) does not by itself eliminate private participation in the "money supply process." Private gold miners will happily be mining gold (i.e. supplying money).

            What private miners will not be doing is "credit expansion" as so-called "money supply." But then the question is, do we want a kind of money that allows for "credit expansion" out of "the thin air." That is where I seem to differ from Selgin et al. I do not regard "credit expansion" of the "money supply" as either a good or a necessary thing.

            However, I am willing to leave that to the market as final arbiter. But if I want my DEMAND deposits back ON DEMAND and its been "lost" or "unavailble" due to "credit expansion," I should be able to use the law to sue every director, manager, shareholder, and employer of said bank, both individually and separately, for what is essentially theft.

            [Also, the claim that 100%-reserve money is the only sort "backed by real savings" is untrue.]

            But the claim was not that it is the ONLY sort. The claim was only that it "would be backed by real savings."

          4. [Issue Real Money.]

            "Real Money" to me is never something issued by a state. The fact that I have to live in a situation where money is legislated by a state does not mean I support it.

          5. You don't have to support it, dude.(or dude-ess)
            It's what the law is.
            Government is sovereign over money.
            Real Money would be the money issued BY the government FOR its sovereign people.
            Like Greenbacks were.
            Federal Reserve money is not real money – it is the $-denominated credit of private banker FRBS members.
            Never read "The Legalized Crime of Banking'?

            You don't have to live here.
            You can move.
            But every nation in the world remains sovereign over its money system.
            Despite this fact, every nation of the world uses this same money system – "legally" delegated, nationally-denominated private Banker credits.

            Just saying.

          6. "But every nation in the world remains sovereign over its money system."

            How about Panama and other "dollarized" nations? And the Eurozone? There are many more historical examples, e.g., California during the Greenback era. Sovereign (national) control is now the norm, but there is nothing inevitable about it. On this topic I highly recommend the works of Benjamin Cohen and Eric Helleiner.

          7. So what law allows for inmates to exchange in cigarettes?
            The purely legalistic definition of money totally misses the point of the phenomena. It is about value, trust, and qualities of the medium. It is not about laws making demands of people, it is about people deciding to cooperate for mutual benefit.

          8. Correct – I'm speaking only of reducing the degree. Any power/control given to government over the sources and uses of money will inevitably result in political manipulation in the service of connected interests. As I closed my post, we NEED a money supply immune to political manipulation. Getting one is the Herculean task. Gold & silver coins only, issued by whomever cares to coin them?

            I did not mean to imply that there is no other source for savings-backed debt instruments than 100% reserve deposits. Indeed, that would be a contradiction in terms!

            It's a commonplace that real savings – time deposits, wholesale borrowing (outside of a fractional system), capital from equity shares issued – are what would still be lent under a 100% reserve system. What would change is the available supply of credit as demand deposits and the like would never be available for lending, nor would the pyramiding of demand deposits be able to occur as under a fractional system.

          9. The "commonplace" (i.e. Rothbardian) suggestion that lending based on demand liabilities cannot also be lending of "real savings" is untrue. I assess it at length in The Theory of Free Banking, among other places.

          10. Downloaded & on my Kindle. I promise to read at least those chapters this long weekend.

            Thank you!

          11. Dr. Selgin,
            Excuse me ?
            Costly, how?
            Properly regulated fractional system ….. where?
            It doesn't take a bank run to freeze the national economy and turn dedicated loan collateral from borrower to lender assets.
            It's not the banks we worry about, professor.
            It's The Restofus.
            And we thought you were on our side.

          12. I am decidedly not on the side of opponents of fractional reserve banking–and I have made that perfectly clear in numerous places.

          13. I didn't mean to imply that such was the case.
            Merely offering my own observation that FR's pro-cyclical nature enables economy-destroying Crashes, such as 2008, without classic bank-runs against demand-deposits.
            Such financial crashes – caused directly by FR's money system cyclicality and instability – come down hard on regular people – the Restofus.
            I was hoping that your ambivalence on FR banking might be instigated to further consideration.
            Again, proper regulation? By whom? How?
            And, as to eliminating bank runs, via either full-reserve(nah) or non-reserve based money-issuance, being 'costly'?
            I asked, anything to say on how this happens in that economy?

            Looks more like non-inflationary stability and economic growth.

          14. I think Fractional Reserve banking has some design problems, but banking has great value by providing both political and market inter-mediation. Banking has 2 big design problems, IMO, both now and historically. One is that Fractional Reserve has no mechanism for "graceful failure", it essentially tries to maintain a 1 to 1 peg, between deposits and the reserve currency, up to the point of catastrophic failure. When reserves become stressed, a different protocol needs to be adopted, limiting withdrawals, or even reducing deposits across the board. Right now, the whole FDIC process establishes failure protocols, but banks could create their own protocol that didn't rely on a political authority stepping in and saving the day. The other design problem is that interest rates are a poor abstraction for the risks and benefits of lending. I think you could do lending at a flat fee, say 10% of principle over the lifetime of a loan, with penalties capped at 30% of principle if the repayment schedule is not met, for example. I think interest rates can be a good abstraction for averaging returns across a large set of investments, but they are not a good mechanism for handling truant loans. I think interest rates create "financial brinksmanship", where both sides are threatening the most extreme outcomes, either complete default, or very costly fees with exacerbated by ongoing interest at a high rate. A flat fee on lending, based on both risk, and availability of the resource being lent, with capped penalties for payment truancy, would be much better than the current way of lending.

        2. @Milton_Hayek – " A 100% reserve system by its nature guaratees [sic] 100% liquidity to all demand depositors, even if the bank is insolvent" – but this is trivial. Imagine this: a meteor shower destroys all homes in the world. All the home mortgage lenders, like in your 100% reserve system, get all their money back. But there's nothing to buy. So their 'money' is worthless. How is this any different from a fractional reserve system? It's not, ergo, as George says on different grounds, the Chicago Plan game is not worth the candle.

          Bonus trivia: less than 5% of depositors lost all their money in the US Great Depression. I personally have heard of one such person, and the bank gave them collateral in the form of foreclosed real estate. Many years later, the real estate was worth much more than the lost deposit money. Corollary: abolish the FDIC and all deposit insurance.

          1. Non-sequitur. A principal flaw of fractional reserve banking (FRB) is the lack of system liquidity without a central bank backstop. Meteors destroying all homes would have $0 impact on depositors under 100% reserve banking. Under FRB it would however cause an exponential collapse in credit after millions defaulted on their loans on destroyed homes. Loans which by and large were created by pyramiding of deposits, and which now would implode due to lack of payments.

            It's interesting you bring up the Depression. The recession the politicians turned into a depression was caused by the business cycle generated by the Federal Reserve's inflation of the money supply in the 1920s.

            The Roaring 20s was a time of great productivity enhancements and expansion after the war. It should have been (and would have been, under the old gold standard) a time of productivity-driven deflation. But it was instead a decade of flat prices. Why? The money supply was inflated resulting in steady prices, rather than falling prices. Inflations are inevitably followed at some point by a collapse and business retrenchment.

            As Rothbard pointed out, contrary to Friedman/Schwartz, the Fed was actually correct (!) in allowing the money supply to contract from 1929-1932 as the demand for money had fallen precipitously…

          2. well that's interesting Milton_Hayek, and Rothbard's 'alternative universe' theory may even have merit. However, I think you have to concede that in a world where all housing got destroyed, even a non-FRB/Chicago plan banking system would have the savers suffer. Put another way, I think you will concede that savers will suffer almost just as much as debtors (maybe not as much) if a world where there's a real shock to the economy (i.e., meteors destroy all homes). I'm not a Keynesian, but that was Keynes great insight: if debtors/spenders stop spending, then creditors/savers will also suffer, since "you can't eat gold (or money), but need spenders to get a return on your savings".

          3. Keynes had no great economic insights. To assume saving is bad is to assume investment and lending are bad. If you don't save you spend. If you save, your savings are either in a bank, in a business, in purchased debt or in a jar.

            Keynes had no theory of capital (neither do the monetarists), so he had no theoretical justification for savings – Keynes was all spend, all day.

            He knew the end result (spending for consumption) but assumed it was the font of all prosperity. Not so.

            To your point, you assume in the event of a calamity that the lack of "enough" spending is a market failure to be cured by government. A key fallacy of Keynesianism is the assumption that cash cannot be a valid asset preference. When production resumes, spending follows, and not before…

          4. Yes, good points, but my point was that in the event of a real GDP shock, say half of all physical assets are destroyed, then both savers and spenders (lenders and creditors) will be hurt. The creditors will default / declare bankruptcy, and the lenders will find their money buys a whole lot of nothing (the existing housing will be 'over-priced' due to severe shortages) not unlike what happened after every major war, where a pack of cigarettes was worth a full gold coin, or, as in Greece during WWII, the city folk would sell their jewelry for a loaf of bread, from what I've heard from people who lived through it. You can't eat gold…

          5. Lol, then my reply is "OK; so what?". Man recovers and goes on. A government can do nothing to improve that situation…

          6. Milton_Hayek says: "Lol, then my reply is "OK; so what?". Man recovers and goes on. A government can do nothing to improve that situation"–aha! Got you. Never forget I am a chess player–Google my nym. And you my friend fell into my trap. So you admit then that a stable money supply, e.g. a gold standard, or even a gold coin based non-fractional reserve system standard, maybe even a bitcoin cryptocoin standard with a finite supply of crypto-coin, is no guarantee against everybody taking a hit in a calamity? That is, even the soundest money system will not prevent people from losing out with their standard of living if there's a disaster? Fine. Because most FIAT based money supplies failed only when there was a disaster, typically a man-made disaster like war. So in short, a gold-based 100% non-fiat, non-fractional, coin based (cash and carry) system will not stop the decline and fall of the Roman empire, when there's barbarians at the gate. Modern analogy: North Korea nukes all the major cities in the USA. Check and mate!

          7. "That is, even the soundest money system will not prevent people from
            losing out with their standard of living if there's a disaster?"

            LOL, who claims it is? Not me. I've never seen any monetary theorist claim that either. Wealth comes from a proliferation of material goods and services, not money. mercantilism was debunked in the 18th century.

            You're not playing chess, you're playing with yourself!

          8. But Milton_Hayek, in the short-run, all claims of money non-neutrality are a disguised form of monetarism, think about it. Why should 'sound money' matter? Because it has some sort of benefit, in the holding of it. I posit outside of Zimbabwe hyperinflation, there's no such benefit, while you assume the opposite. Bernanke in 2002 (FAVAR paper) did an analysis and found a small influence of 3.2% to 13.2% in Fed policy shocks from 1959 – 2001, out of 100%, for things like GDP growth, unemployment, and the like. Statistically significant but not worth spending hours belaboring, like monetarists and old fashioned 'sound money' types (like you? like George? like Cato?) like to do.

          9. Quoting Helicopter Ben scores no points with me. Your theory is bunk, and you must posit an extreme scenario to prove whatever point you think you are proving (All "money" is the same? There are no stores of value? In the long run, we're all dead?). Is your crisis possible? Sure. Plausible? Not according to world financial markets.

