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This article develops the idea from my recent post, Is money like energy
Money is very difficult to understand; it seems to behave like nothing else in the universe such that every analogy captures only a part of its behaviour. Its properties as both a commodity and as an agreement seem deeply paradoxical. This may be an indication that we need to look at it from a level. It is easy to examine the tokens which move from hand to hand - their inscriptions and their value, or the transactions - their form and meaning. The tokens flow in the opposite direction to the goods and services; their value is a counterweight that enables every transaction to balance and indeed to close without the need for risky credit.
This describes very well how gold money works. But most money has no value-in-itself. By this view fiat money is a massive fraud foisted on the people using legal tender laws which inject into the tokens some kind of value based on fear of bailiffs.
But that flowing tokens model is even more inadequate when it comes to explaining credit money, which makes up 97% of modern money and even precedes coinage.
Bank deposits have value because they are (supposedly) matched by equal and opposite liabilities. A bank deposit comes into existence through a contract which creates an asset and a liability simultaneously ex nihilo. It then moves around (the banking system) until it is reabsorbed when used to repay a loan. These bank deposits have another property that differentiates them from a commodity: they lack individuation; there are no individual tokens which enable the route of any particular dollar to be traced.
It seems to me too far-fetched that this bank-deposit money is some kind of bastardised pretend commodity, and that another analogy is far more fitting. Credit money viewed from the perspective of a trader, may be like a particle with mass which bounces against against other particles, but viewed from the perspective of a whole system it looks more like a wave.
The full analogy has not revealed itself to me yet (PhD thesis, anyone?) but I invite you to consider.
Instead of value being exchanged for liquid value, what if money had negative value which pulled goods and services into it?
It is clear to me that the difficulty we have conceiving of money is because it can be viewed on many levels, much like the particle/wave duality