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Alex Kampa

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New Money Hub, 3 pgs.


Reviewer comment:

A terrific, much needed, essay in which the author indeed demolishes the standard economic establishment assunption about the uses of money. But he does not go far enough because he retains the concept that money is something. Although he does indicate that there is a difference between money and money tokens. His conclusion is that of these three 'one is imprecisely stated, one is misleading and the last one is simply incorrect." They are all that but worst. See futhrer below.



The author brings up a question that has always bothered me. He notes that normally something is defined by its nature - its attributes and only after that can one describe its functions. But in all the standard economics texts money is directly 'defined' by these three functions. He attributes this to economists' confusion about the real nature of money (exactly right). But he believes this confusion has been solved by the theory espoused by Mitchell-Innes and the current champions of the 'credit theory of money.' I disagree. First and obviously the 'credit theory' is NOT widely accepted in establishment economics circles, nor is any other theory of money.
But Mr. Kampa simply jumps to Alfred Mitchell_Innes' statement of 1913 that "credit and credit alone is money" as if this comes from Aristotle of the Bible. He continues by stating that this 'terse statement' in which 'the essence of moeny is clearly described' is deninitive - an axiom.

In my opinion the 'value' of credit is quantified by a numerical descriptor the generic category of which is called in English 'money' and the specific representatives of which are such ideas and dollars, pounds, rubles, yuan and such. But it is NOT itself money. Money is an abstract concept - that enables establishment of 'value's' relativity in time and space and especially the mind of the holder. The 'value' of credit, as the 'value' of everything else varies (sometimes dramatically). And some numerical descriptor was and is needed to enable people to quantify the relative 'value' of the different objects of their desire over time and space. Now taking this into consideration I agree with Mr. Kampa that credit is created by debt and that the exchange that takes place when things having different 'values' are transfered can be a transfer of credit/debt which disappeares when that difference is settled. So credit is continually expanding and contracting during the process.


Money as store of value:

The author rightly describes the process that involves 'debt' generated by a difference in 'value' of what is being exchanged for what. And that normally the parties expect to 'repay' this debt. (called borowing). He notes that debts not paid - that is eliminated - are lost so whatever 'value' they were ascribed to have in money terms disappears. He notes, further, that money is a claim on future work. Yes, but a double claim - the creditor has a claim on the future work of the debtor by which the debtor can create some thing of 'value' to complete the previous transaction. Money is simply the agreed quantification of the size - extent - value- of that claim. Money does not exist - it is the claim that exists.

Again, 'value' is not a fixed category of things such as weight or length of color. So 'value' cannot be stored. Things do not HAVE intrinsic 'value' but they are 'valuable' because they are 'desireable' in the minds of people.


Money as a medium of exchange:

Mr. Kampa rightly points out that 'exchange' as a term itself is not appropiate in discussion of exchange because it is actual material or immaterial) things that are being exchanged. He notes that 'money' is the method by which debt circulates - it is created and disolved in the process. He affirms this - he notes that it is credit/debt that is created and disolved. And he notes that when 'money' is used in a process of exchange that does not involve creation of debt it is simply a transfer of credit from one creditor to another. The new holder of that 'money' is now able to claim the production of things via the work effort of some producer.
BUT he ignores credit created by government which has no intention of eliminating debt. He discusses this elsewhere.


Money as a unit of account:

The author zeros in on the critical issue here when he writes: "here we have a confusion betwen the unit of measure, and the thimg being measured." Exactly what I have been arguing throughout - it affects the conceptions about the other two functions. But he proceeds to mix up the term 'money' with the concept of money. The historical source of this problem lies in the adoption of things having their own relative 'value' due to their desirability - such as gold and silver when uses to make coins. Then the weight of the gold and silver varies on 'value' on one way while the 'official' 'value' of the coin varies in another way.

He sums up by writing:"Bottom line money is not a unit of account, rather money is expressed in a unit of account. This is semantics. But it would be clarified if some other term had been invented for one or the other concept.


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