            Here's something for you to chew on – from colonial days until 1913 +/-, inflation in the US was virtually unknown except for discrete periods such as Lincoln's Greenbacks, and the CA, AK, and Australian gold strikes. Gold strikes being the major unforeseen jolts to the market, caused short term disruptions until the exact size of the strikes and their relative impacts on supply could be determined, disseminated as news and markets could adjust.

            From 1913 until today, mostly after Nixon closed the gold window, the 1913 US $1's purchasing power declined to $.045 +/-. I'd say that's a historically proven and predictably far more likely future scenario – destruction of the value of the people's money by a profligate, debt saturated government – than meteor strikes.

            But as I understand you – none of that matters because…?

          10. Milton_Hayek

            "But as I understand you – none of that matters [historical inflation] because…?" – ARMs, TIPs, inflation adjusted contracts. I agree there was a temporary jolt when Nixon went off the gold standard, and/or when new gold was found (CA, AK, AU, South Africa being the biggest). But people quickly adjust. The big insight in the 1970s was "ratex" or rational expectations for the representative man. Only unforeseen surprises cause potential real shocks, and Bernanke in his FAVAR paper (he had a team of people doing the stats) showed the real shock for Fed policy is 3.2%-13.2% out of 100%–statistically significant but nothing huge. Brazil had inflation since WWII averaging in the teens and yet they grew in real terms quite a bit. By contrast, inflation in the USSR, Cuba or some-such place like medieval Russia was probably low, because there's no goods on the shelf. The short-hand expression for all of the above is: "money is short-term neutral", i.e., people adjust to inflation and it has no real effect (even diehard monetarists like Scott Sumner and the rest agree, btw, that money is long-term neutral, and as taught in every college econ textbook, with the intersecting AS-AD curves that form a diamond long term).

            Look Milton_Hayek, I used to believe in money non-neutrality short term (i.e., what you believe in now). I really did. I used to be a diehard gold bug when I was younger. But I did the research and concluded I was wrong. I'm not a Keynesian, but I do think both Keynesians and Friedmanites (Monetarists) have it wrong when they assume either fiscal or monetary policy has short term effects. Most of the time these policies have weak effects, akin to pushing on a string. BTW, I'm reading the excellent new book by George Selgin, "Money Free & Unfree" and he argues, as Sumner did, that the Fed in 2008 "did not do enough". But that's just IMO the argument of a 'true believer'. Heck even some communists feel that to date, communism has not been tried in the manner taught by Marx, and Red China and the USSR were not really communist. Whatever.

            "When the facts change, I change my mind. What do you do, sir?" – attributed to Lord Keynes.

          11. Temporary jolt??? I lived through that temporary jolt. Do you deny the extreme debasement in the US $ since 1972? Please!

            Sorry, you peddle money crankism. And I'm neither a monetarist or a Keynesian…

          12. @Milton_Hayek:disqus – Oh c'mon man! You lived through the 1970s just fine. Consider this: government as a share of GDP was LOWER in the high-inflation 1970s than it was in the low-inflation 1980s. Debt per capital, by growth rates, and every other metric, was LOWER in the 70s than the 80s. Productivity and wage growth were HIGHER and/or about the same in the high-inflation 70s versus the low-inflation 80s. Except for the price increases, which people adapted to (except you, which it seemed to permanently traumatize) life was fine in the 70s for everybody but a hypothetical little old lady living on a fixed income that is not adjusted for inflation. Was that you? Inflation, pfft. Get over it snowflake…

          13. It was lower in the 70s that today because the government has expanded massively since then, the value of the dollar is far LOWER than then and you assume that everything evens out in the end – right?

            Your grasp of economic basics is lacking and worse, all you can see is what's in front of you. A shallow intellect fails to see when it's being duped…

          14. @Milton_Hayek:disqus – "It was lower in the 70s that today because the government has expanded massively since then, the value of the dollar is far LOWER than then and you assume that everything evens out in the end – right?" – wrong my dear boy. We are taking RATIOS. Ratios my man. Anything in the numerator is also in the denominator.

          15. @Milton_Hayek:disqus The point being that 'value of the dollar' does not matter; the US government grew faster in the low inflation 1980s, as share of GDP, than the high inflation 70s.

            Here's something to mull over: http://www.bbc.com/news/world-asia-india-41109272 . Why is it that an Indian government scheme to destroy big currency bills, which had real affects to the economy, did not really matter? Because money is largely neutral, just like I said. Go here to see Indian GDP was not much affected by this move: https://tradingeconomics.com/india/gdp-growth

            My dear man, you have a lot to un-lern before you can debate with me. Brainwashed by the Mises Institute?

          16. "The point being that 'value of the dollar' does not matter;"

            LOL, ever? You are deeply confused old man.

            In the US, it was suggested the $100 bill be removed from circulation, but no one cared about the economic effects, because other than increased transaction costs, there'd be none. Indeed, it was pushed by the government as a means to fight crime & cash-businesses not paying taxes. The end game is a government issued digital currency so that the government can end the ability of people to hide assets from it. And of course, to make the next bank bail-in automatic. Remember Cyprus old sport?

            I'll have to live with the fact that you feel I'm not up to debating a money crank…LOL…dear boy…

          17. @Milton_Hayek:disqus Old chap, you are debating yourself, with your own ignorance as the other side. Do you know that taking bills out of circulation, at a discount, as happened in India, is, according to monetarists, contractionary? That's why the experts predicted that Indian GDP would go down, but it did not. Money is neutral, largely.
            I'm rapidly losing interest in this thread, as I don't see the point of either watching you debate yourself nor in trying to educate somebody who is self-taught with Austrian economics books.

          18. Bank robbers or dishonest bankers making off with gold from a bank vault seems more likely to me than meteors destroying all homes securing my bank deposit. Anyone who wants a full reserve bank deposit may have one. Peter Schiff peddles them every chance he gets. If you trust the Goldmoney guys, go for it.

          19. The Fed runs off with around 4% of your money each year by inflating the money supply to hit its bizarre 2% inflation target.

            " Anyone who wants a full reserve bank deposit may have one." Peter Schiff runs a bank? Which one?

          20. The Fed runs off with the value of my money only if I hold its currency. Anyone who wants to hold gold instead is free to hold gold.

            Schiff has some interest in Goldmoney, which is a full reserve bank.


          21. LOL, that's a precious metals warehouse, not a bank. But you have touched on the main point – banks SHOULD act as bailsmen for demand deposits, to which they promise immediate access (per business hours of course) to what they hold…

          22. Follow the link. Goldmoney doesn't warehouse metals, but it does offer payment services, retirement and pension accounts and other services that it calls "banking services". If you have a Goldmoney account, your metals are in "insured vaults around the world". Goldmoney does not own these vaults.

          23. LOL I did, did YOU?

            On their face page:

            "The World’s Most Trusted Name in Precious Metals

            Goldmoney is the easiest way to invest in physical gold and silver bullion online. We safeguard nearly $2 billion of assets for clients in 150 countries."

            I see no mention of checking accounts, Christmas clubs, or lending activities….

          24. A full reserve bank need not extend credit. It can hold demand deposits exclusively and facilitate exchange thereof. Since you can read, I won't quote the "banking services" (in the words of the company itself) described on the same page you quote. Selectively ignoring facts is a time honored tradition, but the tradition does not support your point.

          25. Please – it's a precious metals warehouse offering a very limited selection of banking services, namely a credit card. You accuse me of cherry-picking while you conflate a precious metals warehouse with a full service bank.

            The original subject of debate was the government's debasing of the money supply and Lopez's crank theries on the matter…

          26. "Full service bank" are your words, not mine. If you want to hold gold rather than FRNs, hold gold. Bury it in your backyard if you want. If you want a fully backed gold account permitting you to spend gold practically anywhere you can use a Visa card or save gold in a retirement account, use Goldmoney.

            Regardless of the original subject, you made this point about meteors destroying homes, and I responded to your point.

          27. Your problem is you don't read far enough back into threads to know who said what, or you simply don't pay attention to who says what. I never brought up meteors destroying homes. So you've been wasting my time…

          28. I never claim that you made the point originally. Practically every point of any sort anywhere at any time refers to an earlier point. Regardless of who raised the point in this thread, meteors destroying all homes causing a collapse of fractional reserve banks is your point above. I responded.

            If your five posts in reply wasted your time, you wasted it, not me, just as you place the value of your holdings at risk by holding FRNs (or a deposit in a free bank not circulating a legal tender) rather than gold or anything else you could choose to hold instead.

          29. Again you are mistaken. It's not that I didn't make that point originally, it's that I never made it at all. I was refuting the point Lopez was attempting to make by his use of that example he created…

      2. Sorry, Ray, that is an extremely myopic view of the Chicago Plan, and the more advanced proposals that I posted.
        Narrow banking?
        Here's a clue.
        It's not about the banking. It's about the money.
        It's not about the fractional v. 100 percent reserves.
        It's about the money.
        Who creates it and how it enters circulation and who gains from that monetary operation.
        Of course public money will stop bank runs.
        The intro to that Fisher-Douglas-Graham 1939 proposal states its purpose – "to end the lawless variability in the supply(quantity) of our national circulating media"

        Why don't you read that paper – on fractional reserve banking and full-reserve banking and the national Monetary Authority – and get back with me.
        Let me know if you want a more up-to-date model.


        1. Sorry, joebhed, but anybody that advances a "national Monetary Authority" has an extremely mypic approach.

          Here's a clue. It's about the market.


          1. Its not about the market, its about privately issued money as interest bearing debt, created ex nihilo in order to dominate all markets. There is no 'free market' today. That should not be hard to see and we need to do more than just make banks intermediaries which is a good idea and is one of the 3 essential elements in the NEED Act HR2990 which would get us on the road to recovery.
            1.The FED becomes part of our government, precisely what most of us mistakenly think it is now.
            2. Bank creation of money as debt is decisively stopped. Banks will only loan money that already exists, exactly what most people mistakenly believe happens now.
            3.The federal government creates and spends into existence US Money in non inflation/deflationary amounts for the needs of the nation and its people. Again, what many mistakenly think is happening now.

            All three of these need to happen at once because; The Bank of England was nationalized in 1946 (Reform #1). But because bank creation of money was not stopped (Reform #2), private banks now still create 97% of the UK's money.

            Jackson and Van Buren revoked the Second Bank of the U.S.'s charter, effectively ending most bank created money at the time (Reform #2). Misunderstanding the true nature of money, they failed to create and spend, debt-free money into existence (Reform #3), bringing on the depression of 1837.

            Debt-free Greenbacks (Reform #3) were created under Lincoln to fight the Civil War and save the nation. Because bank creation of money (Reform #2) was not decisively stopped, the bankers methodically got the upper hand and quashed the Greenbacks.

