[OPE-L:1936] Re: the money supply

Gerald Levy (glevy@PRATT.EDU)
Fri, 17 Dec 1999 07:58:55 -0500 (EST)

Re Akira's [OPE-L:1930]:

> The other side adresses the contemporary currrency as the credit money.
> +It's circulation is based on the principle of means of payment.
> +They think that the contemporary currency just functions in place of the
> money.

Currency *is* money, or -- more accurately -- it is one component of the
money supply. Therefore, I don't understand why you think that currency
functions _in place of_ money.

> Therefore the money or measures of value is ultimately gold.

Why the "therefore"? Simply because you have credit money doesn't require
gold to function as commodity money. Indeed, there is no necessary reason
to believe that when you have credit money, there will of necessity also
be commodity money whether of gold or some other object.

> However
> I guess this group does't always consider gold as the money, but the
> commodity money. They think the present money is gold because we cannot
> point out another commodity as money.

This sounds like circular reasoning:

Q: why is gold commodity money?
A: Since we can't point out any other commodity as money, the money
   commodity must be gold.

Yet, this assumes what must be proved. That is, whether there is commodity
money at all.

> +The international currency is also the credit money.

What about the (US) Dollar?

btw, how can the benefits of *seigniorage* be explained within the context
of your theory?

In solidarity, Jerry

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