In the topic, Counterfeits, satootoko wrote: "Fantasies are coins produced for other purposes, including non-existent governments (Sealand for example), throwing from floats during Mardi Gras parades, unofficially issued proposals for real coins, advertising tokens of all sorts, etc. "Notgeld. Even though this German word literally means "emergency money", it makes a good category title for semi-official monetary issues, often put out by cities, provinces, etc.; but also by private parties, to assuage shortages in official currency/coins. Conder Tokens, Hard Times Tokens, children's game coins, gambling tokens, and similar coins fall in this category. They are "fake" because they are not "money", even though they often perform the function of money." This raises several important questions about how we define things in numismatics. It is a common "default value" in numismatics that we call "money" only those issues of "governments" (however defined). Yet, as satootoko points out, so-called non-money objects do, indeed, perform the function of money. If something performs the function of money, then why is it _not_ money? Apply the same standard, say, to education or healthcare or (most recently in the news) space travel. Are only public schools real schools, with private schools being "non-schools that perform the function of schools"? Is Rutan's SpaceShipOne, a "non-rocket that performs the function of a rocket" just because it did not come from a government? And what is a "government"? Satootoko cited Sealand. Sealand, Hutt River Principality, and other micronations are as valid as any other state. The Vatican has only a few hundred actual citizens and perhaps 1500 other "guest workers." We recognize the Vatican as a legitimate government -- Euros and all; Pope speaks to the U.N.; etc. -- but we deny this to other micronations. Why? I have read once through each, two books by E. C. Riegel, The New Approach to Freedom and Flight From Inflation. Riegel makes a strong case to show that in terms of pure accounting, money is only created when a buyer accepts a seller's offer. Riegel goes on to show that strictly speaking by definition governments really do _NOT_ create money, only money-like objects that perform the function of money when used by persons. Hard Times Tokens, Conders, scrip, the entire matrix of commercial counters are within the context of numismatics. They are all money. Mardi Gras Doubloons and other fantasies are in a different class entirely. (Some Mardi Gras Doubloons are, in fact money objects because they are -- on rare occasions -- tokens, good-fors. ) I have been involved in a "community currency" project here in Traverse City, Michigan. About 30 cities have their own local currencies, and in every case I have researched, these are created by non-government associations of participating individuals and businesses. In the Riegel model, these people create money with their transactions and use these community currencies as their preferred accounting tools. As a numismatist, I consider checks, drafts, stock certificates, banknotes, coins, and all the rest to be equally valid as forms of money. Some of these I have collected with more interest and some not at all. My "aesthetics of economics" (if you will) does not define money, only my preferences for studying some of it. Comments, questions, criticisms or suggestions? Michael
Hi Micheal, That is some very interesting and thought provoking writing. Yes I usually think of coins and currency that has been issued by a country's government when I think of "money". However, there are so many other possibilities. I collect tokens. CWT's. HTT's, transit, but mostly local merchant tokens. There's no doubt that these were just as good as money. And what about the cupons my wife clips from the newspaper? How about barter? Items for trade? Services in exchange for goods? Seems the possibilities are almost endless. It's just easier for me to think of "cash" when I think of the word "money", although deep down inside, There will always be the realization that it has, and will continue to, present itself in many fashions. Good topic.
Money is not simply anything which might be exchanged for something else. Almost any physical thing could fit such a definition. One meaning of barter, in fact, means an exchange not involving money. The essential characteristic of money is that is widely accepted as a medium of exchange within a broad community, and that someone who accepts money can reasonably expect to exchange it for something else of value in the future. In addition, money can always be used to satisfy debts and taxes, and here is where most governments get involved. Thus, subway tokens and grocery store coupons, among other things, are not money, because thay cannot be used to buy a wide variety of things nor pay taxes. Neither are stock certificates, they are certificates of ownership.
