Monday, 17 November 2014

Fraggle nails it in the comments.

From the comments to the post Money:

The question posed on the thread was: "If money is a “measure of indebtedness”, who is indebted to who when gold coins are used as money? The answer is “no one”. And the same goes for all commodity monies."

Fraggle replied thusly:


The extent to which a commodity is *used and treated as money* is the extent to which it is *no longer a commodity*. It's all about the reason why it is accepted in trade. An item or token is money when it accepted because of the expectation that others *in general* will accept it in trade.

When someone accepts something as money rathen than as a commodity, then for them the transaction is not actually complete, because they haven't yet got what they actually want. What they have is a general claim on stuff.

This claim is what money is a measure of and is equal and opposite to others' de facto obligation to give actual stuff for something that they do not want in and of itself, and it doesn't matter what that something is, nor what it *used* to be for.

Exactly. It's not difficult, is it?


Dinero said...

I was going to put it simmilarly myself -

In the mettalic coin system it is the persons who want, and expect, to use the system in the future that jointly owe an informal debt to the currency holder, because the currency holder at the point of being the vendor, accepts the coin not to consume the metal but to use it in a consequential and eventual exchange. So the users of the mettalic coin economy have to validate the coins value after the fact of the exchange for the system to continue.

Lola said...

Like cigarettes in prison camps, or sea shells, or big bits of round stone, or camels etc. etc.

Mark Wadsworth said...

Din, yes, that's an equally valid summary.

L, no, cigarettes in prisons are a valuable commodity, they are not "money" until people borrow cigarettes to swap for something else entirely and promise to repay the debt in terms of a slightly larger number of cigarettes at a future date.

Then, as between lender and borrower, 'one cigarette' is a unit of measurement of indebtedness. It does not increase the number of cigarettes in circulation but it increases the amount of 'money'.

Lola said...

MW . Oh but that is exactly what they do with ciggies in clink - according to the client of mine that has been there. (Don't ask).
And, personally, I have seen this happen with desserts. Yes really. In boarding school. An account was kept and everything and debts were traded.