Toward a Clearer Understanding of the Nature of Money

Toward a clearer understanding of the nature of money, and the surrounding conversation let’s focus for a while on the terminology and see where that focus leads us. Let’s see if we can move from the experience of power engendered in the word money to the experience of the power of clarity that goes hand-in-hand with the words common currency. Let’s try to move away from the almost ethereal power of money to the informative power of common currency. In the later words, we are reminded that there is work to be done the work of negotiation of value.

Generally speaking, the word of money makes our ears perk up a lot quicker than the words common currency. Are they the same function they appear to be. But some of the conversation recently seems to say that only governments can create money. Or only those moneys created by governments are authentic. What they do control is the name of the unit. They can speak of the relative value of different nations units. But one unit of one nation’s currency is going to be equal in trade value to one unit of another nations money.

Is that saying that a group of people who developed a common currency were not legitimate. Could we possibly say that trade agreement reached using the units of common currency prevailing were not binding simply because they were not stated in the terms of a fiated unit? That would not hold up in court because agreements which are lawful in terms of their content and intent derive their power from the traders. Agreement between humans have always been held up by courts even if they don’t involve a common currency. History has shown the existence and use of several currencies at the same time in geographic areas. They could all be called money. What they can’t each be called is the dollar. There in lies the rub. That is the action of government. What the government does it is stipulate the word which will be used to identify the trade facilitation unit.

We will see people building upon that kind of transaction and subsequent like transactions gradually building a system of exchange, using a thing to represent the commitment in trading fulfillment of which could be delayed. Which provided time in which to make a good deal. Alternately it could be saved, added to additional savings and used in a bigger deal.

So we can see that the government establishes the name of the common currency. It does not dictate that we shall use a common currency. It can also dictate form in other ways. But when it says that a note is legal tender for all debts public and private the question is, how does that note tender debt? The answer to that question is that there is a commitment attached to that unit. There will be subsequently new commitments of that commitment, in other words, the ownership of the original commitment will be transferred in trade. This satisfies the new commitment, but the original commitment is still there and that commitment is an IOU as well. And now if we remember that a commitment is an I owe you. we will realize that we can pass it on, transfer it.