            Greenbacks are not inflationary unless spent on war or speculation which is not the purpose of government. Money created and spent by government “..to form a more perfect Union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.” Read what Herman Daly says about it: https://www.opednews.com/articles/Nationalize-Money-Not-Ban-by-Paul-Craig-Roberts-Banking_Banks_Bankster_Credit-151008-676.html

    2. So the answer to the profound, inherent flaws of central planning is…more central planning? Money by committee?

      1. Milton ?

        The answer to profound, inherent flaws in fractured planning (fractional reserve banking – money created BY bankers AS debts) is a change to good planning where economic stability actually becomes achievable.
        Very simply so.
        Let money be the needed medium of exchange to promote commerce (production and consumption), being enabled by freedom from using debt for money.
        PS – concluded Milton – You can't have free enterprise without a level playing field, and you can't have a level playing field when one class of business (bankers) creates the money for all the other classes of business, and the government …..and then rents that money to the Restofus.
        Paraphrased a bit.

        For the Money System Common.

        1. "…change to good planning where economic stability actually becomes achievable"

          And your real world example of that is….?

          Planning means force is used to implement the plan, since by their nature, plans mean directives that must be followed by the willing, and the dissenters.

          You want to replace a disfavored statism with one more to your liking.

          No thanks…

          1. You're welcome, Milton
            I have already stated my real world examples, primarily the North American Colonies for over a hundred years – ( debt-free government-issued money), and also Greenbacks, (Issued debt-free by government, spent into existence by Lincoln) but really, Milt … do you want the science of this money, or just interested in another Guv-mint BASHING opportunity ?

            I suggest a read of Zarlenga's "The Lost Science of Money", Ch.s 6, 14, 15 and 17 …., I sent you the link to Uncle Miltie's Proposal for fiat moneyed economic stability.
            What do you think of that?
            End. Fractional-based Lending.
            Full Reserves on all demand deposits.
            Guv-issue of all money.
            That's Milton Friedman – Mr. Free Marketeer.
            Confident of your positions on money?
            National Monetary Commission.

            Do you really think it possible to achieve a revisit of the gold standard without legislation, and that you can achieve that legislation without a rigorous public discourse?
            Time for a new Monetary Commission .

            For the Money System Common.
            Not a government hater..

          2. What the colonies used was a mishmash of foreign coins, British money and (illegal) colonial government issued fiat currencies and coins with the predictable volatility of fiat paper issues tied to nothing. Planning? Please.

            Lincoln's greenbacks caused an inflation which after the war was replaced by a return to a true gold-coin standard. There was a reason greenbacks were used – to pay for the war without crushing taxes on the people. See the resulting post-war panics that resulted. Refer to the Fed in WW1 – the war time inflation was followed by the depression of 1920-1921; the inflation of the 1920s – the Feds plan to keep prices steady during a decade of intense productivity related deflation – brought us the Great Contraction of 1929-1932.

            Uncle Milton was a monetarist – I'm no monetarist. Money cannot be engineered and imposed – see how well the Euro has worked out (PIIGS).

            You planners are the bane of mankind; you are anti-capitalist and anti-liberty.

            "Do you really think it possible to achieve a revisit of the gold standard without legislation, and that you can achieve that legislation without a rigorous public discourse?"

            Under the Constitution, all that's needed is a repeal of the legal tender laws. Then free people can choose to use government's money, or someone elses.

            That's the beauty of markets – especially for money. When people are Free to Choose, they inevitably drive out inferior products….

          3. Thanks for the inanity.
            WTF are you talking about – you are obviously ignorant of the success of the Colonies economics, caused by the plan for issuing own fiat money systems in proper quantities.
            You're out of touch with reality on that one.
            Then, pray tell, using any Austrian definitions, HOW can an amount of money paid into an economy by the government for that government's purchase of goods and services NEEDED by the national economy cause inflation in that economy ?.
            Theory of Money and Credit pg. 126.

            Then, PLEASE DO NOT equate the private Fed with anything I am talking about here.
            Issuing Debt for Money is the problem there. Naturally these private bankers prosper from those post-War Booms and Busts.

            Got anything else besides mis-informed anti-government hyperbole ?


          4. The economic success of the colonies was hardly due to their choice on exchange mediums. They were helped by those choices to be sure, but you seem to claim their success was mainly due to them – that strains credulity.

            "Then, pray tell, using any Austrian definitions, HOW can an amount of
            money paid …" – Wrong definition of inflation. Per the Austrians, inflation is an artificial increase in the money supply, whether it shows up as discrete price increases, or new bank reserves. So, by your example, government creating money out of thin air is inflating (increasing) the money supply.

            Now, government spending taxes it's confiscated from the public is not inflationary, any more than when a thief spends his ill gotten gains, since both merely change WHO spends a dollar. Neither action creates new dollars.

            "….government's purchase of goods and services NEEDED by the national economy…" Talk about inanity. Why does a "national economy" need a government to purchase for it its own production?

            I brought up the Fed merely as more evidence that your faith in planned economic activity, especially that surrounding the money supply, is sheer folly, doomed to failure and all sorts of bad unintended consequences. Hayek (among many, many others) lays out the reasoning for why planning always fails in several pieces, this being the most well known:




            You mistake my specific disparagement of economic planning for one of government in general. I am an anarcho-capitalist, but my critiques of government in general are not the subject of my replies to you….

          5. "They were helped by those choices to be sure, but you seem to claim
            their success was mainly due to them – that strains credulity."
            Typical anarcho-capitalist (mainly) hair-splitting.
            So, was the Colonies' own currency more, or less, than fifty percent of the basis for their prosperity? Mainly. Talk about straining credulity.

            2'd para – please do not infer anything about my statement beyond what it is.
            Government issuing new money (all money MUST BE created out of thin air – how else?) to purchase goods and services in the national economy is no more or less inflationary than if the purchase was done by any person or business doing the same.
            How can the 'source' of the money, and not the 'quantity' of the money, be the cause for monetary inflation?

            Then, really? Did you misunderstand that "context"? It's the national economy that NEEDS the goods and services, in this case food, ammo, housing, etc, for the nation to survive the War … so, Greenbacks.
            Did you think the Bankers were going to provide what the country needed?

            I've read all of Hayek's books. The best of the Austros for sure, IMO.
            Also his Nobel paper.

            I don't agree and have no interest in the relevance of his micro-knowledge gaps.

            For me, aggregate demand was the correct metric.

            How to achieve that should be the considered debate.

            Even when we can't know everything.

            Yeah, we really believe that private planning of our economy's future is just fine. But if the government does it, damnation.

            I go back to why Milton-Hayek should not avail money knowledge to an impartial monetary commission, where a real decision about our future money system might be made.

            From above (earlier)
            JB "Do you really think it possible to achieve a revisit of the gold
            standard without legislation, and that you can achieve that legislation
            without a rigorous public discourse?"

            M-H "Under the Constitution, all that's needed is a repeal of the legal tender laws. ,,,, "

            Sorry, are you really implying that repeal of the legal tender laws can happen without legislation ?

            And that the country might legislate a repeal the legal tender laws without a substantive public discourse?

            31 U.S. Code § 5103 – Legal tender
            US Code Notes

            United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts.
            (Pub. L. 97–258, Sept. 13, 1982, 96 Stat. 980; Pub. L. 97–452, § 1(19), Jan. 12, 1983, 96 Stat. 2477.)

            If the Money Statutes survive, even without the Legal Tender laws, you accomplish nothing. Not even anarchy in money.

          6. Where does gold come from? Thin air? How about silver?

            If all it takes to create wealth is a printing press, why should government get the monopoly on that? Why can't we all print the dollars we need to pay for stuff? Give everyone the proper supplies & authentic printing plates so the currency printed is "real".

            I don't want a legal answer, I want the economic answer. If government pays for goods and services by creating printed pieces of paper that in turn benefits the people, then why does it forbid the average citizen to do so? Per your theory, the two (currency creation and productive activity) balance out for government printing – correct? Then why not for the average citizen?

          7. uh perhaps becasue government is supposed to represent us all? Why would we ever want to allow a few rich bankers have the monopoly on creating our money? …and do it for personal profit not for the general welfare or the common defense or anything else this country supposedly stood for. Why can't we all print money? Uh…inflation? How about really stupid chaos? But decentralizing power is the point of public money. Nothing empowers a citizenry like money in their pockets instead of being in the speculators account.

          8. Naive and fallacious. What government is "supposed to do" and what it actually does are vastly different things. You need to read more history, or just keep up on the news.

            "Why can't we all print money? Uh…inflation?" – Really? So since the government has been in charge of the money supply via the Federal Reserve, there has been no inflation? That your answer?

            You need to explain to me why the exact same mechanism – printing money to pay for material goods and services is inflationary when the citizens do it, but not the government does it….

          9. As I said they are supposed to represent us and we should be sure they do, don't you think? Again with the myths? Government has never been in charge of the money supply in this country, THAT is the problem. We have an unhinged private banking system with fascist tendencies running roughshod over public policy. The dollar has been going down ever since the FED, our privately controlled central bank, was established. It in fact caused the Great Depression as a Congressional investigation proved but without power could do nothing about it. The business cycle is a pump and dump scheme where banks and their minions drive the price bubbles up then collect the collateral when they stop lending. You keep referring to others as if they are stupid but how do you imagine that everyone printing money willy nilly wouldn't create a mess? There needs to be some rules for an economy to work for everyone and the ones we have are inadequate thus we need to change them.

          10. If you think the Federal Reserve is anything more than even nominally private, I have a bridge to sell you. Here's a dirty little secret – it's a creature of government, the chairman of which is chosen by government, that prints money to fund the government, and manipulates the supply of credit to placate government.

            It is a backstop for fractional reserve bankers, designed by them to allow them to do what bankers love to do – steal by inflation of the money supply.

            So we seemingly agree somewhat on what the problem is, yet you think the answer is to give government, a political machine staffed mainly by untouchable bureaucrats, who keep their jobs no matter which way the political winds blow, driven by incentives to garner ever more power and to prevent change from occurring – you believe that is a better alternative than a free, competitive market in banking with no barriers to entry and easy exit.

            My question to you: on what grounds?

          11. I suggest you research the facts, activists like Alfred Crozier knew it was happening when it was happening, read his 1912 book, U.S. Money vs Corporation Currency. FED people have admitted it is a privately controlled institution for years. They gave it a government sounding name to fool people like you who don't check the facts. Creating a competitive market in banking is exactly what a public money system would do, now banks can just create money, who can compete with that?

          12. I have better than a book. I have 104 years of Fed history. The Fed is private in name only.

            Regardless, we both agree it needs to go. Congress needs to end FRB, repeal legal tender laws and return money to the people, to be in whatever form they decide it ought to be.

            Lending must only be made from real savings, not pyramided demand deposits…

          13. "Government has never been in charge of the money supply in this country, THAT is the problem."

            Not so. Although the Fed banks are at least nominally private, monetary policy decisions are made by FOMC. Although some Fed bank presidents serve on the FMOC, so does the government-appointed Board of Governors of the Federal Reserve System. Moreoever the Board alone, rather than the FOMC, sets the interest rate on excess reserves, which since Otober 2008 has been the main monetary policy instrument. The Fed banks themselves play no part in setting monetary policy.

