Talk:Representative money
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Keynes quote
editCarolMooreDC - as requested above, here is a little more context for the Keynes quote:
(iii.) Representative Money
This, in its turn, leads the way to a further evolution of State-Money itself; The Bank-Money may represent no longer a private debt, as in the above definition, but a debt owing by the State; and the State may then use its chartalist prerogative to declare that the debt itself is an acceptable discharge of a liability. A particular kind of Bank-Money is then transformed into Money-Proper- a species of Money-Proper which we may call Representative Money. When, however, what was merely a debt has become money-proper, it has changed its character and should no longer be reckoned as a debt, since it is of the essence of a debt to be enforceable in terms of something other than itself. To regard Representative Money, even when it conforms to an objective standard, as being still a debt will suggest false analogies.
At the cost of not conforming entirely with current usage, I propose to include as State-Money not only money which is itself compulsory legal-tender but also money which the State or the Central Bank undertakes to accept in payments to itself or to exchange for compulsory legal-tender money.[1] Thus most predent-day Bank Notes, and even Central Bank Deposits, are here classified as State-Money, whilst Bank-Money (or non-legal-tender money) is mainly composed, nowadays, of Member Bank Deposits.[2] Historically, a good many examples of Representaive State-Money are descended from some kind of Bank-Money, which by being adopted by the State has subsequently passed over from the one category to the other
(iv. ) The Forms of Money
We are now in a position to proceed to a further analysis having an object different from the above, namely, to classify the three forms which State-Money can take, which we may call, for short, Commodity Money, Fiat Money, and Managed Money, the last two being sub-species of Representative Money.
Commodity Money is composed of actual units of a particular freely-obtainable, non-monopolised commodity[3] which happens to have been chosen for the familiar purposes of money, but the supply of which is governed - like that of any other commodity - by scarcity and cost of production.
Fiat Money is Representative (or token) Money (i.e something the intrinsic value of the material substance of which is divorced from its monetary face value) - now generally made of paper except in the case of small denominations - which is created and issued by the State, but is not convertible by law into anything other than itself, and has no fixed value in terms of an objective standard.
Managed Money is similar to Fiat Money, except that the State undertakes to manage the conditions of its issue in such a way that, by convertibility or otherwise, it shall have a determinate value in terms of an objective standard.
- ^ The exact legal status of various moneys is susceptible of considerable variety. For example, the Federal Reserve Bank Notes in the United States are only "optional" money. Knapp acepts as "Money" - rightly I think - anything which the State undertakes to accept at its pay-offices, whether or not it is declared legal-tender between citizens
- ^ See below (p. 10) for the explanation of this term.
- ^ Or of warehouse warrants for actually existing units of the commodity. E.g. American Gold Certificates are best regarded as Commodity Money.
- John Maynard Keynes (1965) [1930]. "1. The Classification of Money". A Treatise on Money. Vol. 1. Macmillan & Co Ltd. pp. p. 6-8. {{cite book}}: |pages= has extra text (help)
Difference with token money
editI was wondering if there is a difference between representative money and token money. If there is little distinction we should probably merge them. - Shiftchange (talk) 04:25, 4 January 2017 (UTC)
- Reading the page on token money, it seems there is a difference. Token money is a form of representative money, but one that is representative by legal degree or custom. It might make more sense to have a small mention of it with a link from here rather than merging the articles. Fresheneesz (talk) 18:15, 20 August 2022 (UTC)