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> From: John R. Ernst <ernst@PIPELINE.COM>
> Isn't
> gold production a "natural monopoly"? Do not the firms producing
> the money commodity have to be natural monopolies? Or, could any
> commodity be the money commodity?
>
It is a natural monopoly in the sense that labour required
to produce gold is high due to natural circumstances. This means
that ownership of unusually productive gold bearing land can
yield rent.
As to whether the firms producing the money commodity have to
be natural monopolies. Clearly 'money', whether as a commodity
or not, must have some mechanism to ensure that it is in short
supply, i.e., that it can not be forged at will.
For state currency, we have a legal monopoly; for gold and silver,
the natural conditions of production are their own certificate of
authenticity.
Where a natural monopoly garners rent, the ability to issue money
accrues seigneurage.
When we deal with modern forms of electronic money like Visa cards,
what prevents forgery here? At one level, obviously the care that
Visa take to make the production of forged cards difficult, but at
another level what stops anybody else stepping in and issueing their
own cards?
For the process or doing so is surely profitable, the interest that
Visa charge is merely decapitalised seigneurage.
Is it that the capital necessary to set up an international credit
card network is its own certificate of authenticity?