Another thing: in a sense commodity money is fiat money also, unless a commodity itself is used for payment. Because the state can chose whatever commodity to pay in exchange of whatever money it issues.
Aren't I right? But, what if there is no state? Or if there are many states and other states do not accept what my state chooses? Best, Sabri On Mon, Oct 31, 2011 at 2:54 AM, Sabri Oncu <[email protected]> wrote: > Jim: > >> There isn't really a debate that I know, except about semantics. Banks >> can't create commodity money (a province of nature, as it were) or >> fiat money (a province of the state). They create bookkeeping money, >> i.e., liquid assets that are entries in a bank's books, that >> corresponds to debt. > > We are in a minor disagreement, Jim. Fiat money is debt also, the debt > of the central bank to itself. Further, fiat money is credit also, the > credit of the central bank to itself. Hence, in your terminology, fiat > money is bookkeeping money also, which means that debt (liabilities) = > money = credit (assets) to the central bank at the moment the central > bank creates it. > > Things get different when central bank lends that money to the rest of > the world. Prior to that, both the assets and the liabilities are > equally liquid since they are the same thing, but after the money is > lent to the rest of the world, the central bank assets, that is, the > central bank credit may get illiquid. But, this is not a problem to > the central bank, because if the central bank assets/credit disappear > altogether, the central bank liabilities/debt and hence money > disappear also. Then the central bank can create new money if the > money is fiat money. > > This is what the other banks cannot do in the presence of a central bank. > > However, if there is no central bank, and the US did not have one > until 1913, then who creates the fiat money? > > Best, > Sabri > _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
