The national debt surpassed $16 trillion for the first time yesterday and you may hear a lot of people talking about how this is a disaster waiting to happen or construing it as something really terrible and horrible, so I wanted to give you some facts and information about what that “debt” really is so that you are well informed and can talk about it intelligently.
First it’s important to understand that the U.S. is not on a gold standard or some system of convertibility such as a fixed exchange rate or something, so there is nothing “backing” the U.S. dollar. What gives the dollar value is the fact that it is the only thing accepted by the government for the payment of taxes and since most people need dollars to satisfy some tax liability this creates demand for the currency. Furthermore, dollars circulate widely and are used as a “unit of account” or means of exchange because our economy doesn’t transact in barter, but rather, we use currency because it’s simpler and easier.
Since there is nothing backing the dollar the act of spending by the government merely involves electronically crediting bank accounts with dollars (or debiting them, when it collects taxes) and there is no limit to the degree that it can do this. All dollars in the world today, whether they be held by individuals, firms or foreigners (and even foreign nations) are created when the government spends and that is the ONLY way that dollars can come into existence. Furthermore, in order for the non-government (you, me, businesses, rest of the world, etc) to have dollars in our pocket or bank account the government has to spend more than it taxes. If it did the opposite—tax more than it spent—then all dollars in the world would soon disappear.
The $16 trillion national “debt” is not really a debt, but merely the sum total of all dollars spent minus all taxes collected over the past 234 years. In other words, $16 trillion of net dollars have been created in the past 234 years and they are floating around out there in the global economy. There are all kinds of reasons that the government spends, but the main reason is that people, firms and foreign nations desire to hold dollars so they end up selling their goods and services and labor to the government in order to accumulate and “have” dollars. This is really what creates deficits, not some arbitrary decision by the government to spend such and such, but rather, the desire by people to “net save” in the government’s unit of account, namely, the dollar.
While the $16 trillion may be a debt or liability to the government, it is not a liability it can never meet because it is denominated in its own currency. And what kind of liability is it, really, because as I said before it is not redeemable for gold or some other currency on demand? Well if you look at a dollar bill it says right on it, “This note is legal tender for all debts, public and private.” And in that promise, it’s the “public debt” part that really is the most important because it’s basically the government promising you that it will accept its paper for the payment of tax liabilities (public debts). So, again, it’s not a promise it can’t keep. Not to worry.
Now we have established that the debt of the government ($16 trillion, whatever) represents a debt or promise that the government has absolutely NO PROBLEM satisfying or keeping, but remember, for every debt (liability) there is a credit (asset). Then who holds the asset side? That’s us, the people. The government’s debt equals the private sector’s asset. The $16 trillion of dollars spent in excess of taxes collected reside with the public and the public holds these dollars, mostly, in the form of Treasury securities that are like government savings accounts or CD’s (Certificates of Deposit). If the government were to “balance” its books or eliminate its debt, it would have to take back, probably through taxation or some other confiscatory measure, those $16 trillion that the public holds. That would reduce the public’s wealth by $16 trillion. That is the ONLY way that the government can eliminate its debt. Would that be a good thing? Hard to see how it would, yet that’s what people are calling for.
So that’s it, an explanation of the government “debt.” And the next time someone tries to scare you about this or point to that Debt Clock in Times Square, you ask them where the Asset Clock is. There is none, but there should be, because for every liability there is an asset. It’s just basic accounting. The fact that there is never a discussion of the asset side of the balance sheet is proof that the fear mongers who talk about the debt are either ignorant or intentionally trying to manipulate you into believing something that is not true.
32 comments:
something like $4.5 trillion is owned by foreigners.
Y,
Here:
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
rsp
Hey Mike,
"If the government were to “balance” its books or eliminate its debt, it would have to take back, probably through taxation or some other confiscatory measure, those $16 trillion that the public holds. That would reduce the public’s wealth by $16 trillion. That is the ONLY way that the government can eliminate its debt. Would that be a good thing? Hard to see how it would, yet that’s what people are calling for."
As you know the Government doesn't have to tax or confiscate to repay the debt. It can repay it by using Proof Platinum Coin Seigniorage (PPCS)!
Hey Mike,
"If the government were to “balance” its books or eliminate its debt, it would have to take back, probably through taxation or some other confiscatory measure, those $16 trillion that the public holds. That would reduce the public’s wealth by $16 trillion. That is the ONLY way that the government can eliminate its debt. Would that be a good thing? Hard to see how it would, yet that’s what people are calling for."
