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.
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| 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.
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| 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.”
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| 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.”
#30#
