Talk:Money

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Fiat Money

The base essence of fiat money is rooted in the organic definition of the Latin term fiat, meaning "By official decree" or "Let it be so (because of an official decree)".

One of the best example of a non-fiat medium of exchange and a medium of exchange established by fiat comes from ancient Rome (where they spoke Latin and where the term "fiat money" was coined). The Romans' use of bronze, while not among the more ancient examples of the transition from barter systems to a monetary systems is well documented, and it illustrates this transition clearly. First we find the use of "aes rude" (rough bronze) which was a heavy weight of unmeasured bronze being used in what was properly a barter system -- the barter-ability of the bronze was related exclusively to its usefulness in blacksmithing and it was bartered with the intent of being turned into tools. The next historical step was bronze in bars that had a 5-pound pre-measured weight (presumably to make barter easier and more fair), called "aes signatum" (signed bronze), which is where debate arises between if this is still the barter system or now a monetary system. Finally, there is a clear break from the use of bronze in barter into its undebatable use as money because of lighter measures of bronze not intended to be used as anything other than coinage for transactions. The aes grave (heavy bronze) (or As) is the start of the use of coins in Rome, but not the oldest known example metal coinage.

The "aes signatum" (signed bronze) was established by fiat, or in other words, it was established by an official decree setting the weight and purity and then stamped (signed) by the state official who was the central authority making sure the weights and measures were accurate in order to prevent people from cheating each other. This was the first "fiat currency." It was made of metal.

The perversion of the definition of the term "fiat currency" doesn't make it a valid definition simply because so many people are in error. Further, it doesn't matter if people can be cited in any academic papers or other sources of authority making this common error.

In light of this, fiat money is best defined as the "official money" of a Nation established by an official decree or written law. This includes official gold and silver coin minted by the State or National Mint because, by official decree, this was established as money by the State/Nation by law. Gold and silver coin that is not established by official decree, is not the sovereign money of the Nation or even a legal tender.

Further, there have been several different kinds of fiat money used and tried in history. Some tried to rely upon nothing more than the official decree to sustain the face value of the money. This failed in the US when the Nation first started with its very first issue of Bills of Credit (there have been other issues of Bills of Credit in US History and there are currently still $300 million US Notes in circulation). Christopher Theodore (talk) 16:40, 11 June 2018 (UTC)

Functions

In the section "measure of value" there's a meaningless sentence "It has significantly in developing efficient accounting systems". I propose a replacement: "The value function of money has been a significant challenge in the development of effective accounting systems."

Criticism

Why is there not a section for criticism of money? — Preceding unsigned comment added by 60.43.49.28 (talk) 23:59, 1 May 2015 (UTC)

What do you mean by this? Critizism about the consept? About inflation of money? 80.212.44.121 (talk) 20:31, 10 April 2016 (UTC)

Complete overhaul required.

Firstly, 'Modern Monetary Theory' needs to be capitalised (and linked to its page) as it is a school of thought not merely the way people think today.

Secondly, the whole page is an unchallenged (apart from that small MMT reference) recounting of the 'traditional' or 'orthodox' view as invented by Adam Smith and expanded on by Carl Menger. It has been seriously challenged (I would say demolished) by Innes, Knapp, Wray and Hudson, amongst other neo-chartalists and MMTers.

This is a controversial area as indicated by Sumandark8600's comment which has it exactly backwards. Money by definition has *no* intrinsic value, it is not even a physical thing. If a currency (the physical representation of money) has intrinsic value it is because it is made of a commodity. Usually the face (monetary) value of a gold coin (for example) will be higher than its inherent value or it will be exchanged as bullion. Try buying a gold eagle for a Dollar!

Historically, credit preceded money, there are credit notes from 3000BC, and money (using many forms of currency) preceded coinage. The notion that only gold is money came from 12th century France. — Preceding unsigned comment added by Wingsail (talk • contribs) 20:33, 28 June 2015 (UTC)

Now I've read all the talk archives (up to 2009, the rest are not linked) I see that all heterodox views have been, and are being, deliberately excluded. The people who thought (like me) that the page doesn't actually have a definition of what money *is* got no traction.

It is remarkable that an apparently simple everyday subject like money should be so contentious. It is a disservice to Wikipedia readers to pretend otherwise. Wingsail (talk) 18:01, 30 June 2015 (UTC)

I do not have it backwards. Currency is not a physical representation of money and money by definition has to be a physical commodity. Though I can understand where your confusion arrises.

Currency is defined by having the 6 following traits: 1) being a medium of exchange - ie; it is able to be used as an intermediary in trade, 2) a unit of account - ie; it is able to be numbered and counted, 3) durable - ie; it has a long useable life, 4) divisible - ie; it can be divided equally into to smaller units (coinage oe), 5) portable - ie; it is easy to carry or transport, 6) fungible - -ie; each unit is capable of mutual substitution, meaning units are of equal value (1 pound coin or 5 pound note in my pocket holds the same value as all other 1 pound coins or 5 pound notes, or five 1 pound coins holds the same value as one 5 pound note etc) (By this the value is meant as the value given to it by the power of the people, not by the value of the individual components used to create those units as the 2 values are not synonymous). It does not however fit this 7th trait which money does fit, money also fits the previous 6 traits that currency fits (for fungibility, the value of the units of money = the sum value of the components used to create those units), this 7th trait is; 7) store of value - ie; retains its purchasing power over long periods of time.

