What is money? This is what a bank director (Argentarius) tried to explain to his son in twelve letters “On Money” in 1921. One of the most brilliant and comprehensive books. A short thread

Shout out to @MichaelAntonF for the book recommendation.

Money is the embodiment of a claim to goods that has arisen because someone has performed something but has not yet received the consideration. Money therefore embodies the claim to equivalent consideration arising from a service.

As long as someone has not received any consideration for a service, he has only a claim on a certain person, namely a claim on the recipient of his service. But as soon as the same has received money for his performance, he possesses a claim on the general public.

Therefore, money represents an attested right to receive consideration which has been preceded by corresponding services, and its main function is to transfer this consideration from the market to the person entitled to receive it.

It is a fact that when demand doubles and supply remains the same, the prices of goods rise. The doubling of the monetary tokens therefore leads to the market goods becoming more expensive.

Objection: The new demand stimulates the whole production to increased activity by the rising prices. As a result, very soon new quantities of goods appear on the market, which counterbalance the increased demand with a larger supply and push down the rising prices again.

This effect can indeed occur, namely when the farmers and their workers are stimulated by the price increase to an increased work performance. But this effect does not have to occur.

Consider that the rising prices lead to substantially increased profits and result in higher wages. In this way an ease of earning arises in the whole production, which often does not lead to increased work, but to a certain comfort and inertia.

Therefore, the first and certain moment is always the inflation; the cheapening is a later and very questionable eventuality, which, moreover, at best mitigates the inflation somewhat, but never prevents it completely.

This means nothing else than that, by increasing the amount of money, one has forcibly taken from him a part of the consideration which he has earned by his labor, that one has expropriated him to a certain extent.

Some classes of people must necessarily bear the costs and put up with the fact that their well-acquired claim to consideration shrinks significantly.

All that the state can do is to produce new monetary tokens mechanically. But these money tokens do not fulfill the purpose that money has; they do not provide the people with new rights of reference to goods, they do not make the people more powerful.

They only transfer long existing rights of reference, long existing purchasing power from their rightful owners to other people. The state creates, by issuing money tokens, no new money, but it taxes the one part of the population in favor of the other!

It is only a deception if you believe, in view of the mountains of new money in which we threaten to suffocate, that the German Reich has created many billions of marks of new money in the last years with the help of the Reichsbank. Of course, the notes are there, no doubt.

But they are not new money. The purchasing power that used to be in the old money and belongs by right to the holders, gets, in reality, transferd to the people closest to the money printer. It is a brutal act of expropriation.

And in fact, it is also the only thing that the state can do to the money. It can always only expropriate money, i.e. property rights, never create them anew.

The money system regulates itself automatically, and the state has nothing to do further than to keep the cash machine technically in order. There is no room for creative activity here, and it is a fatal error if numerous economists believe that money is a creature of the state.

Conclusion: Due to the fact that governments have always tried and are always trying to manipulate money and thus people’s decisions, we must take this task out of the hands of governing and distribute it in a decentralized manner. “Fix the money, fix the world” – #Bitcoin



Leave a Reply