Currency

After adopting a commodity into use as currency, man begins to lose sight of its fluctuations in value; these fluctuations appear to him to be altogether in the commodities that he buys; he looks upon currency value as stationary, and regards it as a fixed standard by which he can measure the value of other commodities. It is only by comparing the price of one commodity with that of another that we get any idea of value; hence, to regard currency as a fixed, and not as a fluctuating measure, produces the same kind of misconception that one would have of the solar system who regarded the earth as stationary. Until such delusions are dispelled, the one individual can no more understand currency than the other can realize the fact of the earth's orbit. Since there can be no fixed measure for values, obviously it becomes of essential importance that the commodity selected for use as currency should fluctuate as little as possible.

Currency is the tangible instantiation of money as ‘a means to achieve payment’ finality, via the unconditional extinguishment of a monetary lability, typically as the result of a transaction, involving a medium of exchange with a standardized unit of account. Currency always has a standardized unit of account within each currency area. Traditionally payment is made in the form of ‘legal tender’ as coins when used within an exchange to achieve an unconditional settlement with legal finality of the exchange solely via a change of possession. Currency is the medium through which money becomes tangible in form and has objective exchange value. Only a currency can exist as legal tender, within a payment, to achieve an unconditional settlement to exchange with guaranteed payment finality.

Currency is accepted within a deferred payment, when it complies with the Regression Theorem, which states that the value of currency must be traced back ("regressed") to the goods and services it obtains. The theorem claims that at a point in time there was a good with objective exchange value, which is a goods capacity in given circumstances to procure a specific quantity of other goods as an equivalent in exchange and is derived from the human process of valuing individual goods not granted from nature, based on emotion which was then gradually adopted as currency. This also implies that currency must always have intrinsic value to underpin acceptance of a deferred payment across space and time.

Put another way, the subjective exchange value of money (to hold) today takes place using as a starting point the objective exchange values of yesterday. The Regression Theorem holds true for all current and future forms of currency. The second part of the regression theorem explains the genesis of a new currency where none existed before. It explicates how a barter economy—where all economic calculation is conducted ordinally —becomes a monetary economy in which calculation is performed cardinally. The Regression Theorem shows how an economy transitions from a state in which there is only direct exchange—a state of barter—to one where indirect exchange via money is present.

The objective exchange-value of currency must always be linked with a pre-existing market exchange-ratio between currency and other economic goods (since otherwise individuals would not be in a position to estimate the value of the currency ), it follows that an object cannot be used as currency unless, at the moment when its use as currency begins, it already possesses an objective exchange-value based on some other use outside of its existence as currency.

The argument is market participants always have to experience the value of money in some direct way before they can use it as a medium of exchange. In essence the future of money deprecates the ability to create monitory value, which is not bound to a previous human based trade within the real world of goods, services or economic production.

Currency has:

• “use value” or “intrinsic value” or “value in use”,

• "face value" the standard unit of account, or numeraire within a currency area, or the number printed or depicted on a coin, and banknote,

• “exchange value” or mutually agreed “value of exchange”, as represented by the equilibrium of two supply vs demand curves for the commodity and currency mediating the trade payment.

• 'market value' is based upon supply and demand and is the price or amount that someone is willing to pay in the market, and hence is a synonym for 'exchange value'.

Whereas exchange and use value both in simple and in money-mediated commodity exchange (C-C, C-M-C), use value is the beginning and end of the process (producing use value for others in order to obtain use values to satisfy one's own needs), in capitalist transactions (M-C-M), exchange value is the driving force. While face value is simply the standardized numeraire used to measure an absolute rather than relative based value within all exchanges within a currency area.

It is difficult for people to understand the following concepts:

a) that there is no prosperity at the end of permanent currency depreciation, or the destruction of currency via monetary policy debasement, and

b) the concept that the strength or weaknesses of a currency, is simply based on a monetary rule implemented by a central bank that has the monopoly on issuing money, has nothing to do with the real economy or how people behave, or fate, and

c) there has never existed a rational for peoples ongoing acceptance of a irredeemable fiat-currency.

Currency represents Human Trust

Without getting too metaphysical, trust is how we manage the human fallibility of others. Whenever I need to rely on other humans in order to do something each party to a trade or exchange is exposed to their fallibility. To minimize this risk, people choose counterparties based on a complex web of human factors including direct personal reliance (“I know and like her”), organisational brand and reputation (“these guys are big, safe and friendly”), recommendations from others (“everyone at work banks with them”) and so on – all ”trust” in the broad sense.

All currency based deferred payments are predicated upon the acceptance or trust in the currency in circulation. I struggle to see a scenario where ordinary people feel the need to defer the trust in a currency to a unknowable third party, to mediate trade based exchanges between two humans. The regression theorem is the statement of how humans trust a currency, within a deferred payment between two humans and it is not dependent upon the exitance of a currency monopoly.

Currency represents the value, of an informed human decision and freedom to choose, the form of a currency mediated payment...

Currency Competition

If currency is a natural monopoly good, the central banks do not need a legal monopoly. Since we do not even know whether currency is a natural monopoly good and what its optimal characteristics are (for instance, whether it should be of stable or increasing purchasing power), barriers to competition from private issuers prevent us from finding out; the mechanism of discovery is blocked.

A governmental producer of currency is not an efficient natural monopolist unless he can prevail in conditions of free entry and without discrimination. An empirical question which cannot be answered as long as free currency competition from private issuers is not permitted. Monetary history does not provide a clear answer, as every form of monopoly fiat-money has failed without exception. The only operational proof that a fiat monopoly money is more efficient than currency competition and that the government is the most efficient provider of the fiat money would be to permit free currency competition...

Currency must exist solely as the most liquidly of all commodities available within a currency area, that is "accepted" within a differed payment for trade. Only People's freely given acceptance of a currency as payment can define what represents the best currency of all possible commodities, for use within deferred payments.

Currency exchange value stability necessarily implies that there is something by which the 'value of currency' across a deferred payment remains stable in value; stability does not exist in a vacuum. It is generally accepted that commodity price trends mark the stability of the currency, within which they are denominated, as the exchange value within a payment is based upon the supply vs demand of a currency in equilibrium with the goods and services in exchange .

The introduction of private currency competition would allow the markets to settle the question of what represents value of currency in trade stability, without causing harm throughout the economy, as it represents the way of a free market economy.

Although the nature of human creativity does not allow us to predict exactly what will come out of the introduction of competition within currency or even the exitance of a multiplicity of circulating currencies within a currency area economy, it is only logical to conclude that the increased stability and predictability of non-monopoly currencies whose value is base upon private sector economic production, will allow the development of value-creating endeavors that otherwise would not be feasible.

The movement from monopoly debt based money to a private sector economic production based value resents the return of sound money, with a predictable and stable exchange value as the value is now directly measurable via currency area economic production or GDP, not central banksters pixie dust economics called 'monetary policy'..