Samuel A.

Chambers
Money Has No Value
Samuel A. Chambers

Money Has
No Value
ISBN (Paperback) 978-3-11-076090-3
ISBN (Hardcover) 978-3-11-076072-9
e-ISBN (PDF) 978-3-11-076077-4
e-ISBN (EPUB) 978-3-11-079674-2

Library of Congress Control Number: 2023936598

Bibliographic information published by the Deutsche Nationalbibliothek

The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie;
detailed bibliographic data are available on the internet at http://dnb.dnb.de.

© 2023 Walter de Gruyter GmbH, Berlin/Boston

Cover image: Michigan near Trumbull, photographer: Lester K. Spence
Printing and binding: CPI books GmbH, Leck

www.degruyter.com
To Rebecca
Advance praise
“The provocative, counterintuitive title challenges us to think as deeply as Sam Chambers has
done in Money Has No Value. In doing so, we see how meticulous scholarship and relentless
logic can take us to a new level of understanding beyond the confused debates that have dog-
ged the theory of money for centuries.”
− Geoffrey Ingham, Professor Emeritus at Cambridge University,
author of The Nature of Money

“Money, Chambers shows in this important book, is at heart always a social relation of credit.
But what would it mean for a credit theory of money to take seriously the role of the state as
one of the primary sites of capitalist production? Building on a powerful re-reading of early-
twentieth century theories of credit, Money Has No Value offers a seminal intervention in
foundational debates over the nature of money and carves out an original place for a
novel conception of credit money. Chambers questions not just received orthodox wisdom
but also deftly challenges recent revisionist understandings of money. Brilliant, elegant,
and written with revisionist verve, Money Has No Value is an essential contribution for the-
orists, historians, and students of contemporary money alike.”
− Stefan Eich, Georgetown University,
author of The Currency of Politics

“Chambers takes on an immense and dual task: recalibrate the immensely complicated schol-
arship on money in order to rethink the tangled web of assumptions we hold about it. That he
does so with such originality, rigor, and clarity is even more impressive. The stakes for under-
standing money have never been higher, and this book – one of the most important of its kind
– rises to the challenge.”
− Jacob Swanson, Georgetown University

https://doi.org/10.1515/9783110760774-001
Acknowledgements
Though they gave me no explicit teachings on the topic that I can recall today, there
can be no doubt that my parents taught me important lessons about money. From
my father I learned that you could not realize money’s “value” without spending it;
there was thus no reason to hold on to it. From my mother I learned that you could
not survive – literally could not eat – without money; this, it turns out, was a very
good reason to hold on to it. When I compared and combined their approaches, I
got a glimpse of the mysteries and paradoxes of money. Money is both nothing and
everything at the same time. I thank my parents for making it possible for me to
spend my life pursuing such mysteries and paradoxes.
Like so many before me, I wrote this book in an effort to climb out of the
money rabbit-hole into which I had fallen. Along the way up, I benefitted enor-
mously from the aid, support, and traveling companionship of my students. The in-
tellectual spark for this book came from early undergraduate seminars on capital-
ism. When those classes turned to money I saw a flash: money grabbed these
students in a way I had seen no topic do in quite some time. Their fascination
with money became my own, as I tried to understand money well enough to
teach it to them. To grasp money to those depths, I needed the significant help
of a unique group of graduate students. We learned money together: through mul-
tiple seminars that I taught, through undergraduate classes we taught together, and
in Perry Mehrling’s online banking and finance course, which a group of us took
together. I owe a series of debts (think of them as maturing bonds) to various co-
horts of students over the past eight years. I am particularly grateful to the follow-
ing: Cécile Cadet, Em Cytrynbaum, Rothin Datta, Conrad Jacober, Felicia Jing, David
Johnson, Henry Scott, Ben Taylor, and Darko Vinketa.
Portions of this book – including excised portions, the exclusion of which
proved essential to making this book a book – were first presented as papers
and talks to a variety of audiences, whose criticism, feedback, and encouragement
shaped the project in countless ways. It is a deep privilege to be able to share one’s
work in this manner and I take great pleasure in specifically acknowledging the
following individual organizers and institutional hosts: Heikki Ikäheimo, Universi-
ty of New South Wales; Julen Etxabe, PDX theory workshop; Tamara Metz, Reed
College; Jake Swanson, Cornell University; Stefan Eich, Georgetown University; An-
thony Lanz and Deme Kasimis, University of Chicago; Philip Wohlstetter, Red May
Seattle; Amin Samman and Martijn Konings, Finance and Society Network, City,
University of London; Patrick Murray, Creighton University.

https://doi.org/10.1515/9783110760774-002
X Acknowledgements

Certain passages from various chapters of the book first appeared in Cham-
bers, Samuel, “The Money Array,” Finance and Society, 9, no. 2 (2023): 1 – 20. Thanks
to the lead editor, Amin Samman, for permission.
For feedback on various drafts of chapters along the way, I am pleased to ac-
knowledge Rebecca Brown, Rothin Datta, Alan Finlayson, Henry Scott, Adam Shein-
gate, and Joshua Simon. A number of generous souls read the entire manuscript.
Such an act creates debt that cannot be redeemed – but perhaps it can circulate.
Deep thanks to Rebecca Brown, Geoff Ingham, Christopher Robinson, and John
Seery. Ben Taylor copyedited the entire manuscript, engaging with both the lan-
guage and ideas at an incomparable level of depth. Ben also remains the undefeat-
ed champion in starting arguments (both intellectual and grammatical) that I can
never win. Here I express my extensive gratitude and leave it to Ben to decide the
use-value.
With an insider’s view that proved invaluable, Alex Andre helped me to under-
stand how traders talk, think, and act. With grace and good humor, Tim Schere en-
dured an almost endless series of simple and silly questions about money markets.
Thanks to both of them for helping me enormously in the effort to link the theory
of money with today’s money-market practices.
A book is much more than words, and its creation requires much more than
an author. It has been a genuine pleasure to work with the professionals at De
Gruyter. Thanks to: Faye Leerink, for initial interest in the project; two anonymous
reviewers, for giving me energy, insights, incisive criticisms, and wonderful sugges-
tions; Gerhard Boomgaarden, for seeing the big picture, how this book fit into it,
and for steadfast support; Mark Petrie for peerless copyediting; and Lucy Jarman,
for working so ably and deftly with me to make it across the finish line. Everyone
knows the cliche “never judge a book by its cover,” but in this case I can only hope
the work on the inside lives up to the art on the outside. That art was created by
my colleague and friend Lester Spence, who shot the original photograph. I am
both thankful and delighted that he kindly allowed me to use it for the cover.
Very few of the arguments in this book were not first tried out on Paul Mariz,
and the final form of them all has been inflected by our unique collaboration.
Whatever I understand about blockchain I owe to Paul; all my arguments about
crypto might as well be co-authored. Paul did not necessarily read this book, but
he can see its shape better than anyone – and he has helped me to see it too.
For that, I am grateful.

As always, I owe it all to Rebecca.

Contents
Advance praise VII

Acknowledgements IX

Preface 1

Introduction 9
1 What is “Money”? 9
2 A Non-Disciplinary Study of Money Relations 11
3 Capitalism, Value, and Money 14
4 Credit (i. e., Debt) 17
5 Indexing the Money Array 21

Chapter One
How to Do the Theory of Money 30
1 A Note on Method 30
2 “What Is Money?” Redux 31
3 The Strange History of Theories of Money 34
4 Conceptual and Historical Accounts – and Capitalist Social Orders 36
5 Against Functionalism: The Ontology of Money 40

Chapter Two
The Matrix of Money Theories 45
1 Money Sources 45
2 Money Choices 47
3 The Matrix 59

Chapter Three
Money “Is” Credit 62
1 What Is Economic Exchange? 62
2 A True Credit Theory of Money 72
3 Beyond the Quantity Theorem 83

Chapter Four
Money Theories Today 87
1 Money and Credit Redux 88
XII Contents

2 The Myth of Community Debt 92

3 Origin Stories: From Barter to Wergeld and Chartalism 98

Chapter Five
From Money/Credit to Money-Credit 107
1 The Ontology of Credit 107
2 Five Theses on Credit and Money 111
3 Liquid Goat Money and Illiquid US Treasuries 120
4 Money and State Money 130

Chapter Six
Money Markets 137
1 Money Problems 137
2 Money Creation, Part 1; or, What Is a Loan? 140
3 The “Price” of Money 151
4 The Logic of the Derivative 155

Chapter Seven
Money Today 166
1 Is It Money? 166
2 World Money 168
3 Money Creation, Part 2 173
4 Bitcoin: Digital Metallism 179
5 The Ontology of Bitcoin 184
6 Crypto Markets 189
7 Money and Capitalism 195

Bibliography 196
Preface

Money Parables: From Coin to Edict to Crypto

For a very long time the story of money was straightforwardly told through coins.
Digging up old coins as artifacts of previous civilizations seemed to reveal a thing
called “money,” understood as bits of metal of certain weights. In the typical tale,
the metal was “rare” and thus thought to have some intrinsic value, and in turn the
coins – the money – had value because they contained a specified weight of the
metal. Because money itself possessed value, and because it was generic and stand-
ardized and would not spoil, we could exchange it for the wide variety of other
things we needed or wanted – things that were of value precisely because they sat-
isfied those needs or wants directly (in a way money could never do).
But money, as this story goes, was very much like those other things (commod-
ities) in that both money and commodities were thought to have fundamental
value. In this narrative, shoes have intrinsic value (a value in their use, use-
value) because they keep your feet warm and dry, or they protect you from
rocks and glass when you go for a walk; money has intrinsic value because it con-
tains valuable metal. We want the shoes so we can wear them, but we want the
money so we can buy the shoes (or anything else we might prefer). In this tale,
money is a commodity (just like any other) with direct and positive value. The
story could be rendered more complex by the issuance of credit (a promise to
pay money at some point in the future), but one need not worry much about
those complications because at root money itself was essentially coins, and there-
fore relatively simple to understand in its nature. The moral of this tale: money has
value because money is, and should be, a commodity with its own intrinsic value;
money should therefore be “sound money” in that it should contain the value it
says it does.
I cannot overstate this next point: though that story has been told throughout
history (and repeated especially forcefully since at least the eighteenth century), it
has never been true. Never. Even in those historical periods when coins seemed to
preponderate, money was never a weighted quantity of metal (with intrinsic com-
modity value). Rather, the coin was a token or symbol, a claim ticket within a re-
lation of credit and debt. It mattered not whether the ticket itself had any value.
The money token could just be a piece of paper; the money symbol could be
mere lines on a clay tablet, marks on a paper ledger, or digits on a computer
spreadsheet.
There were particular societies, of course, where the object used as token of
money – say a gold or silver coin – was itself a good that had both some intrinsic

https://doi.org/10.1515/9783110760774-003
2 Preface

use-value and a market exchange-value. Gold can famously be used to fill dental
cavities and has sometimes played small roles in industrial production, while
most precious metals can serve as raw materials (production commodities) in
the making of jewelry. Thus anyone wishing to buy gold or silver for those produc-
tive uses would have to accept the going market price. However, in those cases
where a commodity served as the money token, its commodity value (as a
metal) was always less than its money value (as a claim of denominated credit/
debt). Within a properly functioning coinage system, money-gold always has a
higher denomination (and thus seems to be “worth” more) than the market
price of commodity-gold. For just this reason, the monetary system breaks down
the moment that relation inverts, for if commodity-gold is worth more than
money-gold, no one will continue to use gold coins as money; they will hoard
them for their commodity exchange-value. This means that money can never be
sound, because to be “sound” is no longer to be money. Hence we can refer to
these coinage systems as having or using “commodity money” only in the very lim-
ited sense that their money tokens were composed of a commodity, but the nature
of their money was not that of a commodity. Money is not and has never been a
commodity in this sense – and money’s nature would not change if those societies
substituted paper money or any other symbolic representation for the coin tokens.
Money as a commodity proves to be the oldest, most dominant, and most fre-
quently told story about money. It forms the backbone of the treatment of money
by modern economics, and this book will engage in great depth with that narrative,
along with a strong series of criticisms of it. But for now we set this story aside in
order to move to the more recent and quite dramatic turn, by which a new narra-
tive of money has quickly started to take hold.
Over the past fifteen years, people have been abandoning this old yarn (about
bits of metal) in droves, and though it still survives intact in the skeletal structure
of neoclassical economics, many have been surprised by the speed with which
some writers and thinkers have moved on to a radically different account. In
the ongoing aftermath of the great financial crisis (GFC) of 2008, there have
been many new course corrections in the tale of money, but all largely orbit
around one particular rejection of the old narrative. The new account of money
dispenses with the commodity story in the starkest manner, by proclaiming the fol-
lowing: money is not bits of metal with intrinsic value, because money is nothing
more than fiction.
One could generate countless examples, both popular and academic, that de-
fend this thesis, so we can pick almost at random. Take Jacob Goldstein’s 2020
book, Money: The True Story of a Made-Up Thing. The title says it all: money is fab-
ricated, nothing more than a story we tell. But in case any readers miss the point,
Goldstein titles his preface with the declaration, “Money is fiction.” At its core, this
 Money Parables: From Coin to Edict to Crypto 3

new narrative re-grounds the value of money by substituting social value for com-
modity value: money has value only if and insofar as everyone believes it does. A
2021 New York Times article presents the new common sense by quoting an osten-
sible expert on money, Neil Buchanan, as follows: “Monetary systems depend on ‘a
leap of faith.’ People accept it because others accept it, making money one big
‘group delusion’” (Coy, 10 December 2021, quoting Buchanan 2013).
Here we have money as nothing more than a kind of shared faith – hence
ephemeral and precarious. This new narrative resonates with so many readers be-
cause it rises to the surface amid the tumultuous wakes of both the GFC and the
coronavirus pandemic; it captures the important sense that whatever money is
or has been in the past, money today feels both mysterious and conspiratorial –
manipulated by shadowy figures, important but intangible, beyond our control.
It also resonates with broader ideas about a historical change in money, a shift
from sound metallic money to so-called “fiat money” – a putative type of money
that depends solely on the decree or edict of the government. As societies have
abandoned faith in a variety of governmental institutions, they have in turn lost
trust in money itself. At this same moment, they begin to tell a tale of money as
itself nothing other than a made-up bedtime story. The moral of this second nar-
rative: money has whatever value it is believed or decreed to have. Money is there-
fore no longer “sound” (or never was) because all money is mere fiat money.
This recent tale of money has roots in the past, and I freely admit that it better
conveys certain elements of money’s nature; it captures more of the history of
money practices than the old story. Moreover, it is a basic fact of markets that
the prices of both commodities and financial assets can be moved by the collective
beliefs of market actors (e. g., meme stocks). Nevertheless, money is neither mass
delusion nor simply shared faith, and no government or other issuing agency can
establish value in money by fiat. Governments, of course, have played and continue
to play an enormous role in monetary systems; as with so many elements of the
life of a society, governments have enormous power to shape and impact
money. Yet neither money’s origin nor its end lies with the government, or any
other central authority. Chapter 4 engages in depth with state theories of money
and explores the complex relation between money and state powers. For now
we only need to underscore that money is not made up – it is very much real –
and this means that we cannot change money (and money practices) either by
abolishing it or making it up anew.
At this juncture we come face to face with bitcoin and the larger project of
cryptocurrencies, whose original and very much explicit goal was precisely to cre-
ate a new form of money. While crypto seems like (and in some sense is) a brand
new story of money, we must first understand it as a momentous wrinkle in the
post-2008 narrative. The invention of crypto would arguably have never occurred
4 Preface

were it not for the undoing of the old tale (money is bits of metal, with real value)
and its replacement by the new (money is fiction, with value decreed by the gov-
ernment). Our second money story serves as a condition of possibility for crypto’s
rise: only in a context in which large swathes of people believe that money’s value
is nothing other than an index of what people think money is worth, might we wit-
ness the results we have seen over the past few years with crypto – people paying
increasingly large sums of real money (bank credits denominated in dollars, euros,
etc.) in order to take ownership of a sequence of numbers on a distributed ledger
(a blockchain). In November 2021 the price of a bitcoin reached a high of $68,000; if
ever there were a time when “group delusion” was the best explanation for the
putative “value of money,” it was at that moment. As Matt Levine pithily puts it:
“Much of crypto economics consists of some version of ‘if you assume this thing
is valuable, then it is valuable’” (Levine, 14 February 2022).
But crypto is much more than merely a component of the new money narra-
tive. Rather, crypto constitutes an ingenious and dangerous new development pre-
cisely because it powerfully combines the old story with the new. On the one hand,
crypto is openly and expressly made up, because, quite literally, someone (or some
algorithm) just writes lines of computer code and crypto tokens magically come
into existence. On the other hand, crypto purports to be of intrinsic value in a
much more essential manner. Tracing its origins to the 2008 white paper that an-
nounced both Bitcoin (the computing protocol) and bitcoins (the digital tokens),
crypto evangelists (especially early on) insisted that crypto was valuable for the
same reasons as commodity money: because its supply was definitively limited,
and because it had some intrinsic use-value (with crypto this use-value is vaguely
ascribed to the value of the blockchain as a technology).
Crypto therefore leverages the new narrative (money is fiction, it can be in-
vented) while calling on the reassurances of the old narrative (money has intrinsic
value, it can be isolated as a singular entity beyond the control of bankers and pol-
iticians). Starting with the white paper, the hope for crypto was always for it to be
“digital cash,” where the word “cash” (just like “currency”¹ in “cryptocurrency”)
functions as a synonym for “coins” in the original tale of money as bits of
metal. Bitcoin is also bits, in the bare sense that it is nothing other than computer
code that occupies bits of computer memory. But unlike bits of metal, which had
value because the metal had real-world use, the bits of computer code have value
only because we assume they do. And if enough people make such an assumption,
then they will pay real money (credits denominated in national currencies from
actual bank accounts) to buy a token (a string of alphanumeric characters),

1 For more on the slippery term “currency,” see Chapter 3, Footnote 19.
 Money Parables: From Coin to Edict to Crypto 5

which can then later be sold again for more real money. In other words, the prom-
ise of cryptocurrency is to function like gold and silver function in the original
myth of money as valuable bits of metal.
Of course, if actual metallic coins were never money in the way the original
money narrative propounds (i. e., as objects of intrinsic value), then cryptocurren-
cy can never be money either. Never. Chapter 7 makes that argument in full, but
here we need to do something much simpler: to trace the short but intense devel-
opment of cryptocurrency in relation to both its promise and its practice vis-à-vis
money. Recent events in crypto and the crypto markets tell their own important
story about money. In a word, the development of crypto – from proof-of-work to-
kens like bitcoin to stablecoins like tether – can serve as a powerful parable of
money.
Let us start with an outline of this tale, and then fill in the needed detail:
1) In 2008, the Satoshi white paper announces bitcoin as the first cryptocurrency,
designed specifically as a digital version of cash, understood as standalone,
non-bank money that does not depend on any trusted third party (Nakamoto
2008: 1).
2) In its early history, bitcoin and other cryptocurrencies fail, repeatedly, to func-
tion as money.
3) In 2012, J. R. Willett publishes “The Second Bitcoin Whitepaper,” which explic-
itly specifies the need for a trusted entity, the existence of which will solve
crypto’s major problems of “instability and insecurity” (dacoinminster 2012).
Willett’s mastercoin becomes the protocol on which tether, the first stablecoin,
is based.
4) In 2019, tether surpasses bitcoin in daily trading volume.
5) By early 2022 the Tether institution has just under $80B in tether tokens is-
sued, and ranks third (behind bitcoin and ethereum) for total outstanding
value of issued tokens. In daily trading volume tether is two to four times
the size of bitcoin.²

We can reformulate the above timeline to produce our own pithy tale: crypto set
out to revolutionize money, to literally create a new form of money never seen in
history, and instead, within a few short years it managed only to reinvent one of the
oldest forms of money – bank money. As I elaborate in Chapter 7, bitcoin is not, and
has never been, money. Tether, in contrast, is in fact money. But here’s the rub:
tether is not crypto (its tokens are not decentralized because they are issued as ex-

2 Specifically, as of spring 2022 tether fluctuated around an average of $75B daily trading volume
(+/− $20B), compared to $35B daily (+/− $10B) for bitcoin.
6 Preface

plicit liabilities of the Tether institution), and as money tether is not new at all; it’s
quite old.
The key to the entire story of crypto (up to now) lies in understanding, first,
the fundamental facts of the rise of stablecoins, and second, the basic structure
of the three dominant stablecoins (the coins issued by the Tether, Circle, and Bi-
nance institutions³). We can take tether as our case study: the Tether institution
(Tether Limited, Inc.) is a shadow bank, and the tether token is bank money.
Each tether token, worth $1, functions just like a $1 deposit in a bank account:
the $1 is a denomination of debt owed by the institution to the holder of the
token/deposit account. To spend tether is just like writing a check: the recipient
is agreeing to accept debt on the Tether institution in exchange for whatever
they are selling.
Tether is bank money, and the rise of stablecoins is nothing less than the cryp-
to universe’s reinvention of bank money (outside the regulatory environment).
Crypto has become exactly the thing it set out to avoid; stablecoins are the reinven-
tion of standard banking, all while pretending to be radically new. Crypto was
founded on the mythical promise of trustless money. But in its initial incarnations
(bitcoin, ethereum, etc.), it failed entirely at being money – though importantly, it
did achieve some success as a speculative asset. And so, in an effort to develop a
crypto version of money – under the guise of “stablecoins” – we found ourselves
with just more shadow banks, albeit ones dressed in slightly different clothing, and
operating almost completely unregulated.

