EVOLUTION OF MONEY INTO A SEGREGATED INTERMEDIATION TOOL WITH IMPRECISE FRONTIERS

Linguistic Definition of the Word "Money"

If we consult the Oxford Dictionary, money is defined as “a current medium of exchange in the form of coins and banknotes; coins and banknotes collectively”. As today's guardians of this dogma (recognized as being foreclosed since the 1971 demise of the Bretton Woods monetary regime), both the IMF and the central banks define liquidity in a restricted context. However, included in the word “legal” is the inherent liberty for individuals and enterprises to engage in trade. A more restrictive definition of the legal aspects pertaining to money is provided by the French Larousse dictionary.^[1] This source refers to the “currency exchange rate of a note” – which in turn is contingent on the currency denomination having received a specific stamp from the central bank guaranteeing a monetary note's reimbursement value (either in metal or in exchange to a specific quantitative level of release from debt).

These two “at variance” definitions of money reflect a philosophical divergence with regard to two issues: (1) the trend that a central bank or equivalent authority needs to define money tends to hide the last 20 years of innovation and (2) an evolving reality that governments or their central banks are – in the public mind – no longer able to guarantee convincingly the potential conversion of the money supply into an acceptable counter form or other asset value derived from the sale of assets or tax levies that would be recognized by creditors. In other words, what is at question here is the reliability of a sovereign privilege that, in essence, cannot (over a predictable period of time) support the reimbursement of government debts or guarantee equivalent convertibility of an issued monetary supply to potential subscribers.

In raising this issue, one may return to Chapter 2 and reconsult Table 2.2, which reflects the relationship between merchandise exports versus US household and non-profit wealth. These parameters are reflective of systems involving exchange volumes without imposed constraints with regard to the speed, frequency or total number of applicable transactions per unit time or per market size. This limits any understanding of how such transactions are compensated for either in cash-value or in non-cash-value equivalents, thus necessitating revision of the existing limits that govern an increasingly outmoded definition of money.

• [1] French equivalent to the Oxford Dictionary or US Harraps.