The role of the state and the hierarchy of money

Abstract

This paper uses Minsky's definition of money as a two-sided balance sheet phenomenon to challenge many common positions on the nature, evolution and role of money. His definition is applied to two opposing theories in the history of monetary debates, and it is shown that the Chartalists (as opposed to the Metallists) developed a general theory of money that can be applied equally convincingly to the entire era of state money. This theory is then used to show that the state's power to make and enforce tax laws renders its money the most acceptable form of debt within what can be considered a 'hierarchy' of monies. This leads to some important policy implications as well as a strengthening of the endogenous money position.

Speculative bubbles in Bitcoin markets? An empirical investigation into the fundamental value of Bitcoin

“…According to the claim theory of money Bitcoin constitutes a social relation representing a claim on the issuer. In addition, Bitcoin can be considered as a legal tender with regard to enforceable debt and tax obligations on citizens (Bell, 2001;Dequech, 2013: Ingham, 2004). In the United States the IRS treats Bitcoin as property and consequently, taxable.…”

Franco-German Monetary Relations - Tensions Built Into the Eurozone Core

“…Peníze samy jsou institucí, specifi cky lidským nástrojem, vzniklým ke koordinaci hospodářských aktivit v čase (Keynes,1 Blíže ke sporu mezi zastánci státní/kreditní a metalistické teorie peněz viz Bell (2001), Goodhart (1998), nebo Ingham (2004. V souhrnu metalistická teorie svou deduktivní metodologií lépe odpovídá normativním předpokladům neoklasické ekonomie, proto je v ní obecně preferována.…”

“…Blíže k problematice zajišťování reálných zdrojů pro potřeby státu skrze peněžní systém a reálná omezení tohoto procesu viz Lerner, 1943;Goodhart, 1998;Bell, 2001nebo Wray 2012 měně. Na vztah země jako celku se zahraničím tak skutečně lze použít analogii s fi nancováním domácnosti.…”

A Monetary Theory of Public Finance : The New Fiscal Orthodoxy: From Plummeting Deficits to Planned Fiscal Surpluses

“…The theory of the monetary circuit brings about the rigorous proof of the Lerner-Wray proposition (Bell 2001;Wray 1998), according to which, since taxes destroy money, they cannot be a source of funds. The state imposes tax liabilities to squeeze the private sector aggregate income and therefore ultimately consumption (a rigorous proof of this ultimate consumption squeeze is to be found in Parguez, 2003).…”

“…In the second section, a rigorous proof of the fallacy of the state budget constraint will be presented within the context of the theory of the monetary circuit. The major propositions of the neo-chartalist school (Bell 2001;Wray 1998) can therefore be integrated within a general theory of money (Parguez 1999;Parguez and Seccareccia 2000). Indeed, the postulate of state budget constraint is enshrined in the myth of a moneyless or real command economy.…”