***
What is the moral to this final story? Perhaps it is premature to draw any definitive
lessons while crypto remains both in its infancy and still subject to dramatic
change. Although, if the future of crypto looks anything like the present, then
we can safely conclude that crypto will not “revolutionize money” (as so many
crypto startups promise on their websites). Nonetheless, the development of crypto

3 Here I treat only the putatively successful stablecoins while underlining that the successes all
prove isomorphic with shadow banks. Other types of stablecoins have been proposed, or even im-
plemented, but never sustained. They include: 1) so-called “commodity-backed” coins meant to
have one-to-one backing by gold or oil, with Digix as a failed version, well known within crypto
communities; 2) algorithmic stablecoins where one coin is meant to algorithmically hold steady
the value of another, most famously luna and terra, which collapsed spectacularly in 2022 and
were for a brief moment well known far and wide; 3) decentralized finance coins, which function
much like brokerage margin accounts, and probably provide the closest example to a viable form
of crypto money (see Chapter 7) but, nevertheless, play an absolutely tiny role in the overall story
(to date) of crypto.
 Money Parables: From Coin to Edict to Crypto 7

from 2008 to 2022 (the movement from the promise of digital gold to the domi-
nance of stablecoins) does teach us something significant about money – namely,
the overriding importance of bank money.
Bank money can be traced back at least 1,000 years, to the thirteenth-century
Venetian money markets (Mueller 2019). This book will not engage that history in
depth. Instead, many of its early chapters schematize the history of theories of
money. As the book traces these histories, it simultaneously builds out its own,
richer theory of money. Within this framework we will see that the nature of
money can never be rendered simple (money is not a base element or primary par-
ticle). Moreover, money always takes myriad forms: there is a variety of money, a
hierarchy of different monies.
At the same time, it may serve as a useful guide along the way, a watchword of
sorts, to keep in mind the central importance of bank money. In a significant sense,
within today’s societies, all money (we might even say, all “real money”) is bank
money. Put differently, if you want a simple check for determining whether some-
thing is money and, if so, what type of money it is (with what quality), you can
always ask yourself: Who and where is the bank? To paraphrase a famous
movie line: show me the debtor.
If you cannot come up with any answer at all – if there appears to be no bank,
no debtor of any sort – it’s very likely that whatever you are looking at is not
money. And if the answer is “my friend Bob,” then you know you are dealing
with a lower quality of money than if the answer is “Deutsche Bank.” In turn, if
the answer is the US Federal Reserve or the European Central Bank, then you
know you have a higher quality of money on your hands. Regardless of the details,
before beginning the journey that this book charts toward a theory of money,
know that you can be guided along the way by remaining on the lookout for
bank money (our North Star), by always checking for the debtor. We can close
here with a clear and concise contemporary example that highlights the signifi-
cance of thinking about money as bank money.
When Russia invaded Ukraine in February 2022, both the United States and its
European allies responded quickly with a tacit declaration of “economic war” on
Russia (Tooze, 27 February 2022). This war took many forms, but its most impor-
tant initial thrust was the unprecedented action of freezing Central Bank of Russia
(CBR) assets held on other central banks. At the time, these frozen assets amounted
to an estimated $630 billion, with over $400 billion in foreign exchange reserves,
approximately $100 billion of which was held on the US Federal Reserve (Klein
2022). In the early days of the war, it was commonplace in the United States to
see headlines like this: “$100 Billion. Russia’s Treasure in the U.S. Should Be
Turned Against Putin.” The basic argument was that President Biden’s administra-
tion (presumably in coordination with the Fed) should do more than “freeze” these
8 Preface

assets; they should “seize” or “liquidate” them in order to put them to work against
Russia or for Ukraine. The demand was simple: take Russia’s money and use it to
support the Ukrainian war effort (Tribe and Lewin 2022).
But what does that demand really mean? Russia’s $100 billion appears in the
form of a deposit account they hold on the US Federal Reserve. Therefore, prior to
the start of the war, the Fed’s balance sheet included a line on its liability column,
as follows: “$100 billion deposit – CBR.” The $100 billion in question is the Fed’s
debt; it is nothing more or less than what the Fed owes to the CBR. The sanctions
against Russia manifest in the Fed refusing to honor that debt – that is, intention-
ally defaulting and therefore rejecting any Russian attempts to transfer that debt to
someone else. Concretely, if Russia tries to spend their Fed deposits by buying
rubles from another bank, the Fed will withhold payment and the transaction
will fail. In other words, Russia’s check will bounce.
Crucially, however, because Russia’s deposits at the Fed take the form of debt
for the Fed, there is absolutely nothing to seize, liquidate, distribute, or otherwise
give to Ukraine. Before the war started, the Fed listed the $100 billion CBR deposit
as a liability; after the invasion when sanctions are imposed, the Fed draws a line
through that debt.⁴ The Fed was not holding gold bars for Russia, so it cannot con-
fiscate those bars and send them to Ukraine. Money, as we shall see, is never the
site of positive value, but rather always a relation of credit/debt. In refusing to
maintain that relation, which is precisely what the US declaration of economic
war accomplished, one can effectively erase the debt, but this does not itself create
positive money. Money is always the relation, so destroying the debt destroys the
money.

4 Of course, the elimination of this liability favorably alters the Fed’s balance sheet (by decreasing
their liabilities without changing their assets), and if they so choose, they may then create a new
liability – say, to the Ukrainians. But they could do this regardless of the status of the Russian li-
ability. As we will see, the extinguishment of debt destroys money, and the creation of new debt
creates it, but there is no need for the former to precede the latter.
Introduction

1 What is “Money”?

Money is not a thing – not an empirical object of any sort. If we insist on defining
money as a singular concrete entity, we will consistently and repeatedly misiden-
tify money, fail to grasp it as a worldly phenomenon, and ultimately produce only
false theories of money. Rather, the concept “money” comprises a relation. Money
is nothing less (or more) than this money relation. The tricky part consists in
grasping the nature of that relation.
To carry out that task, this book starts with, and consistently calls for, a fun-
damental reversal of our everyday understandings of money. Most readers will
naturally assume that “money” names stuff: things such as gold bars or silver
coins; paper bank notes or digital bank deposits; perhaps other financial assets
such as stocks, bonds, or derivatives; and maybe even digital “coins” or assets
like bitcoin.¹
This book will ask readers to reconsider that assumption and, in essence, to
rename those instruments. Both a $20 bill and $20 in my bank deposit account
are what we will call money stuff, but the money thing (the stuff ) is not money
itself. Rather, the money stuff must be grasped as merely a ticket, a token, or a
claim. Those things that we like to call money always point beyond themselves,
to two other parties: the agent in possession of the money stuff (the creditor),
who in turn holds a claim on or against another party (the debtor).
The shift lies in seeing money not as the token, but as the relation between
creditor and debtor. The token/ticket/claim symbolizes or represents the money re-
lation; it is the only “thing” that can stand in for money, but it always remains just
that – a stand-in for a more complex money relation. Furthermore, this represen-
tative token cannot be equated with or substituted for the full money relation.
To effect this reversal means not to see money as one thing (the money stuff )
but rather to grasp money as the concatenation of three entities: creditor, token/
symbol of credit/debt, and debtor. Properly understood, “money” must always in-
clude all three elements. In this book we will see that treatments of money often go
astray because they either elide this last element (the debtor) or presume that as

1 “Stuff” and “things” are merely synonyms. The general approach to money as some sort of ma-
terial entity (stuff or things) includes both the analog and the digital. The emphasis here lies not
with a difference between the physically tangible and an ostensive intangibility of the digital (ledg-
er numbers), but with the broad idea of money as a thing of positive value – regardless of whether
this “thing” takes the form of a metallic coin or the balance in a PayPal account.

https://doi.org/10.1515/9783110760774-004
10 Introduction

long as there is someone (creditor) in possession of money stuff (token), then we

have an instance of “money.” But without all three elements – including the debtor
– we do not have money. In many such instances we have an owner and an asset,
but we do not have money because we do not have a complete money relation.
Finally, we note a “fourth dimension” to money: the money concatenation
(token, creditor, debtor) must necessarily be denominated in a “money of account.”
This phrase “money of account” indicates not any particular money thing (which is
always concrete and material, even if it is only digits on a spreadsheet) but rather
the utterly abstract denomination of money stuff in its countability – in dollars,
euros, yuan, etc. Every money relation also includes this fourth dimension of de-
nomination. ²
Across the history of theories of money there has been an overwhelming
temptation to study money through direct analysis of the money stuff. Such an ap-
proach tacitly yet powerfully assumes that money is the money stuff. This empirical
seduction makes a kind of logical sense, especially when one considers the nature
of historical (especially anthropological and archeological) evidence: as noted in
the Preface, according to the early story of money, if we find coins and notes,
we think we have found money.
But we can see from the above elucidation of the money relation that a proper
explanation or account of money absolutely cannot be propounded strictly through

2 The concept “denomination” powerfully, but potentially confusingly, combines two meanings of
the word. It includes both the older meaning of name or naming of the credit/debt (pounds, dollars,
etc.) and also the mathematical association with units, which appears in money terms as quantity
(5, 20, etc.). Different denominations can thus range across both quantity (smaller or larger denomi-
nations) and type or kind (rupees or pesos). Denomination includes both type and number – e. g., 31
euros or 16 pesos. This concept is related to but distinct from the notion of “money space” that I
develop most fully in Chapter 5. To say that any token of credit/debt must be denominated in
money of account indicates a kind of virtual or conceptual space for money (the space of dollars,
euros, etc.). No credit/debt can be money without being named in this way. However, my own con-
cept of money space is not abstractly conceptual but concretely phenomenological – money space
is the worldly space in which credit/debt circulates – and is therefore distinct from denomination
in money of account. (Thanks to Ben Taylor for critical clarification on this point.) In addition to
space, we can also consider the conceptual and phenomenological question of time. The creditor/
debtor relationship is necessarily temporal because for money to exist there must be debt, some-
thing owed and putatively to be paid back. To the extent that we can speak of the value of money, it
always remains future value. John Maynard Keynes understood this point deeply and well: “Money
is, above all, a subtle device for linking the present to the future” (Keynes 1936: 183). Stefan Eich
lucidly expands on Keynes’s point by describing money as a “battlefield of conflicting conceptions
of the future” (Eich 2022: xiv). Eich’s The Currency of Politics appeared in print just as this book
was going to press; hence proper engagement with his important work must itself be deferred
to the future.
 2 A Non-Disciplinary Study of Money Relations 11

an empirical investigation of the money token. The assumption of money as the

money stuff proves false. Indeed, to focus narrowly on the money stuff would
be to profoundly misunderstand money by ignoring the full complexity of
money in its four-dimensionality. Worse, by focusing on a concrete thing, we
run the risk of repeatedly mistaking some other thing – such as a commodity or
a technology – for money.³

2 A Non-Disciplinary Study of Money Relations

The only viable theory of money must be a theory of money relations. Here, how-
ever, we encounter a second temptation: to reduce money relations to some other,
putatively more primary or dominant, relations. Many well-known and popular ac-
counts of money assert that “money is a social relation,” but they take that phrase
to indicate either that money’s value is established by prior social relations, or lit-
erally that money is a thing whose existence depends on such social relations.
This book’s insistence on the primacy of money relations operates quite differ-
ently. The point is not that money “depends on” social relations, but that money is
a relation. There is no such thing as money itself; there are only money relations.
Hence this book takes as a guiding methodological conjecture what it ultimately
seeks to prove: the money relation can never be derived from any other form or
type of relation.⁴ This is to say that one cannot subsume money relations within

3 This section poses the question that the entire book tries to answer: “What is money?” Through-
out the book it may be helpful to think of this question as less like (1) “what is oil?” and more like
(2) “what is photosynthesis?” Grammatically, these seem similar, but the first asks about an object,
while the second inquires into the nature of a process. The difference matters. One would assume a
definitional response to (1) but expect a fuller elaboration and deeper explanation for (2). Put dif-
ferently, if money is like oil, then we probably already recognize it as the stuff in our wallets and in
our bank accounts. We think we already know the answer: a $20 bill is money. But if we make the
heuristic assumption that money is like a complicated, dynamic process, then we will need to learn
much more about it before we can understand its very being. This distinction also helps to clarify
why my initial account of money in this chapter should not be taken for “my definition” of money
(as if money were an object to be defined) but rather understood as the first of many layered ef-
forts to conceptualize money. For more on this methodological point, see Chapter 1, Section 2.
4 In Chapter 1, I develop further an important point indicated here concerning the historical na-
ture of this study of money. I reject any strictly logical (and therefore atemporal) approach to
money, and this means that my “methodological conjectures” or “cautionary prescriptions” (see
Footnote 7) must not be confused with the assumptions of formal logic. I am therefore not falling
prey to the logical fallacy of “assuming the conclusion”; quite the contrary, I am avoiding precisely
that error by refusing to assume that money can be understood fully either by its own “natural
properties” or by its determination within a previously given social or political system. Operating
12 Introduction

a theory of society or politics or culture without fundamentally misunderstanding

money (and, perhaps attendantly, without misconstruing society or politics or cul-
ture). To the extent that money relations are irreducible to supposedly “prior” re-
lations, we might say that the money relation itself proves fundamental. However,
we must immediately clarify that this is a very odd fundament because the money
relation is never pure. Money relations are always hybrid relations – simulta-
neously economic, social, cultural, and political.
This basic fact about money has significant implications for the type of theory
one produces when trying to account for money. Most significantly for my purpos-
es here at the outset, it dictates that one cannot produce a disciplinary theory of
money: a political or sociological or strictly economic theory of money would al-
ways be a deficient theory of money because it would necessarily be limited in
its understanding of the money relation. To clarify this point, we can consider
the general limitations of three different disciplinary theories of money.
1) Sociology
Money is fundamentally a social relation because it binds debtor to creditor,
and creditor to debtor. Yet no prior social theory can properly account for
money. The reduction of money to a constituted element within the social
order (what I call the “sociological reduction”) misconstrues the very nature
of money because while money relations surely cannot stand outside of soci-
ety, they themselves are constitutive of the social order.
2) Political Science
Money is an intrinsically political relation because it is a relation of power –
creditor and debtor are never equal within the money relation – and thus of
hierarchy (and potentially of domination). The money relation always has the
capacity to become a direct relation of force (should the unequal power of the
money relation be translated into a relation of domination beyond the terms
of credit and debt). All money relations are ultimately enforceable by non-
monetary forms of coercion and violence, which means there can be no “theo-
ry of money” that is not bound up with a “theory of politics.” Money cannot be
studied in isolation from politics. Nevertheless, money can also never be deter-
mined by or completely contained within a larger theory of politics precisely
because the money relation is not just any sort of power relation. It has dis-
tinct origins and unique implications that are irreducible to the political,
even while they are indissociable from the political.

as if money relations are unique will then make it possible to marshal arguments that ultimately
illuminate this very phenomenon, but such arguments will be distinct, not deductions from a prior
assumption of truth. Thanks to Joshua Simon for discussion on this question of logic.
 2 A Non-Disciplinary Study of Money Relations 13

3) Economics
Money is perhaps the quintessential economic relation because it binds indi-
viduals and groups to one another across the realms of production, distribu-
tion, exchange, and consumption. However, classical and neoclassical econom-
ics have repeatedly given inadequate, often bankrupt, accounts of money,⁵
primarily because they both presume to start with putatively natural and tran-
shistorical economic forces and then derive money from that basis. Money,
however, cannot be explained by universal economic laws⁶ but rather must al-
ways be understood within the context of a historically contingent social order.

