Re: Commodity Money vs Fiat Money

"Commodity money and fiat money are
commonly viewed as two quite different
kinds of money. The transition from
commodity to fiat money occurred in the
mid-20th century when the State ended the
gold backing of its notes."
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--------------------------
No, commodity backing for bank credit in
international trade settlement does not
alter its fundamental nature as bank
credit.
-

"When the State declares what kind of
asset it accepts in payment of taxes, it
assumes a liability equal to the
outstanding stock of those assets."
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--------------------------
No, because the "assets" do not derive
exclusively from government spending, but
represent bank credit extended to not
only government, but also to private
enterprise and to consumers.
See the diagram at
http://www.geocities.com/new_economics/conrad-borrowing-2005.gif
-

"The former is referred to as commodity
money, and the latter as fiat money."
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--------------------------
No, until quite recently historically,
fiat money was the derisive term applied
by bankers to money printed and spent by
government. Only recently have they
begun to apply the term to the money they
create through loans.
-

"The State sets the face value of the
tokens, and accepts them in payment of
taxes at that value."
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--------------------------
No, there are no "tokens" issued by
government in the United States of
America, or any of the Western
democracies. The governments of the
United States and the Western democracies
accept bank credit in the form of
deposits in payment of taxes.
-

"The difference between the face value
and the material value of a token is
normally positive, and known as the
seigniorage gap."
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This would be true only if government
printed and spent into circulation notes
at face value. It does not. What it
spends it has either collected through
taxation, or borrowed from banks.
-

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