            The idea that putting government in charge of money is a guarantee of having it "work for everyone" is in any case exceedingly naive. Governments have always catered to special interest groups, and given the chance to print money at will for the sake of doing so, they are inclined to print far too much of it. Nor is there any shortage of evidence for this. There have been stable monetary systems in history, but they have been ones in which governments have played a trivial part, rather than a major one. Find me a government-run monetary system that worked better than the systems of Scotland from about 1772 to 1845 or Canada from 1871 to 1914 and I'll eat my hat!

          14. > You need to explain to me why the exact same mechanism – printing money
            to pay for material goods and services is inflationary when the citizens
            do it, but not the government does it….

            "The State is the representative of God on Earth."

          15. > government is supposed to represent us all?

            Note the statist evasion of the only rational purpose of political representation, ie, protecting individual rights. Statists regard govt as a method of whim-worship.

          16. Milton,, golden softballs.
            I have honestly read, carefully, Rothbard and Huerta de Soto.
            This is a great example of WHY we need a national monetary commission … to clear some fog.

            Gold, is a metal that is traded as a commodity after it is mined from the ground. As a commodity it has value, as do all other metal commodities, value that is “expressed” in monetary terms.

            If you care to see how today any of that mined gold becomes money have a read of the ‘commemorative coinage’ statutes. That is the only gold that is money. It is only when a law is passed that denominates gold metal
            coinage into a currency value that any of that gold becomes – an exchangeable circulating medium ….. money.

            Gold comes out of the ground as a beautiful metal with intrinsic industrial values, and then money laws create that gold metal into money via the Guv-mint’s legal money power, a.k.a. thin air, ex nihilo,‘substantiation.’

            Then, of money-'system' substance.
            Why should the Guv allow ‘people’ to use the national currency denomination unit ($US) to create national obligations for their private gain? You tell me.

            The Guv is sovereign in money and has the obligation to defend its value for The Restofus.Giving that power away to any private interests without
            closely-controlled regulation (??as in FRBS??) would negate money’s
            effectiveness and abdicate our currency’s protections.

            Right now you and Larry are free to use whatever you want to use to convey any transaction between you. What more do you want?

            OH ! You want to be able to use our currency-unit national denomination on something that you might lend to others, or to invest for further private gain?
            Sorry. without sovereignty over money, the nation would never survive.
            Or, is that the plan?

            BTW, please understand that the government DOES NOT …. "" pays for goods and services by creating printed pieces of paper that in turn benefits the people,””
            THAT it does not is the problem.
            No, the Guv does not do that, paper or electronic, or whatever. The government issues only “coins: commemorative and otherwise,as ‘money in circulation’.
            So, what are you talking about?
            Oh wait. I forgot.
            To Austrians, the private FRBS is the Guv-mint.

          17. Your problem is too much legal theory, not enough economics. What you posit is that legislation determines what is and isn't money – tell that to the cryptocurrency folks. Gold was money long before governments deemed it so. Coining of metals started in Asia Minor around the 7th century BC as merchant tokens, not government issue.

            And by the time you finished your screed, you stopped making sense. At least as far as your assumption that the Federal Reserve is (wink, wink) a private entity uncontrolled by government. Nominally yes, practically the Fed is a tool of DC and Wall Street.

            You also seem to be under the delusion that Federal Reserve notes can be redeemed for "something", but you indicate it is "debt" of some sort. My dollars don't say that; do yours?

            Your entire premise boils down to a call for the extraction of monetary policy from "elites" that you don't care for, and the placement of it with your new elites who go by the name "Monetary Commission".

            Have you ever heard of the Better Angels fallacy?

          18. Milton,

            This might be funny if it weren’t so wrong.

            But, when the identity is strictly economics, and not law, especially the weedy micro-economics of Austrian School, then, of course, anything can be anything.

            And that’s what makes economics the warm and fuzzy identity for the free-marketeers among us. We could argue this one forever.

            You have continually failed to see the reality of the situation here in discussing Dr Whites new study of gold-as-currency escaping the State
            Theory of Money. That reality you are missing is exactly as I first described in asking for consideration of a national nonetary commission to have a broad public policy discussion of all of these matter.

            It is that either we both forget about seeking a better alternative to the F-ed up system we have, or we both recognize that whatever alternative we seek
            requires a change to existing money and banking laws, insofar as these are currently related – which is intimately.
            Gotta change the law. ( not the economics)

            Either of us will require a change to the law, which is a major undertaking, for the national monetary system.

            A change to the monetary system. I can hardly think of anything more worthy of a public dialogue than this reality, again for both of us.

            I have to hope that not all Austrian ‘elite-government-state-planner-psuedo-liberal haters are incapable of realizing the potential benefits of an open and honest discussion about money.

            If you care to suggest an alternative forum than the somewhat traditional
            method off a national commission on money … maybe and banking , well then go ahead and suggest that better alternative.

            It would seem an Austrian dream. In fact, isn’t there already a Bill in Congress to consider going back to the gold standard, and to have a national monetary commission undertake that discussion?

            I think so.

            Almost seems embarrassing to this discussion. Or, we could just expand the scope of what that group of elitists have on their policy plate.

            Who should create and issue the nation’s money? And why? Maybe even, and how?

            BTW, no, bitcoin is not money.
            Like I said you and Larry can settle your transaction in any medium agreed.
            That is an economic exchange not involving anything that is money.
            An actual medium for barter. Almost Smithian.
            Sort of a black-market economy media.
            Not a problem.

            For the Money System Common.

          19. Deflection. Answer the question. It is not Austrian, it is Econ 101 – "school-less" if you will. And we cannot progress to what changes are needed unless we at least understand your theory. Economics first, then policy proposals.

            The rest of your blather is just that, though there is truth that, as I told you before, repeal of the legal tender law is needed. That or for crypto-currencies to become useful to a critical mass of the populace…

          20. We are well aware of the similarities between gold and bitcoin, both marketable commodities, neither being money.
            The Goldie-Bitcoinists. Good luck.

            The legal tender statutes only affect coins and currency and National Banknotes, being a couple or three percent of the money supply. Only the coins are government-issued. Repeal of the right to use coins to pay for stuff seems a hollow victory.

            The paper notes are already of private issuance.
            Even repealing the power to use those FRNs in payments of transactions doesn't do much.
            And demand for cash would require its replacement – somehow.

            The government is still sovereign over money.
            The government still has the power to denominate its money unit and to define every aspect of the money (currency) system, and also to create and issue all of the money.
            Again, if the object is not to destroy the country and its economy, why would we destroy our money system?

            I'm sure you are just as bored of me.
            On behalf of the public money alternative,
            Have a wonderful life.

          21. Stay in your safe-space, uneffected by facts, history and basic economics.

            True "public money" needs no guiding elitists – those who have studied the history of money know this…

          22. Milton,
            You're the joke here, despite your longevity.
            You haven't dealt with the deafening reality that you are for a new gold standard, yet against a national money commission to evaluate money reform options, including a new gold standard. Why ?
            MEANWHILE there already is a Bill in Congress for a national money commission to study a new gold standard.
            SO, you want a limited public study, eh? Why ?

            How hypocritical can goldies be, meanwhile claiming for errant readers their knowledge of 'facts, history and basic economics'
            I have argued throughout, correctly, that all reforms need legislative changes, yet you reply that money reform isn't needed, only a repeal of the legal tender statutes, like THAT is going to be an easy sell in the Congress.

            You contribute intransigent ignorance of our body politic and our modern money system economy.
            I leave you to your golden money sandbox.
            But it's you who should get out more often.

          23. I'm for free banking, the end of fractional reserve banking, and a return to a gold-coin standard. I'm not for anything set up by, run by or maintained by a small, elitist cartel of unaccountable, politically motivated statists or oligarchs.

            That Congress must act to repeal what legislation it and the banking cartel has saddled us with is a sad fact of reality. The silver lining (no pun intended) is that centralized government is finally threatened by a decentralized, private sector information system through which bright minds are working day and night to obsolete government control and plunder of wealth.

            At the risk of repeating myself – you simply demand "your" cartel of trusted elitists replace the current cartel of elitists you don't like; aka the Better Angels fallacy…

          24. Why don't you address his points? From what I see there is no "blather" whatsoever. You completely mischaracterize what he said and then dismiss your own fabrication.

          25. Let him answer my question. I owe him nothing when he deflects. I owe you even less…

          26. Seems he preferred to stay on topic and not be "deflected" regarding some philosophical point regarding the defects in human nature and Better Angels….
            What I took from his comments is that money should be issued in a democratic manner, and have the weight of law to support it as opposed to an anarchical model. Whether gold served as currency in the past is no indication that commodity money is beneficial to society. Its not the fiat nature of our current system that is the problem, but rather who is issuing the fiat – currently that is the private banking system.

          27. He prefers his set of statist elitists to the current ones – hence the better angels reference.

            There's nothing more democratic than free markets and his ideas have nothing to do with freedom, choice or markets.

            Get it now?

          28. > He prefers his set of statist elitists to the current ones – hence the better angels reference.

            As George Orwell noted, some Good Intentions are more equal than others. I will give you more stolen compassion than my opponent. Vote for me.

          29. > we need a national monetary commission

            Ie, a govt gun stuck in the faces of productive people. When was slavery more productive than freedom?

          30. You are free to print anything you want – just don't call them dollars. How about "hayeks"?

          31. Not the issue – the claim was that government doing just that – printing money to pay for goods and services – causes no ill-ECONOMIC effects.

            If that is true then from a strictly ECONOMIC POV, everyone should be free to print money to pay for goods and services.

            The question of whether I or government does it is a dictinction without an economic difference…

          32. > The question of whether I or government does it is a dictinction without an economic difference…

            Economics is the fig leaf that covers his lust for political power.

          33. A printing press is not necessary for state money. An organization effectively monopolizing "legitimate" coercion is necessary. This organization then can create state money with a printing press if it can effectively avoid counterfeiting, but it can also create money as bits in a computer. It can also coin gold, silver and copper, particularly if similar coins already circulate as money, as the nascent United States did, when its monopoly was less a fact than a claim.

          34. The ECONOMIC claim being addressed was this: government can print money to pay for goods and services with no inflationary or other ill effects on the economy.

            If that claim is true, then every citizen should be able to do exactly the same thing – print real money – exactly the same as that which government issues now – to pay for material goods and services, BECAUSE per the claim – doing so causes no inflation or other ill effects on the economy.

            You and others are muddying the waters talking about the surrounding legalities, political issues etc – which are irrelevant for the economic question at hand.

          35. I don't see anyone claiming, as a general proposition, that government can print money to pay for goods and services with no inflationary or other ill effects. Mosler says no such thing. He says that fiat monetary policy can be inflationary. It's inflationary if the state spends too much relative to its tax collection and sale of entitlement to future tax revenue..

          36. > sale of entitlement to future tax revenue.

            Somehow, the sale of indulgences by Catholic clergy comes to mind…

          37. > If government pays for goods and services by creating printed pieces of paper

            You may want to rethink "pays."

          38. Oh and as regards a) – the mercantalists thought prosperity came from money too….

          39. > eah, we really believe that private planning of our economy's future is just fine. But if the government does it, damnation

            Spot the hidden statism in "our economy" and win a signed photograph of Lord (bow and scrape) Keynes, suitable for dart games and warm beer.

