Posted by: graemebird | October 20, 2011

Value From Brute Force Unrelated To Legal Tender Laws….

Contrary to Misean economic theory, the value that fiat currency holds does not come primarily from its history as a commodity money.  The value that the paper money holds does come from brute force, but not primarily from the brute force, as specified by legal tender laws.

The value of paper money comes primarily from their tax voucher status. That really is the end of the mystery of how paper can have value. Its the taxing power that does it for the most part.

This does not sound right or good does it? It doesn’t sound either Misean, or Randian.  That the necessary value of a medium of exchange can be created through brute force? Not anything a good objectivist might like to admit to.

But it is nonetheless a fact, and a fact that we must take into account when we go in for monetary reform.  While we have a government, it is quite legitimate to maintain a proportion of our money supply as fiat money.  Its a good safeguard against mischief by international bigshots.  At the same time having a proportion of the money supply in fully-backed commodity-money is a safeguard against our government abusing our fiat currency.

So each is a safeguard for the other, and we need both in our quest for good money.  But fractional reserve can never have any part of an honest quest for hard money.  Nor can government borrowing ever be acceptable. Nor can money-with-interest attached ever be okay.


  1. I think I have worked out why, for over 40 years, no human on earth, of whom I am aware, who describes themselves as a professional economist, political scientist, anthropologist, sociologist, Cultural/Media/Blah Studier, legal academic has said anything that someone interested in political economy would love to hear, or could learn from. The last was arguably Timothy O’Leary said “Turn on, Tune in, Drop out”. They never ask The Question.

    The Question, let alone its answer, might well have been redundant had O’Leary’s mantra grown legs. But O’Leary failed to add, that unless you have hot and cold running access to the most vacinerous neuropschyopharmacologists, and equally hot and cold running access to $50 bill, you can’t avoid The Question.

    I find The Question is better approached by its Answer. And the Answer to Political Philosophy’s most burning question, which is never asked is that ‘Yes, Virginia, Might Is Right’. Why don’t any of these famous and rich academic gurus ever say this? Imagine how much more informed and efficient we will be from this point on.

    Should Palestine be admitted to the UN? The first question must be, how much violence can it muster, either among its own people, or friends it can rely on to at least hurt, probably maim, and of course kill, just so Palestinians can have a State. See? Doesn’t the whole issue become so much clearer, and time needed to spend on it, suddenly reduced from 60 years to 6 minutes. No, your dorks, Palestine should not be admitted to the UN.

    From right now, at your next JD seminar, when the resident Fauxborigine thinks he is splitting the atom by saying ‘Always Was, Always Is, Always Will Be Aboriginal Land’, your Professor will now turn to her, and demand, “how many spears and nulla nulla you got? Best you get Larissa Behrendt to up the number of those classes, if she wants this ‘Aboriginal Sovereignty’ lark to kick off. Ethical issue: Are we obliged to tell her many .303s we’ve got?

    And finally, when that Friday afternoon Professor aks, like butter wouldn’t melt in his month – “Given the failure of democracy to tackle climate change, what other strategies should be contemplating”? I will put up my hand like the wind, and say, “Professor, we have two options”. The 1st is stealing all the militarie’s weapons, and doing what we like. And the second is move, preferably without stealing guns, but we’ll probably need our own if we move to Alaska, Siberia, or Tasmania.

  2. Well might appears to make right in a lot of cases. But its only that proportion of interaction where this is not the case that makes civilization possible. Otherwise we would just have to accept the righteousness of the banks continually stealing from the society until the US and Europe collapsed into anarchy and violent occupation.

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