In sum, money is always already social, political, and economic; hence no viable
theory of money can bracket any of those dimensions. Readers coming to this
book from any particular disciplinary context may all wish to register the same
complaint, though in different forms: the scholar from each discipline will find
too much in the book from the outside fields and not enough from their own dis-
cipline. Or they may feel that the conclusions the book draws are not directed back
to their discipline, in the form of the work’s “implications” for sociology, political
science, economics, etc. My only defense, my only hope: that all disciplines prove
equally disappointed. This would indicate my other, larger aim: not for interdisci-
plinarity but for non- or anti-disciplinarity. That is, I write here not as a political
theorist foraging in the history of economic thought (and then framing those ma-
terials in terms recognizable to political scientists and philosophers) but rather as
a student and scholar of the money relation itself. Throughout this book I aim pri-
marily to illuminate the money relation as brightly as possible. Put differently, my
goal is to develop the best theory of money, but to do that requires refusing, on the
one hand, the guiding assumptions or methodological frames of any extant disci-
plines and, on the other, the criteria of “output” or “impact” by which each disci-
pline judges works within its field. Instead, drawing from all of those fields (and

5 Starting in Chapter 1, I will set out some of the details of this “failure” of prior theories of money.
Here I point mainly to two categories of theory: 1) economic theories that say nothing about money
at all (or specifically assert that money can be excluded from economic models) and 2) theories of
money as a material of intrinsic value. The former fail because they do not attempt to explain
money; the latter fail because they are false historically (they fail to illuminate the concrete phe-
nomenon of money in the world) and misleading or distorting conceptually (they lead to explana-
tions and predictions that are themselves false).
6 There are none. Economic forces and relations are real, powerful, and irreducible, but social,
legal, and property relations – contingent elements of a concrete social order – are the precondi-
tion for those forces and relations. We therefore cannot understand or explain economic forces
without first understanding what type of economic forces we are dealing with, which means con-
sidering the social order in which we find such forces (Chambers 2022).
14 Introduction

from others), I develop my own methods and frameworks as best suited to the sub-
ject at hand, and I orient my implications toward a much wider audience of read-
ers across and beyond these fields.

3 Capitalism, Value, and Money

My first “cautionary prescription”⁷ with regard to method: begin any study of

money by situating it in history, and within society. A capitalist social order is
one structured by and for money. Unlike previous social orders (e. g., feudal or trib-
utary), the primary production of goods and services – including basic necessities
– cannot even be begun without money. And the ultimate aim of such production
processes is not the goods and services themselves but the money that can be
gained through their sale. Money therefore proves essential not just to “the econ-
omy” but to the continued maintenance of the social order; life itself depends on
money. It should therefore come as no surprise that in such societies the pursuits
of life seem bound up with, if not overtaken by, the pursuit of money. In capitalist
societies today, money appears to be the manifestation of value itself; money is the
measure of value and the form in which value necessarily presents itself. The
worth of a thing (sometimes even a person) is its price measured in money.
These simple facts about money tempt us to assume that money is value itself.
It seems to us that to hold money (i. e., the money stuff ) in our hand is to possess
value, to grasp the essence of positive, intrinsic worth. Our daily social practices
and institutions push us to conceive of money as value incarnate, to understand
money as the substantive manifestation of value. But as we have already observed
above, money is not what it seems.
Any effort to understand money must start here: money is not value itself; no
form of the money stuff – as money, i. e., as part of the money relation – ever pos-
sesses any positive, intrinsic value. Within capitalist social orders the money stuff
often seems to be the essential, positive location of value, the place where value
crystallizes or condenses. However, to grasp money in its complex concatenation

7 I borrow this phrase from Michel Foucault, who used it carefully in his section on “method” in
The Will to Knowledge (Foucault 1978). Such care was not always matched by Foucault’s readers,
who often took him to be laying down universal methodological principles or philosophical axi-
oms. But Foucault’s point was that the question of “how” to study objects in history could only
be answered on the go, as it were, with an emergent set of guiding principles that helped orient
those studies.
 3 Capitalism, Value, and Money 15

is to see an utterly contrary reality: the money stuff is never the site of positive
value.⁸
This book develops this larger argument – that money does not incarnate
value – from a number of different angles, but one way to initially orient ourselves
around this new understanding of money is through a metaphor. To avoid any un-
necessary confusion, I note that a good metaphor ought not function like a model
or a concept, and mine is definitely not meant to be either. Quite the contrary, the
“is” of the metaphor does not equate in formulaic fashion because the metaphor
links two things that are absolutely not identical.⁹ A metaphor produces distanci-
ation; it defamiliarizes (Public Address 2021). Hence good metaphors convey mean-
ing in a way that exceeds the literal (in a way that can even put philosophical con-
cepts under pressure).¹⁰ When I say “love is a rose,” I try to indicate something
important about love – not to suggest that one will find love by picking flowers.
Bearing the above in mind: money is a pointer variable. I draw the metaphor
from the language of computer programming, which marks a fundamental differ-
ence between a “normal variable” (the standard kind) and a “pointer variable” (a
special kind). A normal variable is just a location in computer memory that stores
a value. Normal variables have value. In stark contrast, a pointer variable directly

8 As I stress in this introduction, throughout this book I continually call on some very old, but at
the same time quite lost, insights about money. For example, here are the first lines of the second
chapter from an 1896 book called The Science of Money, which powerfully expresses the epony-
mous argument of my book:

The laws of certain States ordain that either one of the several different coins weighing so many
grains, or of pieces of paper of such a size, each called a pound, a dollar or franc, shall be “the
unit of value.” Important as they are, neither of these words, “unit,” or “value,” is defined in the
law. Reasoning from its use in analogous cases, “unit” is a synonym for measure; but the mean-
ing of “value” is not to be determined by analogy, for there is no analogous use of it in the stat-
utes. When it is remembered that the ablest logicians of all countries, from Aristotle to Mill, have
vainly endeavoured to give it form, it will begin to be seen how complex and obscure the nature
of value must be, and therefore in what great uncertainty the statutes have involved all commer-
cial relations, by using, without defining, this intricate term. Nor is its use a mere matter of
speech, of interest alone to pedants or grammarians. The existing law treats value as a thing,
and measures our affairs and fortunes by means of assumed relations to this thing, which, we
shall see as we go on, is not a thing at all. (Del Mar 1896: 7– 8, emphasis added)

Note that throughout this book all emphasis in quotations is original unless explicitly noted other-
wise (as above).
9 On this basis, Nietzsche argues for the superiority of metaphors over concepts: “Every concept
arises from the equation of unequal things” (Nietzsche 1979: 83, emphasis added).
10 Some argue that the failure of a philosophical metaphysics lies in its efforts “to pass off the
metaphor for the concept” (Vinketa 2022: 66; see Kofman 1993: 15).
16 Introduction

contains no value whatsoever. Instead, it literally points to another variable – that

is, to a normal variable that contains value. But the pointer variable has no value;
all it contains is an address, the physical memory address of the normal variable.¹¹
So much the same can be said of money in the world as we have just said of
the pointer variable in programming language. The raison d’être of the money
stuff – of any coin, note, bill, check, or digital token – is not to contain, have, or
incarnate value. Money has no value. ¹² The value element of the money relation
never lies in the money stuff, but rather can only be located across the entire
money array. “Array” denotes an “ordered series,” an “arrangement of quantities
or symbols,” or, in mathematics, “a matrix.”¹³ In referring to the “money array,”
we indicate not an array of money; rather, we designate money itself as the
array. Money cannot be grasped as a thing or as any sort of simple relation; it
can only be understood in the sense of an array. In choosing the term “array”
to name this complicated, four-dimensional money relation, we also extend the
programming metaphor. In programming, an array is at base nothing more than
a table or spreadsheet, much like a basic money ledger. Importantly, however, a
computer programming array is dynamic and multidimensional, and thus the ref-
erences to value may constantly move and shift across the array.
The value dimension of money depends on the entire money apparatus: cred-
itor, debtor, token, and denomination. If we isolate the money stuff, the token or
claim itself, we do not find value in it, though we will observe that it wields a cer-
tain purchasing power in that agents may be willing to give valuable commodities
in exchange for the claim of credit/debt.

11 For a detailed elaboration of the metaphor, built out in terms of the computer programming
language C, please see the appendix to this chapter: “Money as a Pointer Variable.”
12 As briefly mentioned in the Preface, and as will be discussed in much more detail in the fol-
lowing chapters, this thesis holds even when a commodity with value (use-value and exchange-
value), such as gold, serves as the money token. Under such conditions, we must distinguish be-
tween commodity-gold and money-gold, and we must recognize that the value of the former
only matters when it exceeds the denomination of the latter. See the detailed discussion of Schum-
peter in Chapter 2.
13 A recent formulation by Ingham chimes with my use of “array.” He writes: “Money is not a
‘thing’ that belongs to one or other of the institutions that it passes through and between. Rather,
money consists in the ensemble of social relations … [Money] is not created ex nihilo. The sovereign
power to ‘tap’ the keyboard lies in the ‘consolidated’ matrix of credit-debt relations” (Ingham,
forthcoming, emphasis added). For the definition of “array,” see the New Oxford American Diction-
ary.
 4 Credit (i. e., Debt) 17

4 Credit (i. e., Debt)

This book builds from a rich vein of late nineteenth- and early twentieth-century
writings on the history and theory of money. These works were often thought of as
iconoclastic or strange at the time of their publication, and mostly they were quick-
ly dismissed or forgotten. But for a brief period, they were numerous. Across their
differences, we can read these works as arguing for a concept of money as a rela-
tion of credit (and therefore debt). This older body of literature shows that money
has no value. Nonetheless, in their central focus on extant money practices, in
their close scrutiny of given money stuff, these writings typically fail to grasp
the wider money array. Hence, for my project, this body of work functions like
a magnet, offering both a push and pull of attraction and repulsion.
This literature sharply illuminates a crucial fact that serves as a cornerstone of
this book: any concrete example of the money material – a coin, a bill, a bank ac-
count, a digital token – will always be a marker of credit for the holder and a
marker of debt for the issuer. “Credit” and “debt” are different names for the
same thing; they distinguish not between different entities, but between different
poles of a relationship.¹⁴ The marker of credit/debt never itself possesses value, but
only measures value denominated in a named money of account (euros, dollars,
rupees). As detailed in the preceding section, we may think of the marker as the
money thing, and we can even agree to call it by the name “money,” yet we cannot
forget that the thing is not actually money itself. Money always consists of the
wider money relation, the credit/debt relation for which the thing simply serves
as token. To spend or earn money then – to buy or sell – is simply to update
and alter the array that records all credits and debts. To create money is merely

14 In making his own version of this clarification, Ingham puts the point nicely (in a passage I only
came across after drafting my own formulation): “Credit and debt refer to the same thing seen
from either side of the relation” (Ingham 2012: 122). Though I insist on this point throughout, I
should clarify that not all writers on money maintain such consistency. Some authors intentionally
allow the concept of “credit” to ossify; they thereby treat a “credit” as a site of positive value with-
out a corresponding debt. In contrast, in my account what a creditor holds is nothing other than a
claim on a debtor. For further illumination of this point, see my critical engagement with Stephanie
Kelton in Chapter 6. In a related but distinct move, Tony Lawson reads various credit theories of
money as arguing that “money is essentially debt, a liability per se” (Lawson 2022: 11). But this is
incoherent: there can be no such thing as a liability per se. The concept of “liability” is fundamen-
tally relational, and as such it cannot exist “in itself.” My liability entangles me with a creditor, the
agent I owe, and my debt is always their credit. Lawson stumbles into the nonsensical when he
tries to discuss an intrinsic liability; this leads him to tie himself in knots trying to distinguish be-
tween “money” – which he claims, as debt, is “not visible” – and the “markers of money,” such as
coins, notes, and deposit accounts.
18 Introduction

to issue debt that the holder then circulates as credit. These early works therefore
frequently test the hypothesis (or, alternatively, advance the thesis) that money is
credit.
Hence the importance and attraction of these works, which offer a succinct
answer to our opening question. The most in-depth analysis of the money stuff
will always give the same result: the token, claim, ticket, or voucher that is the
money stuff can never be other or more than a symbol of credit (and thus of
debt). This result must be taken as fundamental to any effort to understand money.
However, that very result cannot be fetishized or somehow taken as itself es-
tablishing a full-blown theory of money. Hence the repulsion, the need to move
well beyond this literature. “Money is credit” proves inadequate as a theory of
money because any narrow focus on the money stuff is insufficient. The money
array must include not just the money stuff, the pointer, but also that to which
it points (the creditor and debtor) and the denomination in money of account.
At an abstract level, we might describe money as the array itself, the overall
accounting of the totality of credits and debts distributed throughout a multiplicity
of denominations (multiple moneys of account). The nature of money is indelibly
tied to this array. Yet we can never give an adequate account of money if we re-
main at too high a level of abstraction. We have to look at the contents of the
array, which include specific moneys of account, concrete creditors and debtors,
and a wide variety of money tokens.
One way to bring home this crucial point, which will arise again and again
throughout the book, is to stress the deep ambivalence of the word “money.” In
using the term we find ourselves constantly substituting and conflating two differ-
ent ideas: money as marker (that cheque for £47; this $20 bill) and money as the
very money of account (GBP and USD). Moreover, cutting across and connecting
these concrete and abstract levels, we find the definite existence of real creditors
and debtors (individuals and institutions) who hold and exchange concrete money
tokens, denominated in abstract moneys of account.
Tying these strands together leads to the conclusion that if we focus narrowly
on the money stuff and ask the question “What is that?” then we are left with only
one good answer, “It is credit,” in the sense that it serves as a token of credit for its
holder and a token of debt for the party upon which it makes a credit claim. The
book develops and amplifies this argument that “money is credit” in a number of
respects.
Simultaneously, however, the book also demonstrates that “What is money?” is
absolutely not the same question as “What is the nature of the money stuff?”
Whenever we limit our analysis to the money thing, we pose only the latter, nar-
rower question. Yet this is an improper translation of “What is money?” and allow-
ing it to guide the analysis severely limits any theory of money.
 4 Credit (i. e., Debt) 19

By insistently posing the broader question – what is money? – this book takes
a subtle position on the “credit theory” of money. First, I strongly affirm the credit
theory’s core claim. The money stuff is an empirical entity, and if we inquire into
its conceptual and practical nature, we will find that it is nothing other than a
claim of credit/debt. The credit theory that arose at the turn of the twentieth cen-
tury offers one of the richest resources for any effort to understand money today,
and it provides an important background for the overall argument advanced here.
In the debate between, on the one hand, metallists and commodity theorists, and,
on the other, credit and claim theorists, the latter win – hands down. But to win a
debate by proving one’s opponent wrong is not equivalent to, nor does it logically
entail, the validity or viability of your own theory. To construct a full-fledged theo-
ry of money requires much more than a critique of commodity theory, and the
early twentieth-century credit theory cannot stand on its own.
Hence I depart from the credit theory in various ways. Primarily, money, in the
broader sense of the money array, is not a thing; thus asserting that it is credit is
never enough. On its own, “money is credit” cannot produce a fully robust theory
of money, and therefore the argument today must look slightly different than that
presented by the credit theorists a century ago. Whenever we encounter some-
thing purported to be the money stuff, we must ask ourselves: Does this entity
function as a token or claim of credit/debt? Does it point to an identifiable creditor
and debtor, and is it denominated in a (potential) money of account? In other
words, can we locate the putative money stuff within a proper money array? If
the answer is yes, then we will have shown how this money stuff functions as cred-
it/debt, and in that sense it makes perfect sense to say money is credit (and thus
debt). But the process of establishing something as money entails more than the
designation of the money stuff. No matter how in depth the analysis, we cannot
grasp money strictly by molecular analysis of the money stuff. If someone
hands me a seashell, I cannot tell if it is “money” (that is, a token of credit that
points to a debtor) simply by looking at the shell. Instead, we must always explicate
the broader money relation, the concatenation of creditor, debtor, and denominat-
ed token of credit.
The basic idea of redescribing the money stuff as a claim of credit is nothing
new: many of its core elements were detailed just over a century ago by A. Mitchell
Innes.¹⁵ After being forgotten for many decades, Innes’s work – and, along with it,

15 While his legal name was “Alfred Mitchell-Innes” his official publications bear attribution to
“A. Mitchell Innes,” sans hyphen (Wray and Bell 2004: 4). My concern lies not with his biography,
so I simply refer to the published author as “Innes.” Innes’s work was effectively lost (never cited)
for more than 75 years, before being rediscovered by L. Randall Wray, to whom anyone writing
20 Introduction

a rudimentary credit theory of money – has today come into a sort of fashion.
However, in this context, I want to underscore two points. First, Innes’s writings
were not sui generis. Joseph Schumpeter details a long lineage of “claim theories”
of money, a line of descent in which Innes surely has a place, even if Schumpeter
never read him (Schumpeter 1954). Second, despite the relative familiarity of In-
nes’s name, a deep and sophisticated theory of money as credit simply has not
yet been developed, and the radical implications of such a theory have not been
fully explored. Quite to the contrary, at the very same moment that Innes’s
work has been uncovered (its insights celebrated), it has been simultaneously,
even if unintentionally, reburied (its transformative implications blunted).¹⁶ Just
as the credit theory of money has been identified as a fundamental alternative
to the dominant commodity theory, so has it simultaneously been misidentified
as little more than a precursor to a state theory of money.
This book will frequently use the phrase, and defend the thesis, “money is
credit,” but it always does so in the context established just above: as an answer
to the smaller question, “What is the nature of the money stuff?” While the
short thesis “money is credit” powerfully disrupts a host of orthodox arguments
for money as a positive site of value, we must remind ourselves that this phrase
operates as shorthand; consequently, that claim must be taken in concert with a
wider account of not only the nature of the money stuff but also the overall work-
ings of the money array. To reiterate, “money array” names the quadripartite
money relation. As an array, money pivots around the money token as a pointer
(held by a creditor) that identifies a debt (held on a debtor) denominated in a spe-
cific money of account.¹⁷
Therefore the narrow claim for the money stuff as credit must consistently
and repeatedly be set into the broader context of the money array. As long as
our gaze remains confined to the money stuff, our account of money will remain
limited to exploring the nature of that element in isolation. But such an explora-

about, or just trying to understand, money today owes an enormous debt for excavating and pop-
ularizing Innes’s early articles.
16 Of the three most important and widely read authors who cite Innes prominently: one consis-
tently subordinates his work to Georg Friedrich Knapp (Wray 2014); one thoroughly muddles the
theory of money (Graeber 2011); and while the final one reads Innes incisively, he nevertheless de-
preciates a credit theory of money in favor of a sociological account of state-capitalist money (Ing-
ham 2004a; Ingham 2004b).
17 Programming-languages tacitly presuppose either no denomination or a universal denomina-
tion of pure numerical number (established in the declaration of variables as integers or float-
ing-point decimal numbers, etc.). In the concrete world, denominations are multiple and must
be specified clearly. There is no such thing as a credit/debt of pure number (e. g., 22); it must be
a credit/debt of specifiable denomination (e. g., $22 or £22, etc.).
 5 Indexing the Money Array 21

tion proves impossible: the token of credit/debt in itself is nothing.¹⁸ To understand

“money” we must trace the connections to which the money pointer points. This
means that every time we see a putative instance of “money,” we must look to
the creditor and debtor, and often we must inquire further into the details of
their balance sheets. As we will explore further later, not all money tokens are
the same: first, because not all creditors and debtors are the same; second, relat-
edly, because not all moneys of account are the same.
The issues at stake here go well beyond the treatment of one author; they re-
dound to the presentation of the entire history of theories of money. Recent work
repeatedly parses that history into two categories: the orthodox theory that runs
through classical political economy (mid-sixteenth to mid-nineteenth centuries),
comes explicitly to the fore during the emergence of the neoclassical paradigm
(late nineteenth century), and continues to be repeated in introductory economics
textbooks to this day; and the heterodox alternative, a mixed bag of texts and argu-
ments drawn from diverse quarters, all of which oppose or challenge the so-called
orthodoxy. This narrative framing nicely supports contemporary accounts of
money designed to offer their own distinct, present-day, theory. When given any
length of overview of orthodoxy versus heterodoxy and then asked to choose be-
tween them, there really is no choice: the “orthodox” account proves false at al-
most every turn. But along the way these approaches get the history wrong, and
do so in a way that has significant consequences for the theory of money. The
plain truth is that, even working with simplified typologies, we can easily discern,
at minimum, more than half a dozen distinct alternatives to the orthodox account.

