Man up. Its not going up hill from here.
Setting aside the obvious difference of opinion that we have (he's wrong by the way which I will presently demonstrate with no little amusement), our view of where we stand in the grand scheme of things is profoundly similar. If you look carefully... you'll see that I was the one that dropped the bomb... not Vox. Vox just stepped back and said.. "did you see that bomb he dropped? Say boys... That's a big freaking bomb. I doubt even he knows how big a bomb he just dropped." Then, being the cruelty artist he is, he explained the bomb. Then you realized... "Oh damn. There's a bomb."
You see why this debate is important? Its the format. The format itself allows you to accept things that you would otherwise refuse to believe. That's why... in spite of the enormous time investment it requires... I cannot simply quit. That... well... and the fact that every once in a while I'll get to do this...
Remember I said our money was fiat money... with characteristics of credit money. Right? Vox says I am wrong about that. And... while I considered rushing off to donate some money to an unrelated charity in his name and make a video about it... instead... I just decided I would address his well made point like an adult... mostly...
"Nate's first mistake is the identification of credit money as fiat money, even though he clearly has his suspicions concerning the problematic nature of the distinction as it applies to the US monetary system. That this distinction is false can be demonstrated in two ways, first with a legitimate appeal to authority and history, and second by the money creation process."
He then provides a quote from Mises, that I agree, does indeed say that fiat money doesn't yet exist and probably hasn't existed. Vox appeals to Mises who appeals to history. And Nate points out... well shit... this book was written in 1912... it appears we have some more history to investigate before that holds water doesn't it? Well lets look at this new history then... especially... recent history.
Say what does our buddy Murray have to say about fiat money?
"Under a fiat money standard, governments (or their central banks) may obligate themselves to bail out, with increased issues of standard money, any bank or any major bank in distress. In the late nineteenth century, the principle became accepted that the central bank must act as the "lender of last resort", which will lend money freely to banks threatened with failure. Another recent American device to abolish the confidence limitation on bank credit is "deposit insurance", whereby the government guarantees to furnish paper money to redeem the banks’ demand liabilities. These and similar devices remove the market brakes on rampant credit expansion."
Are we done?
No... no no no... we're along way from done. Remember.. Mises characterized fiat money by legal privilege. Legal Privilege? Consult the MisesWiki!
According to Hülsmann, there are four groups of legal privileges granted by the state (usually more than one is granted):
legalized counterfeiting - the promises of banks are allowed to be more "elastic". For example, a coin marked "an ounce of gold" will be allowed to have any amount of gold or none, and can have any meaning. Banknotes were named "promises to pay", but were obscure on the details.
monopoly - only some monetary products may be produced by law, like a specific metal; or only the banknotes or coins of a certain bank. This limits the freedom of choice of users of money and benefits the producers and first recipients at the detriment of others.
legal tender is a money, that must be accepted in exchanges under a predefined price. Some monies may be driven out of the market due to Gresham's Law.
legalized suspension of payments allows banks to avoid paying their obligations, while receiving payments from their debtors. If a bank is freed from contractual obligations to redeem its money and it is also legal tender, its banknotes become genuine paper money.
With legal privileges are the banks allowed to behave more irresponsibly, which increases moral hazard.
Now are we done?
Well... not really. Because what I've done here isn't intellectually honest, in the sense that I have not represented the whole of Vox's point.
The reason I hated Chapter three is not because of confusing terms like fiduciary media. Its because Credit Money itself is a category error.
Credit money is a description of leverage. But... Leverage can be applied to all types of money.... Thus... Credit Money... is a subcategory. Credit Money is what happens when you take money of any other type.. and then leverage it up for lending purposes.
I am going to be as clear as I can be... you may need to go back and re-read my last post on this... but I will try to explain again.
Leverage is something that happens to Money Types. It isn't a money type itself. Its like including cancer cells in a discussion of human cells because they form in the human body. Cancer cells aren't human cells.
We must always go back to competition.
Money is money because of the constant commodity competition Every day the competition is on going... and every day one commodity is winning. that one commodity that is winning... is the money. The money types... are explanations of WHY the competition is being won. Fiat money is fiat money because the government helped it win artificially and it wouldn't have won otherwise. Take away the government advantage... and its not the money anymore. Commodity money types? Well they have no artificial government advantage.
That is the true definition of sound money.
Its money that wins the competition... every minute of every day... the on going competition... not some past competition .. on its own without aid of the government.
All modern paper currencies are fiat money.
The bits that are loaned into creation from thin air? Those are credit money too... but it is dishonest to ignore the fact that it is fiat money as well. Loans may have created the individual dollar bills... but those dollar bills wouldn't be money... if it wasn't Fiat.
May God have Mercy on my soul... Ludwig Von Mises... was wrong. You cannot disregard the fiat nature of the original money... just because most of it was created through leverage.
So Fiat? Shenanigans?
The answer is both. Not one. Not the other. Both. To fail to grasp that... will totally blind you to the inherit problems of our current economic system. The money is fiat money and credit money.. because much of which was created via leverage... but also much of it was created through counterfeiting. This is why I created the word "clusterfutastrophe" while attempting to parse the US money supply.
Its not that there is no money. I already explained that there is always money. Money...is like energy. It cannot ever be destroyed. It can change forms... its velocity can change. But it cannot be destroyed. The problem is... our system is so screwed up through fiat and leverage... that we can't even measure the money supply any more.
Come Vox... be sensible... you're absolutely right to point out that the leverage can't be ignored... but you were wrong to suggest that the fiat aspects can.
Now tell us Vox...
What IS the best way to measure the abomination posing as the US money supply? He asked knowingly...
*** PUBLIC SERVICE ANNOUNCEMENT*** I want to apologize for using Credit Money as a type of money in my last post. I knew full well I didn't believe it to be an actual money type while writing the post... but because the way Vox asked the question... and because we are debating on Mises' turf... I felt I had to. I do not believe anyone would've taken me seriously if I didn't. First I had to demonstrate that i did understand the Misean terminology... otherwise I wouldn't have any credibility on the matter. Regardless it may cause confusion. If Vox chooses to score some points by saying, "hey wait.. first you said credit money was a type of money then you didn't" I concede those points willingly.