Fiat is "money" by force. Money arises naturally. Sound money is that which has the most market adoption through voluntary trade.
Government is not required for, "Money."
RE: Knowledge of History + Economics = Disbelief in Government
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Knowledge of History + Economics = Disbelief in Government
The archaeological evidence leans towards state origins of money. There isn't any evidence of the barter system spontaneously creating money. Money seems to have started more as a way for the state (or the king) to violently moved resources from the private to the public sector.
I agree government is not required for money. However, that doesn't change the fact right now, the government has a monopoly over creating it. Because the government has a monopoly, we are forced to deal with it. If we're forced to deal with it, we better learn how it actually works if we ever plan on coming up with a better solution.
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The archaeological evidence leans towards the market adoption origins of money. There isn't any evidence of government being the first to use gold and silver before natural adoption.
Money seems to have started more as a way for the merchants to move resources from one part of the Arabian peninsula to the other.
I agree government is not required for money. However, that doesn't change the fact right now, the government has a partial monopoly over creating it. Because the government has a monopoly, we are forced to deal with it.
If we look at ways that sound money can be adopted and furthered based on Austrian economics, we can move away from fiat by convincing others of the ethical solution - Voluntaryism.
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Can you provide me the evidence? Evidence of state origins of money in the books The Lost Science of Money by Stephen Zarlengena, and Debt: The First 5,000 Years by David Graeber.
Austrian economics fundamentally misunderstands money, as it treats it like a real asset. It's not. Real assets are things like cars, houses, mugs, gold bars--something real that adds up to a positive number. Money is a financial asset, and all net financial assets add up to zero. A financial asset creates an asset for one party and a liability for another. If I give you a mortgage for $100,000, I have a financial liability of $100,000 and you have a financial asset worth $100,000. If we add them up, it zeros out.
Money itself is a financial liability and asset. When we carry it, it's a financial asset for us, and a liability for the government, who has the obligation to accept it as taxes.
The Austrian response to this concept, as far as I've seen, is basically, "Yea... well it SHOULD be a real asset." First this is a logical fallacy because it completely ignores the argument presented, but secondly it's a bad idea. You can guarantee exchange parity with real assets, because it's incredibly difficult to really know what they're worth. With an abstraction like money, you can set up systems that guarantee par clearing. You won't read this in The Creature from Jekyll Island, but one of the purposes of the Federal Reserve is to guarantee par clearing among different banks. Prior to the Federal Reserve, it was very common for banks to accept notes from other banks at a discount (say 80 cents on the dollar), so no one really knew what any of their money was worth.
When the federal government spends money (i.e. creates it out of nothing), it spends it into the private sector, so the private sector can then use it in the economy. There is no other place for money to come from. What this means is if the federal government balances its budget (takes more in taxes than it spends), it will actually remove money from the system, and the economy will crash simply from lack of money. This is what has caused every single economic depression and recession in the US history.
I'm willing to debate this on a recorded call.
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Money is nothing more than a communication tool. It communicates whether someone is willing to perform future work based on the medium.
Whether someone values what the money is subjectively is an enhancement to that function.
This is why people in past times used various monies that had some type of subjective value scarcity ex. large stones/shells, that could be relied on for future communication without much inflation.
The historical reason for adopting gold and other precious metals was that those who had an abundance wanted to show off their wealth with jewelry and ornate clothing and housing.
This caused people to seek out these precious metals to trade with those who had an abundance due to excess from farming and penning of animals.
Adoption was furthered as people realized that these metals could be broken down and weighed for accuracy to trade with others.
The possible utility of gold and silver was more fully realized over time, furthering the adoptions.
It would be wise to study the Austrian theory of money to realize that money is, at its foundation, communication.
And the value of this communication is often strengthened with natural scarcity, durability, divisibility, and multiplicity of utility.
See: https://mises.org/library/origin-money-and-its-value
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I have studied Austrian economics, and while I find it spectacular in the field of ethics, I find it utterly lacking in the understanding of money. The article is speculation that's based on the barter fallacy ("Menger pointed out that even in a state of barter, goods would have different degrees of saleableness or saleability"). There is no evidence of barter being the basis for any economic system.
The article points out that a ruler would have create precise ratios between the newly defined money and all other goods--this is almost right. The ruler defines a precise ratio of taxes. One unit of money is a tax token equal to one unit of itself. One dollar pays one dollar of tax liability, per definition. All other prices follow. Because the ruler demands tax tokens that only he can create, the subjects are willing to work for it in order to pay their taxes. Thus spending occurs first, then taxation later. Because taxes apply to ALL subjects in the ruler's jurisdiction, the tax token becomes universal and can be used as money.
Again, open to recorded debate on this.
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A ruler is not necessary. What takes place is the greatest good/service provider chooses to accept a certain denomination.
This can include governments, but it isn't exclusive to governments, as popular merchants would choose to sell goods based on some monetary metric. ex. Pearls. Gold dust/nuggets. Salt. Etc.
The money form also had subjective value use, so that is why it arose naturally to begin with.
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Never said a ruler was necessary. I'm saying that's the only way it has been done until now.
Again, money cannot be a real asset. There is no evidence of this happening in history. It has been be financial in nature--that is, by definition it creates an asset and a liability at the same. When a ruler demands a tax, it creates an objective value, which is it protects you from the ruler's tax-collecting thugs.
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