As you know the Government doesn't have to tax or confiscate to repay the debt. It can repay it by using Proof Platinum Coin Seigniorage (PPCS)!
Joe-
I know. And you have been a big promoter of this idea. Keep pushing!
Watch out for the doomsdayers!
The people who hold these bonds expect to be paid in "dollars" which purchase goods and services worth approximately the face value of those bonds. Those goods and services will come from other people in the "non-government sector" (what a loathsome term). "We" owe it to "ourselves" only in the sense that "we" and "ourselves" are completely different people.
Further, creating "dollars" with keystrokes cannot magically create the goods and services promised as $100 trillion in unfunded entitlement liabilities. All that creating "dollars" with keystrokes can accomplish is to shift purchasing power to the first recipients from the holders of existing money. MMT is a scam that no one believes.
"There are all kinds of reasons that the government spends, but the main reason is that people, firms and foreign nations desire to hold dollars so they end up selling their goods and services and labor to the government in order to accumulate and “have” dollars"
Could someone plz explain...here in ths US, when someone is employed in the private sector, do we sell our labor directly to the government, even though working for a private employer? I watched the "WM speaks at PK conference" video and that seemed to be what WM was saying so I thought I would ask for clarification. thx
There are certainly plenty of "dollars" floating around and there is no need for any more. Further, the market could provide all the sound private money anyone could ever need except that the government decided it wanted a monopoly on the fiat funny money supply and severely hinders private money with sales taxes and capital gains taxes, among other forms of harassment.
" the "non-government sector" (what a loathsome term)."
LOL! Bob you're a trip man! ;)
Could someone plz explain...here in ths US, when someone is employed in the private sector, do we sell our labor directly to the government, even though working for a private employer? I watched the "WM speaks at PK conference" video and that seemed to be what WM was saying so I thought I would ask for clarification. thx
IN the US, most everyone is paid in USD, which is a tax credit from the US govt. The US govt is the sole supplier of the currency and govt uses this monopoly to allocate private sector resources to public use iaw policy based on appropriations made by a democratically elected legislature and presidential approval, which the legislature can override.
Usually this is only a fairly limited portion of GDP, but in extremis like war, the govt can increase its expand its use of private resources through changes in policy, as it did during WWII.
Bob,
" the goods and services promised as $100 trillion in unfunded entitlement liabilities."
Look, most of this includes Social Security Payments (probably most of it) and Medicare.
These "promises" come due when people reach age 65.
If you reach 65 you will probably live for another 25 years.
If your 100T number is to be believed, over 25 years that is only 4T per year or about 25% of current GDP.
So what you are saying is that over about a 25 year period, between senior citizens healthcare and the consumption they do with their SS payments, they will account for about 1/4 of our economy....
Is this unreasonable?
If so, then how???
How is this assumption unreasonable?
The healthcare industry in general is regularly reported at 15% of GDP (mostly going to end of life issues), and then another 10% of GDP for seniors to eat and perhaps consume a few creature comforts???
Why is this unreasonable????
rsp,
Tom Hickey:
If the government were to “balance” its books or eliminate its debt, it would have to take back, probably through taxation or some other confiscatory measure, those $16 trillion that the public holds. That would reduce the public’s wealth by $16 trillion.
You are conflating nominal dollars with wealth. Dollars are not wealth. They are means to acquire wealth. If everyone's cash balances decreased by say half, and all prices fell by half, then everyone would be as equally well off as before in real terms. Their standard of living, which is measured in real terms, would be the same.
I am not better off if I have twice as many dollars in the face of doubled prices. More dollars would only allow me to acquire more real wealth if prices do not rise by as much as the rise in dollars, i.e. only if real production increases.
That is the ONLY way that the government can eliminate its debt. Would that be a good thing? Hard to see how it would, yet that’s what people are calling for.
This is false. Not that I endorse the following, but the government could also eliminate its debt by the Fed creating $16 trillion of new additional dollars and purchasing the entire outstanding debt, and then declaring it will not seek interest or principle payments from the treasury. It can buy up the debt with new dollars, then tear up the debt contracts. Or, the treasury can be the party to initiate the tearing up of the debt contracts, by declaring it will "default" on the debt the Fed now owns. Either way, it's the government moving debt from one hand to the other hand, and then eliminating it.
