A question about banking in AC

[Bob Moss]

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Even if we eliminated paper money right now, it's silly to believe that money wouldn't reemerge in a rational market. Do you honestly think people are going to go to the trouble of storing all of their wealth in material goods? "Tickets" to represent claims on goods are just easier to use. In a free market, someone would start a business producing money for people to use in lieu of goods and it would gain traction because it's so much easier.

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Redeemable tickets are indeed a good idea, and hard money advocates/ACers are not against this. The import difference is that you could turn in this ticket for something real, while there is no guarantee that federal reserve notes are worth anything.

[mosdef]

I understand. But the way your post was phrased suggested that you think that the use of money instead of gold is irrational:

"Do you think businesses would continue to accept easily-printable dollars if they weren't forced to pay taxes in them or issue paychecks in dollars? Of course not. People would trade in gold or silver."

I disagree, I think people would still use a form of currency.

[pvn]

[ QUOTE ]
I understand. But the way your post was phrased suggested that you think that the use of money instead of gold is irrational:

"Do you think businesses would continue to accept easily-printable dollars if they weren't forced to pay taxes in them or issue paychecks in dollars? Of course not. People would trade in gold or silver."

I disagree, I think people would still use a form of currency.

[/ QUOTE ]

Silver and gold *are* currency. "easily printable" means "backed by nothing". You can print all you want without worrying about matching deposits of specie.

[mosdef]

[ QUOTE ]
[ QUOTE ]
I understand. But the way your post was phrased suggested that you think that the use of money instead of gold is irrational:

"Do you think businesses would continue to accept easily-printable dollars if they weren't forced to pay taxes in them or issue paychecks in dollars? Of course not. People would trade in gold or silver."

I disagree, I think people would still use a form of currency.

[/ QUOTE ]

Silver and gold *are* currency. "easily printable" means "backed by nothing". You can print all you want without worrying about matching deposits of specie.

[/ QUOTE ]

Fair enough. I didn't interpret "easily printable" as meaning "backed by nothing". Even if it's backed by gold, it's easy to print (I think, I've never actually tried).

And you are right, gold and silver are currency. I should have said "a more convenient and reliable representation of gold and silver in lieu of coins and bricks". I suppose that if you have money backed by gold, then then you could say that you really are trading in gold and silver, which I would agree with. The way the original email was worded, combined perhaps with my lack or reading comprehension, made it sound like people would be walking around with sacks of gold and silver to buy things if they weren't "forced" to use paper.