5 Indexing the Money Array

This book is not another contribution to the “heterodox tradition.” Quite the con-
trary: I reject the notion that we can properly conceptualize either the history of
money or extant theories of money through the lens of the orthodox/heterodox bi-
nary. For just this reason the book begins, in Chapter 1, with a reconsideration of
the history of theories of money. I title the chapter “How to Do the Theory of
Money” to signal that history is not just a blank context, an empty container for
“theory” as a work of abstraction. Rather, history is made and theory is a mode
of seeing; both theory and history are things we do. Hence I start with methodolog-
ical remarks that draw out the threads woven here concerning the type of ques-
tions we must ask in order to provide an adequate account of money. We cannot

18 Thanks to Paul Mariz for this essential notion.

22 Introduction

take up the project of trying to grasp money without considering some much
broader questions about how we understand history, theory, and their relation.
This first chapter establishes a working framework for both theorizing money
and studying the history of prior theories. It also outlines the paradoxical history
of theories of money before engaging in some detail with the dominant approach
to money: functionalism. The functionalist approach to money – money is that
which performs money functions – centers and dominates (even if tacitly) almost
every introductory economics textbook. My critique of functionalism shows that
despite putatively eschewing metaphysics, these simplified approaches tacitly pre-
suppose their own (false) metaphysics of money. Ironically, they thereby serve to
mark the importance of inquiring into the very being of money. Chapter 1 thereby
lays important groundwork for later, theoretical chapters.
Before taking up those tasks, I first turn, in Chapter 2, to build my own broad
typology of money theories. This matrix of money theories is not at all the telos of
this book, but charting it early in the book allows me to situate my own theory in
relation to that matrix, and therefore to illuminate its various contrasts with other
theories – not only the orthodox account, but also a variety of unorthodox theories.
By highlighting the differences between my account and these other “alternative”
theories of money, I bring to light the power and distinctiveness of a theory that
both pushes to its radical conclusion the thesis that the money token is credit,
and situates that thesis within the broader context of the money array. As elabo-
rated above, the money token is a pointer to a debtor, held by a creditor, and in-
dexed in a money of account.
Chapter 3, “Money ‘Is’ Credit,” takes up the so-called credit theory of money,
considering it both in its historical context and in our own present. The quotation
marks in the chapter’s title underscore a point developed fully in this introduction,
one that subtends the entire chapter: understood in the more limited sense as a
theory of the nature of the money stuff, the extant credit theory provides a power-
ful starting point for reconceptualizing money today, but on its own, it cannot
stand in for a proper theory of money because the money stuff must never be mis-
taken for the wider money relation. Thinkers such as Innes, R. G. Hawtrey, and
Henry Macleod consistently prove that – at every turn, across swathes of history,
and in theoretical terms – the money stuff is nothing other than credit. The late
nineteenth- and early twentieth-century debates on money thus provide a definite
critique of all versions of metallist or commodity theories of money, and this de-
spite the fact that those latter theories never lost their dominant position within
neoclassical economics (and hence in mainstream, everyday understandings of
money).
This chapter develops a novel and, I submit, much more radical reading of
Innes, designed to show that his conceptualization of money actually portends a
 5 Indexing the Money Array 23

new vision of “economic exchange,” one completely at odds with the paradigm of
neoclassical economics. Despite what all introductory textbooks still teach, at its
core economic exchange is not the swapping of one commodity for another (two
entities of the same kind) but the swapping of a commodity for a credit (two utter-
ly different kinds of entities). Later in the book, this theory of economic exchange
will provide a framework for a series of arguments that expand and develop my
broader theory of the money array. At this juncture, the rereading of Innes and the
development of a thicker understanding of the credit theory allows me to draw a
much sharper contrast between credit theories and state theories of money.
Chapter 4, “Money Theories Today,” both highlights and cashes out the impor-
tance of that contrast by engaging with the two dominant strands of “heterodox”
money theory today, that of Geoffrey Ingham and his followers, on the one hand,
and Randall Wray and his students, on the other. These writings, and the broader
cohort of anti-orthodox works they call upon, all have the great merit of rejecting
commodity theories of money (thereby undermining the teachings of modern in-
troductory economics) and of learning from some of the key insights of the credit
theory. Building from my radicalization of the credit theory in the previous chap-
ter, I argue here that the broader sociological account of money that we see as a
kind of foundation of these works (explicit in Wray’s case, more tacit in Ingham’s)
proves limiting because it ultimately strives to treat money as a “thing” that is
somehow endowed with value. To be clear, this approach does not naively take
money as a “value-thing,” in the sense of an empirical object with intrinsic
value. Nevertheless, the state theory repeatedly falls back on the trope of money
as an “institution” or a “tradition.” In this narrative money has no value but for
the sheer fact that society has “agreed” or collectively “believes” that it does.
The sources of this putative societal value of money may differ, but the edifice
of the argument remains the same. We see its outline when journalists call on the
post-2008 narrative of money that I described in the Preface, quoting experts to the
effect that “money is a social institution … It’s like language. Its value depends on
how many people agree to use it” (Coy, 10 December 2021).¹⁹ These types of argu-
ments manage to preserve the core of commodity theories of money while purport-
ing to reject them, because ultimately they swap value in the money stuff for value
in the money “institution.”²⁰ We wind up in the same place: committed to the value

19 Here Coy, as journalist, quotes George Selgin of the Cato Institute, as expert on money. The
quote comes from Coy’s interview of Selgin.
20 Though I regret not having the space to address their work in detail, I would apply my broad
challenge to the idea of money as an “institution” (posed in Chapter 4) to the significant work of
Michel Aglietta and André Orléan, who, despite other significant differences, understand money in
just these terms (Aglietta 2018: 67; Aglietta and Orléan 1998). When I describe the money “array,” I
24 Introduction

of money and therefore blinded to the actual, and quite complex, functioning of
the money relation. In other words, to assert that money is accepted as payment
because “everyone accepts it,” one must ignore (rather naively) the long history
of money relations in both capitalist and non-capitalist societies – a history replete
with cases in which people routinely cease to accept tokens of credit as payment
for goods, services, or previous debt. Calling money an “institution” tells us nothing
about whether (and which) money relations in a particular society remain viable.
More to the point, the question of whether money is accepted does not depend on
some large and amorphous institution, but rather on the particular characteristics
of the discrete money token, the concrete debtor on whom it makes a claim, and
the specified money of account in which it is denominated.
Chapter 4 cuts at the root of these broad sociological accounts of money and
challenges their vague reliance on “tradition” or “society” as a source for money’s
ostensible value. While it is doubtless true that money practices are bound up with
all sorts of institutional systems and patterns – with norms, laws, and traditions
themselves crucial to larger social and international orders – I demonstrate
here the untenability of positing money as an institution that would somehow
endow “money” with “value.”
The title of Chapter 5, “From Money/Credit to Money-Credit,” signals the most
philosophical chapter of the book, wherein I consider seriously the question of the
“nature” of the money stuff. Zooming in on the money token itself, I follow earlier
credit theorists by asking after the very nature of the ticket, token, or claim. More-
over, by leveraging my earlier work on the money array – that is, by framing the
work here as a micro-level project carried out in a wider macro context – I propose
to push that work much further than it has gone before. I do this by raising the
genuinely ontological question of the being of the money stuff. What is the entity
we refer to as “money” and that Keynes named “money proper”?
As already detailed in Chapter 3, any credit theory of money defends the claim
that all money is credit – meaning that in each and every instance the nature of the
money token is nothing other than a symbol of credit/debt. The late nineteenth-
and early twentieth-century credit theorists all affirm this fundamental thesis.
However, no one – then or now – has been willing to defend the corollary: all cred-
it is money (i. e., there is only money-credit). Chapter 5 pushes a credit theory of
money to its furthest ends by showing that a tenable theory of money must not
only affirm the nature of the money stuff as credit but also demonstrate that
any credit instrument can never be categorically distinguished from the money

am still using a metaphor to help capture the meaning and implication of money and money prac-
tices. Those scholars who describe money as an “institution” mean it much more literally.
 5 Indexing the Money Array 25

stuff. Put simply, earlier writers argued: show me money stuff, and I’ll reveal its
nature as credit. Here I prove: show me a credit, and I’ll reveal its nature as indis-
tinguishable from money stuff. This means that one can never draw a fixed line
between “money” and “credit.”
In our everyday practices and discourses we can (and do) distinguish between
promises to pay (credit) and actual payments (money). But this can only ever be a
post hoc construction, not a categorial dichotomy. After all, in almost all cases “ac-
tual payment” is delivered in the form of further promises to pay (through the
transfer of some other credit on a debtor). We can make empirical observations
of money practices and measure the difference between credit that circulates
and credit that fails to circulate, but this gives us only a descriptive or historical
account of an emergent difference between money and credit – one that can al-
ways dissolve or even reverse. We can only draw the line between credit and
money concretely, in history and in daily practice, while the line itself will con-
stantly be blurring and shifting. At the ontological level, credit instruments and
money tokens cannot be dissociated from one another; they are the same
“stuff,” what I call money-credit.
The conclusion of Chapter 5 brings the book to an important pivot point. Hav-
ing explored the unique nature of the money stuff, located within the wider money
array, the theory of money in an abstract sense proves complete to a greater or
lesser degree. But to stop here – as most theoretical treatments of money do –
would be to leave the understanding of money woefully underdeveloped. Indeed,
my inclusion of the final two chapters itself poses a challenge to those works that
would rest content with an abstract account of money.
Chapter 6 asserts that one cannot grasp money without exploring, even if only
at a schematic level, the subject (and title) of this chapter, “Money Markets.” Per-
haps some readers may initially find the material addressed in this chapter prosa-
ic. I spend a significant chunk of time first working through the elementary out-
lines of bank loans, then detailing some of the most basic components of today’s
money markets. But the finer points of those arguments are, in their own unique
way, as conceptually complex as the footnotes on ontology from the preceding
chapter. Today’s money markets are simultaneously enormous, enormously com-
plex, and enormously important – not just to economic forces and relations but
to the entire constitution of contemporary capitalist social orders. Money markets
form part of the bedrock of modern capitalist societies. If we cannot make sense of
those markets, we cannot presume to understand money.
This chapter begins by developing a crucial complement to Chapter 3’s revised
theory of economic exchange as the swapping of commodities for money-credit:
here we consider the idea of financial exchange as the swapping of money-credit
for money-credit. Money markets are nothing more or less than markets in money-
26 Introduction

credits, functioning according to distinct precepts. To expound this notion I draw

on Perry Mehrling’s insightful illumination of the basic principle of banking as the
swap of IOUs, and from there build to a working understanding of one of the most
important money markets today, the “repo” market, valued at almost $7 trillion in
transactions daily. At this point in the discussion, those readers who expected a
boring, merely descriptive project will be surprised to discover that money mar-
kets operate according to a logic that can only be grasped properly through
deep conceptualization and rigorous philosophizing.
The study of repo markets serves as the base for analyzing more complex fi-
nancial instruments, especially derivatives. In this chapter I develop what I call the
“logic of the derivative,” an argument designed to show how non-money markets
are treated like money markets (or better, how new money markets are created on
the basis of commodities), with significant social, political, and economic effects.
Importantly, I also address the thorny question of the “price” of money. The goal
is to affirm both the central importance of markets in money, where traders surely
see various prices for distinct money-credits, but also the fundamental thesis of the
book that money has no value, and therefore has no price in the sense of a direct
measure of that value. Overall this chapter serves as a bridge from the historical
and theoretical work of the previous chapters to the more concrete political ques-
tions of the final chapter.
Chapter 7, “Money Today,” addresses some of the biggest of today’s money top-
ics, using these examples to clarify the terms of the theory developed in the book,
and mobilizing that theory to better highlight the shape of answers to such ques-
tions. The chapter briefly addresses today’s “gold bugs,” who think that money
problems can be solved by returning to a place we never inhabited – to a sound
(i. e., intrinsically valuable) money stuff. The point here is not just to show that
this position is utterly wrong, both conceptually and historically, but to use the
theory of money developed in this book to show precisely why and how it is
wrong – and finally to indicate why so many would be attracted to such a nonsen-
sical theory in the first place.
From there the chapter takes up the thorny question of “world money.” I brief-
ly show how, historically, it turns out that gold was never really money in the sense
it has been taken to be. Then, perhaps even more counterintuitively, I explain why
today it is not so simple as saying that “the dollar” is world money. The dollar is not
money but merely the name for one of many moneys of account. And while world
money today is typically denominated in dollars, and therefore always overlaps
with US sovereign territory and the sphere of US influence, this does not make
the direct issue of US debt the ultimate or only world money. In fact, world
money today takes a different version of the same shape it took in the past –
that of the derivative. Only a form of money that can move across both multiple
 5 Indexing the Money Array 27

denominations and geographic territories (across “money spaces”) can aspire to

world money, and only derivatives truly achieve this end.
Finally, here at the very end, I submit to the necessary compulsion that comes
with concluding a book on money in 2022: to offer a more detailed discussion of
bitcoin (and thus cryptocurrency in general). For readers who want the answers
without reading the chapter: no, bitcoin is not money; no, bitcoin can never be
money; yes, as others have suggested, bitcoin is a kind of fake gold, what I call a
“faux commodity.” But most significantly of all, I show that the fake-gold nature
of bitcoin depends not merely on legions of bitcoin bros pretending that bitcoin
is like gold (a too-simple particular thesis that operates according to the same
logic as the too-simple general thesis that money is a mass delusion). Rather, bit-
coin can function like a faux commodity only and precisely because it already func-
tions like a derivative (though technically it is not one). In a word, bitcoins are like
oil futures without spot prices. And this determination, I suggest in my own con-
cluding lines, tells us something crucially important about capitalist social orders
today.

***
Within the terms of this book’s theory of money, we might accurately redescribe
capitalism as an arrangement of society based upon the necessary availability of
money-credits, which are drawn on to mobilize a system of production designed
to generate more money-credits. Markets in money, built around and shaped by
the principle not of economic exchange, but of financial exchange (the swapping
of money-credits for money-credits), therefore prove central to capitalism. And
the logic of financial exchange comes to play an increasingly dominant role not
just within the sphere of the money markets but beyond it: through the logic of
the derivative, markets in goods and services are routinely treated as if they
were markets in money-credits. Money lies at the center of it all. But in order to
make sense of any of it, we can never forget that money is not a substance, not
a thing of value of any kind. Money is a pointer to concrete, denominated cred-
it/debt relations, and as such, money has no value.
28 Money as a Pointer Variable

Money as a Pointer Variable

We can use programming language as a metaphor to grasp some of the fundamental conceptual truths
about the nature of money. In particular, we can get a clearer sense of what the money token (the
money stuff – coins, notes, spreadsheet entries) is and is not, and thereby clarify how money relates
to value. Step one of this metaphor takes up the basic framework of the C programming language. For
our very limited purposes, this gives us access to two types of variables.
A normal variable is nothing more than a location in computer memory that can store a value. For
example “int x = 2;” is a line of C code that first declares a normal variable of the integer type and then
assigns that normal variable the value 2.²¹ When the program runs, the computer will allocate 4 bytes of
memory for the variable x and then write the value 2 in that location in memory. We usually think of
money like a normal variable: we assume that while money may have some symbolic or representa-
tional aspect, it nevertheless represents real value, located somewhere.
A pointer variable is unique: the only “value” it can contain is the physical memory address of a
normal variable. The line “int *p;” declares an integer-type pointer variable (the “*” just means the var-
iable is a pointer). And the line “p = &x;” assigns as the value of p the location in memory of x (the “&”
just means memory location). The pointer variable points to the normal variable, and therefore it points
to value. However, only the normal variable (x) could be said to contain value; all p contains is the ad-
dress in physical memory of x. Money is like a pointer variable, not a normal variable.

Step two of the metaphor modifies the C programming language with two new rules:
I. Every declaration of a normal variable requires a corresponding declaration of a pointer
variable that points to that normal variable.²²
II. All normal variables must be negative.²³

Rule (I) means that lines 2 and 3 of the code below must follow ²⁴ line 1:
1) int v;
2) int *m;
3) m = &v;

21 For those completely new to the language of code, it could be helpful to think of lines of code
like the statements of a god – that is, they are simply meant to bring into existence whatever they
declare. This means you can read a line of code not as an argument/claim/assertion, but as the dec-
laration of a new truth. The line of code that says “int x = 2;” makes it the case that an integer
variable named x now exists, and that its value is 2.
22 This rule expresses that money is always “credit/debt,” which means it is credit and debt simul-
taneously. Money must always have two “sides” to it because for it to be money, it must be a credit
for one party and a debt for another.
23 This rule gives expression to money’s “value form.” Money itself has no value – is never the site
of positive or intrinsic value – but money can have purchasing power because it functions as a
value claim. Hence money can be one form that value takes within a capitalist system without itself
having any value.
24 That is, literally: if a normal variable is declared without both the declaration of a pointer var-
iable and the assignment of that pointer variable to the normal variable’s location in memory, then
the program will not compile.
 Money as a Pointer Variable 29

We may then add a fourth and final line of code, declaring the value of v; v can take any value we want,
but it must be negative. For example:
4) v = − 47;

The first two lines give us two working locations in computer memory: the one where the normal value
(v) is written, and the one where the pointer variable (m) is written. After the first two lines, neither v nor
m has any value at all assigned to it. Line 3 assigns to the pointer variable (m) as its value the location in
memory of v. The “value” of m is nothing other than this memory address, a site for the possible value of
v. And at this moment, v still has no value at all. Line 4 changes that fact by assigning v the value of − 47.
These four lines of code are the entire “program” for this heuristic example, but they can illumi-
nate a great deal about money and value.
A) Whatever else we might say about value, we know that “47” is the amount of value in play. And
yet, there is no positive value located anywhere in the code. The only normal variable, which is the
type of variable to which we can directly assign value, in our program is v, and it has a negative
value. The normal variable (v) is a measure of debt. We can think of the location where v is written
into memory as lying within the liability column of a debtor: that debtor owes 47 units of value to
someone else.
B) The pointer variable (m) is the measure of credit. Importantly, because m is a pointer variable, it has
no positive value assigned to it; m’s “value” is the location in memory of v, the debt.
C) The credit cannot exist without the debt. ²⁵ If v is not declared in the program, m cannot be declared
or assigned its value.
D) The only manifestation of value in the program is negative value, debt, as expressed in the normal
variable (v).
E) The positive credit is the pointer variable (m), but m contains no intrinsic value whatsoever: it
merely references value located elsewhere, and that value is negative (it is debt).

