But what you would find if you turned up at the Bank of England and met the cashier and asked for your £20 was that they’d just give you another £20 note.
So there has to be something else that makes this promise valuable.
And there is. The value in the promise is that it is the government – which has owned the Bank of England since 1946 – that is really making it.
That’s important because the government has the ability to make good on the promise it is making.
There is one simple reason for that. It’s because many of us, most of the time, are in debt to the government. We owe it tax. And the only thing they’ll accept in payment is the money that they happen to make – the pound in your electronic bank account.
Wrong on three entirely different levels. As we know the BoE only makes about 3% of the “money” floating around. The vast majority is created by banks in the form of credit. And yes, you can pay HMRC with credit as produced by the banking system.
Secondly, It is not necessary to pay tax with UK money of any type. HMRC will entirely happily take euros from you, a form of money which the UK government does not produce. It is also possible to pay in artworks and so on. Even old notebooks – I’m told that a substantial part of the inheritance tax due on Tony Benn’s estate was paid in the form of his old papers.
And, to reach the Tre Professori thirdly, if it is that we can pay tax in it which means money maintains its value then why do we have inflation? For government always is willing to take its money as our tax payments. But sometimes money loses its value all the same. Thus it cannot be the government’s willingness to take it which is the sole determinant of value.
Oh, and as a corollary to that, some monies – say Bitcoin, or dollars in Russia – cannot be used to pay taxes and yet they have value.
It ain’t all in the state, nothing outside the state, you know?
As to what does give money it’s value it’s the belief in the willingness of the next person down the line to ascribe value to that money. That’s all.
I am really interested to hear. If this is to be done I want to do it in a way that works.
He doesn’t actually mean that in the slightest. For the above critique won’t appear there, will it?