          40. > faith in planned economic activity

            Planning is the product of man's independent mind, not a govt gun stuck in the faces of productive people. See "Economics In Atlas Shrugged" (online) by Duke U economist, ex-banker and Objectivist, Richard Salsman.

          41. Milton-Hayek needs a closer look at history. Money only exists by law otherwise it is just a commodity and when a commodity is used for money it simply concentrates wealth to those who control that commodity. So money should be issued as a public asset spent on the purpose of government which is described in the first sentence of the Constitution. Art.1, section 8 clause 5 gives government the tool required to do this. The Constitution gives the money creation power to Congress not to private for-profit banks so they can just buy our government. Get in touch with monetary science by reading The Lost Science of Money and discover the history of power. It might help you understand inflation as well. Quite a tangle of misconceptions still going on in the Austrian School of confusion.

          42. > Wow – lots of error packed into that comment, both historical and legal.

            But he opposes packing, ie, concentration. ;<)

          43. > Money only exists by law otherwise it is just a commodity and when a
            commodity is used for money it simply concentrates wealth to those who
            control that commodity.

            In the Beginning was the Law? Sorry, bubie, reality, including production for a market, is real, not a manifestation of the Form Of The Perfectly Good Economic Intention. The laws (definite actions of definite entities) of economics are facts of reality, not arbitrary statistics of the last few anti-ideological, Pragmatist nano-seconds. Commodities used as a method of trade (inc/credit) are money, regardless of whether His Holiness And Defender Of The Latest Favorable Political Poll, the Fed Director, has farted on them or not. The poor in capitalism have vastly more concentrated wealth than the wealthy in pre-capitalist economies. Concentrated wealth is good for man, eg, the difference between hunting-gathering and supermarkets. Those artistic tapestries in drafty medieval castles were their very low-tech version of central heating. Prior to capitalism, daily near-starvation and famine was normal. Your rationalizations of your Marxist hatred of individual achievement (and, basically, of man's independent mind) are noted.

          44. > the inflation of the 1920s – the Feds plan to keep prices steady during a
            decade of intense productivity related deflation – brought us the Great
            Contraction of 1929-1932.

            Was that to indirectly decrease govt expenses or to enable more?

            Scholarly worm: Mises refused a job offer from an Austrian govt bank because he didnt want any professional link to statist economics. He had predicted a depression from those steady prices, ie, the Fed must be inflating. I wish he were alive and had a TV show. When Mises taught at NYU in 1969, I lived a few blocks away in the Albert Hotel. Rock musicians and cockroaches. My audio system was stolen while I was working. A woman was raped in the next room. The rapist knocked on my door and asked for a towel. What a clean fellow. Mises taught in the Business Graduate School because the Economics Dept didnt think he was a good economist. An economics student said that Mises had died some years prior. He was teaching there at that time. That intellectual situation makes Stalin's censorship seem as full of holes as Swiss cheese. Professors, we have a problem. Might I recommend Atlas Shrugged? Or Political Economy of Public Debt: Three Centuries of Theory and Evidence ,2017 by Objectivist economist, Richard M. Salsman? Or Money, Banking, and the Business Cycle: V. I, 2 by Objectivist economist, Brian Simpson ,recent?

          45. You posted rambling lunacy.

            To your query – neither. It was to follow the Fed's single directive at the time: keep the general price level steady. In a decade of production driven deflation, inflation is its only tool to do that.

            Now, you answer my query…

          46. > neither. It was to follow the Fed's single directive at the time: keep
            the general price level steady. In a decade of production driven
            deflation, inflation is its only tool to do that.

            But WHY was the general price level a target, to indirectly decrease govt expenses or to enable more? The first socialist central bank, the Bank Of England, was created to help govt fund its expenses.

            > Now, you answer my query…

            Govt-approved meds?

          47. The Fed was created to backstop the US fractional reserve system. That it funded WW1 by inflation was a happy by-product.

            Why do you insist keeping the price level steady had something to do with government spending? Perhaps you'd best explain where your meds addled thinking is taking you…

          48. I queried, not claimed anything, about govt spending. You need rational philosophy to focus your empiricist-addled mind. See Hume's bizarre comment beginning with "The intense view of these manifold contradictions" for a warning about the misuse of the mind. The Fed backstop may have been created to aid govt spending. You are splitting concretes apart instead of systemizing them. Science is system, not mindless observations of a random flow of events without identity and cause. You are part of the modernist dis-integration of science. Driving a car requires integrating the use of steering ,gas and brakes into a single (ideological) goal. As the Greeks knew, the mind makes One out of Many. Modernism is lost in the Many with only a mystical One, split from the Many, as alleged alternative. Philosophy is not an intellectual luxury solely for philosophers. Its a common human need because mind is volitional, w/no innate ideas. Ideas must be logically formed from observation not rationalize emotions. Eg, "In the Beginning was the Word."
            Mind requires a framework. See Edvard Munch's modernist "The Scream" for mind without rational or even mystical framework. See Aristotle's biology for the first observation-based, rationally systematic study of reality and of science itself. Aristotle taught man the method of systematic reasoning that later became modern science. He even did a few experiments tho that was later systemized by Francis Bacon.

          49. > Free to Choose

            The moral responsibility of choosing is precisely why capitalism is good for man's life.

          50. Dr. Selgin,
            Thanks. Catching up is always a great idea and I would be glad to discuss the content of that very interesting paper if time permitted. However, Friedman's ideas and thinking went through more apparent reformations than most economists. Most Chicago School economists, for sure. So, over time, he is remarkably nuanced on fiat money. Maybe we each find what we want to there.

            Friedman wrote at length on the topics covered in this 1987 (?) paper, in the Preface to the 1996 re-issued version of his "A Program for Monetary Stability"
            Don't buy it without the Preface, or it doesn't include his latest thinking.

            There you will find Friedman's clear re-statement of his views on the role of government in money. And his ideas there only modernize those contained in his 1948 paper on 'A Monetary and Fiscal Framework for Economic Stability.'

            It should not be the latest thinking that we find exclusively pertinent, in vogue …… but the best.

            Who should create and issue the nation's money? Why? And how?

          51. > I have already stated my real world examples, primarily the North
            American Colonies for over a hundred years – ( debt-free
            government-issued money), and also Greenbacks, (Issued debt-free by
            government, spent into existence by Lincoln)

            Coincidences are not causes. Parts are not wholes. Youre a blind man, grabbing onto to an elephant's whatever. Eek! Drop that thing before it….oh, thats gross.

            The US Constitution doesnt hate or love govt. It limits it, an eternal thorn in the side of tyrants, thank you Jefferson, Adams, Madison and all the guys. How do you like that planning? True, its political, not economic…

          52. Nor are vacuous slogans, and missives on elephant parts, wisdom.

            What the Constitution 'does', it does.

            On the nation's 'money', it's pretty well agreed, it gives full rights TO the government, to Act through the Congress to create it into circulation and to control its value in the national economy.
            Also, to prevent the States from doing so.

            thank you Jefferson, Adams, Madison

          53. > Nor are vacuous slogans, and missives on elephant parts, wisdom.

            Science is a causal system, not an unintegrated, empiricist chaos. See: Newton.

            The Constitution's power of money creation and control contradicts man's need for individual rights, inc/the right of property, production, trade and the pursuit of profit. States also should not violate rights.

          54. > [received as email from joebhed; I posted it here]

            > Nor are vacuous slogans, and missives on elephant parts, wisdom.

            Economics requires observation-based, logically organized concretes, not arbitrary concepts hiding religious fantases, definitions by non-essentials and empiricist coincidences (statistics). The Founders were afraid of govt paper "money," because of the colonial experience. Also, American Revolution (not worth a ) Continentals and Lincoln's Greenbacks caused post-war bubble-and-pops.

            >On the nation's 'money', it's pretty well agreed, it gives full rights TO the government, to Act through the Congress to create it into
            circulation and to control its value in the national economy.
            Also, to prevent the States from doing so. thank you Jefferson, Adams, Madison

            Rights are the moral sanction of man's freedom of action in society, not a grant from govt (bow and scrape). The Constitution created a govt w/powers to protect prior existing rights.

            The Founders honestly erred in creating political monetary power. It must be ended, as Mises knew.


          55. > And your real world example of that is….?

            You fool! He's affirming the Platonic Form Of The Perfect Plan. The Oracle Of Delphi got stoned on some fine subterranean smoke and whispered sweet statist nothings into joebhed's ear. Do you think he talks of mud, hair and dirt? No, sir, he's read The Republic. Concrete reality is politically suspect, if not actually incorrect. Good planning is a transcendental ideal. He's read his Kant. And if we're not there yet, well, we need a stiffer backbone. Look what Germany went thru in the horrid 1940s, all for the ideal statist economic plan. Need more farmland and farm hands? There's plenty of both in the Soviet Union. Say what you will, that was a statist plan to end all plans. True, it ended in the Fuhrerbunker and one last pill. But it was glorious while it lasted. Just imagine the possibility. The State furiously thinking for all. The individual, his mind turned off, floating downstream. It is not dying…

    3. [Let's push this discussion to a National Monetary Commission for the essential public discourse needed to inform sound public money policy outcomes.]

      No. Let's push it to the market.

      1. Sorry.
        Money is a national, legal and social construct to which all, including capital markets, are susceptible.
        Having been 'legally' privatized, this is how money 'capital markets' work.
        Greedy, Autocratic Creditocracies.

        Afraid of a little debate over the 'money power' – public v. private?
        Rather than have the 'money power' define the debate?

        PS All for having a two-tiered system.
        Government issues the national circulating media.United States Money.

        Private banks issue their own 'stuff' United States Bank Money – THEN let the markets decide. All in for giving that a try.
        But, how do you get there without a National Monetary Commission?

    4. Today "you can't have any more money without having more debt," you say. So do you think that Federal Reserve Notes are debts? If you do, good luck trying to collect on one. If you don't, do you think they aren't money? Or that the the Fed can't issue any more of them? Both propositions seem clearly untrue. I conclude that we can today have more more without more debt.

      1. Larry, as a learned gentleman of the money trade, this is respectfully submitted backatcha.
        Do YOU think that federal reserve notes enter circulation (become 'money' and not Vault 'paper', without the collateralization of that money by the FRBS?
        If so, sorry, one gig for Larry White.
        Yes, all FRBS money, in whatever form, is issued into circulation as a debt, and as long as its collateralization remains in effect, the liability remains, with the issuer declaring its own limit on that liability within the system, being the obligation to replace one FR note with another, each one in circulation being debt-based.
        Were the Gov to directly issue money into circulation, as with Greenbacks, that money would circulate, permanently, as public equity rather than as private debt.
        But, thanks for the engagement.

    5. > you can't have any more money without having more debt.

      Statist Dictionary: money——govt permission to live

      1. You MAY be familiar with the "Bankers-School" of Money.
        I hope so, because that is the only legitimizing framework for your otherwise vacuous observation.
        Under the Bankers-School system, all money must be created – by the bankers – by issuing debt contracts with borrowers. Under that system, indeed, all money quantities are debt quantities. (Money IS debt)..

