On Fri, 26 Apr 1996, Paul Cockshott wrote:
>
> What I mean is that the state has, in the absence of a gold
> standard, no obligation to redeem its money. In what sense
> then is the money state debt?
First of all, in an accounting sense. But the state also has to redeem
the money when it is offered in payment of someone's tax liability. I
think we need to be careful in distinguishing "redemption" in the sense
of accepting the currency to extinguish a debt, and "convertibility" in
the sense of guaranteeing the exchange of the currency for some other
asset (say, gold, or foreign exchange) at a fixed rate.
Duncan
>
> Formally, the finance of state expenditure by the issue of
> currency may be borrowing, but in practice, given the non
> redeemable nature of the currency, it is a tax on holders
> of existing money balances.
>
> >> Paul
> >> ----
> >> Is this not a legal fiction?
> >> Is it not better to see seigneurage as a form of taxation?
> >>
> >I don't see that it is a legal fiction. I could choose to use British, or
> >French money, or Japanese money, or gold if I wanted to. Seigniorage
> >results from the government outlawing banks and other potential
> >competitors from issuing small denomination notes, and from reserve
> >requirements that give the government's debt a monopoly of certain functions.
> >
> >Duncan
> >
> >
> >>
> >>
> >
> Paul Cockshott
>
> wpc@cs.strath.ac.uk
> http://www.cs.strath.ac.uk/CS/Biog/wpc/index.html
>
>
>
>