The main problem with MMT is that it focuses too much on the accounting aspects of the monetary system. It doesn't contain any analysis of how to connect these accounting relations to the market process. So we see extremely sloppy usages of the word "wealth" that fail to distinguish between dollars and real wealth, that doesn't grasp that a reduced quantity of dollars does not necessarily imply reduced standard of living, nor how an increased quantity of dollars does not necessarily imply an increased standard of living. Not to mention the complete and utter absence of the concept of economic calculation, of inter-temporal and cross sectional market coordination, and the importance of relative demands and relative prices which crude aggregates mask and obfuscate.
While it is true that the US technically cannot default on its debt, MMTers have to be aware that the US as of now is in the position of creating the world's reserve currency. This is a contingent privilege, not a necessary one. If the US does not get its house in order on the fiscal side, then even though the Fed can technically "bail out" the Treasury and prevent official default, the Fed cannot enforce US dollar world currency reserve status at will. If the treasury continues to behave as if money grows on trees, then as the Fed continues to inflate to prevent official default, especially once interest rates start to rise again, then the Fed and thus the US government will risk losing its reserve currency status, and NO amount of additional money printing after that will be able to replace the lost standard of living that will come from no longer controlling the world's reserve currency. This is why worrying over the fiscal situation DOES have merit.
MMTers are being extremely irresponsible for pointing out the banal truth that the Fed can print as many dollars as it wants. Yes, that's true, but it is only part of the story. Too much inflation, and the world will no longer use dollars as reserve currency, and the portion of wealth produced by the world that we now enjoy merely by virtue of the dollar being the world reserve currency, will disappear, and no amount of additional money printing will get that back.
You are conflating nominal dollars with wealth. Dollars are not wealth. They are means to acquire wealth.
I guess you don't have a portfolio or keep books with a chart of accounts, Major, or you would know the difference between financial wealth like cash and govt securities and non-financial wealth like RE and other physical assets.
You are conflating nominal dollars with wealth."
No, he's not. Tom knows the difference, but it's clear you don't. It apparently doesn't occur to you that if there are no dollars or it's functional equivalent, there would be no wealth at all measured in those terms.
Wealth would have to be measured in some other way by some other metric. So far, this appears on;y to be "different" not "better."
The dollar is just a way to "measure" wealth and keep score of how much one has.
If the level of currency available is not matched and maintained with the level of production and consumption, then price distortions or adjustments will/must occur.
If we don't expand the supply of funds avilable for spending when production/consumption expands, the price of goods may go down (deflate) but more likely, economic activity will contract, because economic activity is a direct function of funds available for spending and the propensity to spend the funds.
"Dollars are not wealth."
Rephrased, "a tape measure is not inches".
No shit. Dollars are a "measure" of wealth.
Dollars can be a store of wealth also, albeit only one class of it.
Paul "Dollars can be a store of wealth also, albeit only one class of it."
That is exactly what I say if you look. There are financial and non-financial assets in a portfolio that makes up one's balance sheet, and the equity (assets - liabilties) is one's equity, aka "net worth" and "wealth." This shows up on the balance sheet under various accounts, some as cash, some as fx, some as tsys, some as other securities, some as equities, some as commodities, which may be financial (ETF's) or non-financial (physical possession), real estate, and other real property, e.g., art, etc. Then there is the value of intellectual property, which from some people is extremely significant. All this is recorded on the balance sheet nominally in the unit of account.
The idea that what on holds in one's portfolio at any particular time free and clear, e.g., cash or T-bills and other govt securities, is not part of one's wealth (net worth) is bonkers for anyone with a rudimentary understanding of accounting. Portfolios are in constant flux, with one's cash and T-bill position expanding and contraction with liquidity preference and transitional circumstances.
Tom,
Yeah, I agree with you. It's The Major I have difficulty agreeing with.
@Tom Hickey
Thank you for yr response which was:
"IN the US, most everyone is paid in USD, which is a tax credit from the US govt. The US govt is the sole supplier of the currency and govt uses this monopoly to allocate private sector resources to public use iaw policy based on appropriations made by a democratically elected legislature and presidential approval, which the legislature can override.
Usually this is only a fairly limited portion of GDP, but in extremis like war, the govt can increase its expand its use of private resources through changes in policy, as it did during WWII."
