On The Ebb and Flow of Money Re-Definition
Here I am thinking of the Misean or Austrian definition of money especially as described by JW Weatherman which/who professes the conclusion and definition that there can only be one money.
When pressed JW explained to me that there is by definition only one money that a people use. The narrative he gives in this regard is nefarious and deceptive however as it ignores or conceals that the scope of the population is relevant.
So “In China” there can only be only money perhaps but of course there are many such nations in the world that have their own currencies. If there is to be a global money then there could only be considered one (and we can extend the Misean argument to suggest that it would be therefore the common unit of account among all individuals in the global economy).
But this view is really one that has actually started to lose ground in my opinion since the advent of bitcoin. Although there were already times in history in which private money was issued the generations that are on social media today typically have never experienced truly privately issued money. It is much easier I think to believe that a population must only ever be seen to use one money in a world in which each nation’s state has a control over its own money issuance.
In a world without such a premise it would be difficult to sincerely argue that there can only ever be one money when its empirically obvious that many people are using different and perhaps multiple currencies.
On the Fallacy of Inflation and Inflation Targeting
My previous articles re-view a narrative on inflation targeting such that it can be shown that markets ultimately value a currency by the trustworthiness of the issuer rather than the actual changes (increases) in the supply of the currency units.
If the value (or objectively viewed purchasing power from some all knowing view) trend of a currency was declining this would be more or as a much as the markets distrusting the stability of the economy that the currency represents as it might be simply a reaction to a change in monetary policy direction (or the targets themselves).
Put another way, if a central bank means to achieve stability with a slight decrease in the purchasing power of the money (over time) they influence what would happen if the markets had a perfect trust in the the respective political atmosphere of the economy that currency represents?
It would be held as a very strong money if there was perceived great stability in this regard.
We might then view inflation targeting, and the belief in slight inflation over time, as a certain fool’s errand-yet if a decline in the general market’s (ie views from other nations/economies) valuation is desirable but that central banking in a trustworthy manner can’t have tools to create inflation there would still always be the argument that corruption and purposeful destabilization could (negatively) influence the observed purchasing power of the respective currency.
Notes on Inflation Targeting as a Strategy for Bluffing
Then a “central banker” does in fact have a political role in which they convey either sincerely intended information and signals or perhaps deceptive signals or noise.
A central bank is used to coordinate the economy but the policies are always said to be so important and so influential that they are very publicly conveyed. And in this world today this means that all nations and people from all nations are watching the signals.
So if one country caught on to the idea that inflation targeting could be used as an advanced strategy line (which includes deceptive lines) then whether or not inflation targeting was an optimal practice directly would not stop most or all nations or major economies from gravitating towards the practice.
From this perspective we can see how trying to seperate a nation's government and politics from the money supply is not only absurd but a determinantal suggestion.
Beyond that I think that we can understand how absurd it might be to make assertions as to what can be money and when and how many different types of medium can only exist as money at one time.
Currency war is already a widely observed practice and it is well understood that a decline in a nation’s currency value can offset other difficulties with exports by inviting foreign economies to purchase the local goods at a reduced value.
Currencies are often said to be used in geopolitical conflict as well as certain changes in the value and usage of a currency can mark a change in tides.
As the gold standard was left the “world wars” broke out and at some point the US government made the decision to reign in all the gold held in its nation. Conspiracists will tell you this is why we need bitcoin but there is another possible view that the US intelligence had understood it to be a matter of national security (whereas the population in general was not in a privy enough position to understand this order).
Later at Bretton Woods it was decided the world would accept American dollars as the de facto world money and this was basically the outcome of the conflict.
Gresham’s Narrative and Why Bad Money is Good
I still haven’t found these letters or letter that Gresham wrote the queen with. But for all I can understand he was tasked to explain to her where her wealth went.
I’ve read Machiavelli; he will teach you not to blindly tell the truth to a monarch (but I think he would not dare directly write such words under his own name). He was tasked with not making a fool of her and speaking over her intelligence and he was tasked with informing her such that the subjects livelihoods could be salvaged.
Gresham explained to the queen there is good money and there bad money. Whereas gold or a commodity with value otherwise than money was the good money the mandated fiat printed on to an otherwise lesser valued medium was bad money.
The observation was that the good money left abroad and the bad money stayed.
But this is far more than just a simplification. It is actually hardly true to imply that one money was good and left with the wealth of the nation simply because a bad money was mandated.
It is a causal based explanation of a phenomenon that is itself not causal in nature (much like there is no distinct truth that either the egg or the chicken came first).
I have used the example before of perhaps the information came to the monarchy’s advisors that the gold supply was in for a massive shock in the form of a glut. Or that perhaps the newly found supply of gold was a mine now in the hands of an enemy state (which perhaps itself is nearly allied with another near ally). In such scenarios much like the order of confiscation of gold that the US government enforced it would make sense to abandon a gold based economy out of national security concern.
Oil as Money
Oil itself is a commodity that is necessary for nations and major economies to the thrive. It is one of the cheaper more transportable energy sources and not every nation has perfect domestic access to a plentiful enough supply of it. Thus trade is necessary for these economies to sustain competitive production.
This is not perfectly identifiable as money per se but as oil contracts arise we can revisit the problem of (non) coincidence of wants to understand oil to be a unit of account for the global economy (here we can think of the petro-dollar and the petro-yuan).
When party A has what B wants and B has what C wants and C has what A wants there can be no direct trade made and a new level of security complications arises (ie trust).
It is understood that money allows trade to take place in such a scenario where higher level trust is necessary to avoid.
Between nations that don’t even themselves issue oil, but each does value oil significantly, oil could certainly serve as a settlement medium for this problem (and then the issuer of it and the issuance policies would act like a central banking management system).