Re: FW: Money, Taxes, and Government Debt

["Jack O'Donnell" <jackodonnell@xxxxxxxx>]

Harry Veeder wrote:
>
> Is cash ever acceptable to goverment as a means of payment? If it is never
> acceptable then it is legitimate to insist on an inherent distinction
> between "state" money and "bank" money. Otherwise there is only one (state)
> money. The *apparent* difference is due to the system of payment that  acts
> like a financial fire-wall *effectively* dividing one money into two kinds.

Yes, cash is acceptable even though it is usually less convenient, but
that does not mean that there is not a distinction between state money
and bank money.

The difference is that state money consists of cash and reserves issued
by the CB [or Treasury] while bank money is just a shifting of bank
promises to pay state money from one depositor to another.

It is no different than you passing a promise to pay from one friend to
another except that such individual promises are limited to transfers
among friends / known persons whereas bank transfers are generally
accepted among strangers. The distinction then is the "generally
accepted" condition that separates money from other forms of
exchangeable assets.

--
			-- jbod

		Tax Privilege, Not People
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