Re: James A. Baker III

["William F. Hummel" <wfhummel@xxxxxxxxxxxx>]

William Hummel to Geoffrey Gardiner:

You wrote:
>
>Even the possessor of a coin is a creditor of society, for he holds the coin
>as evidence that he has provided goods or service without receiving anything
>in return. His debtor is anyone who honours the debt by taking the coin in
>return for supplying goods or service. Adam Smith noted that. So coins are
>anonymous debt tokens, as neither the creditor or the debtor is named on the
>coin.

It seems to me this description of a coin conflates the era of
precious metal-backed money and fiat money.  If one accepts the
view that a precious metal coin was a commodity used to
intermediate the exchange of goods and services, a distinction
must be made.  Such a coin was an asset to the holder and a
liability to no one.  The government may have minted the coin,
but it did so for the producer of the raw material.

In the modern era of fiat money, a coin is an obligation of the
government which has a monopoly on its issue.  It represents a
balance sheet relation, i.e. a liability of the issuer and an
asset of the holder.  It derives its exchange value through a
promise, namely that it will be accepted in payment of taxes.  In
effect it is a tax credit.  Rather than being an anonymous debt
token, the debtor is in fact the government.
>
>The only definition of "money" which works is "money is assignable debt."
>
I think an equally useful definition of "money" is a "negotiable
IOU".  I also like the definition of "money" as "credit that is
widely accepted as a medium of exchange."

William