Intrinsic Problems

For me, the economy is transaction. Every transaction is part of it. Any transaction is an example of it. If I buy a hamburger, wolf it down, pay up, and leave, that's a transaction.

The "credit theory of money" looks at things differently. It doesn't look at my burger transaction. Or maybe it does, but then it also looks at the $10 bill I used to pay for my meal. And it says that the $10 bill is a promise to pay $10, even after lunch is bought and paid for.

I think that's just silly.

The people who look at money that way are still thinking in gold-standard terms. Intrinsic-value terms. They're thinking the $10 bill isn't gold, so it has to be a promise of gold, or a promise of paper, or a promise of something. It isn't. It's just a medium of exchange. It's a way to transfer value, because it is a store of value.

When I sit down at the counter and order a burger, my words convey an implied promise to pay for the grub. After I eat, when we settle up, I make good on that promise.

That is the medium-of-exchange part of it. Then there is the standard-of-value part of it, which means we call it "the dollar" and it is issued by the Fed. And then there is the store-of-value part which depends on how well they run the economy. And that's the whole thing.

That's it. There are no other promises to think about. There is no more economics to think about. The economics is simple. The rest is philosophy or something.