In other words, what we might otherwise wish to conceptualize as positive value is only ever credit, and
credit can never be anything other than a claim on a debtor – a reference to value owed, which is neg-
ative value.
In programming languages a pointer variable is a “reference” to value located elsewhere. In this
example, by requiring all normal variables to have negative value, I have underscored this truth: the
value that money references is always debt. Only the relation between the pointer variable and the nor-
mal variable can make value possible in the program (in the system of money and value). Put differently,
the only positive value is the reference to a negative value.
Without pointer variables there would be nothing like positive value at all. This is not despite, but
rather because pointers themselves have no value. The existence of value in the system depends on the
essential role of a unique variable that has no value. Moreover, the necessary and highest form of value in
capitalism, money-value, is only ever a reference to negative value located elsewhere.
This metaphor conveys a truth about money: money has no value because the only thing one can
possess is the money token, the pointer to value elsewhere, yet that money token points only to a de-
nominated record of debt – not to positive, intrinsic value but to a record of negative value.

25 This fact within the metaphor tells us something of great significance about money: while we
can rightly refer to money as “credit,” we can never forget that credit is never anything more than
a claim (held by the one who is owed) on a debtor (the one who owes).
Chapter One
How to Do the Theory of Money

1 A Note on Method

Any serious study of money must combine the historical and the theoretical, and
sooner or later this simple fact forces the student of money to confront complex
questions about the theory of history and the history of theory. In other words,
the study of money inevitably raises thorny epistemological, ontological, and
historiographical issues that many would reasonably wish to eschew, but
which remain unavoidable so long as one refuses to settle for oversimplified ac-
counts that would explain money based on its functions. Such accounts prove
reductive and unhelpful, regardless of whether they take the shape of a crude
empiricism that defines money by deducing its nature from the roles that it
has played strictly in history, or if they manifest in an utterly abstract account
that defines money based on its putative powers to solve logical or efficiency
problems strictly in theory.
The first reduction we might call “functionalism”: it illicitly transforms empir-
ical facts (the money stuff currently performs these concrete functions) into gen-
eral theory (money must exist in order to perform these functions; its very nature
must be explained on the basis of these functions). As I show below, despite their
ubiquity, functionalist theories of money always fail to identify the specificity of
money. The second reduction we could name “theoreticism”: it naively and wrongly
assumes that the establishment of conceptual relations can itself serve to explain
historical development.¹ Each of these reductions seeks to escape difficult ques-
tions about the relation between theory and history by narrowly explaining one
in terms of the other. Yet neither pure historical description nor abstract logical
positing will produce an adequate account of money. A history is not a theory,
and no theory can truly explain history.

1 The term “development” has a long and problematic history in economic thought because it has
often been understood in linear or even teleological terms, in the sense that all societies “ought to
develop” toward some end point of advanced industrial/commercial/global capitalism. I use the
phrase “historical development” only to indicate historical change (transformation of a social
order) that can be grasped in relation to both the past and the future. Such change can include
growth or disintegration, improvement or decline, and it can be radically discontinuous. Societies
do not evolve (species evolve); they do not grow naturally; they are not headed toward the same
end point (there is no end point); and none can be judged by comparing its position on a purported
path of development relative to others or to a generic standard (there are no such standards).

https://doi.org/10.1515/9783110760774-005
 2 “What Is Money?” Redux 31

In general terms we must start in the only place there is to occupy: a location
within history (never outside it), but nonetheless a location from which we can still
theorize. To theorize in this sense does not mean to postulate abstract and transhi-
storical elements and categories, but to try to see the world (theoria), to attempt to
grasp conceptually (begreifen) the relations among elements as located within con-
crete (particular in time and place) social orders.² To put this point in the language
of epistemology, we can say that knowledge is itself a product of history; to know is
to know within history, not outside it. Such a claim in no way reduces to so-called
relativism, since our location within the present does not confine us there; quite
the contrary, that location affords us a view of the past, and provides us with
the resources to try to understand the path from there to here. Furthermore,
that same knowledge of history allows us to travel across time and place, to go
first into the past and then back to the future (our present). Ontologically it
means that we are not only creatures of history but also beings with the capacity
both to know and to theorize history. The first point means that our being is always
a historical being. The second point entails that our being is a being-historical. His-
tory is not just something we are “in” but something we “do” – hence the title of
this chapter. In one sense it provides an overview of previous theories. However, I
frame this issue as the question of “how to do” the theory of money: the point is
not merely to document past efforts but to create a framework through which we
can construct a new theory of money.

2 “What Is Money?” Redux

These brief methodological remarks on theory and history can help to clarify the
specific nature of my theory of money, to say with more exactitude how I go about
answering the question of the book, “What is money?” and how I distinguish my
approach to the question from the many other authors who have tackled it. In

2 This form of seeing and grasping both exceeds and often rejects the terms of an empiricist epis-
temology, which commits itself to observing the world and fitting collected data into patterns (or
testing hypotheses, or generating causal laws). Therefore when I say above that a history is not a
theory, I include the work of empiricism within this very broad term “history.” I distinguish the-
oretical work from an approach to money that would, first, generate a definition of money and
then, second, operationalize that definition by testing gathered data for whether it fits the pre-con-
stituted category. This epistemological approach would not get at what Ingham calls the “nature” of
money (Ingham 2018: 845), or what we might call, using the language of ontology, the very “being”
of money. In pointing toward the primacy of ontology, I follow a very long line of thinkers who
have explored these philosophical issues in depth (Taylor 1985; Connolly 1987; Markell 2006).
32 Chapter One: How to Do the Theory of Money

some ways, I have already provided my answer: the Introduction presents directly
the “money array.” One could easily read the opening of that chapter to be directly
defining money as the four-dimensional concatenation: creditor, token, debtor, and
denominated money of account. Indeed, I do propose, in the most general sense, to
use the term/concept “money” to refer to this clutch of ideas that I have captured
with the name “money array.”
However, because I reject the theoreticism described above, I also refuse to re-
duce my concept of the money array to an abstract “definition” that I (or anyone
else) would simply stipulate in advance. In the chapters that follow, I intend to dis-
tinguish my account of the money array from an abstract or analytical “model” of
money. I theorize money as the array of token/creditor/debtor/denomination not as
an arbitrary or subjective postulation that I would then “apply” to the world.
Rather, I conceptualize money from the world; the money array is an entity of
the world. My account of money locates both money practices and theories of
money within history, and from that starting point builds up a richer conception
of money that can analyze, can make sense of, those very practices. Importantly,
this leads to a theory of money that can distinguish money from other things,
even if those things sometimes perform the same functions as money.
This approach – based on my understanding of the theory–history relation –
also sharply differentiates my work from those authors who employ a wholly nom-
inalist technique. That is to say, many writers propose to eschew the question
“What is money?” – or better, to displace it onto the social orders they study.
For them, money is whatever society says it is. As Viviana Zelizer puts the
point: “Money is an abstraction that observers make from social interactions,”
and for this reason we can call money “all objects that have recognized, regular-
ized exchange value in one social setting or another” (Zelizer 2000: 384; quoting
Zelizer 1994: 21). Zelizer’s nominalism naturally leads her to embrace a very
long list of examples of money, starting (uncontroversially) with international cur-
rencies and ending (problematically) with “investment diamonds.”
Throughout this book I will be at pains to draw a clear and tenable distinction
between specific commodities (e. g., diamonds or gold) and money, just as I will
consistently reject the more general idea that money is what society says it is.
Money is not just a nominative that can be arbitrarily attached to certain objects
or practices. While it surely matters what a particular society takes money to be,
groups within society (perhaps even society as a whole) can certainly be wrong
about what money is. I reject the nominalist approach precisely because any ade-
quate theory of money must allow for this possibility. Diamonds are not money
any more than frogs are fish. There can and often will be serious implications
 2 “What Is Money?” Redux 33

when that which is not money is treated as if it were, a fact lucidly illustrated by
the spectacular implosion of the FTX crypto exchange in November 2022.³
In sum then, by taking a dialectical approach to theory and history, I reject
both an abstract analytical formalism and a thin historical sociological nominal-
ism. While we cannot use philosophical logic to “posit” the nature of money in
some transhistorical sense, we also cannot reduce money to a mere name attached
to myriad objects and practices in society. To put the point in the ontological lan-
guage used in the previous section, while the being of money (what money is) is a
historical being, it cannot be definitively determined or utterly contained by histo-
ry – it remains a being-historical (Heidegger 1962).
This leads me to one final note on ontology. On the one hand, and to be clear,
this book is not an ontological work. I believe any effort to derive a rich and robust
theory of money by way of fundamental ontology would prove futile, and I have
previously argued against the conflation of theorizing with ontologizing (Chambers
2014). On the other hand, this book necessarily raises ontological questions⁴ be-
cause trying to theorize money while avoiding or eschewing ontology would be
a fool’s errand. For this reason I will occasionally recur to the language of ontology
used in the previous pages. Money cannot be understood without rigorous concep-
tual, philosophical work, yet it also cannot be confined to a narrowly or strictly
philosophical domain. In this context we turn to the history of theories of
money, a topic that necessarily entangles history and theory in pursuit of the ques-
tion of money.

3 See Chapter 7 for a detailed engagement with the nature of blockchain tokens and their differ-
ences from money. The collapse and eventual bankruptcy of FTX proved dramatic and complicated,
and at the time of my writing the consequences remain far from fully sorted out. I cite the case
here because the best early accounts of FTX’s demise trace it directly to the failure of FTX’s
CEO, Sam Bankman-Fried, to distinguish between real money assets, on the one hand, and
magic beans (i. e., the FTT token that FTX itself generated), on the other.
4 It does so in order to ensure that the project does not lose sight of the question “What is money?”
To pose the question “what is” means to inquire into the being of an entity; “ontology” is nothing
other than the study of (logos) or inquiry into being (ontos). Money cannot be grasped ostensively
(by pointing to empirical examples) or even strictly historically (by mapping its historical appear-
ances); rather, these activities presuppose our capacity to ask after the ontos of money – to figure
out what it is. As I have made clear in this section, such an inquiry cannot be conducted outside or
apart from history – being is itself historical – but as I will emphasize at various points in the book,
the analysis will often require pausing at a particular moment and posing (or reposing) the onto-
logical question “What is money?” – usually in the implicit form “What is the money stuff?” An
empirical account of money that operates only at the level of epistemology will never be adequate
to grasp the being of money. See Chapter 5 for much more on the ontology of money.
34 Chapter One: How to Do the Theory of Money

3 The Strange History of Theories of Money

The history of theories of money proves a tough tale to tell; hence it comes as no
surprise that, to date, no one has told it well. I am not the writer to rectify this
problem, and certainly not herein, but I can offer a well-drawn roadmap, and high-
light certain locations on it that prove critical for the argument of this book.
First, and quite importantly, the development of theories of money does not
map onto history; theories of money cannot be unfolded and explained chronolog-
ically because their history proves to be a history of forgetting. Insights into the
nature of money emerge and sometimes even flourish at one point in time, only
to disappear for decades or even centuries. At multiple moments in history, includ-
ing recently, the “normal science” of money has coalesced around a few key ele-
ments taken as unquestioned facts or ineliminable guiding assumptions, yet the
“facts” are false and the assumptions are frankly terrible. The fundamental ele-
ments of the dominant theory were disproved long ago, but in tracts that no
one any longer reads or even remembers.⁵
Moreover, the history of money and the history of theories of money prove
radically discontinuous because only at a certain historical moment did we gain
(roughly) accurate historical and anthropological knowledge of the history of
money and coinage. First, much of what was written about money prior to the
very late nineteenth century made key assumptions about coinage (particularly
concerning a standard of metallic value) that turned out to be incorrect. Second,
the early history of money was not discovered until roughly this same period.
Therefore anyone writing prior to the late nineteenth century simply did not
know that money could be found in history 2,000 years earlier (in Mesopotamia
in the period 3,000 – 2,500 BCE) than the history of coinage, nor that the early his-
tory of money was quite simply not a history of coins but of measures of credit/
debt – listed in abstract units of account, and recorded on clay tablets. In a certain
crude sense then, the history of theories of money really only begins near the end
of the nineteenth century.
Serendipitously but significantly, this means that the relevant history of theo-
ries of money coincides with the (retroactive) establishment of the neoclassical
paradigm of economics. As the story goes, three writers in the 1870s all “independ-

5 Complicating matters further, most of the significant historical debates over money are not aca-
demic/scientific/theoretical debates but practical/political/policy debates (Schumpeter 1954: 276).
This poses to readers a real hermeneutic challenge: to distinguish an author’s practical position
on policy questions of the day from claims about the nature of money. For the purposes of this
project, I bracket almost entirely this historiographical issue, focusing my reading on fundamental
arguments concerning the nature of money.
 3 The Strange History of Theories of Money 35

ently discovered” the theory of marginal utility, thereby effecting the “marginalist
revolution” and its decisive break with classical political economy (see Mirowski
1988). The latter had reached its pinnacle in writings that stretched from the
late eighteenth century (Adam Smith’s Wealth of Nations, 1776) to the early
(David Ricardo’s Principles, 1817) and mid-nineteenth century (Karl Marx’s Capital,
1867⁶). Two of the foundational works for the so-called orthodox theory of money
were written by two (out of three) “co-founders” of the neoclassical paradigm –
namely, William Stanley Jevons and Carl Menger.
This historical coincidence (between the so-called origin of the neoclassical
paradigm and the establishment of a somewhat more complete historical record
regarding money) makes it deceptively easy (but also dangerous) to gloss the his-
tory of theories of money. First, one starts with the short and accessible books by
Menger and Jevons, summarizing their main arguments. One may then be tempted
(herein lies the first danger) to follow their lead by projecting their argument for
money both back and forward in time – back to claim that all of the essential
truths of this theory are found in the “greats” (mainly Smith⁷ and Ricardo, but
sometimes also Aristotle) and forward to claim the universal and enduring truth
of the theory (as distilled in contemporary textbooks). These basic moves comprise
a set piece that produces the orthodox theory of money as a timeless theory of the
nature of money, containing a few clear and simple tenets. Of course, with the es-
tablishment of the orthodoxy, it naturally follows to group all the major alterna-
tives or challenges to this single theory and name them heterodox. In a short series
of steps, we have thus produced a binary debate, reducing the messy theory of his-
tories of money to a choice between orthodoxy and heterodoxy.
Such a typology proves tempting, and one finds it reemerging even in some of
the most sophisticated and rigorous overviews of money theory.⁸ But the trade-off
is not worth it. To pose the question “What is money?” is to ask a series of concrete
historical questions, and also to raise a sequence of deeply conceptual or philo-

6 Most writers, non-Marxist and Marxist alike, simply include Marx directly within “classical po-
litical economy.” But the best readers of Marx have always rightly insisted that Marx was not a
member of the classical paradigm who merely criticized certain authors within it; rather, Marx
conceived of his mature project as a fundamental critique of the whole paradigm. Nevertheless,
in taking classical political economy as his object of critique, Marx thereby worked with (and
against) its principles and precepts. Of course, Marx was not a neoclassical thinker, so in the
break between the classical and neoclassical paradigms, Marx must still fall on the former side
of the divide.
7 The attribution of this theory to Smith proves at best tenuous (see Cencini 1988), but that attri-
bution nevertheless plays a key role in the narrative.
8 Ingham’s massive and hugely important work on money represents by far the most prominent
and sophisticated example. For much more on Ingham, see especially Chapter 2 and Chapter 4.
36 Chapter One: How to Do the Theory of Money

sophical issues. This latter point entails that no good theory of money can avoid
complex metaphysical problems, eschew theoretical complexity, or evade philo-
sophical dilemmas. That is to say, any viable theory of money must not only
make sense of the practical history of money – as empirical object, as social prac-
tice, as technology – but also connect that history to a conceptual framework that
interprets the nature (metaphysics) or being (ontology) of money. Reducing theo-
ries of money to two camps – orthodox or heterodox – untenably limits the variety
of possible linkages between money practices and money concepts.⁹ Careful exami-
nation of the history of writings on money clearly reveals a large number of ways
(far more than two) to make these connections.
We need, then, a way to do justice to the complexity of the theory and the
messiness of the history without ultimately getting lost in either. Mine undoubtedly
remains a project of disentanglement, yet I aim to create categories that help to
make sense of the various theories, while avoiding any urge to distill them to
some supposed essence.