        Unfortunately, under that Bankers-School system, NOT all debt-quantities are equivalent Money-quantities.
        The debt-quantity is (P+I)
        The Money-quantity is (P).
        See the problem?

        That's what we want to change.
        To the New Currency School Model – where money is not debt, and is issued by the people's government.
        Ahhhhhh ! the achievement of public-purposed and public funded progress, or to the TPers, "statism'.

        1. Money is production used as a method of trade. Govt steals when it counterfeits money and credit. Your fascist worship of govt, w/communist slogans, is noted. Your out-of-context technicalities are noted. As Say recognized, production is primary.

  3. From the Table of Contents, the below 2017 Bill Gates funded book has a sub-chapter in the Civilization chapter: "From Barter to Money" . It is deemed "truly complete" in the below publisher's blurb. It thus backs, implicitly, the White/Menger view. Who to believe? The market evolutionists (Menger-ists) or 'cartelists'?

    Bonus trivia: gold and silver are found in an alloy that's part of each, called "electrum" and according to one theory at en.wikipedia.org/wiki/Electrum , it was a form of money non-neutrality and seigniorage that electrum became the first state issued coin, which seems to support the "Cartelist" position to a degree (put another way: if electrum coins–the world's first currency–are not due to arise from Cartelist viewpoints, why would it not be driven out of circulation by Gresham's law, since clearly electrum coins are inferior to pure gold or even pure silver metal tokens, since you have to go through the hassle of assaying electrum coins for purity and doing all kinds of calculations to determine their Au/Ag content).


    Publisher's blurb on this Bill Gates funded 2017 book on 'world history' (history of humanity in one volume):

    The Little Book of Big History is an endeavor to encapsulate the entire story of the cosmos, from the Big Bang to the current day, into an engaging and comprehensive narrative. Combining methods from history, astronomy, physics, and biology to draw together the big story arcs of how the universe was created, why planets formed, and how life developed, the result is a unique perspective of mankind’s place in the universe.

    Excited by the alternative "framework for all knowledge" that is offered by this approach, Bill Gates is funding the Big History Project, which aims to bring this concept to a wider audience around the world.

    The Little Book of Big History breaks down the main themes of Big History into highly informative and accessible parts for all readers to enjoy. By giving a truly complete timeline of world events, this book shines a whole different light on science as we learned it and makes us think of our history―and our future―in a very different way.

  4. "It is possible, of course, that in surveying the literature I have
    overlooked a more plausible Cartalist account of why sovereigns chose
    very expensive materials, silver and gold, for their tax-anticipation

    I've always wondered this too.

    It's possible that the sovereign wanted to make it less profitable for counterfeiters, so it used gold as the material for its tax anticipation tokens rather than copper. After all, a counterfeiter would make a far smaller return buying gold and turning it into a token then buying copper. The resource cost the sovereign incurs in running a gold token system would be much higher than a copper based system. But maybe this was more-than-compensated by the savings on lower counterfeiting? Just thinking out loud.

    I'm also wondering how standard Wray's view is among chartalists. Maybe he's an outlier?

    1. Is this a rational or arbitrary possibility? Dont forget the blind men who grabbed an elephant, each thinking that a part was the whole.

  5. Professor White, I make some similar points in this post on a banking school approach to money https://syntheticassets.wordpress.com/2017/03/21/banking-theory-a-monetary-theory-thats-more-heterodox-than-heterodoxy/

    In it you will see that I argue that the gold standard could only work because of the role played by banks in supporting it. That is, the gold standard worked because it united an intrinsic value approach with what I call the synthetic value approach of the cartalists.

    1. Gold's value is objective, ie, the product of man choosing to logically identify the facts of concrete reality. Gold aids trade. Trade furthers man's life by a rational standard. Gold's value is not mystical (intrinsic) nor subjective (synthetic)

  6. The reason gold and silver were used is because they are naturally anti-inflationary. There is such a limited supply of them that is becomes impossible to swamp the market with fake tokens, even if rampant counterfeiting is going on. With iron, it would be trivial to put so many fake pieces into circulation that all faith would be lost in the system. With gold, that is not possible due to how difficult gold is to find and mine in large quantities.

    1. And why is inflation bad? Money is largely neutral, and long term even monetarists think money is neutral. The Conquistador Spanish did not 'go poor' in 200 years because of inflation due to the gold and silver they discovered. They went poor for the same reason the Congo is poor despite vast natural resources (aka "resource curse", "Dutch disease"): they squandered their money fighting the Dutch over religion and trying to colonize the world.

    2. The last time a President got the lame idea that gold and silver was natural money he plunged the nation into a horrendous depression of 1837-1847. He banned banks from creating our money but then didn't create any US money imagining that gold and silver would do. It is a lesson we should learn from. Precious metals have NEVER EVER been a stable currency and never will be. The historical record is the science, precious metals are volatile commodities and as such do not make for a good money system.

      1. Since banks were govt-controlled, there was a money problem. In this context, market money is coincidental. Economics, rational economics, as distinct from the mainstream, is about rational man producing and trading in the long run. Statist controls disintegrate the market as integrator of production. See Mises' Human Action for an excellent description of market process. The market sloshes this way and the market sloshes that way. Hey, that's a good Broadway lyric.

      2. > Precious metals have NEVER EVER been a stable currency and never will be

        Your implicit context of stability is mystical, ie, the impossible dream.
        Precious metals are the rationally most stable currencies. Man's life should be measured by what is rationally possible, not by fantasies, unless, of course, you reject man's basic moral responsibility, ie, to focus mind onto concrete reality.

  7. Ask the Colonies.
    (Because it works)
    Ask the Founding Fathers.
    To keep it working.
    Constitution 1.8.5
    Ask Lincoln.
    Because the banks wanted 30 percent interest AND a commitment to pay the losing sides' debts.
    Talk about corrupt.

    1. I'm not sure what you mean by 'in a free society'.
      After our Colonies rose up and defeated the British for trying to foist their private money system upon the Colonies, the Colonies got together and agreed on how to establish themselves as a free society.
      Did a pretty damn good job.
      They wrote a Constitution, those free society Members.
      Maybe that's your problem.
      But not mine.
      In that Constitution those free society members decided that the federal government should maintain the people's sovereignty over our money system, in our name. 1.8.5
      Monetary systems are legally a national identity.
      So, if your private money-powered bankers have corrupted that monetarily-ignorant government under this Bankers' money system, then maybe we should end that aristocracy's grip on our well being and take back the money system. For ourselves.
      As a free society, we are legally entitled to do so.
      I ain't a government hater.
      Money and government represent an essential structural element of our free society.
      We are free to do what we want with it.
      That's why I'm calling for a National Monetary Commission.
      So my grandkids don't have to do this all over with your grandkids.
      Aren't we all confident in our ways?
      Time for a rational, national discussion.
      What else is there?

      1. Indeed, backatcha.
        I don't disagree with most of your observations at all, merely on 'cause' and 'effect'. It's the money that corrupts our politics, and not the other way around.
        See Goldenweiser – American Monetary Policy.
        Thanks for the advice.
        I relax when I'm sailing or on the beach, otherwise I'm actively advocating for an honest and just money system.Pretty much full time.
        Have a nice life.

        For our Money System Common.

        1. It is the system of issuance of the money that is the problem. Money issued privately as debt for personal profit is usury and that alone is corrupt but then it is used to bribe Congress, control the election process take over all government agencies etc. As the Princeton Study proved, 'we the people' have zero influence on government and that is becasue it is not OUR government it is THEIR (international finance) government. If we want corruption to end we must establish our own government that issues the money publicly as an asset for the purpose of government as stated in the first sentence of the Constitution. Precious metal money is controlled by the same people, he who has the gold rules. We need to get back to the older version of the golden rule. Also, Money issued publicly is not destroyed when the loan is paid off as it is now which creates the scarcity of money, instead public money continues to circulate as a debt- free exchange medium. This also eliminates predatory competition and speculation which keeps so much money out of the real economy.

          1. Of course there is nothing dishonorable in the least in charging interest for lending someone your savings, I would not say otherwise. It is what the baking business in part should be but that is not how it works. They create money at the instance of a loan, they don't lend people's savings. If that was how it worked it would be a 100% money system, theirs is a fractional reserve system.

            However it is and has always been the big private money people, those who control money issued as debt for profit, that has corrupted governments through the mechanism of debt, bribery and "every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.” as James Madison put it. He knew the history.

            Government is a tool, it serves only those who control the money which is why it is important for it to be a public utility issuing asset money. Jefferson the farmer wanted asset money, Hamilton a banker wanted debt for money, we know who won. Public money would shift the power from the giant private interests to the public interest. Given of course we have to find a way to elect people interested in solving the problem, making their government our government. That is what the American Revolution was fought over and while we won the revolution by creating our own money but we did not win the power because our government was corrupted by private money at its outset and a brief issue of Greenbacks to save the nation from dissolution is the only public money the US ever issued. So Lincoln was shot and the banks made war upon the greenbacks. Any government that does not issue its money is controlled by those who do.

          2. I have a very clear view of how banks would compete and work in a free society, the task is getting a free society and the first step toward that freedom is getting public control of the issuance of money so it can be directed toward the general welfare of society instead of just the interests of a very tiny percentage of it. The connecting tissue between government and banks is money, government has ceded its sovereign power to create money for the general welfare to private banking institutions so they can create money for their private profit instead. It is the power of money that has corrupted government to in order to do this. If you knew the history you would know the capitalists (rich spawn of the money-changers) working out of the Bank of Amsterdam, funded William of Orange's invasion of England specifically to take over the monetary authority of England, which happened in 1694. We are ruled by a system that gives the power to the wealthiest, not to the smartest, not to the most beneficial, not to the most generous, but to the sickest segment of society, the usurers.

          3. >free society…public control

            Here is another intellectually awkward context: for Marxists and Leftists, freedom is State-Think. That impotent little abstraction, the individual, feels free to express politically correct emotions when he fulfills his duty by sacrificing his mind to the state, the representative of society. [That grinding sound you hear is Thomas Jefferson spinning in his grave] As Pink Floyd sang, "Another brick in the wall." See Ayn Rand's 1936 We The Living for a romance about man vs. the state.

            Scholarly worm: We the Living was filmed ,w/o Rand's permission, by order of Mussolini. He thought it anti-communist. His Nazi buds, educated with serious German philosophy ("No, no, Martin. Being on time!"), told Benito that the theme was anti-statism and anti-collectivism. The film ,starring Rozanno Brazzi and the beautiful Valli, was pulled from theaters. Its available in DVD and, maybe, online.

          4. > Indeed, without fiat money, the world govts could not possibly have
            amassed the present unpayable level of debt. Govts would actually have
            to find savers from whom to borrow and pay them enough interest to
            persuade them to lend.

            What?! This is outrageous! Isn't there something that people of fine sensitivity can do?

