[OPE-L:1954] Re: [MIKE WILLIAMS] electronic money

Duncan K Foley (dkf2@columbia.edu)
Thu, 25 Apr 1996 09:26:05 -0700

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On Thu, 25 Apr 1996, Paul Cockshott wrote:

> Duncan
> ------
> I'm not sure what you're thinking of here. Even in a closed economy, when
> the central bank (or the state) issues currency, it functions as a
> liability of the state (or the bank), and represents a loan from the
> public to the central bank or the state. It is true that in this case the
> Paul
> ----
> Is this not a legal fiction?
> Is it not better to see seigneurage as a form of taxation?
I don't see that it is a legal fiction. I could choose to use British, or
French money, or Japanese money, or gold if I wanted to. Seigniorage
results from the government outlawing banks and other potential
competitors from issuing small denomination notes, and from reserve
requirements that give the government's debt a monopoly of certain functions.