Re: Creditary Economics (CE)

[Bruce McFarling <ecbm@xxxxxxxxxxxxxxxxxxx>]

ON Wed, 18 Apr 2001 22:09:26 -0700,
John O'Donnell <jackodonnell@xxxxxxxx>
wrote:

>Why do economists have such difficulty admitting that
>intermediated credit is a money substitute and not money?
>Terminology like this horizontal - vertical distinction only
>further obfuscates the simple fact that intermediated credit
>is a reliable and efficient method of net transfer of money
>between banks and internal transfer of promises to pay among
>a bank's own depositors.

This is a semantic question, not a substantial one.
Clearly, in our system bank deposits SERVE as a
medium of exchange, a store of value, a standard of
deferred payment.  In other places and other eras,
they might not have.  Now, the convention of referring
to something that does those things as "money" can
be changed, and we can restrict "money" to whatever
it is accepted in settlement of public debts.  And
then call horizontal money "direct systemic money
substitute", or DSMS (pronounced dizumz) for
convenience.  And then rewrite everything that refers
to the role of money in a monetary production economy
to that it talks about the role of money and DSMS in
a monetary and DSMSary production economy ...

... but it would be a lot of extra effort for no
substantial gain.  The distinction between vertical
and horizontal money makes the desired distinction,
without threatening to bring us back into the mainstream
economic fairytails about happy people in their happy
villages higgling and haggling in their barter markets
until someone got the bright idea of creating money.




Virtually,

Bruce McFarling, Shortland, NSW
ecbm@xxxxxxxxxxxxxxxxxxx