If I understand you correctly, a private sector employee then is not paid directly by the US government and therefore does not accuire net assets (ie direct payment made by the US government) when paid for their labor. Is this correct?
Also, then at what point does private sector employment become a service to the public sector, for the purpose of taxation? If you take the example of the "buckeroo" which LR Wray and WM use to explain how a currency issuer operates, it appears the school (government) pays the students not the employer, who receives the laabor of the student. In the PK conference video, part III, WM states, starting about the 02:25 mark, that looking for "paid work" ie work that pays the governments' currency, puts one into the public sector. So, is all work in which payment is made in the governments' currency considered public sector work? The second part of yr comment above says no, but I haven't yet grasped, outside of direct government employment, where the movement of private sector resources (labor) to the public sector occurs for the purposee of taxation. WM states the point of taxation is to move private sector resources (labor) to the public sector. As we are all psy income taxes, are we not all then considered public sector workers?
It's the words we use to explain abstract concepts (ie words such as public and private) that may cause confusion.
If I understand you correctly, a private sector employee then is not paid directly by the US government and therefore does not accuire net assets (ie direct payment made by the US government) when paid for their labor. Is this correct?
Not correct because banks are public-private partnerships that include a franchise to denominate credit money they generate in the unit of account, with access to the central banks for settlement in currency. There is no way to distinguish between money issued by the government by crediting private accounts and credit money generated by banks by crediting bank deposit account based on credit extension. The reason that taxpayers can use the combine sources of money in payment of taxes is because banks have access to currency through the central bank.
Also, then at what point does private sector employment become a service to the public sector, for the purpose of taxation?
Just look at the percentage of GDP that went to moving private resources, including the employment involved, to public use. It's govt expenditure less interest payments and transfer payments.
While its true in a sense to say that everyone that is paid in currency is 'working for the government," it is only true in the sense that taxpayers need to accumulate enough of the currency to pay taxes. If there were alternative monies available, taxpayers might only obtain the amount of currency they need to satisfy govt obligations, and use other monies for the rest of their affairs. But in most modern economies, this is not an option, so everyone accepts currency (state money) pretty much exclusively.
Warren's point is that the purpose of state money is to move private resources to public use. Therefore, use of the currency has to be mandated directly or some other reason has to be manufactured to ensure that markets using currency exists so that government can transfer resources to its use. In moder states, taxation creates the need to obtain currency rather than mandating use.
As we are all psy income taxes, are we not all then considered public sector workers?
In the sense that we have to obtain the currency, which allows government to transfer resources to public purpose instead of households or firms. Obviously, govt has to leave enough in non-govt hands to create the market that it needs for obtaining these goods without confiscation or direct levy (as was done historically may many if not most regimes). Of course, govts still can obtain resources through confiscation and levy and do do this, either in extremis such as war, or through penalties.
In this sense, governments still "own" everything. Representative democracies have just bridled this within certain boundaries. In extremis, those boundaries are dropped based on the justification of public purpose, such as national security or emergency, which trump all claims. Libertarians may hate this, but this is the way it is, and the majority wants it that way.
Major,
The point is the government can spend without that necessarily leading to inflation beyond the standard target of 2%. Yes if the government created price inflation like crazy then that would be a problem. You and Bob simply assert that government spending as recommended by MMT leads inevitably to price inflation, without ever bothering to prove it.
Anonymous:If I understand you correctly, a private sector employee then is not paid directly by the US government and therefore does not acquire net assets (ie direct payment made by the US government) when paid for their labor. Is this correct? If you are being precise, this can be correct. It depends on how the private sector employee is paid. If your boss pays you in cash or T-bonds, the private sector employee does acquire NFA, currency. If not, not. Simple as that.
"Not" is usual: Usually people are paid with checks or by crediting their bank accounts. So they're getting bank money, bank credit. If they want, they can exchange this for dollar bills at the bank, and then they've acquired currency, while the bank has lost some.
But bank credit money & government money has to be made indistinguishable this way for practical purposes; it isn't indistinguishable by nature. For instance, personally I've accepted money-market fund checks - which are slightly more risky than ordinary bank checks - at the height of the 2008 crisis there was one such fund that could not redeem them at par & the government did not make them indistinguishable/ trade at par.