            Mises says wars should be paid from taxes, not borrowing. People will be encouraged to vote for a rational foreign policy and they will avoid post-war bubble and pop. Eg, the post-American Revolution Depression when the Western lands bubble popped. Its not housing and stocks, of course, but you get the ugly picture.

          5. Money problems were the trigger to solve the problem of insufficient national political unity from the Articles Of Confederation.

          6. Concrete problems with insufficient political unity and insufficient political power ,insufficient to protect individual rights, were used (bait and switch?) to create a principled, systematic protection of those rights. Its good they did, despite continuing problems. Consider the frustration it caused in slowing the violation of rights, eg, Wilson, FDR, Obama and Trump. Without it, we would be Europe. ;<) Wilson, a Constitutional scholar(!), hated the checks and balances. Yes, the states should have more separation from the feds. We need an amendment explicitly basing it on and limiting it to the Declaration's concern with rights. This would explicitly extend to the right to property, production, trade and the _pursuit_ of profit! And the right to practice religion is an unnecessary and dangerous singling out one group. Note the appeal to religion by Christians frothing over the homosexual marriage cake. Leftists counter w/an appeal to equal protection. And the Supreme Court is guided by the arbitrariness of "balance!" What happened to individual rights, inc/property rights?!

            But a perfect Constitution is still limited, properly, by Supreme Court review. And the SC is limited by philosophy of law, itself limited by philosophy. Reasoning about reality is hierarchical, as Plato discovered (suggested?) and Aristotle systemized. Try surgery w/o anatomy! Or algebra w/o arithmetic. See Judicial Review In An Objective(!) Legal System by Objectivist philosopher Tara Smith (UTX-Austin, Ayn Rand Institute). Her excellent, tho technical, book, identifies the intellectual weakness in conventional legal theory, w/its reliance on mysticism, subjectivism and convention, popularity and tradition. See online video discussions by Smith and Amazon reviews.
            See also an older Objectivist book, Sweet Land Of Liberty, by Hoover Inst. legal scholar, Henry M Holzer, who shows how collectivism has corrupted the Supreme Court from the beginning.

            "General welfare" has been interpreted as a big collectivist, booger-filled, camels nose in our individualist tent. But this is an evasion of the basic political value of the Enlightenment, the ONLY BASICALLY individualist culture in history. Thus general welfare here is, grammatically, distributive, not collective, referring to the welfare of all individuals as individuals, not to a social mysticism from German philosophical idealism (Kant, Hegel, even Marx!). The collectivist view of Society (bow and scrape) as a virtually supernatural individual (The Entity) , above and beyond mere individuals, allegedly individual men as mere abstractions, would be a bizarre contradiction if implied by the (Enlightenment) Founders. Today, its the product of Progressive education which rationalizes the evasion of conceptualizing and reduces mind to a cognitive chaos and overload of out-of-context concretes w/empiricism and Pragmatism. See Fox News and CNN. They know what Paul Manafort had for breakfast last Tuesday and that the recent church shooter had a mother-in-law (what?!) problem. But they are virtually ignorant of the role of ideas in history. We have pseudo-educated Leftists and uneducated Rightists. One of these days, maybe soon, Atlas Shrugged will be widely recognized as not merely predictive, but frighteningly so. Man need ideas and, more, the knowledge and motive to form ideas. Postmodern culture hates any concern w/fundamentals. We are that slowly boiling frog.

            See also Rand's political essays in Virtue Of Selfishness, definitively and objectively conceptualizing rights and govt.

          7. The crash of 2008 is a perfect example of how an unregulated market-based banking system behaves. That they were bailed out was not something the bankers themselves cared about – they already made their fortunes – it was the "insured" masses and the convoluted unregulated monetary system that the economy relied upon that needed the bailout.

          8. Read "Bailout" if you want to see how a captured regulator regulates. See how the "regulated" rating organizations kept the free market transparent.

          9. A conflict between an armed bureaucrat and an unarmed businessman can have only one outcome. Your blood-drenched, Marxist economic determinism is noted.

          10. > Regulators are invariably captured by the bigger regulated entities.

            Youve dropped your context, Marxist idealism, in which there are only good intentions and no laws of economics. In that context, you are correct. See Ayn Rand's, _Capitalism_, for thinking contextually about economics.

          11. > The crash of 2008 is a perfect example of how an unregulated market-based banking system behaves.

            Intellectual squinting makes it difficult to notice the Fed and its sticky tentacles.

          12. See ex-BB&T head, John Allison's Financial Crisis, for an insider's account of govt force and corruption.

          13. > > Government is a tool, it serves only those who control the money which
            is why it is important for it to be a public utility issuing asset

            Note the Marxist evasion of individual rights for group power.

            > public interest

            There is only private interest because individuals are alive. There is no public interest because abstractions are not alive.

            America was created as the nation of the rational individualist Enlightenment after 400 years of radical cultural change from faith to reason and, from that, from collectivism to individualism. America was not created as a theocracy or democracy. Pragmatism causes intellectual squinting.

          14. Your blood-drenched, Christian-Marxist hatred and terror of man's independent mind is noted. Science is not mysticism, supernatural or social.

          15. Wider, to the principle, as Ayn Rand advocated, ie, a wall of separation between economy and state.

          16. > Howard, there is nothing dishonorable in the least in charging interest
            for lending someone your savings. It is a virtuous act of faith. As
            long as their is no dishonesty, there is no corruption.

            The attack on interest (usury) is an attack on man's independent mind, on values and the right to life. Individuals have the moral right of property honestly acquired. There is no moral obligation to sacrifice. Morality is a rational guide to life, not a religious sacrifice of life. Individuals have the moral right to ask any payment for anything borrowed, from a farm tool for production to a pet rock for amusement (a type of consumption). Economically, interest pays for the lender's time (alternative uses). Lending at interest for production is win-win, even if a concrete borrowing fails to produce profit The continuous potential for profitable borrowing is important.

      2. > the people's sovereignty over our money system, in our name.

        Man, the individual,is sovereign. Abstractions, eg, the people (bow and scrape) are not sovereign. Man has a moral right to his life. Man is morally free of man.

  8. David Kinley considers the theory of Aristotle to be flawed because the philosopher probably lacked sufficient understanding of the ways and practices of primitive communities, and so may have formed his opinion from personal experience and conjecture.[citation needed]
    In his book Debt: The First 5000 Years, anthropologist David Graeber argues against the suggestion that money was invented to replace barter. The problem with this version of history, he suggests, is the lack of any supporting evidence. His research indicates that "gift economies" were common, at least at the beginnings of the first agrarian societies, when humans used elaborate credit systems. Graeber proposes that money as a unit of account was invented the moment when the unquantifiable obligation "I owe you one" transformed into the quantifiable notion of "I owe you one unit of something". In this view, money emerged first as credit and only later acquired the functions of a medium of exchange and a store of value.[5][6]
    Debt and cash are intertwined. In Egypt, a wealthy family could let a farmer keep the family gold ring until the family receives a shipment of other goods, at which time they could retrieve the ring.

    1. Why does it matter whether money replaced barter or credit (gift)? Both cases increase production and trade. Force, ie, govt, is irrelevant.

  9. There are serious problems with Larry White's view of the emergence of coinage.

    First of all, the names Walwel and Kalil may well be names of mints, not people. It is not at all clear what "Phanes" refers to, as it may be the name of a god.

    Secondly the lion appearing on many of these early coins is the symbol of the Lydian royal family.

    The full evidence against the Mengerian explanation is set out here:


  10. How seriously can we take this discussion, when he misspells the subject, chartalism, throughout the whole piece. . . The word "charter"(A written grant by a legislative of sovereign power) is a central part of understanding the chartalist perspective. In my book, chartalist and market theories of money are not mutually incompatible. Indeed, the whole process of establishing a state is conducted through the negotiation of institutional authority among a populace. So establishing state money, involves a process of peers seeking better resource management strategies, through social governance, very similar to how Larry describes standardized commodity money emerging from "actions of barterers seeking better trading strategies" These perspectives on money don't have to be either/or, they can complement each other.

      1. The only two sources i was able to find that used the spelling "Cartalist", were an article by you on this site, and an article on "the economist" site, from 2012. Everywhere else I see the spelling "chartalism" used consistently. It's not clear to me that the spelling used in that economist article wasn't a mistake. http://www.economist.com/node/21560554

        1. There are many other examples. For example, Schumpeter in his History of Economic Analysis prefers "Cartalism." Type the word into Google search for "books" and you will oodles of other instances.

          1. I'm with George Selgin and Larry White on the spelling. Cartalism is the Latinized form of the word (e.g., Magna Carta is translated as "Great Charter"). As for Knapp, in German, the word probably is written as Kartalismus. German uses an initial K where we would use an initial hard C. Etc.

          2. German Wikipedia uses Chartalismus, not Kartalismus, so this was probably Knapp's spelling. However, this would be ch as in Ach!, not as in cheese. So in English Cartalism is phonetically closer than Chartalism, tho neither is correct.
            That said, Chartalism seems to be the prevalent English usage, though if as George points out Schumpeter used Cartalism, that would be adequate to make it acceptable.

          3. I would expect certain latin based languages would prefer chartalism(french perhaps), while others, perhaps latin itself, would prefer "cartalism". As for the "Ch" in german, I doesn't seem like that's a phonetic sound that goes in the leading position of words, the same way spanish words don't start with s and then a consonant. Because of this, I would expect even german speakers to use a soft "ch" when pronouncing "Chartalismus"

          4. Cassell's German-English dictionary gives several German words beginning with ch- , with three different pronunciations for the initial consonant. French words like Chef and Chauffeur are pronounced as in French, beginning as in English sh- or German sch-, but these are irrelevant here. A few of the others do begin with an ich/nicht sound, such as Chemie (except in southern Germany and Austria where it's k-), Cherub, China, Chiromant (palm reader), and Chrysalide (chrysalis). But most of the others are pronounced as k-, such as Chaos, Charakter, Chlor (chlorine), Cholera, Chor (choir), Christ, Chrom (chromium), and Chronik.

            So I'll concede that Derek is probably right that in German Chartalismus would be be pronounced like "Kartalismus," particularly given the relation to Latin Carta and Schumpeter's spelling. But in English there is no reason to make this a "cheesy" ch- (which if intended would have been Tschartalismus in German!).

          5. Precision in thinking is important, as we can know from a hardware or auto parts store. But Nietzsche, too, was correct in recognizing that, "Scholarship is the delight in having caught a worm." He was ridiculing the evasion of German's growing nihilism by antiquarian scholars besotted with the glory that was Greece but not using it to teach the profound importance of man's independent mind.

      2. Thanks for pointing that out, though, it would be interesting to see someone document the spelling history! I can only find so much from google searches!

      3. Sorry, I guess I should have added "(or 'Chartalist')" after the first time I used "Cartalist." I was following the spelling of the Goodhart article to which I linked.

    1. According to German Wikipedia, JM Keynes instigated the translation of Knapp's book into English:
      Die „staatliche Theorie des Geldes“ wurde auf Veranlassung von John Maynard Keynes 1924 ins Englische übersetzt,…
      This detail didn't make it into en.wikipedia.

