By Frank Shostak
From monetarists to advocates of modern monetary theory, many argue that government edicts give money its value. Austrian economists from Menger to Mises to Rothbard know better.
@denlillaapan, when are these guys (other than you, Bob, and Michael) going to seriously contend with where bitcoin sits in this framework?
I don't care much for the regression theorem.
I'm not sure I'd use not possible so much as not as useful and even then, I'm could see a quite useful money emerging from social contract.
Why couldn't there be a history where people were keeping track of debts and then started trading the things on which they kept track of debts and then whammo! You got money.
(I suspect this is the influence of Graeber on me, but maybe also Mitchell Innes)
I don't fully buy the credit theory of money, but I think that people are smart and pretty early on in human history, people recognized that it was useful to sometimes acquire a thing for no other purpose than to trade of to another person. It's almost like we can't help ourselves but try to trade stuff. And money is close to trade in my mind. Like you can't have much trade without money just kind of happening.
There can be and it would fit my understanding of the theorem because there's a connection between the new money thing and the previously valued debt thing and a connection between the debts and whatever valuable thing they came from.
I'm pretty sure your last paragraph fits the Austrian model. The point would be that the tradable thing can't be arbitrary. It has to be based on what people already value.
They're not: the old guard and all that. The younger generation, tho, there's hope
IMO, this sentence reveals how people misunderstand the role of economic modeling.
Von Mises didn't show how money became accepted. He developed a model for how money might have become accepted. Big difference.
The author then uses this misunderstanding to claim that electronic money can't be money:
Seems like an example of taking a particular theory as truth, then just running with it.
There's a bit of a slight of hand in the final sentence. I'd say the intent there is to dismiss things like personal meme coins.
Bitcoin can't "be issued by just anybody", as in arbitrarily at their whim. It can only be issued under very strict constraints, which makes it more like a commodity money.
I actually do think the regression theorem is right (at least for things that persist as money) and that it does show how money must have emerged (deduction as opposed to induction), but also that it's very weak because the pre-money value can be literally anything. Nothing about the Regression Theorem says that money had to emerge from something that had been valued for its widespread practical uses.
The value of money is determined by its purchasing power.
Bitcoin is the best example yet of money emerging from the market, not the state.
Shostak is right to highlight the Misesian view. Money isn't money because a state says so, it's money because the market finds it useful as a medium of exchange.