"Money is not simply anything which might be exchanged for something else. Almost any physical thing could fit such a definition. One meaning of barter, in fact, means an exchange not involving money." You are right: direct exchange is barter. Money is indirect exchange: accepting something you do not want to consume because you intend to trade it for something do want. So, yes, "anything" can be money (salt, tobacco, goats...). And it does not have to be physical. Phonecards are how we measure the service of telecommunication. Ithaca Hours and other "time dollars" are moneys denominated in labor, rather than goods. Of course, nothing at all stands behind the US Dollar, in that there is no good or service held at the Treasury. So, the dollar is almost perfectly abstract. "The essential characteristic of money is that is widely accepted as a medium of exchange within a broad community, and that someone who accepts money can reasonably expect to exchange it for something else of value in the future. In addition, money can always be used to satisfy debts and taxes, and here is where most governments get involved." Those characteristics of money are pretty much common sense and just as pretty much arguable. I would like to stick with a definition that at once (a) derives from logical principles and (b) is supported by evidence. How "broad" does a community have to be to be "broad enough" to satisfy? There is no objective way to know. I agree that EXCHANGE is the sine qua non of money. The third element -- debts and taxes -- is actually two different things. In American history, we had the time of the Specie Circular, when the government refused anything except GOLD in taxes, but the people broadly used all kinds of things for "money" from local banknotes to Mexican Silver. In fact, local bank notes in Tennessee, Ohio, etc., showed pictures of Spanish or Mexican silver coins as "dollars" rather than US federal money. (See http://scoan.oldnote.org/ "Spanish Coins on American Notes.) So, federal silver coins were not "money" because you could not pay your taxes in them. but foreign silver coins were "money" because a broad community accepted them. I guess that does not make sense to me, so I would say that BOTH federal and foreign silver coins were money, even though you could not pay your taxes in them. And then you have local currencies today - the Ithaca Hours; etc. - which people use among themselves as currency, but which are not "legal tender" and cannot be used to pay taxes (generally). They are nontheless money. (You might call them money substitutes. I am not sure how I evaluate the validity of the term. A poker chip is a money substitute.) "Thus, subway tokens and grocery store coupons, among other things, are not money ... " If we were to apply a consistent definition, we would have to rate those items as "money" but admit that they are not the best forms of it (or even good forms). The Yugo might have been a poor car, but it met the definition. Except in the movie "Mr. Mom" where he plays poker for grocery coupons, I had never seen anyone use coupons for money -- then our local food co-op facilitated just that, the swapping by members of coupons. So, again, store coupons are limited, but they are money by definition. "Neither are stock certificates, they are certificates of ownership." In the olden days, a gold certificate or silver certificate was just that: a promise to pay to the bearer on demand, but also a statement that the gold or silver was owned and on hand at the Treasury. Stock certificates are perhaps more like real estate in that they require a formal transfer, however, how then do we identify checks (drafts) as money, since they, too, must be endorsed, etc. All in all, your points are well made. They are common sense. Getting to the root of the matter, finding the ultimate truth means getting some perspective that includes "common sense" as an easy element. One thing that might be true universally is that we all have our own individual preferences for kinds of money. Here in the USA and around the world, the $20 bill works all right. A Japanese Y1000 note is not so spendable on the streets of Chicago or Houston. Both are money. I personally would rate a 1-ounce silver bar highly, probably higher than the nominal "spot" price for the day, if you offered to pay me in silver for my labor. That is not a deal you will find everywhere. We all have preferences. As noted, most people in the US mostly accept Federal money most of the time because you can pay your taxes with it. Michael ANA R-162953
No, use in indirect exchange is a necessary, but not sufficient, quality of money. The recipient of money must also reasonably expect that he may use the money to acquire a broad range of other items or services or satisfy obligations. I hear the desire for a rational and measurable definition of money, but no follow-through in the examples. In addition, we cannot create so rigorous a definition of money - or any other word - that it can be derived from logical processes or subject to empirical testing. Money can be used to buy many things. I can't buy apples or a car or a shoe shine with stock certificates or pay my electric bill or my taxes with empty soda bottles. There are spurious curiosities out there. Not everything which can be converted to money is money; that is not the test. If it were, everthing would be money. A rose is a buck is a rose?
You also cannot buy apples in the USA with another countries money, without first converting it into US money. So, can we say that real money needs to be readily converted into other forms of money?