    2. > social governance

      Ie, govt demanding mindless obedience or death. Marx is wrong, regardless of how subtly restated. Production is not force. Offering values is not threatening to destroy values. Economics is not politics. Marx's blood-drenched claim is a rationalization of the initiation of force.

      Money is a market commodity (redundant?), ie, production that is voluntarily accepted as a method of trade. Trade is voluntary. Thus socialist central banks dont create money and credit. They counterfeit it. And enforce its use, eg, legal tender, because socialists recognize that people will reject counterfeit. Counterfeit does not become money because govt creates it. Counterfeit steals production. Trade is production for production. I believe Mises and Rothbard recognized this. I look forward to reading Selgin.

      And why is Mises' _Theory Of Money And Credit_ not used in this blog? Why isnt it required for economics students?!

      Still, its very good that capitalist banking is making a scientific comeback. Mainstream economists and reporters spread mindless babble about money and banking. I look forward to the trashing of the Fed and the end of economy-wide malinvestment. See (pre-prostitute) Greenspan's "Gold And Economic Freedom" in Ayn Rand's _Capitalism_.

      Federal Reserve Notes say, "In God we trust."
      The market says, “In gold we trust.”
      One "l" of a difference!

    3. How does a farmer offering a cow for money compliment a govt official demanding obedience or death unless you buy (or not buy) that cow? How does force compliment production?! The farmer doesnt need govt to produce a cow useful for man's consumption. But the govt official needs productive people or he's out of work (even protecting rights). Your hidden context is Marx, whether you know it or not. Force is not production. Money is production used as a method of trade. Trade may be only implicit, as in primitive credit or "gifting." Credit transfers production among people. Money increases the ease and number of transfers. A spear to the gut is not money. A token threatening that spear is not money.

    4. > How seriously can we take this discussion, when he misspells the subject, chartalism, throughout the whole piece

      To pluz too ekwals for. Math is invalid! Spelling is important but not basic.

    1. Its not well known but chickens were a very early money. This was short-lived, however, because of an unexpected problem from making change. Imagine, if you will, buying a nice smoking pipe for half a chicken. You cut your chicken in half (SQUAWK!), pay for the pipe, and put the other half of the chicken in a leather bag. Needless to say, by the time you got home, the chicken and the bag were a fowl (sorry!) mess. This situation, of course, was not improved in sub-tropical regions.

    1. I dont mean to support statism but anthropoloists have long identified primitive cultures as having a subtle, implicit, informal state in various social relationships, eg, clans. Ie ,the accepted enforcement of accepted social rules, maybe by the guy who is the best hunter, etc. In that context ,there was little difference between state and voluntary trade. But that doesnt mean that force is the base of money used in trade and that thus central socialist bank "money" is money or that they are needed. Trash the Fed. Back to private commodity money guided by production and trade, not by force.

      1. I see your point. But if rules are voluntarily accepted (as in your description), then IMHO it's not a Government. The latter is characterized by mandatory rules; otherwise, it would not be different from a private club.

  11. Does Graeber equivocate or note that money as we know it today has not a single origin in either markets or states but emerged from an interaction between the two? In the interview you link, he states that money began, as a unit of account, in Mesopotamia, and he contrasts this usage of money with taxation in Egypt, so he doesn't say that taxation is the origin of money, quite the contrary. He only then says that coinage is "invented or at least widely popularized" by states. He doesn't say that states invented money, only that they invented or widely popularized coinage.

    If a Cartalist advocates state money as opposed to voluntary alternatives, Graeber hardly seems a Cartalist, since he's a self-described anarchist. If a Cartalist claims that states are historically the origin of money, he's not a Cartalist either.

    Cartalism seems the correct theory of actual, existing money in most of the world today. That's no defense of fiat money, only an observation of the world around me since the day I was born.

    1. I think you have a point, in that Graeber's statement is indeed itself
      tentative, and as such not a particularly strident version of the
      chartalist view. Still I stick to my understanding of White's position;
      and the point remains that the relevant question isn't whether the
      evidence favoring either view is or isn't somewhat "feeble," but whether
      it can be argued to be less feeble in one case than in the other.

      My own differences with Graeber don't concern his views on the origins of coinage.

  12. Lets forget the theories and see what worked. Money as a valuing tool, a social origin, predates money as an exchange medium for trade. The ostraka of ancient Egypt was an early exchange medium issued by the temple/state as a receipt for grain storage. It worked very well as it had demurrage built into the system. When the Mesopotamian Kings figured out they could instead just sell money, issuing it as as debt, they discovered that the system made them rich systematically is why we still have such a system today and why there is so much faulty information out there about money. The central political issue for civilization has always been the private vs public control of money. The Spartan Lycurgus, an elite himself who had traveled the world was appalled by this fact and after taking over the governance of Sparta changed to a state issued money and created a stable prosperous economy for over 300 years. The American Revolution was fought becasue the British rulers outlawed our own state currencies causing severe economic depression in the colonies so they revolted and paid for the revolution with there own state issued money, the Continental. Later when the international bankers saw an opportunity to divide and conquer the nation we issued Greenbacks to protect the nation. Anyone who supports our current privately controlled money system based on the banking theory of money, or supports the commodity theory of money, is not well informed enough to protect our nation from dissolution but rather has been sold a sad sack of garbage about government. We don't have a government, those who control the money do. Read the Princeton Study and read up on monetary reform at monetary.org. Be informed.

    1. > > Lets forget the theories and see what worked

      Theory provides long-range, integrated guidance. Eg, Newton, Darwin. Pragmatism is disintegrated and short-run. Govt controls provide short-range relief for people who hate the moral responsibility of man's independent mind.

      > Money as a valuing tool, a social origin, predates money as an exchange medium for trade.

      How would mainstream anthropologists, ignorant of the existence, nature and purpose of man's volitional/conceptual mind, understand anything of what they found, inc/money? Arbitrary description ,guided by hidden religion, is not science. Its the primitive, pre-scientific mentality. See Aristotle, the discoverer of scientific method, not Hume or Pragmatism, the destroyers of science.

      > Money as a valuing tool, a social origin, predates money as an exchange medium for trade.

      Money is a product of mind, not social mysticism. Trade is a type of valuing.

      > The ostraka of ancient Egypt was an early exchange medium issued by the temple/state as a receipt for grain storage

      Youre implying and evading force. Egypt was not an individual rights culture. Govt forces. It does not beg permission. Ostraka was a token of govt force, not voluntary production and trade. A piece of metal (or whatever) whose function is to symbolize govt force is not money. Its a reminder of potential death, like a court document formalizing a jury's vote for a murderer's hanging. Money is a convenient and voluntarily accepted substitute for production. Marx's evasion of the force-production difference is common among virtually all economists, however stated or applied. You define by non-essentials, as if a cigar band and the halo around the head of Jesus should be put in the same category because of shape. This is an example from Kasanin's Thought And Language In Schizophrenia, a study of brain-damaged, Soviet, WW2 military personnel. Science is a product of rational philosophy. But reason has been rejected by philosophers for centuries. Word games split from reality and emotional expressions are not philosophy. Science is disintegrating, adrift in a chaos of concretes, arbitrary hypotheses and causeless statistics. The witchdoctor calls. Philosophy is the base of all knowledge, even for those who attempt to evade or destroy philosophy. Even witchdoctors have a philosophy, regardless of their ignorance of it. The facts studied by philosophers were not created by the Greek discoverers of philosophy. Newton didnt create gravity. But he did tell us what caused the unpleasantness attendant upon jumping off a cliff. Scientists need philosophy.

      1. The ostraka was a clay chip with the date and quantity scratched in it, not metal. And why are you bothering about Marx, he bought into the long defunct commodity theory of money thus he is not relevant to the subject of money. Misinformation, even shared with conviction, is still misinformation.

        1. Marx is the implicit context of the now widely accepted claim that politics=economics. Of course, its rarely stated w/an explicit Marxist context. Its usually stated with lots of out-of-context concretes. Given the virtual lack of philosophical guidance in this here culture, most advocates of this Marxist claim have no more recognition of the context than a mouse has of the mousetrap holding that delicious cheese. A chaos of arbitrarily selected ,organized and interpreted concretes is not reasoning. Its the primitive, pre-scientific mentality, but without the pseudo-integration of tradition and myth.

          As many posters here have identified, the anthropologists who deny the commodity theory of money have only vague and ambiguous claims to rationalize their statism. Science is not random observation guided by arbitrary hypotheses. If you take the wrong road to a destination ,you may become an expert in the details of that road ,but it remains the wrong road.

          1. Only an idiot would not realize that politics is about the economy. Political economy in fact was once a field of study until the bankers bribed universities into creating 'economics departments' in their place which took all the reality out of the subject and replaced it with their propaganda. I am into monetary science not nonsense. History is the science which shows which of the various monetary theories are valid and which are fake. If you don't understand that you don't really know anything about power.

          2. > Only an idiot would not realize that politics is about the economy.

            The Argument From Intimidation was identified by Ayn Rand as an appeal to self-doubt that fails with confident people. Marx and thus you are wrong. Force is not production. Production is not force. The economic power to produce values is not the political power to enforce and/or destroy values. Your Nazi faith in The State is noted. You are a scientist the way that cargo cults built airplanes or the way that a prostitute is a wife. Science is an activity of man's independent mind. Your economic determinism is a rationalization of the evasion of man's independent mind. Arbitrary description is the primitive mentality, not science. History within which philosophical context, Marxism?

          3. There is no science without history. Science is observation of what happened. How would you know anything if you did not remember the past? How would a scientist know the planet is warming without historical data? Think!

          4. Contrary to the prevalent views of today’s alleged scholars, history is not an unintelligible chaos ruled by chance and whim—historical trends can be predicted, and changed—men are not helpless, blind, doomed creatures carried to destruction by incomprehensible forces beyond their control.

            There is only one power that determines the course of history, just as it
            determines the course of every individual life: the power of man’s rational faculty—the power of ideas. If you know a man’s convictions, you can predict his actions. If you understand the dominant philosophy of a society, you can predict its course. But convictions and philosophy are matters open to man’s choice.

            There is no fatalistic, predetermined historical necessity.

            -Ayn Rand

  13. > inherently corrupt institution, government

    Govt has integrity as protector of objectively defined rights. Rejecting objectivity corrupts all values, inc/govt.

    1. Youre evading objectivity, ie, man's mind focused onto reality, as the guide to govt. (Objectivity is not the mystical claim of knowledge w/o mind). The 18th century American Enlightenment, the product of Aristotle's philosophy of reason, came close to objectivity, thus came close to a consistent defense of rights. But problems w/Aristotle and the Enlightenment prevented consistent objectivity. Ayn Rand has solved those problems.

      1. Claims w/o evidence are arbitrary, refer to nothing, have no content and are destructive of the mind's function, for man's survival, of focusing on the facts of reality. A few hints, a suggestion, at the very least. Why did I exaggerate the Enlightenment? Why is the Constitutional _woefully_ flawed? Why did I ignore reality? What do you like about Rand? Im not asking for a dissertation.

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