Thursday, April 4, 2013

Jon Matonis — Bitcoin Obliterates "The State Theory Of Money"

The economic contribution of [Karl Denninger's] essay is that it represents the thesis advanced by German economist Georg Friedrich Knapp in The State Theory of Money (1924), an expose advocating the Chartalist approach to monetary theory claiming that money must have no intrinsic value and strictly be used as tokens issued by the government, or fiat money. Today, modern-day chartalists are from the school of thought known as Modern Monetary Theory (MMT).
Forbes
Bitcoin Obliterates "The State Theory Of Money"
Jon Matonis


3 comments:

Anonymous said...

Matonis should re-read Knapp. Knapp was not an economist. He was a legal historian. In The State Theory of Money he explicitly denied that he was doing economics. That is, his aim was not to explain why people are willing to accept chartal monies, and what gives those monies the value they possess in the economic sphere. He was instead interested in what makes something money in modern states and legal systems, and how those forms of money had evolved from earlier forms.

It is certainly possible that Knapp's implicit presupposition - that what makes something money is the legal status it possesses rather than the economic role it performs - is mistaken. Others would argue that money is as money does, and that to determine whether something is a kind of money you need to understand its economic role. But anyway, that was not Knapp's view.

Anonymous said...

and a response: http://www.bloomberg.com/news/2013-04-04/sorry-libertarians-history-shows-bitcoin-isn-t-the-future.html

The Rombach Report said...

Bitcoin futures and options anyone?