4 Conceptual and Historical Accounts – and Capitalist Social

Orders
The dominant understanding of money pivots around a set of conceptual claims
(sometimes described as “logical” claims) about money’s “nature” – about the
very being of money (hence ontology). Frequently these theoretical arguments
are then mobilized to tell a tale of money’s historical emergence. In many standard
(textbook) accounts we find a theory of money that proves utterly abstract and
ahistorical (it explains money without concrete reference to history), yet that ac-
count has enormous implications for how we understand money’s history – be-

9 There are at least two distinct problems with the orthodox/heterodox framing. First, it oversim-
plifies, as I show in detail in Chapter 2. But second, and just as important, the critique of “ortho-
doxy” as articulated by self-identified “heterodox” theorists elides the extent to which, while quite
wrong about money’s nature, orthodox theory actually tells us something important about money’s
practical and ideological effects within a capitalist social order. Martijn Konings formulates this
crucial point incisively:

In its eagerness to reject the orthodox understanding of money as incorrect, heterodox theory
has generally been blind to the work done by that conception, how it articulates and adds force
to the regulative imaginaries and affective structuration of capitalist life. That is, to argue that
we ought to take orthodox conceptions of money more seriously is to suggest not that we should
celebrate their descriptive credentials but rather that we should take them seriously as an ex-
pression of a particular imaginary that has certain effects. (Konings 2018: 6)
 4 Conceptual and Historical Accounts – and Capitalist Social Orders 37

cause the deductive logic is meant to stand in for history. I address this phenomen-
on concretely in the following section, via my critique of functionalist accounts,
which presume we can know money’s actual history through philosophical posit-
ing of its functions. These theories of money allow their authors to provide mon-
ey’s “history” without ever discussing actual history.¹⁰
The fact that my project necessarily and intentionally combines theoretical and
historical work heightens the need to clarify and circumscribe the historical or
conceptual nature of any specific claims I make along the way. First, my account
will never ignore history, nor attempt to rewrite it through philosophical hyposta-
tization. Further, the overwhelming historical evidence reveals that the history of
money is a history of social relations of credit/debt within and between societies.
Frequently the symbols or tokens of those relations of credit/debt have become fet-
ish objects both for the members of those societies and also for theorists of eco-
nomic activity, such that the claims to credit were understood to have intrinsic
value themselves. Nonetheless, taking a wider view, the money objects themselves
never “possess” value in any intrinsic way, but are always only perceived to have
such value because they successfully function as claims on future value, as symbols
or tokens of credit/debt. My theory of money takes account of both the historical
record of money as credit/debt and the significant political, social, and economic
practices in which money as credit/debt appears as a form of value in those social
orders. Indeed, within capitalist societies money may appear as the ultimate form
of value.
I understand a capitalist social order as a unique and peculiar organization of
society. Capitalism is not an independent “economic system” that a society or na-
tion-state would or could choose. Rather, a capitalist social order (a capitalist soci-
ety) is one in which a capitalist mode of production predominates. “Mode of pro-
duction” is neither an overly technical term, nor in my account (unlike in some
Marxist discourse) is it an enchanted one; it has no special powers. It merely
names the organization, structure, and dominant practices of production in a
given social order. In a tributary mode of production, small-scale producers,
who have direct access to the means of production, produce for themselves direct-
ly, while some state structure extracts part of that product through a system of tax-
ation or direct domination. In a feudal mode of production, serfs produce for their
own families and for that of their lords (to whom they are bonded by law and so-

10 The alternative is simply to presume such history in advance – as if it were given or known –
and then use it as support for the conceptual argument.
38 Chapter One: How to Do the Theory of Money

cial custom), while the lords, in turn, have been granted title to the land (by the
monarch) that the serf works.¹¹

In a capitalist social order, the capitalist use of the market – the use of the market for money-
making – transforms the entire mode of production of society, such that production becomes
production for profitable exchange. Under capitalism, most goods and services are produced
not for direct consumption by either the producers or those they are closely linked to in so-
ciety. Instead, even the most basic necessities (food, shelter, clothing) are produced as com-
modities for sale on the market, and such necessities can only be accessed through the mar-
ket. (Chambers 2022: 59)

Perhaps most significantly, a capitalist mode of production is not a natural or in-

evitable development from the “nature” of homo economicus. Quite the contrary, a
capitalist mode of production is historically contingent. Capitalism emerges for the
first time only because of a matrix of prior conditions – namely, trade and money
practices along with a set of social and legal property relations.¹² In any attempt to
grasp the nature of money within a capitalist social order, history therefore mat-
ters fundamentally since the very economic forces within that order depend for
their existence on these prior historical conditions.
At the same time, once a capitalist social order comes into being, and once cap-
italist structures come to predominate, such orders absolutely do unleash genuine
and significant forces and relations into the world. Economic forces in a capitalist
social order are different from those in a feudal social order, and they are not
merely the product of law or political will. Those forces are no less real for
being historically contingent. Therefore, in analyzing in close detail the nature
of money and commodities within capitalist social orders, I will make a series
of conceptual arguments about the nature of money and its relation to other ele-
ments in a social order. These will frequently be claims of entanglement and also

11 No mode of production is ever a pure type. Indeed, Jairus Banaji has shown that the closest we
can find to an ideal-type model of a feudal mode of production is not western Europe prior to the
emergence of capitalism but eastern Europe after the rise of capitalism (Banaji 2010: 82). In any
case, my rough descriptions in the text above are meant to be schematic and heuristic.
12 The date and content of those earliest forms of capitalism are much debated. In my reading of
this literature, Ellen Meiksins Wood and Banaji offer the most significant and convincing accounts.
Wood focuses on the first appearance of the total reorganization of one sector of production within
a specific country, according to the profit imperatives of the market; she argues that this happens
first in English food production in the sixteenth century (Wood 2002). Banaji looks to wider prac-
tices within global trade that implemented capitalist relations – the use and organization of mar-
kets for making profit. This form of commercial capitalism can be dated back as early as the
twelfth to fourteenth centuries, and certainly provided one condition of possibility for the later
emergence of a distinctly capitalist society (Banaji 2020).
 4 Conceptual and Historical Accounts – and Capitalist Social Orders 39

entailment, arguments that take their own deductive form – that is, given certain
structural relations within society, other relations must follow. I want to stress that
these are always conceptual and theoretical arguments about the nature of money
(and commodities) within those social orders. Such arguments depend on history
(and prior historical development), but they are not themselves historical argu-
ments. They do not explain or predict the past or future historical development
of these social orders. Thus, for example, when I describe relations between com-
modities and other commodities, and between commodities and money (and be-
tween buyers and sellers and producers and consumers), I am not describing his-
torical change, not giving an account of events that happened diachronically in
history. Any necessary relations – relations of entailment or determination –
should be understood strictly in the sense of conceptual relational requirements,
not historical determinations.
To reiterate, however, those conceptual arguments presuppose and rest on a
specific set of prior historical developments: they have validity only for and within
a capitalist social order. Transported to a different mode of production (e. g., feudal
or tributary), none of these conceptual relations would necessarily hold because
the categories themselves depend on a given historical and institutional configura-
tion. This means that the starting point for conceptual analysis is itself historical,
and it depends specifically on the existence of a social order structured by the pro-
duction of commodities for exchange and profit. This is necessarily a monetary
economy, so both money and commodities have already come into historical exis-
tence prior to our description of the conceptual relations between them.
Finally, this approach also circumscribes my own use of ontology in exploring
money because it means that when I inquire into the being of money – by posing
the question “What is money?” – I am specifically inquiring into the being of
money today, the being of money under capitalism. History itself provides the nec-
essary conditions for capitalist money because capitalism is a historical social
order (not a universal form), and to grasp the being of money under capitalism
may be to illuminate aspects of money’s existence in prior historical periods. How-
ever, we must resist any inclination to transpose to prior historical periods the na-
ture of money under capitalism.¹³

13 In an effort to describe his own understanding of the relation between history and ontology,
Marx wrote:

In the anatomy of man there is a key to the anatomy of the ape. The indications of the higher
types in the subordinate types of animal life can only be understood, on the other hand, if the
higher type itself is already well known. …However … [we must not] obliterate all historical dif-
40 Chapter One: How to Do the Theory of Money

5 Against Functionalism: The Ontology of Money

As Schumpeter helpfully documents, between the 1870s and the middle of the
twentieth century a certain common sense about the fundamentals of money
began to congeal within economic writings, especially in the United States (Schum-
peter 1954). This standard and standardizing approach to money eschews any rig-
orous conceptual work (dismissed as “metaphysics”) and insists on a crudely func-
tionalist account of money, as expressed in a phrase oft repeated during this
period: “Money is that money does.”¹⁴ Francis A. Walker offers this proverb
while laying out a line of reasoning that has animated accounts of money for
150 years: to understand what money is, simply look to the functions money per-
forms (what it does). This logic, which underwrites textbook approaches to money
today, asks “What is money?” and answers by listing “the functions of money”
(Mankiw 2010: 80). Therefore money “is”: medium of exchange, means of payment,

ferences and see in all forms of society the bourgeois forms [i. e., the contemporary forms].
(Marx 1996: 151, emphasis added)

The first sentence is quite famous, and it suggests that later forms of historical development can
serve as aids to scientific understanding of earlier historical forms. But the second sentence, where
I have added emphasis, is often forgotten. Marx says that the anatomy of man provides a key to the
anatomy of the ape, but he immediately clarifies that the anatomy of the ape absolutely does not
contain the key to the anatomy of man. Nothing in the ape’s anatomy (nothing in the structure of a
prior social order) can tell us in advance how history will develop, or what future social orders will
emerge. Marx rejects teleology. Finally, while Marx thinks later developments can enrich our un-
derstanding of earlier forms, he explicitly cautions against a tendency to project present forms into
the past. Apes are not human beings, and they may be different from us in ways that we, who ben-
efit from an understanding of human anatomy, simply cannot grasp. We therefore ought to limit
our most rigorous arguments to an account of the present. When I say in the text above that I “cir-
cumscribe my ontological approach,” I follow Marx’s suggestion here. (For much more on this text,
and on the historical and ontological study of social orders, see Chambers 2014.)
14 The phrase comes from Francis A. Walker’s 1879 book Money and Its Relations to Trade and
Industry (Walker 1879: 1). However, the line is typically misquoted as “money is as money does,”
and attributed only to “Walker” (Fisher 2010 [1928]: 18; Kemmerer 1935: 8), or it is misquoted as
“money is what money does” – either without attribution (Ingham 2018: 842) or with misattribu-
tion to Walker’s 1878 book Money (Walker 1878; Ingham 2004a: 205). Ingham actually cites Schum-
peter (1954) in both Walker references, but for the record, Schumpeter is the only author I can find
who gets the wording of the Walker quote correct (Schumpeter 1954: 1052). However, while Schum-
peter cites four different Walker books, he does not explicitly mention the 1879 source for the fa-
mous line (Schumpeter 1954: 861, 906, 1042, 1046).
 5 Against Functionalism: The Ontology of Money 41

store of value, and unit of account.¹⁵ After defining these functions, the textbooks
all move on to other matters, but it helps to go back to Walker’s original presen-
tation because he uses striking language to complete his logic: “Always and every-
where that which does the money-work is the money-thing” (Walker 1879: 2).
Notice the subtle transformation that occurs over the course of these deduc-
tive steps: Walker starts by posing the question what money is and ends by telling
his readers what the money thing is. In other words, the functionalist account of
money rests on a fundamental conflation of money with the money thing.
This functionalist account implies an untenable ontology. Walker’s own con-
temporary Alexander Del Mar thoroughly skewers Walker’s functionalist defini-
tion of money, describing the theory as “no more applicable to money than to
steam engines, or cartwheels.” Del Mar insists that Walker’s account (like all the
functionalist accounts that will follow) proves incapable of “distinguishing
money” from things that are not money, but which might themselves carry out
the enumerated functions. This leaves us with a “definition without any definitive
idea behind it” (Del Mar 1896: 26, emphasis added). Functionalism provides the
form of a definition – “money is the thing that performs money functions” –
but the definition itself can only ever be empty or circular: empty, if it cannot an-
swer the question of what makes money functions the functions of money rather
than something else; circular, if it defines the functions of money by reference
to its previous definition of money.¹⁶ In straightforward terms, to theorize
money as the thing that performs the four standard textbook functions is to say

15 To be more precise, most modern textbooks actually list only three functions; they elide “means
of payment,” implying that the category of “medium of exchange” includes the means of payment
function (Mankiw 2010: 81). By erasing the temporal gap essential to the means of payment func-
tion, this move lends support to the myth that economic exchange can be modeled on the basis of
barter. Dropping means of payment also completely erases a distinction crucial to many nine-
teenth- and early twentieth-century debates, wherein different authors attempted to build the
theory of money from one function or the other, with significant consequences (Ingham 2018:
841 – 42). Hawtrey, for example, in his Currency and Credit (1919), focuses almost exclusively on
means of payment, while Keynes explicitly rejects the Mengerian fixation on medium of exchange
(Keynes 1930: 3).
16 It would be a mistake to think of functionalism as an old argument about money that has mere-
ly persisted in the textbooks. Rather, the most explicit efforts of neoclassical economists to theorize
money today involve resuscitating a new functionalism. Here I point specifically to Tony Lawson’s
social positioning theory, which explicitly defends a functionalist account (Lawson 2016; Lawson
2022). I do not engage with Lawson’s work in depth, mainly because I take Ingham’s critique to
be definitive, and Ingham shows starkly how Lawson “falls inadvertently into [functionalism’s]
trap” (Ingham 2018: 842).
42 Chapter One: How to Do the Theory of Money

very little at all about money;¹⁷ many things that are not money can and do also
perform those functions.¹⁸
More insidiously, a functionalist definition tempts us to adopt a broader func-
tionalist mode of historical explanation. In other words, defining money as “that
which performs money functions” encourages the view that money only emerges
in history because it performs those functions. This account answers the properly
historical question “Why did money become an element in ancient social orders?”
with an abstractly logical (and entirely ahistorical) answer – namely, “because
money performs money functions and thus filled a need for money that all societ-
ies always have.” In short, functionalism lures us into believing barter-myth non-
sense.¹⁹
This brings me to the tacit ontology of the functionalist definition. While writ-
ers in this tradition, especially early and mid-twentieth-century thinkers, wish to
dismiss all deep conceptual work with the pejorative “metaphysics,” Walker’s
own logic entails a strong set of ontological claims (even if Walker and his follow-
ers never offer an explicit defense of these tenets). Walker’s reasoning leads to the
conclusion that the money thing is money, and money is the money thing. The
being of money dwells within the material object or technology that performs
money’s identified functions. We can always answer the question “What is
money?” by pointing to specific objects or concrete practices. Moneyness is always
bound up with, tethered to, and found in, money stuff.
Keynes was one of the first writers to recognize the inadequacy of this ontol-
ogy. The opening passages of his A Treatise on Money (1930) issue a thoroughgoing
rejection of such an approach. In response to the singular ontology by which
money is money stuff, Keynes suggests a two-level analysis: 1) “money of ac-
count”²⁰ provides the “description or title of money” and “is the primary concept
of a theory of money”; while, 2) “money derives its character from its relation to

17 Alvaro Cencini makes the point incisively: “It is not true that the functions played by money
determine its nature; on the contrary, the nature of money determines the functions it can
play” (Cencini 1988: 30).
18 Commodities can serve as store of value and medium of exchange, and with precisely written
contracts, almost anything can serve as a means of payment (e. g., “I promise to deliver three in-
terpretive dances by December 1, 2023”). Lest there be any confusion, these examples do not pro-
vide evidence that interpretive dances are money but rather serve as further evidence against the
claim that money can be defined functionally.
19 For the definitive critique of functionalist historical explanation, see Nietzsche 1967; for the de-
finitive explosion of the myth of barter, see Graeber 2011, whom I discuss in Chapter 3.
20 In the original 1930 publication, Keynes hyphenates the phrase as “money-of-account.” Merci-
fully, the editors of Keynes’s collected works removed the hyphens; I follow them here for both
consistency and ease of reading (Keynes 1978).
 5 Against Functionalism: The Ontology of Money 43

the money of account” and “is the thing which answers the description” given by
money of account (Keynes 1930: 3). In keeping with standard usage, Keynes still as-
signs the word “money” to “the thing,” but the very nature of this money stuff de-
pends on a relation to a prior concept of money (which for Keynes is money of
account). One cannot understand what money is without grasping this two-level,
or doubled, relation between the money stuff and the ontologically prior concept
of money.²¹
On the one hand, Keynes provides a piercing and important insight: money is
not the money stuff, and whatever we wish to say about the money thing must be
placed into relation with a broader, more rigorously conceptual analysis of
“money.” This, I contend, must be seen as a singular contribution to the theory
of money because Keynes supplies his readers with the resources they need to re-
ject outright any functionalist theory of money, and to challenge any account that
tries to derive a full theory of money from analysis of the money token. We will
find the essence of money neither in a chemical analysis of a silver coin nor in
a bare description of how and when that coin was held (as store of value) or
changed hands (as means of payment, medium of exchange).
On the other hand, while Keynes was right to distinguish the money thing
from the primary concept of money, he was wrong to attribute that concept to
money of account. As briefly detailed in the Introduction, money of account
names that crucial “fourth dimension” of money. It provides the denomination
of credit/debt, and indeed, all money must be marked in this manner – in
euros, dollars, rupees, etc. But money of account is not primary because denomi-
nation is not itself a full concept of money. The denomination “rupees” is not money.
Rupee is a measure of credit/debt, and if we have a money token, denominated in
rupees, held by a creditor, and pointing to a valid debtor – then and only then will
we have money. Money requires much more than money of account.

21 A warning for upcoming chapters: we must be careful not to conflate this Keynesian distinction
between “money of account” and “money proper” with the distinction between credit (as promise
to pay) and money (as actual payment). Keynes is distinguishing between, on the one hand, the
idea of denomination, the concept of a dollar as measure, and on the other, the thing that “answers
to that concept,” the “stuff” that we have in our hand and recognize as corresponding to such a
measure. This is the difference between the concept of length (under the name “meter”) and
the thing we say has length (as measured in meters). But this means that the Keynesian “primary
concept” precedes anything purporting to be money. In contrast, the money/credit distinction de-
pends on an argument that some things are (that is, they successfully perform as) money, while
some are not. This second distinction operates only on one side of Keynes’s division; it centers
on the question whether the money stuff really is money. I return to the money/credit distinction
repeatedly over the next four chapters.
44 Chapter One: How to Do the Theory of Money

As much as Keynes helped his readers to avoid the dead end of functionalism,
he put many of them on the wrong track by suggesting that as long as we have the
“title” for money, we necessarily have a complete concept of money. By invoking
the two levels, Keynes lets us see that the being of money – the moneyness of
money, as Ingham helpfully puts the point – cannot lie within the money thing,
what Keynes calls “money proper” (Ingham 2006: 270; Ingham 2004a: 8; Ingham
2018: 841). But we will not, we cannot, find that being in the idea of a dollar or
a euro, and too many of Keynes’s readers (even the best of them) have often
taken this route as a shortcut. That is, they variously assert or assume that denomi-
nation itself, what Keynes called the “title of money,” can stand in for a theory of
money, can “be” the concept of money.
As I have shown both here and in the Preface, most authors who try to give an
account of money cannot resist the temptation to simplify their narrative. This ten-
dency explains both the money theory binaries – commodity versus claim; ortho-
dox versus heterodox – and the efforts to find a plain slogan that serves as a kind
of trump card – money is metal, money is fiction, money is money of account,
money is the ledger.²² However, for better or worse, money is just not that simple.
We need instead to grasp money in its complexity, which means both to get a sense
of how complex it can be but also to provide some handholds for dealing with that
complexity – for making sense of money as complex. Such is the task of the follow-
ing chapter.

22 For quite some time I myself was under the spell of this last watchword. Yet, while the ledger of
credits and debts proves crucial to our understanding of both the money array and our efforts to
track concrete money practices – by “following the money” as it moves across balance sheets – the
ledger or spreadsheet that tracks credits must not be confused with money itself.
Chapter Two
The Matrix of Money Theories

1 Money Sources

The critique of functionalism and its attendant metaphysics, along with the
broaching of broader ontological questions, clears the page so that we can begin
to draw a matrix for categorizing and organizing the wide variety of theories of
money. The goal is to clarify and indeed simplify, but without resorting to reduc-
tivism. We are aiming for a middle ground between, on the one hand, an unman-
ageable survey of each and every individual theory of money and, on the other, the
simplistic notion that there are really only two theories of money.
Anyone who struggles to understand money and then strives to explain it to
others will be tempted to remind readers of the previous failures on this front –
failures by much more famous thinkers. Keynes’s so-called (by him) “Babylonian
madness” provides the best-known example: the benefit of late nineteenth-century
advances in history and anthropology allowed Keynes to see how badly “classical
economics” (also his term) got money wrong. Keynes conceived of A Treatise on
Money, his first major scholarly work, as a fundamental break with that paradigm.
In one way or another, Keynes largely abandoned that project – “recovered,” shall
we say – and moved on to the work that made him the most famous economist in
the world, but he therefore left much of the dominant paradigm fully intact.¹
Less famously, but more substantively important for our purposes here,
Schumpeter failed to finish his money book because he never got “his ideas on
money straightened out to his own satisfaction” (Earley 1994: 342).² Nonetheless,
Schumpeter never abandoned this project, on which he was arguably still working
at the time of his death, in the form of his unfinished History of Economic Analysis
(HEA).³ This text, in all of its repetitive, messy, yet still incomplete 1,300 pages, pro-

1 Ingham categorizes Keynes’s first book as “heterodox work” and then describes the General
Theory as “Keynes’s own rapprochement with orthodoxy” (Ingham 2004a: 27). We might say that
Ingham came to write his “money book” (originally intended as one short chapter of a different
book) due to his own affliction of money madness (Ingham 2004a: viii).
2 James S. Earley credits Arthur Smithies (in personal correspondence with Earley) with this line,
which eloquently captures Schumpeter’s lifelong difficulties in understanding money. At the start
of his major book on money, Ingham quotes this line as one he stumbled across part way through
his own struggle with the topic (Ingham 2004a: 5).
3 Schumpeter spent the last nine years of his life working on this book, one that was itself meant
to update work he published nearly four decades prior (Schumpeter 1956 [1917/1918]; Schumpeter

https://doi.org/10.1515/9783110760774-006
46 Chapter Two: The Matrix of Money Theories

vides the richest resource for understanding the complicated history of theories of
money, and also for constructing a workable conceptual framework that can make
sense of such theories, past and present. My project goes back to Schumpeter,
thereby in many ways bypassing, but not discounting, the profoundly important
and much more recent work of Ingham.⁴
The drawbacks of Schumpeter’s book appear obvious: now seven decades old;
repetitious, scattered, and unwieldy; reaching no decisive conclusions. Nonethe-
less, I wager that the costs are worth it in the end. Schumpeter’s analysis proves
consistently rigorous, and it comes as close to comprehensive as one can possibly
imagine; Schumpeter cites and discusses literally dozens upon dozens of sources
that go unmentioned anywhere else in the literature (even in Ingham, whose
text has an impressive and thorough bibliography). Moreover, the open-ended na-
ture of Schumpeter’s investigation – the very fact that he is not presenting a theory
he has already “straightened out” but rather exploring the texts through a far-
reaching method of discovery – makes this work a much more valuable source
for mapping the terrain of money.

