>> February 4, 2020
>> Blog Post #24
The Monetary Unit
- Money is not an abstract unit
- Historically, prices expressed in gold, dollars, or pounds, were nothing more than a unit of the weight of gold or silver necessary to purchase the item at hand.
- The pound sterling actually began as a pound weight of silver
- The dollar was an ounce weight of silver
The Shape of Money
- The size or weight of money makes no difference, units are.
- The shape of money makes no difference in the value of money.
- Gold in a necklace is worth just as much as gold in a coin.
- Some shapes are more convenient though.
- Coinage enables metals to be used in more regular and smaller quantities.
- Coinage is a business like any other, and the cost to manufacture coins is incorporated in their value on the market.
- Is seen today as a strange idea
- Private coinage should be seen as any other business
- Each miter would coin whatever he wants to, and the price would be set by the market
- This is how the US Dollar came to be popular, as a competitive silver coin
- Critics of private coinage argue that it would lead to fraud, yet they trust governments with a monopoly of coinage.
- If indeed there was a risk of fraud, it means that we should consider government as not being able to properly deter it, as fraud prevention and punishment is supposed to be one of the functions of government.
- But if government can be trusted to prevent fraud, should they be trusted with a monopoly of coinage?
- Money has total control of money:
- It may debase coin,
- It may counterfeit coin,
- With full legal sanction.
- Everyday buyers of products purchase quantities of products
- Ounces of meat,
- Gallons of gas,
- If that can be trusted, why couldn’t private coinage be trusted.
- By insisting that every coin in circulation, whether in pristine shape or badly damaged has the same value, governments are actually introducing price controls on the money through coercion
- Worn coins are overvalued
- Pristine coins are undervalued