Nope, he’s still not getting it, is he?

Money has no value of its own, and it never has. Both physical cash and ancient and modern intangible forms of money (to cover all forms of ledger based monetary creation – which are in essence identical however the record has been maintained) get their value from recording debt. A currency achieves that by being issued into existence by a government that accepts it back in settlement of legally due tax obligations.

It’s the last sentence which is wrong.

A currency might achieve value through government action. But it is not necessary for there to be the government bit for money to achieve value. There have indeed been private currencies around. Sometimes accorded greater value than the government backed ones too.

The Senior Lecturer is making one of his usual mistakes, taking something that can, does but might happen to be a necessary thing that must happen. It is neither true that money only gains value from government issuance or acceptance (that’s “legal tender”, not “money”) nor is it necessarily true that government issuance and acceptance creates value – you could pay your taxes in $Z for example.

This is fun too:

….no country where two currencies are in widespread common usage can ever be subject to effective macroeconomic management in my opinion.

This from the man who insists that monetary policy not longer has any value and that only fiscal policy works?

There is no currency that exists independently of the fact that a sovereign state will accept it in settlement of tax owing. The looser the connection, the weaker the currency, by and large. It is literally this fact that gives money its value in use: nothing else does because nothing else requires that it be used in exchange in a location.

It’s simply not a true statement.

15 thoughts on “Nope, he’s still not getting it, is he?”

  1. His argument seems to be refuted for me by an e-mail I received Friday. Asking for payment for a service to be in Bitcoin if I’m US resident. Apparently the US banking system is denying them card transfers, possibly due to the nature of the service they provide possibly having fallen foul of some recent US domestic regulation. Or whatever. Who knows?
    So, for US residents wishing to use this service, Bitcoin is money. $US isn’t. Bitcoin has value. $US = 0

  2. ….no country where two currencies are in widespread common usage can ever be subject to effective macroeconomic management in my opinion.

    Sounds like a benefit to me, given how (in)effective macroeconomic management has actually been.

  3. Or Ed,

    “….no country where women cook carrots and peas in the same pot can ever be subject to effective macroeconomic management in my opinion.”

  4. Strange, then, how my isolated home town thrived through the 16-19th centuries with barely anothing other than promissary notes issued by the town banking companies.

    Bring home a whale, sell its parts for Sanders’ promissary notes, go to the grocer’s, buy food with Sanders’ promissary notes, buy a house with Sanders’ promissary notes, the builder buys his food with Sanders’ promissary notes, eventually the promisarry notes gets back to the Sanders brothers and it re-enters circulation.

  5. I wonder which government issued the Vikings with the gold and silver arm rings that they wore and used to buy stuff that wasn’t worth the effort to loot?

  6. @BiS

    Spot–on; bitcoin and the other blockchain currencies are modern-day alternatives he knows exist as he’s written about them. Ritchie has worse memory than a goldfish.

  7. @Pcar

    Spud’s line is that bitcoin doesn’t count as it’s a commodity.

    “That field is full of cows”

    “There are horses in it”

    “Those horses don’t count.”

    Impossible to argue against him.

  8. My first thought was, what about countries that commonly accept dual (or more) currency. For example, Peru (and this is not to disparage the nation which is fantastic with many fine qualities and industrious people) but you can use US dollars there pretty well in many instances at pretty much standard exchange rates. Cash and cheques. Peruvians consider it has much value and it’s nothing to do with US tax.

  9. Bloke in North Dorset

    During one of Ireland’s bank strikes cheques became the currency with pub landlords acting as the the clearing houses because they knew the credit worthiness of their choice stompers.

    Banks and a government backed currency make life simpler but they aren’t mandatory for a currency to exist.

  10. Yes but this moron has a publically funded post in an educational establishment. An establishment that just dismisses attempts to demonstrate his stupidity. There is the problem

  11. “Spud’s line is that bitcoin doesn’t count as it’s a commodity.”

    There’s been a lot here shooting the same line, Andrew. Warning of a Bitcoin “bubble”.

  12. Bloke in Costa Rica

    In Costa Rica dollars and colones are almost equally acceptable, with the proviso that $50 and $100 are less likely to be accepted. You can pay in a mixture, and all the supermarket tills do the conversion for the cashier. Even some government fees and stamps are dollar-denominated. So, once again, Murphy knows fuck all.

    Murphy so ignorant, he think convertible security mean putting the top up.

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