1954). After his death in January 1950, Elizabeth Boody – an economic historian, specialist in East
Asian economics, and Schumpeter’s wife from 1937 until his death – spent three months locating
the various draft manuscripts of the work, only at that point realizing “it was nearly completed”
(Boody Schumpeter, in Schumpeter 1954: xxxiv). Boody Schumpeter then spent the last three years
of her life attempting to edit the manuscript pages into a finished book, but she died in summer
1953 before the project was complete. At that stage, some of Schumpeter’s Harvard colleagues took
over, and the book was finally published in 1954. Even with all this post-mortem work, the text is
still a mess, but it is also, so far as I can tell, far and away the very best history of theories of
money available – covering more ground in greater depth than anything else.
4 In my opinion the single most important contemporary author on money is without doubt Ing-
ham. In Chapter 4 I engage in more detail with the substance of his historical and theoretical argu-
ments, but here I want to make a narrower point about the way Ingham’s work frames the ques-
tion of “how to do the theory of money.” Despite the sophistication, rigor, and breadth of his work,
most readers will come away from it with the impression that there are two theoretical choices:
orthodox or heterodox. In this chapter I disprove such an idea, by demonstrating the breadth of
theoretical possibilities. Relatedly, while Ingham is not a historian, his work often implies a certain
history of theories of money, and here the narrowing of choices to two does not do justice to the
historical terrain of money theory. As a contemporary theorist of money, Ingham has no peer. But
as an introductory overview to the history of theories of money, one is better off dealing with
messy excerpts from Schumpeter’s unfinished colossus. Finally, and this is my sharpest criticism
of Ingham, he uses a misreading of Schumpeter (a misreading that was originally Ellis’s) to legit-
imate an overly narrow framing of the history of money. I detail this last point just before my final
section of this chapter, below.
 2 Money Choices 47

Reading HEA’s sections on money⁵ reveals the breadth and depth of money
theory, while consistently demonstrating variety; no one can come away from
close study of this text still clutching the tenet that there are only two theories
of money “worthy of the name.” As one traverses the mountainous terrain of
his arguments, even Schumpeter’s apparent self-contradictions become an asset
because his reader comes to understand that the various positions or choices on
money do not always or easily line up. The orthodox/heterodox framing of theories
of money makes it seem as if there is only one choice: to buy into the orthodoxy, or
reject it for the heterodoxy. Such a notion is belied at every turn by Schumpeter,
who himself develops a unique set of positions on money, combining elements
that, according to the dominant framing, are simply not supposed to go together.
Schumpeter’s reader therefore bears witness to the multiple and multiplying vari-
ety of theories of money.

2 Money Choices

Schumpeter divides his history into three periods: everything before 1790; 1790 –
1870; and 1870 to Schumpeter’s present.⁶ His overarching concern, however, lies
with the nature of economic analysis, not with the history itself, so rather than
dig into historical context for each period to show its uniqueness, Schumpeter ap-
proaches them all with the same set of options. I will adopt and modify this frame-
work in order to create a money-theory matrix. The matrix is formed by combining
responses to three sets of binary options. Any theory of money must pick one or
the other of each of these options, and the cumulative set of choices will itself tell
us much of what we need to know about the overall theory. First I will give a gen-

5 The book has three distinct chapters on money, ranging across almost 1,000 pages, and of course
the reader can find numerous other discussions of money in passages nominally devoted to spe-
cific thinkers, theories, or economic episodes.
6 Originally Schumpeter chose 1870 – 1914 for his final period, but in published form those head-
ings were changed to “1870 to 1914 (and later)” to reflect the fact that as he continued to work on
the book during the 1930s and 1940s, he frequently referred to contemporary writings. And no
reader of the text can fail to see that, throughout, Schumpeter is writing a “history of the present”
in the Foucauldian sense that he reflects on the past as a way to grasp the present state of thought.
For example, Schumpeter opens the section on money for the period up to 1790 with a long dis-
cussion of Keynesian aggregate monetary analysis. He takes it as obvious that the difference be-
tween Aristotle’s real analysis and Quesnay’s monetary analysis matters not for its own sake
but for how it illuminates or reshapes contemporary (1930s) arguments. This may explain why
over the years Schumpeter came to redefine the project as a history of economic analysis, not eco-
nomic thought (see Boody Schumpeter, in Schumpeter 1954: xxxi).
48 Chapter Two: The Matrix of Money Theories

eral description of each of the three options, before then turning to the combina-
torics.

Real or Monetary Analysis

Schumpeter sees the history of theories of money as somewhat cyclical – from long
periods of dominance of real analysis to “interludes” of viability of monetary anal-
ysis. ⁷ Real analysis⁸ posits that all economic activity can (and usually should) be
described strictly in terms of goods, services, and human choice. Money is not es-
sential to economic activity, and reference to money is not required for economic
analysis. Rather, “money enters the picture only in the modest role of a technical
device that has been adopted in order to facilitate transactions” (Schumpeter 1954:
264). Real analysis describes money as neutral because it is nothing more than a
secondary covering – “veil,” “garb,” and “epidermis” are just some of the meta-
phors used – a mere appearance for the real economic body (Schumpeter 1954:
264; cf. Schumpeter 1956: 150). Real analysis therefore always implies and often ex-
plicitly asserts that unless money introduces an unneeded and undesirable distort-
ing impact, the real economy functions on the same principles as a so-called “bar-
ter economy.” A pure commitment to real analysis could lead logically to the very
rejection of a theory of money (as an irrequisite element of investigation), but to
the extent that the “practical convenience” of money as a “technical device” makes
it a ubiquitous part of economic life, it may prove necessary for the real analyst to
deal with money. He or she does so by subtracting money from economic analysis
and by attempting to minimize money’s disturbances of real economic activity.
Schumpeter depicts monetary analysis not as its own positive project but as a
negation of or departure from real analysis – a series of rejections of real propo-
sitions. First, money cannot be neutral because even casual study of economic his-
tory shows that money has fundamentally shaped that history (from gold rushes to

7 Real analysis (from Aristotle to the Scholastics, from Ricardo to Fisher) dominates history, but
monetary analysis breaks through from time to time – for example, in the period of the French
physiocrats (eighteenth century) and again with the rise of Keynesianism (twentieth century).
Schumpeter’s presentation implicitly suggests that real analysis is the norm and thus persists un-
less disturbed by a particularly important thinker. Real analysis provides the default baseline,
while monetary analysis only survives when attached to a name such as Quesnay or Keynes.
8 The real/monetary dichotomy must not be confused with or mapped onto the real/nominal dis-
tinction. In the former, “real” means non-monetary. In the latter, “real” refers to a type of monetary
measure (i. e., inflation-adjusted). From the perspective of real analysis, all prices (“real” or “nom-
inal”) remain monetary, not real, phenomena. See Schumpeter’s own (much longer) footnote on
this point (1954: 264n2).
 2 Money Choices 49

modern banking practices) (Schumpeter 1954: 265). Second, in the form of incomes,
savings, and prices, money becomes foundational to modern economic analysis
and forces us to admit that modern economic life cannot be modeled on barter.
Third, aggregate or macroeconomic analysis necessarily uses money terms as its
fundamental variables; here the very “matter” to be grasped is monetary (Schum-
peter 1954: 266). Fourth, any view of economics as structured by spending and sav-
ing decisions must necessarily be prosecuted along the lines of monetary analysis.
Adding up, we can describe both a weak and a strong version of monetary analysis.
The former sees monetary analysis as unavoidable and therefore indispensable
given the monetary nature of modern economic activity. The latter insists on a de-
scription of money and the monetary as essential to the economic.⁹

Commodity or Claim

Schumpeter helpfully crystallizes the commodity theory of money by articulating

its core commitment to “theoretical metallism.” This he distinguishes from “prac-
tical metallism”: many who advocate “sound money,” or paper money’s converti-
bility to/backing by a designated commodity (with intrinsic value), do not them-
selves hold to the fundamental tenets of theoretical metallism. In his early
article on money, Schumpeter says metallism is the particular name for a general
“commodity theory of money” (Schumpeter 1956: 157). Consistent with this, in his
later work he defines metallism in terms of the commodity:

By Theoretical Metallism we denote the theory that it is logically essential for money to con-
sist of, or to be “covered” by, some commodity so that the logical source of the exchange value
or purchasing power of money is the exchange value or purchasing power of that commodity,
considered independently of its monetary role. (Schumpeter 1954: 274)

Schumpeter’s insight lies in his capacity to see the theoretical problems that a com-
modity theory purports to solve – namely, the deeply complex question of the
“value of money” (Schumpeter 1956: 157). The commodity theory of money “an-
swers” the question by displacing or ignoring it: if money is a commodity then
the value of money is the value of that commodity expressed as an exchange
ratio with other commodities (the goods that it buys). This structure entails a nec-

9 Schumpeter himself accepts the weak thesis, but he would never endorse the strong. And this is
perhaps exactly why he is trapped between real and monetary analysis (or forced to seek a syn-
thesis), because he knows monetary analysis is unavoidable, but he cannot allow that it is essen-
tial.
50 Chapter Two: The Matrix of Money Theories

essary distinction between money, which has intrinsic value as a commodity,¹⁰ and
credit, which is nothing more than some form of promise to deliver the designated
money (i. e., the specified commodity) (Schumpeter 1954: 1053).

10 The commitment of a commodity theory of money to “intrinsic value” may confuse, or raise the
critical hackles of, students or close readers of thinkers such as Menger and Jevons. As I noted ear-
lier, Menger and Jevons are credited as co-discoverers of the theory of marginal utility, and each
wrote a book detailing and defending a commodity theory of money. Central to marginalism is the
claim, announced in one of Jevons’s subheadings, that “Utility and Value Are Not Intrinsic.” Jevons
purposively conflates utility and value, arguing that they are not physical properties but “only ac-
cidents of a thing arising from the fact that some one wants it” (Jevons 2011 [1875]: 18). On the basis
of such quotes, readers of Jevons could reasonably protest that he rejects “intrinsic value.” But Je-
vons is not consistent: a dozen pages later he explicitly affirms that money “should itself possess
value,” clarifying that he means “substantial value” (Jevons 2011: 32, emphasis added). Building on
this foundation, Jevons asserts that a “standard coin” (one with validated metallic content of a
measurable weight) “is one of which the value in exchange depends solely upon the value of the
material contained in it” (Jevons 2011: 67, all emphasis added). At just this point in his discussion,
Jevons seems to realize that his account of commodity money has tied him to a notion of intrinsic
value that his broader marginalist position rejects, so he follows up immediately with this:

It has been usual to call the value of the metal contained in a coin the intrinsic value of the coin;
but this use of the word intrinsic is likely to give rise to fallacious notions concerning the nature
of value, which is never an intrinsic property, or existence, but merely a circumstance, or exter-
nal relation. To avoid any chance of ambiguity, I shall substitute the expression, metallic value.
(Jevons 2011: 66)

Hence: money as a commodity does not have “intrinsic value,” but it does have “metallic value.” If
ever one needed an example of a distinction without a difference, Jevons has provided it here. The
bottom line is that despite Jevons’s protestations to the contrary, Schumpeter’s account logically
holds: the metallist theory (i. e., the commodity theory) depends on positing an intrinsic value
to money (as commodity). A close reading of Jevons’s misreading of Gresham’s law powerfully val-
idates such a summary. Gresham’s law states that “bad money” (token money that does not have
“full-weight” metallic content) will drive out “good money” (proper “standard” money of full
weight) because the “full-weight” coins get withdrawn from circulation, melted down, and sold
for their (intrinsic) metallic value, while the light coins continue to circulate as tokens that repre-
sent greater “value” than they in fact contain. Jevons’s commodity theory of money can only re-
spond to this historical and empirical fact by trying to insist that all coins be of “standard” weight.
As I noted in the Preface and will explore in more detail in later chapters, a much more lucid ac-
count of Gresham’s law emerges when we note the difference between commodity-gold and
money-gold. Gold is taken out of circulation when its commodity value exceeds its money denomi-
nation, and for this reason the proper action (of the sovereign, or the central banker) is precisely
the opposite of that suggested by Jevons and other “sound money” advocates: to make certain that
the nominal money value exceeds the commodity value, thereby removing any incentive for hoard-
ing commodity-gold. Rulers throughout history have always done just this, thereby performing in
practice a powerful critique of the commodity theory.
 2 Money Choices 51

Despite the availability of evidence to the contrary (Innes 1913; Innes 1914),
Schumpeter repeatedly (but still falsely) asserts that the history of money appears
to provide confirmation of the commodity theory. Here he echoes, and perhaps
contributes to, the emerging standard narrative of money found in Menger and Je-
vons: “The historical origin of money certainly lies in the value of the money com-
modity” (Schumpeter 1956: 157; cf. Schumpeter 1954: 276). Notably, however, Schum-
peter also radically departs from that narrative, as the line from above ends as
follows: “but its essential nature lies elsewhere” (Schumpeter 1956: 157, emphasis
added). In methodological arguments that resonate in important ways with
those of Marx, Schumpeter insists on distinguishing historical origins from neces-
sary logical relations (Schumpeter 1956: 157; Schumpeter 1954: 276; Marx 1977
[1859]: 24). Importantly, then, the structure of Schumpeter’s presentation of theo-
ries of money (the “raw material” out of which I build my matrix) creates space
to separate arguments about money’s history from those concerning money’s na-
ture. Finally, in terms of the history of thought, Schumpeter rightly sees the met-
allist theory as dominating – from Smith and Ricardo to Jevons and Menger.¹¹
Much as monetary analysis begins with a critique of real analysis, so the claim
theory of money stakes its territory with a refutation of theoretical metallism. Tak-
ing gold as the representative commodity, the claim theory exposes metallism’s
fundamental error as a failure to distinguish commodity-gold from money-gold
(my terms, not Schumpeter’s). Schumpeter shows that metallism has no way of ac-
counting for some practical facts about money that we frequently observe, even
under a gold standard: 1) irredeemable paper money continues to circulate; 2)
old metallic money (no longer coined) continues to circulate “above par” (i. e., at
an exchange-value higher than that of commodity-gold); 3) making gold into
money alters (increases) the value of gold. Schumpeter admits that commodity-
gold will be worth as much as money-gold, but this does not serve as proof that
money-gold’s value is essentially the intrinsic value of commodity-gold:

The assertion that metal as money [money-gold] depends on the value of the metal as a com-
modity [commodity-gold] is correct only in the sense in which it is also correct to say that the

11 Despite its length and massive coverage of authors, Schumpeter’s book contains no detailed and
explicit discussion of Marx. Instead, one finds dozens of offhand references to Marx, many of
which betray the fact that Schumpeter has clearly read Marx, in some cases deeply. One of the
most stupendous of these seemingly throwaway lines appears in the discussion of metallism:
“For more than a century” after Smith, metallism “was almost universally accepted – by nobody
more implicitly than by Marx” (Schumpeter 1954: 276, emphasis added). A full unpacking of this
claim would constitute a separate project.
52 Chapter Two: The Matrix of Money Theories

value of the metal as a commodity [commodity-gold] depends on the value of the metal as
money [money-gold]. (Schumpeter 1956: 158)¹²

One might press Schumpeter here for more specificity: What is the mechanism by
which the commodity value depends on the money value? The answer, under a
gold standard, is straightforward: the mint price provides precisely this mecha-
nism. The mint price must always remain higher than the price of the metal in in-
dustrial markets (otherwise, once again, coins would be melted down to sell to in-
dustrialists, so no metal would be supplied to the mint). Innes similarly observes
that the only reason gold has been so valuable is that states hoard it – not because
of any intrinsic properties of gold as an industrial commodity (Innes 1914: 164).¹³
Schumpeter’s logic illuminates a crucial point: if commodity-gold and money-
gold are not the same thing, we can never derive the nature of money from the
nature of a commodity. Put differently, even when it is a commodity that comes
to serve as money, this does not prove that money in its nature is a commodity.
Moreover, closer observation reveals the opposite: that in its role as money,
money-gold is something quite other than commodity-gold.¹⁴ This leads Schumpet-
er to perhaps the strongest refutation of the commodity theory that one will ever
find in the history of economic thought:¹⁵

12 Cencini reaches the same conclusion with a distinct argument that he draws from an innova-
tive reading of Smith: “The use of a particular commodity as money is always possible, of course,
but this is not the point. The important argument is that money cannot be identified with the com-
modity to which it is linked, whether it be gold, paper, or electrical impulses” (Cencini 1988: 11).
13 The so-called end of the gold standard was not the end of states hoarding gold, so Innes’s gen-
eral insight still applies to the most recent century as well.
14 This logic helps to explain historical cases that consistently confuse metallists – namely, instan-
ces in which commodity-metals (copper, silver, gold) abound, but money is nowhere to be found.
Ingham provides a brilliant explication here of Max Weber’s work on money in China. From
the mid-sixteenth century onward, China had plenty of commodity-silver, but this led only to
the “chaos of bullion barter and myriad exchange rates” (Ingham 2015: 177). As nineteenth-century
Chinese government officials themselves understood at the time, China remained “a nation with no
money” (Lau 2006: 1; quoted in Ingham 2015: 176). Put perhaps too simply (and in my language,
which is not quite that of either Ingham or Weber), the problem was not a shortage of silver
but a lack of banks.
15 It is worth noting that the basic distinction that drives this argument – that between commod-
ity-gold and money-gold – had already been keenly observed outside of economic thought. In his
famous account of “truth” as a “mobile army of metaphors,” Nietzsche almost offhandedly gives
the following as his example of a “worn-out” metaphor: “coins which have lost their image and
now can be used only as metal, and no longer as coins” (Nietzsche 1979: 84). Here Nietzsche sug-
gests that the “truth” of money rests on a metaphor, which again gives the lie to metallists – be-
cause if the coins were really just metal, they would never have been money.
 2 Money Choices 53

