Upon suggesting that a smart friend check out Dr Wood’s Meltdown I received the following reply:
"Nice, but one problem with the Austrian school remains that they have a peculiar notion of the meaning of the money supply. Currency in all of its forms is and always will remain a creation of the State. Pretending that there is a “free market” in what is necessarily a State creation is always to be blind-sided.
Dallas"
Any thoughts on how to respond to him would be greatly appreciated.
Ask him why if money can only be created by the state, that the state needs to positively enforce a monopoly via legal tender laws on what can be accepted currency. Surely if the capitalists are simply incapable of producing an alternative currency, the the state wouldn’t need to impose its monopoly through legislation and coercion right?
I think that his point is that they always have and always will, and it is naive to believe that any other paradigm will/can exist? I don’t necessarily agree, but what example can I give him to disprove his thesis? I guess that he would term us as unrealistec idealists? A description that I have usually been proud to claim.
A money is anything that’s used as a medium of indirect exchange. Let’s say you have some bread, and you want some apples. However, the nearest apple dealer isn’t interested in bread, he wants shoes. So you do something magical: You find a shoemaker who wants some bread, give them the bread for the shoes, then give the shoes to the apple dealer in exchange for some apples. In this example, the pair of shoes is used as money, as the person performing the indirect exchange with it is not interested in the good in and of itself, but instead obtains it only to exchange it for something else.
Money, by definition, occurs wherever and whenever someone has the idea of performing an indirect exchange, which is not at all a complicated thing.
He’s simply wrong. Production logically precedes plunder. The use of money logically precedes state monopolization of it. Also, money cannot be brought into existence by fiat, not even by a government, a simple result of Mises’ regression theorem. State currency monopolies have only ever come into existence through exchange with previously existing money. Money is that good which is most marketable and, therefore, becomes the most common medium of indirect exchanges.
Clayton -
When I am confronted with this, I go through historical examples of money: seashells, sticks, feathers, etc…
I also point out, in the modern age, in prisons, cigarettes are used as money, a commodity money.
A state is not necessary for the creation of money. Money existed before the state.
Exactly. Ignoring even the most elementary explanations of the origin of money, are we to believe there was only barter before the creation of a state, and money did not come to exist until after some state official thought it might be handy?
You might as well say there was no language before the state, or no law before the state. (obviously, quite a few people probably believe the latter)
These are all great answers, but I think his real point is that there will always be state monopolization of “currency” Or “legal tender” and that we are pipe dreaming if we think that it will ever be different. It doesn’t make it right, but he may be correct. Its the same painful realism that I was confronted with by a particulary intelligent and frightening nationalist who stated: “There will always be government, it might as well be ours!”
“There will always be government, it might as well be ours!”
you need to explode the myth that a person that politically governs over you , is you. unles… Is the person you are talking to B Obama?
Bullshit. There will be these things as long as people assume they have to exist. And there is absolutely no reason why institutionalized extortion must exist. And saying it will always exist is pure defeatism. It’s no better than stating: “there will always be slavery so there is no point in opposing it”.