Re: Putting Chartalism In Its Place?

["Barkley Rosser" <rosserjb@xxxxxxx>]

     when Fed Reserve notes were fist issued,
one could indeed go to a Fed bank and redeem it
for some quantity of metal, little bags of silver being
the last such, according to my possibly mistaken
memory.  That is no longer the case.  What it says
on the dollar bill now in my pocket is "This note is
legal tender for all debts, public and private," which
seems to cover both taxes and private contracts.
     I am really drawing on Keynes in the Treatise
on Money when I stress the link between chartalism
and a focus on money as a unit of account rather
than as a medium of exchange (or with the second
as a secondary matter).  The unit can be completely
abstract, as such examples as SDRs and euros
between 1999 and 2002 and British guineas prior
to 1971 demonstrate (not going to get into further
whether or not SDRs are "really" money, they are
at least "high-powered money," very high-powered).
But, once it is established its value varies over time
with the prices of goods for which it is used to price,
and it exists, also irrespective of the particular forms
or objects in which can be used to pay it.
      Also, regarding this matter of definitions, I think
that a definition should reflect the usage of a word,
or at least its usage among a relevant discourse
group.  Thus, I am perfectly willing to tell some student
that "capital" is not just "money," which is certainly a
very common street usage of the word, and I can
back this up by citing basic econ textbooks.  Thus,
when one wants to define a term widely used among
economists, I think one should follow to some degree
what most economists use as its definition.
      This may be quite different from saying what its
"true meaning," or "fundamental nature," or
"ultimate essence" is.  Thus, profit may simply be revenues
minus costs, but one can still argue that its underlying
nature is really surplus value exploited from workers.  Or,
one can say that money is what fulfills some list of accepted
functions of money, while also arguing that the only way
in modern economies something gets to actually fulfill
all those functions is if a government declares it to be
acceptable for taxes (or acceptable for settlement of
private contracts, if one is a contract-chartalist).
Barkley Rosser
----- Original Message -----
From: "William F Hummel" <wfhummel@xxxxxxxxxxx>
To: "Barkley Rosser" <rosserjb@xxxxxxx>
Sent: Tuesday, September 16, 2003 2:10 PM
Subject: Re: Putting Chartalism In Its Place?


Barkley wrote;

>     Well, actually this is less than clear.
>If one goes along with the idea that the
>true nature of money is a unit of account,
>then its specific "thingness" is essentially
>irrelevant.

Yes, and this is where money theorists must make a choice.  I
understand your point about the money abstraction we call the unit of
account.  However I tend toward the thingness side of money because it
is much easier for the average citizen to grasp, and I'm as interested
in communicating with them as with academics.

>Thus, in the US today the money
>is the "dollar."  But, what is a dollar?  Almost
>nobody goes in with paper dollar bills (or
>higher denominated bills, or a bunch of coins)
>to pay their taxes.  Most pay by check, but
>some pay by credit card now.

In my view, whether the fiat dollar is tangible as a note or
intangible as a deposit at the Fed is immaterial.  We can pay taxes
with either.  When Federal Reserve notes were first issued, you would
see a $10 bill for example with the inscription "The United States of
America will pay to the bearer on demand Ten Dollars", a classic case
of double talk.

It would have made perfect sense if it said something like "This note
will be accepted against Federal taxes due in the amount of Ten
Dollars".   In other words, a tax credit.

>As noted
>already, many governments will accept all
>kinds of forms of payment, with the list of
>objects accepted by colonial governments
>in America becoming quite long in some cases,
>well beyond coonskins and tobacco.  Did
>that make all of these objects money?

In my view, the state theory of money applies to a fiat money system,
meaning credit issued by the state itself.  The theory is not
invalidated by the state accepting other forms of payment.  Whether
those other forms are called money or not is a different subject.

William