The reason currency can't have a store of value is due to its value constantly changing due to the power of countries associated with a country changing, and due to the constant changing of the total sums of a currency from inflation etc. E.G., if in a closed system there are 10 apples and 10 oranges it might be considered that 1 apple has the same value as 1 orange and as such if 1 person has 5 apples and another has 5 oranges they may swap 1 apple for 1 orange, however if the person with the 5 apples grows 10 more apples he now has 15 apples meaning in this closed system there are twice as many apples as there are oranges and as there is no monopoly of either it can be determined that the value of the apples has halved whereas the value of the oranges has stayed the same, then if the 2 people wish to swap it will require person 1 to give person 2 2 apples to be able to get 1 orange. This is an example of inflation where the apples represent currency and the oranges represent money. In the real world, both apples and oranges could be used to some extent as currency if each apple was the same and each orange was the same but they are not, they are however similar to each other so they could still be used as a sort of "pseudo-currency", they could never be used as money however as their quantity is unstable as is the quantity of cash, sheep, steel, televisions etc meaning that none of these things could be used as money. Gold and silver however are elements of the periodic table that are very hard to create from other elements, so hard to recreate in fact that their quantity is very stable to the extent of <± 1 ng a decade. They are also bountiful enough to be readily available for exchange unlike other elements such as platinum and it is this balance between all of these things that makes gold and silver the only true monies and whenever you see the value of them change you are actually seeing the value of the currency used to measure their worth (typically US dollars) change as the value o gold and silver doesn't change.

As I have said before: "There is much confusion in this article between currency and money and the article suffers from it. For example: There is no such thing as a fiat money as all money by definition has an intrinsic value, what the article is referring to is fiat currency which is often incorrectly referred to as fiat money. This is unfortunate as it misleads people into believing that currency is a form of money which it is not as it does not have any store of value, the only true monies are gold and silver (if properly quantised) by the nature of their existence. This article in general is need of a serious rewrite as it seemingly uses money and currency interchangeably and as such much of it is irrelevant to money and/or else wrong due to this confusion." (Sumandark8600 (talk) 14:36, 2 August 2015 (UTC))

Your definitions are those of the metallists, who have it backwards. According to the metal-peddling website you reference all those people swapping real stuff for bits of paper (or even electrons) are deluded fools. Yet trade actually happens. How can that be?

The site mentions IOUs for gold. But IOUs don't have to be for gold. That is a clue. Read this other Wray book for the full story.

Here's my version, which is the kind of info I think this page should include:

1) Farmer Giles sells a dozen eggs to Lord Snooty for a pound of corn. That is barter.

DEFINITION: Barter is the direct, simultaneous exchange of wealth.

2) Farmer Giles sells a dozen eggs to Lord Snooty for his promise of a pound of corn come harvest time. That is credit.

DEFINITION: Credit is a claim on wealth (that may not exist yet).

3) Windy Miller sells half a pound of flour to Farmer Giles for Lord Snooty's promise. That is money.

DEFINITION: Money is transferable credit.

Governments may issue money which is not a promise of wealth but a promise that it (and nothing else) will be accepted in payment of taxes. Since most people have to pay taxes this is sufficient to give the money value.

DEFINITION: Fiat money is transferable tax credit.

Some of the problems inherent in barter can be ameliorated somewhat by using a third, commonly accepted commodity to make the exchange of wealth indirect.

DEFINITION: Commodity money is barter by proxy.

Commodity money may be bulky or risky to carry around so bankers may hold it for the owners and issue notes representing the commodity which may be exchanged in its stead.

DEFINITION: Representative money is barter by proxy by proxy.

There is an elephant in the room called Bank money. I don't have a snappy one line definition for that (yet), but it does not represent a commodity, or any other kind of real wealth.

Metallists believe that Commodity money is the One True Money, but it must be combined with a separate credit system to approach the utility of credit based money.

Note that credit based money (which is what we currently use, and always have, even when we thought otherwise) is an agreement, a social relationship, an idea. Coins, notes, cowrie shells, whatever physical currency happens to be used to record or represent it, are merely operational details. Wingsail (talk) 04:57, 14 August 2015 (UTC)

Reading your post again I noticed a couple of specifics which I'd like to address directly.

You say "2) a unit of account - ie; it is able to be numbered and counted" which comes from goldsilver.com. "Unit of Account" means it is the unit in which accounting is done, ie. it is a set value against which all other values are measured. That doesn't mean values can't change relative to it or each other, it provides a way to compare the values of things that may never have been traded against each other.

Those 7 traits which "define money" are chosen so as to describe Commodity money. Notice that the "standard of deferred payment" is not included. That is because Commodity money does not do that.

Furthermore, these or any other traits may be desirable features of a money or a currency but they do not define what it is. You might as well say "I want money to be orange, therefore gooseberries aren't money" ignoring the fact that the gooseberries your boss pays you will actually buy a hot meal at any diner in town.

Even furthermore, there's no reason why one kind of money should have to fulfil all such specifications. It may not even be possible. You could easily have a "spending money" and a "saving money".

Which brings me to "store of value". There is really no inherent value stability in gold. When Spain conquered the New World, and in the California gold rush the value of gold cratered. Its usually tight supply opens the market to manipulation by large holders. Central banks keep it not because it is money but because it is not. They can settle trade deficits with it in barter arrangements if their counterparty does not want their money, which makes it more likely the counterparty will take the money! Wingsail (talk) 03:42, 19 August 2015 (UTC)

References

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Semi-protected edit request on 27 September 2016

116.106.98.108 (talk) 17:26, 27 September 2016 (UTC)

Not done: and link removed. Other than a bare URL pointing to YouTube, no edit was suggested. Ivanvector (^Talk/_Edits) 17:32, 27 September 2016 (UTC)

Money (монета) - is not total.

Money ever with own QR-code. (андроид)85.140.78.150 (talk) 03:40, 13 October 2016 (UTC)

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History of Money

I've started a topic on the problems of the History of Money article, feedback is welcome! Alæxis_¿question? 12:28, 1 July 2017 (UTC)