As we are all pay income taxes, are we not all then considered public sector workers? It is not paying taxes that makes us public sector workers (by extension) - but being paid in dollars that makes us "work for the US government" - that's how US government employees are paid.
Tom Hickey:
You are conflating nominal dollars with wealth. Dollars are not wealth. They are means to acquire wealth.
I guess you don't have a portfolio or keep books with a chart of accounts, Major, or you would know the difference between financial wealth like cash and govt securities and non-financial wealth like RE and other physical assets.
I do have a portfolio, but I know that if my cash goes up because of inflation, and prices rise accordingly, then the real value of my portfolio is no greater than it was before. Similarly, if the cash portion declines, and prices fall, then the real value also does not fall.
In other words, I never consider myself wealthier if only the nominal value of my investments increases. I always correct it for inflation, i.e. loss of purchasing power of money.
I guess you don't understand economics enough to know the difference. If you did, then you wouldn't have said people are ipso facto worse off by virtue of owning less cash. You didn't take into account prices
paul:
You are conflating nominal dollars with wealth."
No, he's not.
Yes, he did.
Tom knows the difference
He didn't show he understands the difference, because he claimed that a reduction of cash out of the economy by $16 trillion would reduce the wealth of people by $16 trillion. But dollars are means to acquire wealth.
but it's clear you don't.
How can that be "clear" when I was the one who brought the difference up in the first place? Oh that's right, you're just playing a childish game of repeating my statements back to me. Right.
It apparently doesn't occur to you that if there are no dollars or it's functional equivalent, there would be no wealth at all measured in those terms.
I didn't say anything about there being NO dollars. Please try to keep up. Even if there were no dollars, there would still be real wealth. People would spontaneously use another commodity as medium of exchange. It's not like they'd wait around with the hands in their pockets, not knowing what to do.
The dollar is just a way to "measure" wealth and keep score of how much one has.
Right, and that's why it is silly to say that a change in the YARDSTICK of wealth somehow is a change IN wealth itself. It would be tantamount to claiming that if there is a sudden change in official lengths on yardsticks, that the real lengths of things would change.
If the level of currency available is not matched and maintained with the level of production and consumption, then price distortions or adjustments will/must occur.
Of course you'd have to parrot this nonsense. It is a fallacy that the quantity of money has to rise (fall) in such a way that it is "matched" with the rise (fall) in production. Gradually falling prices and costs in an economy where production outpaces inflation, is not "distorting" of prices. What is "distorting" is anything that causes a deviation away from totally unhampered and unadulterated free market prices. That means non-market central bank activity.
If we don't expand the supply of funds avilable for spending when production/consumption expands, the price of goods may go down (deflate) but more likely, economic activity will contract, because economic activity is a direct function of funds available for spending and the propensity to spend the funds.
False. If that were true, then Zimbabwe would be the most wealthy nation ever.
Economic activity is not a direct function of how much money exists. It is a function of RELATIVE prices and economic coordination.
"Dollars are not wealth."
Rephrased, "a tape measure is not inches".
No shit. Dollars are a "measure" of wealth.
The rephrase is wrong. A correct rephrase would be "A tape measure is not that which is measured."
So much ignorance in one post. Kudos.
y:
Major,
The point is the government can spend without that necessarily leading to inflation beyond the standard target of 2%.
Did you not read my posts? I mentioned this. I get the technical point being made. But I added a point that is not being addressed, which is a point that lends SOME credence to the worry warts over the fiscal situation.
Yes if the government created price inflation like crazy then that would be a problem. You and Bob simply assert that government spending as recommended by MMT leads inevitably to price inflation, without ever bothering to prove it.
There is no one monolithic "recommendation by MMT" regarding inflation. Every individual has their own subjective values on how much paper money the state should create, MMTers included.
I did not "assert" anything about inflation. You're straw manning me.
"So much ignorance in one post. Kudos."
Pot.Kettle.Black.
"he claimed that a reduction of cash out of the economy by $16 trillion would reduce the wealth of people by $16 trillion."
It would. No doubt about it. It would directly and immediately remove $16 Trillion dolars in financial wealth from the economy. Net worth on balance sheets would decline by 16 Trillion. Financial wealth is wealth because it can be exchanged on demand (willing buyer/willing seller to avoid further silly side arguments) for other forms of wealth.
