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The next thing you know the Establishment will be saying that the Bank of England is hotbed of money cranks.
2 comments:
Anonymous
said...
Very standard account of money as emerging to meet the demands of trade and avoid the necessity of barter and spot exchanges. Although he finesses the topic, it is clear that the classification of a pound note - or other form of BoE issue - as an "IOU" is only a vestigial honorific dating back to an earlier system when such notes were redeemable. He sees the value of money as residing only in a persisting pattern of expectations: the fact that people continue to have the confidence that its market exchange value in the future will resemble its exchange value in the recent past. He sees one role of the central bank as being to maintain that confidence through various means - presumably by seeking to manage inflation expectations.
2 comments:
Very standard account of money as emerging to meet the demands of trade and avoid the necessity of barter and spot exchanges. Although he finesses the topic, it is clear that the classification of a pound note - or other form of BoE issue - as an "IOU" is only a vestigial honorific dating back to an earlier system when such notes were redeemable. He sees the value of money as residing only in a persisting pattern of expectations: the fact that people continue to have the confidence that its market exchange value in the future will resemble its exchange value in the recent past. He sees one role of the central bank as being to maintain that confidence through various means - presumably by seeking to manage inflation expectations.
He uses the dupe a dope argument for why fiat money has value, always a bad move. The chartalist explanation is the only one that fits.
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