We Must Get Rid of the Word "Money"
This guy, Rajat Soni, has become my favorite Bitcoin influencer du jour. His tweets are a constant stream of pure economic nonsense aimed at convincing people to convert all of their wealth into Bitcoin (which Rajat claims to have done already). The fact that he’s a CFA (Chartered Financial Analyst) makes it even better and just reinforces my belief that the economic and financial “experts” are the least capable people in the world of seeing through the irrationality of the status quo and understanding core economic issues.
In this tweet he makes the argument that "currency" (i.e. a generally accepted means of payment) is not money. Money, in his mind, is assets. But if Bitcoin, an asset, is money, is oil also money? Is lumber money? Are cows money? The logical conclusion of his perspective is that assets are money, so we should exchange assets for assets. But that’s just barter. His definition of “money” essentially does away with the concept of money altogether.
But his confusion does highlight a very important point, even if that wasn't his intention. He says, “currencies are NOT money. They can transfer and measure value, but they can't store it.” As I have argued before, the word "money" itself is highly problematic. Because it contains two contradictory, irreconcilable concepts/functions. As Silvio Gesell shows, it is impossible for one instrument to effectively perform both as a medium of exchange and as a store of wealth. They are inherently incompatible functions. It would be like designing an automobile with one pedal for both the gas and the brake.
See my previous article:
So, in a sense, Rajat is right. Currencies are not “money”. Because the word "money", as we use it, doesn’t make any sense. It contains a logical contradiction.
If we had, through improper logical reasoning, originally designed a car with a "gasbrake" pedal, once we realized the error, obviously the first step would be to separate the functions of gas and brake and make two different pedals, one for each function. But we would also have to get rid of the word "gasbrake" because it is logical nonsense. Once we separated the functions and made a pedal to accelerate and a different pedal to slow the car, it wouldn't make sense to call either of those pedals the "gasbrake". We would need to replace the word “gasbrake” with two separate words, "gas" and "brake". And I would argue the exact same thing is necessary with "money". We need to get rid of the word and replace it with two different words. Those words might be "currency" and "asset", as Rajat suggests.
But that leads to yet another question. What differentiates a monetary asset from any other asset? If gold and Bitcoin are monetary assets, is oil a monetary asset as well? What about steel? Or corn? Or chickens? What’s the difference between a monetary asset and a non-monetary asset?
And this leads to to ultimate conclusion of the Gesellian perspective on “money”. Every valuable substance on earth is an “asset”. And virtually all assets lose value with the passage of time, due to the laws of nature. Some assets decay slower than others and are therefore more effective for the purpose of storing value, but why do we need a special instrument for storing value at all?
As Silvio Gesell wrote in The Natural Economic Order, “All the commodities of the world are at the disposal of those who wish to save, so why should they make their savings in the form of money? Money was not made to be saved!”
Had we understood this concept correctly from the start, we would have designed an instrument that is designed to perform the function of a generally accepted means of payment, but NOT as a store of wealth. And “money” would have been a perfectly good word to describe that instrument. But since we misunderstood the proper function of money and irrationally invented an instrument intended to perform two contradictory functions, I would argue that the word itself cannot be salvaged. We need to get rid of the word “money” entirely.
The Silvio Gesell Foundation is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.