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New Money Hub, 3 pgs.
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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.
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Introduction
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.
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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.
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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.
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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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