Subject: [OPE-L:1898] Re: Re: Re: Re: Re: the money supply
From: Duncan K. Foley (email@example.com)
Date: Sat Dec 11 1999 - 22:16:36 EST
The State might be able to force the coins to circulate using police power,
but can it enforce their value?
>Addendum on a point I missed. Claus wrote:
>> This is why the state, which mints the coins, can profit -
>> and always has - from minting debased coins, as long as
>> people don't notice the fact, i.e., the state falsely
>> certifies that a coin has the amount of the commodity money
>> stated by the law.
>Whether or not people notice is beside the point. The point is
>that the state has a well-enforced legal monopoly on the
>production of money. If the face value of coin exceeds its
>metallic value private agents have an _incentive_ to mint coins
>themselves, but if they do so they'll go to prison. (Ricardo
>was quite clear that the devaluation of coin has always fallen
>well short of its debasement.) Why? The state monopoly on
>money is not arbitrary; it is a corollary of the fact that money
>is the means of discharging one's tax liability to the state,
>and if that is too easily discharged the state is in trouble.
>This simple fact is "invisible" if one attempts to derive money
>as a "natural" outgrowth of free exchange of commodities.
Duncan K. Foley
Department of Economics
New School University
65 Fifth Avenue
New York, NY 10003
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