Further, if the economy had no net cash there would be a drastic reduction of liquidity. Current estimates put the total wealth in a ball park of $200 Trillion. The actual number doesn't matter much to the argument. Hard to buy stuff if you don't have any cash.
A 16 Trillion reduction in liquidity would drastically reduce demand in the economy as a whole. As a result, the ratio between the value of paper wealth and the value of financial wealth (leverage) would decline drastically because the value of most goods and services is directly a function of the ability of people to buy those things. Take that ability away and paper value (wealth) declines.
Or did you not notice that when people could no longer afford to buy houses the value of said houses dropped drastically.
Translate that dynamic to the economy at large and then talk to me about wealth. At that point the only things that would have value would be food, guns and ammunition.
Now talk to me about the value of authentic Elvis or Marilyn Monroe paraphenalia, which would be pretty much worthless in your brave new world.
Major, that's what portfolio shifting is about. People who think like you don't hold a cash postion long after closing out one inflation hedge to move into another. That's a portfolio management strategy. I am not disagreeing with that strategy when one assesses that inflation is a problem.
Paul: "a tape measure is not inches".
Major: "A tape measure is not that which is measured."
Pretty revealing... some equivalencies I see:
Paul: "a tape measure is not inches" = Aristotle: "Nomisma by itself is a mere device which has value only by nomos (law) and not by nature;"
Major: "A tape measure is not that which is measured." = Mat 26:15 "Now they weigh for him thirty pieces of argurion."
This is classic "East vs West" conflict that goes back 1000s of years.... Paul is of the West and law, the Major is of the East and metal.
Looks like the West won the last major battle over this issue that went to a hot war ... the metal-lovers are still seething with anger...
DEBT IS SLAVERY TO THE DEBTOR,plain and simple and the fractional reserve system luvs to enslave its subjects thru infinitum interest payments with the principal created out of thin air, now the new student loan deal with payments extended out for 50 yearas, with infinitum interest costs ...reminds me of a Who song lyric, "meet the new boss, same as the old boss". The centralist banking system uses the illegal ss branch of the govt called the IRS to harrass and strong arm any of the cattle who refuse to go to the slaughter house, the game is rigged as Elizabeth Warren said last night, and as the late Carlin was quoted about the american dream " the owners of this country know the truth about the american dream, because you have to be asleep to believe it".
Rage on Mike -
the problem is with the hoarding of the treasury accounts which are marketed to the masses of people as "borrowed debt money from country XYZ"
hoarders of US treasuries - their bank accounts are too big
do you want stimulus - get them to spend it.
The good news is that all USD Treasury holders like OPEC, UK, Japan, China, etc are all currency borrowers of the USD. They only traded garbage to us and we allowed them access to our goods markets via a USD treasury account.
They are forever ( at least in terms of trillions ) tied to the dollar, tied into our economy, and can never get out of USD unless they create a mountain somewhere else equivalently greater than the trillions they have in USD.
Oil will also never be in Euros or Yuan since in the past 10 years we have another trillion dollar USD user / member to join - China.
To get back to that 1998 "magic" requires some serious "GRIDLOCK" - but the Republicans control more than 50% of House and Senate and probably more than 50% of Obama's though processes due to his beliefs against spending.
Does anyone remember "RUKEYSER REPORT" 1999 ? Gridlock is where it is.
"…and as the late Carlin was quoted about the american dream"
Ahh the great George Carlin. Talk about someone who could see bullshit coming a mile away.
Major Freedom, the problem, the reason for these interminable disputes is that what you (Austrian/commodity/ metallist/neoclassical) call "money" is not what (institutional/Keynesian/chartal/MMT)ers call "money". Each side says the other's "money" is a figment of the scientific imagination. The difference is profound, categorical. It's like mistaking "a friend" for "the friendship", or worse. It would be nice if we could at least achieve some agreement on what we are talking about.
What do you think money is, and where does it come from?
******
By the way, y, looking at an old thread, I noticed you expressed some interest in the Ingham book I recommended. Don't think it is free online anywhere, but here is a relevant paper by him : Babylonian madness: on the historical and sociological origins of money . His & others' contributions to the Mitchell-Innes conference volume are also enlightening. Credit & State Theories of Money: The Contributions of A. Mitchell Innes.
What do you think money is, and where does it come from?
Bob Roddis has already explained that in his view it is dug out of the ground. I wonder how many Austrian economists and Libertarians think that, too.
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