One of the problems with talking about things other people either don’t know anything about, or (more often) who are operating within a different “paradigm” (“a philosophical and theoretical framework of a scientific school or discipline within which theories, laws, and generalizations and the experiments performed in support of them are formulated”) is that matters can often get . . . confused. People often use the same word with different meanings, while some even change the meaning of words within a single sentence, sometimes without realizing they are doing it.
|It's still money.|
Take, for example, the term “money.” Within the paradigm established by the Banking Principle, “money” is defined as “anything that can be accepted in settlement of a debt” (“all things transferred in commerce”). If you carry a chicken to market and trade it for a sack of potatoes, that’s money. If you pick up a bag of onions and promise the onion vendor “I’ll bring you a duck next week for this,” that’s money. If you give a dollar bill for a loaf of bread, that’s money — money is all things transferred in commerce, and that means all things.
In the paradigm established by the Currency Principle, however, the only “money” in any of the transactions in the above example is the dollar bill. That is because the Currency Principle defines “money” as “officially recognized money that passes current in the economy.”
Caveat. That is not the official definition of money under the Currency Principle, but it’s a distillation of the official definition, that money is something generally accepted as:
· A medium of exchange,
· A measure of value,
· A store of value, or
· A means of payment.
The key to understanding the difference between the Banking Principle and the Currency Principle is found right away. In the Banking Principle, money is THE medium of exchange, while in the Currency Principle money is A medium of exchange. From this all the other differences flow.
|Keynes: the State has the power to re-define reality.|
For example, if money is the medium of exchange, nobody has to decide what, specifically, constitutes “money.” If a contract was entered into and fulfilled, there was money. As long as all parties to the agreement were satisfied, who cares whether what took place conformed to an unrelated party’s idea of what was fair or just? Butt out, it’s none of his or her business.
If, however, money is only one of many possible media of exchange, then some authority has to decide what money is . . . giving power to that third party to decide whether a contract is valid, despite what the actual parties to the transaction decide. Not surprisingly, this “monetary moral relativism” is embodied as the first principle of Keynesian monetary theory. As the Great Defunct Economist declared in the opening passages of A Treatise on Money (1930), that he intended as his magnum opus (until Friedrich von Hayek shredded it . . . but missed the biggest errors),
It is a peculiar characteristic of money contracts that it is the State or Community not only which enforces delivery, but also which decides what it is that must be delivered as a lawful or customary discharge of a contract which has been concluded in terms of the money-of-account. The State, therefore, comes in first of all as the authority of law which enforces the payment of the thing which corresponds to the name or description in the contract. But it comes in doubly when, in addition, it claims the right to determine and declare what thing corresponds to the name, and to vary its declaration from time to time — when, that is to say, it claims the right to re-edit the dictionary. This right is claimed by all modern States and has been so claimed for some four thousand years at least. It is when this stage in the evolution of money has been reached that Knapp’s Chartalism — the doctrine that money is peculiarly a creation of the State — is fully realized. (John Maynard Keynes, A Treatise on Money, Volume I: The Pure Theory of Money. New York: Harcourt, Brace and Company, 1930, 4.)
It doesn’t take a genius to see that Keynes’s theory gives total power over every aspect of life to the State. All contracts being by definition “money contracts,” Keynes was saying that the State will decide whether or not a contract has been fulfilled. A kid offers to mow a neighbor’s lawn for a pass at the local amusement park, and — according to Keynes — the State can step in and say, “Sorry. The rate for lawn mowing is $10. You cannot accept a pass at the amusement park worth $20. Furthermore, lawn-mowing is reserved for those licensed in lawn care, and you must be 18 years of age. You are only 15 years of age.”
|Lookin' at hard time on the Rock for defying the State.|
It does no good for both the kid and the neighbor to protest that both were satisfied with the deal. As Keynes declared, “It is the State or Community [that] not only . . . enforces delivery, but also which decides what it is that must be delivered as a lawful or customary discharge of a contract.” Think this is an exaggeration? Be careful where you open a lemonade stand. . . .
The bottom line here is that if a system (such as that of Keynes) has as its only absolute the presumption that there are no absolutes — which is what pure moral relativism is in essence — and that the meanings of words can be changed at will to coerce others, then that system cannot be said to respect human dignity.
It’s a question of power. “Power” is defined as “the ability for doing.” If you are only able to “do” at the behest of another, then you are a slave . . . defined as “A person who is wholly subject to the will of another.” You may only engage in commerce if the State says so, and on the State’s terms? Guess what. You’re a slave, however the State chooses to “re-edit the dictionary.”