Nature of money - part 2

Definition: Currency is the document of money, which is the right to acquire an indeterminate good in commerce.

Law: To raise the quantity of currency does not raise the quantity of money.

To raise the quantity of currency does not raise the quantity of money, but it may seem to raise it. The quantity of buyable goods will remain the same whether the quantity of currency diminishes or rises. There is no sense in a nation raising its supply of currency to get richer. Currency is just the relative measure by which one changes one's actual good by the faculty of buying another one in the future. A nation which has a great amount of gold in its treasury but whose global production is lower than other with lesser gold will fool itself if it considers itself richer. Considering that both nations ignore each other commercially, a small amount of gold on the second buys many more goods than in the first.

There is no sense, therefore, in a nation raising its supply of currency to get richer. But to the issuer of money it does. Because he will buy goods by their actual prices, before people notice the greater amount of currency and adjust their prices. He will buy more so the last ones to receive the currency he has issued buy less. If it is the government who issues the currency, to raise its supply is nothing less than to charge a tax, which people calls the inflation tax.

Normally, the currency has an insignificant value by itself. This is relatively true of gold, as the tragic fable of Midas shows, true of paper notes or of the number written on your bank account. But why, among these three, is gold the most reliable material for currency? Because it is the one that opposes more resistance to its increase of supply. Quantity of gold does not augment in two seconds. Gold should first be extracted from a mine still unexplored. To print paper money is easier and to write a number on your bank account even easier. Gold frustates the issuer of money when he wants to increase the supply of currency.


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Money is the wealth of which one forgoes to obtain a medium of exchange, fungible because portable and durable. It is the unpayable credit the commerciant assumes so he can exchange in an easier way his goods. It is the agreement between the military-political and the entrepreneur castes.

A difference between credit and money is that the former can only be charged from the issuer, and the latter can be opposed against any commerciant.

Nature of money

I've said before that money is a right to acquire a good still to be determined.

But to every right corresponds a duty. Whose is the duty to pay for this good? Of the issuer of money, of course. As money is used to buy goods, its first issuer, who first used it to buy a good, should be responsible to give something in exchange for this good.

Money, therefore, is a debt; a debt of who issues and uses it. Government used to pay its debt in gold, but today it doesn't do it anymore. Government can't go bankrupt, commercial societies can, but government can't.

Who issues money has, by definition, the power to have it accepted. This power, then, implies the obligation of other of accepting it. But this obligation can become merely nominal if it is sustained by the confidence money will be successfully repassed. To demoralize money is equal to not wanting to accept it.*

So money comes to the scene from this strange situation where the issuer oblies the receptor to a credit he will never pay. But the receptor, in his turn, starts to have the right to buy from another; and this goes on.

Is it true, nevertheless, that this right, money, contrary to every other right, does not have a duty as its correlate? Not exactly. Government's duty is not paid to whom detains singularly money, it is paid to the group of people it governs, coordenating their activities Without right of appealing, government pay its debt this way, that means, governing whom it governs.

*Were money issued by a non-monopolist organization, that means, not the state, there woudn't be the obligation of accepting it. In this situation money would be accepted only because it convinced its receptor of being what it is, that is, a generally accepted medium of exchange, not merely the material, be it gold, paper, etc, where it inscribed itself.

In this case, money is only confirmed as a right when it is accepted. Before it is an expectant right.