Sunday, May 14, 2017
The origins of money?
“I think it’s a mistake to think you’ll find the workings of modern money by going back to the origins of money.” -- Michael Beggs, quoted in The Myth of the Barter Economy
I agree with Beggs. But the article in which he is quoted, dwells on the origin of money not being barter. That's the least important thing.
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The important thing is to figure out what's wrong with money now, that it creates so many problems for us and for our economy.
Thomas Palley writes:
A major source of confusion in the economic debate over money’s origin is when to begin the story. Hudson has focused on explaining the earliest record of money in Mesopotamian civilization, and has recently hypothesized (Hudson, 2018) it started as palatial credit. The palace issued credit tokens in return for goods, and those tokens could be used to pay taxes. If true, that would be a chartalist story which complements Goetzmann’s (2016) more general credit story. However, it would still be irrelevant for understanding the evolution of modern monetary arrangements, which emerged out of the Western European experience. That is because precious metals came to dominate as money in Western Europe at an early stage, and precious metals are fundamentally at odds with chartalist theory because the state cannot produce them out of thin air.
From page 5 in "The evolution of money debate: functionalism versus chartalism, Schumpeterian dynamics, Gresham’s fallacy, and how history constrains public finance" by Thomas Palley
https://www.econstor.eu/bitstream/10419/213391/1/1040505937.pdf
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