Distinction Between Money and Currency

From P2P Foundation
Jump to navigation Jump to search

Discussion

Raymond Aitken:

"The fallacy of money being a thing with intrinsic value, instead of a social relationship, is also rooted in two unavoidable different perspectives:

(1) that of the individual user of money, and

(2) that of those who manage the payment (monetary) system as a systemic whole (e.g. banks).


See:

Before the age of real-time electronic accounting platforms and digital currencies, the bookkeeper of the centralised community accounting system could not be physically present everywhere and at all times, to record the transactions of all members of the economic community. This problem was solved by transferring the in-ledger credits to off-ledger monetary instruments, in the form of physical objects (paper notes, wood, shells etc). These monetary instruments, otherwise known as “currency” (from the root word to flow), circulated counter-wise to the flow of goods and services they mediate. In effect, currency is not money, but a monetary instrument that conveys information about credit (purchasing/consumption) rights. A currency system is an off-ledger peer to peer decentralised accounting system, which functions mechanically as an analog computer.

Bitcoin is a bit unusual, as it is in fact a decentralised P2P electronic ledger, with each “coin” (piece of code), being a holographically embeded accounting entry in the ledger.

With the exception of Bitcoins and Tally Sticks, most currency systems are vulnerable to concealed accounting fraud, through the issuing into circulation of monetary instruments that are counterfeit claims on the goods and services available in the economy (which results in a dilution of the unit of account function of the currency (inflation). This is the significance of the “printing press”.


*- The fallacy of deposits and Bail-in

The physical nature of currencies together with the conflation between money and currency keeps alive the fallacy of “deposits”. As a result, the accountancy nature of banking and its rigour are rarely brought to bear by system users on the practice of banking. The actual banking system is a hybrid between the two paradigms of money (commodity and credit), by which the banks “cherry pick” from those aspects of each paradigm that maximise their profits, whilst externalizing the risks, losses, and costs of each paradigm onto their users.

In legal terms, money “deposited” in a bank represents an unsecured loan by the “depositor” to the bank. That is the legal basis of “bail-in”. The bank can therefore use these unsecured loans to secure its balance sheet, and since the bank has no legal obligation to pay back the money loaned to it by depositors, it simply “confiscates” deposits to save itself (Bail-in). The fact that this has never before been explained to bank users, might represent a breach of contract under “non-disclosure” could have invalidated the legal basis of “bail-in”, but maybe the recent publicity about bail-in is supposed to represent “full disclosure”?


* The fallacy of loans and reserves

Central bank liquidity and commercial bank reserves represent nothing more than the fraudulently appropriated credit of the nation (the productive capacity of the People). They never had anything to “loan” in the first place, but this does not mean that the liquidity that they peddle is “created out of thin air”. Taxation to pay the interest and principal on the national debt refute the ex nihilo theory of monetary creation. Government bonds securitised by future fiscal revenues attest to this concealed form of literal “debt-bondage” of the population.


* Credit and Debt are not the same thing

When a charge of interest is levied on the mutual credit that belongs to the economic community as a common good, it converts a social relationship into a revenue earning asset, that can be rented out at compound interest and bought and sold in “financial markets”. This is how economically healthy future orientated credit is transformed into toxic past orientated debt.


* The fallacy of 100% reserve banking

Reserve banking, whether fractional or “full” is predicated on money being a commodity that can be manipulated and speculated on within the banking and financial system. The origin of these reserves is debt-bondage of the nation, through the banking system fraudulently claiming the human capital of the nation as their collateral (which regime is enforced by the State).

That is why I prefer to forget about any form of reserve banking. Lets just do accounting and law, and since there exist a longstanding mutual corruption between governance and finance, we need to establish banking as a civil society (Third Sector) public service." (email, August 2015)