[OPE-L:1857] Re: [MIKE WILLIAMS] electronic money

Duncan K Foley (dkf2@columbia.edu)
Mon, 22 Apr 1996 07:09:39 -0700

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Some points that I think it's important to keep in mind in considering
modern monetary systems:

1) All forms of modern money are debts of various nation-states. These
states also have assets (in the case of the U.S., for example, immense
land and natural resource holdings, as well as a large, if somewhat
indeterminate power to tax future income) and it is presumably these
assets that lend "credit" to the State's liabilities, including money.

2) As Paul Cockshott pointed out, the elaboration of various further
forms, such as credit cards or electronic balances, whatever their
technical base, are economically no different from other elaborations of
credit. They all depend on a chain of convertibility back to the monetary
liabilities of the nation-state.

3) Samuelson's overlapping generations model of "money" is highly
misleading in two senses. What Samuelson actually modeled was a social
security system, not money in the ordinary sense. Furthermore, real-life
monetary systems are not self-sustaining bubbles as the OG model suggests
(see point 1 above).