Representative money

Abstract: This book wishes to be a “history”, as very aware that it isn’t by far the first called like that. By being a “history” this book sees facts in their chronological order. But, certainly, not only, as time as this kind of a criterion applied would limit to seeing diverse money signs throughout the world and this kind of history would easily have turned into a numismatic description, be it followed by some corresponding reflections. On the contrary, facts described (here and there highlighted by “related history” titles) rather associate to concepts and scientific debate on money and its developments. So, this story becomes a monetary economics and related history attached paper. It starts by: ‘what has been before the money-based economy?’ in its ‘Part one’ and ends in: ‘the post-gold and contemporary money era’, as in its ‘Part five’. So, it is already understood that the historical dimension of this paper equally prefers to extend back into the ‘pre-money’ times that sources to be researched for prove not too much available. Concepts like barter, natural economy and gift economy come to associate with the ones surrounding money. Parts ‘one’ and ‘two’ are especially for reviewing the old description of barter. It is the time to reject a whole scientific prejudice for which barter was just “preparing the money’s historical appearance”; barter comes to be seen in two different and successive eras: the one related to ancient communities (part one); the other, much more opened, searching for money-value appropriate standards (commodity money) and this for an unprecedented opening trade (part two); a simple mathematical model here proposed is intended to provide more about. ‘Part three’ finally comes to join the money concept in its primitive, versus modern forms, plus the Middle Ages add to the previous (parts) ancient history descriptions. The economic skilled reader here “finds out” that, despite the major significance of the quantitative theory (highly developed in the literature), the money’s long run history prefers to focus on a different (i.e. ‘qualitative’) debate, as priory significant: the one between representative (roughly, metal-based and coined), versus fiat (roughly, conventional value) money. ‘Part four’ meets what is really the most significant in the world money history, meaning the ‘gold standard’, as international. Its history seems to push the appearance of representative money achieved and the gold metal becomes a money-value standard as resulting from an artificial selection and market competition with other similar (market) commodity items for such a ‘privileged’ position. The same history shows how an apparently primitive value standard penetrates the modern world of money and finance, proves its very peculiar qualities of price stability and international extension, as a modern monetary system, but finally goes bankrupted together of all bankruptcies of the big 1929-1933 economic crisis. Finally, ‘Part five’ gathers all facts since the early thirties that regard the money matter, despite that such a relatively short historical interval passed through a tremendous amount of facts. First, there came a transitory post-gold standard proving what a non-monetary order was supposed to provide, as compared to its opposite and previous environment. Then, another international monetary system (IMS) that was the Bretton-Woods International Agreement (1944) was attempted and its international arrangement lied about two and a half decades (roughly, less than a half of the gold standard era). The new bankruptcy of an IMS seemed to share the same excessive exchange rates floating symptom and was at least confirming the complexity of the money and monetary issues of both earlier and modern-contemporary times, plus specific differences between. But even the contrary: the mid-eighties seemed to feed the idea that the international money didn’t necessary need once more the “old style” IMS remaking for tempering exchange rates floating and so having the monetary order back into the international area. More issues, like international currency areas and their optimality, monetary unions and finally the European story of the common regional currency shared by several national areas all come to be considered within this last ‘Part five’ and all similarly look confirming fiat money, as the ‘new’ and/or ‘true’ money. Ultimately, this paper keeps aware of another double truth: the one that it wasn’t able to exhaust a topic like this and that is why it hadn’t even intended it, as previously. It might be even about one thing that keeps confused: is that money representative or fiat? It looks like the gold standard was once ending a long history of representative money, then ‘money out of its previous metal base’ that is the fiat money came in place instead for good. But this paper doesn’t argue this way; on the contrary, the money seigniorage was present since the primitive ancient times, the Roman laws of money issuance were really harsh for people who were refusing those coins, and both these belong to fiat money – in an obviously representative money environment; on the contrary, the today non-monetary gold is still ‘kept in custody’ by banks and treasuries as a ‘representative’ reserve, the market liquidity extends through the simple representative money procedure, the banking compulsory reserves procedure belongs to the today central banking based system, but these all equally belong to representative money in a fully fiat money environment. ‘Money is endless story…and history’ might become the very motto of this book.