"I hear the desire for a rational and measurable definition of money, but no follow-through in the examples." I cited examples from community currencies (time dollars), 19th century US society, bullion bars, etc., etc. I do know what kind of an example you are looking for, but I tried to provide specific examples for each broad statement. "In addition, we cannot create so rigorous a definition of money - or any other word - that it can be derived from logical processes or subject to empirical testing." Here, we disagree on a basic issue in epistemology. I suspect that if we follow this path, we will come to a basic difference in metaphysics. Basically, we see the world differently and it pretty much stops there. "The recipient of money must also reasonably expect that he may use the money to acquire a broad range of other items or services or satisfy obligations." My problem with your definitions is that they are vague. How "many" is "many" things? How "broad" a community is "broad" enough that what it uses for "money" is "money" in your terms? As I said, the differences in our approaches to the problem are basic differences in us as individuals. "Not everything which can be converted to money is money; that is not the test. If it were, everthing would be money. A rose is a buck is a rose?" The test, to me, is not what the stuff _is_, but how it is _used_. Cigarettes are money in prison and have been money in other times and places (World War II Europe) and tobacco has been the store of value for money (colonial Maryland and Virginia, if I recall) and in fact, the people actually burned warehouses of tobacco to support the value of their paper receipts for it. None of that says that tobacco _is_ "money" in your terms, but it does show that according to your definitions tobacco _can_be_ money, if it is used as money. By money, I mean only that something be a medium of indirect exchange: you accept it now with the intent to trade it later for something else. I agree with you that that in order to do that, to exchange it later for something else, you must have an expectation that the object (or promise) is acceptable to other people. That is implicit in the definition of indirect exchange. Again, it is not what the stuff _is_ that makes it money, but how it is _used_. That we do not use old pop bottles to pay our taxes is only a social custom. In fact, during the Great Depression, employees at the Board of Water and Light in Lansing, Michigan, were paid 10% with BWL scrip which was acceptable for property taxes -- and which passed on the street for groceries, etc. -- because it was accepted at the BWL for payment of electricity and water service. That was a temporary condition in a small locale. The scrip was money by my definition.
Some world currencies are "inconvertible." Officially, the issuing government does not allow them to be exchanged for anything else. I think the North Korean Won is like that. It is still money within North Korea, of course -- and probably a black market exists for exchanging it. Actually, in the USA we tend to use American money -- so do many other people in other places. You do not need to convert American money to spend it in Bulgaria or Greece or Mexico. Here in Michigan (as in Ohio, New York and other places near Canada) Canadian coins circulate on par with US coins as a minor inconvenience. It is true that by its nature money can be "readily converted" into other forms of money. I see that as a consequence of its being money in the first place. That you can buy other money with it is just an example of the fact that you can buy "anything" with it.
Money is an idea. First and foremost money is a practical thing which is valued by its users by consensus. When people believe what they're using for money is overvalued than it becomes less valued through inflation or sudden adjustment. Money in one area is rarely money somewhere else. A worker in a West Virginia coal mine couldn't spend his scrip in Cincinnatti and one would look long and hard in this country trying to spend or deposit large quantities of aluminum Chinese coin. Anything used as money has with it an implied usage, geographical area, and value. Most money in the modern era is issued by governmental authority for use in the country of origin (euro excluded). Its value is set by users and is dependent largely on its supply. When the Zaire government added a few more zeros to their currency to make it practical in an hyperinflationary enviroment, the people refused to accept it. Instead they simply continued to use the older currency and were even able to obtain the printing plates to make more.
I have been reading A NEW APPROACH TO FREEDOM and FLIGHT FROM INFLATION both by E. C. Riegel. These are the clearest expositions I have found on the nature of money.
I don't consider North Korea a country. I don't consider their Enlightened Fearless Leader as the head of any sort of "government". But I can bet you that if you took $100,000 in US currency to North Korea, it would be readily converted onto wons, or confiscated, by the North Korean "government". Are you saying that if I brought $100,000 worth of wons into the US, I could not convert them to US dollars? Yes, you can spend US money without exchanging it in those countries, but you still cannot buy apples in the USA with their money. I own a store in northern Ohio near a major amusement park. I discount Canadian money at 30%. Of course, I live in my own little world.
It would be confiscated. While I do not know for sure if the won is inconvertible, I know that the official exchange rate is 2.2 won to the dollar. So if you brought 100,000 won to the US, officially, it would be worth $45,454.54. The key word is "officially," though. Just recently I bought a 50 won note (officially worth $22.73) for $4.50, and later I found out I could have gotten the same note for $3.00. Since it was an uncirculated note, the black market rate for the won is going to be smaller than the rate of six cents to the won, if you use $3.00 for 50 won.
An interesting topic. To add fuel to the fire, consider that not all money takes on a physical form. If you adhere to the simple definition that money is any object that is chosen by at least two individuals to serve as a universal "medium of exchange" and then apply that to the wealth that moves around on a daily basis just by the click of a mouse here or there, it really starts to confuse things. For mer personally, money is whatever I can pull out of my pocket to acquire whichever coin I may desire at that particular moment ;-)
If you tied a 1 won note to another 1 won note to make a rope, could you say that won plus won equals tew?