Money is not a commodity – not even when it happens to consist of a valuable material. For as
soon as the latter is used as money, it must necessarily cease to fulfil its role as an economic
good; and as soon as a piece of money made of valuable material is diverted to use as a good,
e. g., for jewelry, it ceases to be money. As long as a material is money, it satisfies no wants and
can never be the object of subjective use-value appraisal, and therefore as money can never
have value of its own. (Schumpeter 1956: 161, emphasis added)

Rejecting the commodity theory of money poses a dilemma: How do we explain

money’s “value”? Schumpeter argues, first, that in a technical sense money has
neither use-value nor exchange-value. Money is not value; it is a type of power.
For Schumpeter, money’s “purchasing power” arises independently of any ques-
tion of value.¹⁶ Of course, we realize that money “exchanges” for commodities
and in this sense surely seems to have an exchange-value. Schumpeter’s explana-
tion functions by way of a crucial metaphor: “We can speak of the exchange value
of money only in the sense in which we can speak of the value of a theatre ticket in
exchange for the seat to which it gives title” (Schumpeter 1956: 162, emphasis
added).¹⁷ No one would suggest that the theater ticket has any intrinsic use-
value: if I take the ticket home with me, it immediately becomes completely use-
less. And though I may well hand over the ticket upon entry to the theater, this
is not an example of exchange in the barter-economy sense; after all, the ticket-
taker does not use the ticket but simply tears it in two. We are not swapping
two commodities with use-values because we each want what the other has; I
am exercising my claim to the seat, and the ticket-taker is recognizing that
claim as valid. If money is not a commodity, which for Schumpeter it is not and
cannot be, then money can only be a claim – a ticket or voucher. This basic
point needs to be amplified (and clarified) along a number of dimensions.
First and most importantly, the claim theory at least erodes and at most com-
pletely undermines the distinction between money and credit. As we saw above,

16 “The point is that money not only has no use-value, but also, as a consequence, cannot have
exchange value in the same sense as commodities” (Schumpeter 1956: 162; cf. Marx 1973: 142). To
develop this point in the language I use in the text above, we can say that when a commodity per-
forms the service of money, money-gold’s purchasing power is not based on commodity-gold’s
value. Quite the opposite in fact: commodity-gold’s value (exchange-value with other goods) rises
to the level of money-gold’s purchasing power. Crucially, if money-gold’s purchasing power falls
below a threshold of commodity-gold’s exchange-value, then at that stage gold ceases to be
money (it becomes a commodity, likely hoarded or exported for sale). This is why the metallic con-
tent of money-gold remains irrelevant as long as the exchange-value of commodity-gold is propped
up by the purchasing power of money-gold. Metallic content only becomes a “concern” when the
exchange-value of the commodity, as metallic content of the coin, exceeds the purchasing power of
the coin as money.
17 For more on the “price” of money, see Chapter 6.
54 Chapter Two: The Matrix of Money Theories

that distinction is drawn on the basis of the difference between money as a com-
modity and credit as a claim on future money, but if money itself is no more or less
than a claim, then a sharp distinction proves impossible. Whether or not we call
one “money” and the other “credit,” both are conceptually similar as “claims.” The
money/credit dichotomy can be replaced with varying “levels” of money, with a
“natural hierarchy,” or simply with better or worse credits (Innes 1913; Mehrling
2012). This issue will center my argument in Chapter 5.
Second, given that the claim theory is a credit theory of money (Schumpeter
1956: 163), it comes as no surprise that Schumpeter argues lucidly and continuously
for an endogenous theory of money in which banks “create deposits in their act of
lending” (Schumpeter 1954: 1080). If money is a ticket whose “value” is actually the
power of redemption for goods and services, then money can and will be created
as an internal part of the process of economic activity (rather than being produced
externally as a commodity, and then brought into “the economy” exogenously). In
short, the “exogenous versus endogenous money” debate does not manifest as a
fourth and distinct “money choice”; rather, it maps directly onto the commodity
versus claim choice.
Third, the core of claim theory must be rigorously distinguished from the par-
ticular form it has been given by “state theory” (Knapp 1924 [1905]). Schumpeter
himself could not have been more adamant about this distinction, which makes
it ironic that the difference between claim or credit theory, on the one hand,
and chartalism or state theory, on the other, seems to have been lost or erased
by contemporary commentators – who frequently read not only Schumpeter but
also Innes, Macleod, and others directly into the tradition of Georg Friedrich
Knapp (Ingham 2004a).¹⁸ I will take this point up in Chapter 4.
Finally, for Schumpeter the claim theory implies that we can bring monetary
and real analysis together by viewing contributions to production as leading to
“money incomes,” which are themselves nothing other than “receipt vouchers”
that authorize a claim on some portion of the product (Schumpeter 1956: 155).¹⁹

18 Even in his early article, Schumpeter goes so far as to suggest that despite the utter falsity of
commodity theory, Knapp’s state theory might prove to be the “worse aberration” (Schumpeter
1956: 161). In HEA, a book in which Schumpeter strives throughout for a voice that conveys disin-
terested neutrality, the short portion of the text devoted to Knapp takes on a sharply critical tone
otherwise reserved for Smith. Schumpeter also officially marks his distance from Howard Ellis,
and especially Ellis’s treatment of Knapp, which he describes dryly as “a more generous appraisal
of Knapp’s performance than I feel able to present” (Schumpeter 1954: 1056; Ellis 1934). This matters
in relation to contemporary surveys of money (especially Ingham’s), which tend to rely on Ellis yet
simultaneously suggest that Schumpeter can be folded into this same state money tradition.
19 Schumpeter ultimately wants a synthesis of real and monetary analysis, and he sees this as
made possible by developments and advances in monetary theory that he identifies as early as
 2 Money Choices 55

The Quantity Theorem

As the above sections make clear, Schumpeter articulates some of the most forceful
and lucid arguments against commodity theory and for claim theory, and he rec-
ognizes much more clearly than his contemporaries the limitations of a blind de-
votion to either real analysis or monetary analysis. (Schumpeter was surely no
Keynesian, yet he took Keynes very seriously.) I argue that these are Schumpeter’s
most important and lasting teachings on money, the ones we still need to learn
today. Nevertheless, Schumpeter himself emphasized neither of those contribu-
tions; instead, he focused most of his energies on his own distinct elaboration of
the so-called “quantity theory of money.”
Schumpeter insists on a set of terminological clarifications – sadly, ones that
again seem to have been erased by later commentators. First, Schumpeter repeat-
edly demonstrates why it is wrong to refer to the quantity theory of money: “The
quantity theory is only a monetary theorem which in itself says nothing about the
nature and value of money” (Schumpeter 1956: 163; cf. Schumpeter 1954: 297). He
elaborates this point in his early article by explaining that one cannot compare
the “claim theory” with the “quantity theory” because the latter is not in fact a
proper theory of money at all. A “theory,” as the quote above suggests, would
have to give answers concerning the essential nature of money and its economic
“value.” A “theorem,” as the OED indicates, is a non-self-evident statement or prop-
osition, demonstrable by evidence or argument. Schumpeter’s central aim is to
prove that not only the commodity theory but also the claim theory can support
the quantity theorem. He takes the former as obvious, and then sets out to
prove the latter. Indeed, as his contribution to money theory, broadly construed,
Schumpeter aspired not to articulate a new theory of money, not to prove the

his 1917 essay (Schumpeter 1956). At this stage Schumpeter expresses the confidence of a young
man when he asserts the truth of real analysis: “It is clear that the function of money in the econ-
omy is in principle of a merely technical nature” (Schumpeter 1956: 150). By the end of his career
(in HEA) he sounds much more ambivalent: while describing the various levels of monetary anal-
ysis, he simultaneously tries to show how real analysis can accommodate the challenge that mon-
etary theory poses. The trick is to allow real analysis to “admit” a dimension of monetary analysis.
One might say that at the end of his life he still chooses real analysis, but without the confidence.
HEA tacitly implies the necessity of such a synthesis without ever pulling it off. Yet the reader can
see Schumpeter pushing toward this aim, suggesting its inevitability and hoping for its realization.
Schumpeter, then, wants to overcome the dichotomy by subordinating monetary analysis to real
analysis. As will become clearer in Chapter 3, Section 1, my own treatment of this dichotomy
takes the form of a deconstruction (or negative dialectics) – that is, displacement rather than syn-
thesis.
56 Chapter Two: The Matrix of Money Theories

quantity theorem, but to demonstrate the compatibility of the claim theory with
the quantity theorem.
In the context of driving home this central point, Schumpeter writes the fol-
lowing, which both Ellis and Ingham after him use as fundamental framings for
their own approaches to money: “There are only two theories of money worthy
of that name: the commodity theory and the claim theory. The basic ideas of
these two theories are not compatible” (Schumpeter 1956: 163; quoted in Ellis
1934: 3; quoted in Ingham 2004a: 6).²⁰ Of course it is absolutely true, as we have
seen above, that Schumpeter sees the commodity and credit options as incommen-
surable; as essential propositions about the nature of money, these two cannot be
reconciled. Yet it would be a serious mistake to draw from this argument – as both
Ellis and Ingham do – the idea that in the broader sense there are only two devel-
oped theories of money. A full-blown “theory of money” will have to choose not
just between commodity and credit, but between real and monetary analysis,
and between affirming or rejecting the quantity theorem.
Read in total, Schumpeter’s writings consistently demonstrate the variety of
money theory, and the last thing we should take from him is the notion that
money theories boil down to two. Most damningly, we do not even need to turn
to Schumpeter’s wider writings to make this point as we can see it in the very
same sentence from which Ellis quotes (and Ingham repeats). Ellis leaves out
the remainder of the sentence, which concludes as follows: “although in very
many cases they lead to the same results” (Schumpeter 1956: 163). In other
words, read in context, Schumpeter’s point was to show that both commodity the-
orists and claim theorists can affirm the quantity theorem; Schumpeter used the
idea of “two theories of money” as foil for his unique version of claim theory –
a version supporting the quantity theorem. So far from splitting theories of
money in two was Schumpeter that his 1917 article aims to reconcile claim theory
with the mainstream position (on both real analysis and the quantity theorem).
As if he were writing a rejoinder to Ellis and Ingham avant la lettre, Schum-
peter states: “The view that we are dealing with two standpoints which differ toto
caelo, which lead to completely different results and are irreconcilable, is … super-
ficial” (Schumpeter 1956: 149). Ingham’s favored Schumpeter quote (from Ellis)
does not quite say what either Ellis or Ingham suggests. It is also worth noting
that Schumpeter writes this line in 1917, very early in his overall career, more so
in terms of his time spent specifically studying money. Whether he held firmly

20 Ellis cites Schumpeter’s original article in German (1917/1918) and offers a translation very
slightly different from that which appears in the 1956 version I am using. Ingham quotes directly
from Ellis.
 2 Money Choices 57

to the idea of “two and only two” theories of money in 1917, it is doubtless the case
that he did not hold to it at the time of his death in 1950.
That (important) digression aside, we can return to a succinct outline of the
quantity theorem. Schumpeter first clarifies that the theorem must not be confused
for the earlier “equation of exchange.” Schumpeter credits John Briscoe (1694) with
being the first to write down such an equation (Schumpeter 1956: 299).²¹ By the
nineteenth century this equation had become commonplace, especially in English
political economy – from John Stuart Mill to Alfred Marshall and the Marshallians.
As a sort of algebraic construction, the equation of exchange can be rearranged in
varying forms, but it is standardly written as MV = PQ. M represents total money
supply; V, velocity of money; P, the price level; and Q, the total quantity of transac-
tions. While many writers have assumed that MV = PQ is an identity – true by def-
inition – Schumpeter is at pains to reject this notion: the symbols on the left side of
the equation represent distinct concepts and can be captured by different statisti-
cal measures than the variables on the right side.²²
Irving Fisher’s work provides a breakthrough, says Schumpeter, because it
uses the equation of exchange to derive the quantity theorem. Fisher constructs
the essential proposition by rewriting the equation of exchange with P as a func-
tion of the other variables: P = f(M,V,T).²³ And fundamentally, P is a function of M,
since in the short run V and T will be relatively fixed. At its core the quantity the-
orem is a causal claim, asserting that “the price level is … passive and determined,”
while money and its velocity “are the active and determining elements” (Schumpet-
er 1956: 183). In the most succinct form, the quantity theorem states that M!P.
As a precisely stated theorem, the “choice” for a theory of money proves quite
simple: affirm or deny. To affirm means to insist that changes in the money supply

21 Schumpeter points out that in his classic statement of the quantity theorem, Fisher actually
gets the history of the exchange equation quite wrong. Fisher primarily credits Newcomb (1885)
and Edgeworth (1887) while also mentioning Mill and Ricardo (Fisher 1911: 305). In addition to giv-
ing credit for the discovery to Briscoe (more than a century before Ricardo), Schumpeter points out
that Newcomb, in fact, never wrote down the equation of exchange, while Edgeworth was but one
of many Marshallians who affirmed it (Schumpeter 1954; 299, 833, 1065).
22 It is true that if we know three of the variables we can derive the fourth, but this, for Schum-
peter, shows that the equation expresses an equilibrium condition, not a tautology (Schumpeter
1954: 1062; cf. Schumpeter 1956: 183).
23 Since P varies directly with respect to M and V, and inversely with respect to T, Fisher’s formula
transforms back into the standard equation:
P = f(M,V,T)
P = MV/T
PT = MV
MV = PT
58 Chapter Two: The Matrix of Money Theories

lead to changes in the price level, though of course this can occur through a whole
host of different (and incompatible) mechanisms – depending on other elements of
one’s broader theory of money. To deny could either mean to reverse the causality
(changes in PQ themselves cause changes in MV, i. e., the money supply adjusts to
price changes) or to reject any kind of causal claim whatsoever (perhaps the whole
mechanism is affected by distinct systemic forces, perhaps the very concept of a
“money supply” is ill-conceived).
Schumpeter’s first aim is to raise the quantity theorem to greater prominence,
both in relation to theories of money and vis-à-vis the wider body of economic
analysis. For Schumpeter, no theory of money can be complete without including
a position on the quantity theorem (for or against) and an explanation of that po-
sition. Schumpeter thereby insists that the quantity theorem cannot and must not
be reduced to a mere outgrowth of commodity theory. Of course, the commodity
theory naturally affirms the quantity theorem: as a commodity, money is subject
to the same laws of supply and demand as any other commodity; hence an in-
crease in the money supply leads to a decrease in the “price” of money, which
is only another way of naming the inflation phenomenon (all other commodities
cost more in relation to the money commodity).
But this does not mean that claim theory will reject, or even that it can eschew,
the quantity theorem. Hence Schumpeter’s second goal: to show that the quantity
theorem can be affirmed by a variety of different theories of money. This project
takes multiple forms in Schumpeter’s writings. In his early article we see it in his
explicit effort to develop a claim theory argument that affirms the quantity theo-
rem.²⁴ In HEA it appears in extensive discussions of the dominant (Keynesian)
monetary analysis, and Schumpeter’s resistance to the notion that the quantity
theorem should be relegated to real analysis or an anti-Keynesian position. Here
is just one representative quote from dozens of passages spread throughout the
text: “The monetary theory of the twenties and thirties is much more under quan-
tity theory [sic] influence than is generally realized” (Schumpeter 1954: 1067). To
reiterate the main point: like the previous options (real versus monetary; commod-

24 Schumpeter’s project is distinct (perhaps unique) in attempting to articulate a different mech-

anism to support the quantity theorem. I exclude the details of this long and sometimes convoluted
argument, which Schumpeter never got right to his own satisfaction. In basic terms, Schumpeter
tries to use a circular flow model to theorize monetary incomes as claims to goods. Following Fish-
er, Schumpeter’s model excludes savings and tax payments so that money (claims) earned equals
money (claims) spent. Given this restrictive (and unrealistic) assumption, Schumpeter can conclude
that an increase in the money supply (understood as claim tickets) will necessarily lead to an in-
crease in prices – since all money will be spent on a fixed amount of goods (Schumpeter 1956).
 3 The Matrix 59

ity versus credit) the choice to affirm or deny the quantity theorem operates inde-
pendently. Schumpeter’s unfinished – indeed, undecided²⁵ – project on theories of
money has the chief advantage of mapping out these distinct options.

3 The Matrix

My reconstruction of these three “money choices” out of Schumpeter’s writings

does not in itself develop a theory of money (neither Schumpeter’s nor my own)
but rather provides a map, a matrix of various theories of money. We can produce
an initial sketch of that matrix simply by combining all possible choices to produce
a typology. Here are the sets of binary options:

A = Real B = Monetary

1 = Commodity 2 = Claim

x = Quantity – Yes y = Quantity – No

From these choices we can derive eight possible types. The following table lists
those combinations along with some representative thinkers or theories:

A1x Orthodoxy – Petty, Hume, Menger, Jevons, Fisher

A2x Schumpeter, Fisher and Wicksell (according to Schumpeter)

A2y Innes, Cencini, Value-form reading of Marx

A1y Benjamin Anderson, Standard reading of Marx (Mandel)

B1x Smith (according to Schumpeter)

B2x Hawtrey, later Keynes and Keynesianism (according to Schumpeter)

B2y Heterodoxy – Macleod, early Keynes, Knapp, Wray, Ingham, Mehrling*

B1y De Brunhoff’s reading of Marx, Quesnay, John Law, Smith (according to Cencini)

I will not attempt to develop a detailed account of each type listed here, nor to de-
fend rigorously the choice of representative names.²⁶ The aim of this exercise is to

25 In a line that expresses his ambivalence about his own contributions, Schumpeter insists in this
same article that “it is in no way my purpose to defend the quantity theory [sic] as such” (Schum-
peter 1956: 163).
26 This matrix fundamentally (perhaps constitutively) excludes a purely sociological approach
whereby money is “meaning,” “language,” “institution,” “ritual,” or “form of life.” Such an ap-
60 Chapter Two: The Matrix of Money Theories

present the matrix of money theories itself; the fact that some readers of certain
authors on the list would make the case for moving them from one category to an-
other only reinforces my main point about the variety of theories of money.
The starting place for surveying this matrix must be the two types in which all
three choices line up – namely, A1x and B2y. The former gives us the putative or-
thodox theory of money: committed to real analysis in which the money commod-
ity is no more than a neutral veil; insistent on a sharp distinction between money
and credit; and at least implicitly, but typically explicitly, supporting the quantity
theorem. The list of thinkers across the history of economic thought who putatively
fit in this category would be very long indeed. The latter gives us a pure form of the
so-called heterodox theory: starting with monetary analysis as primary, rejecting
the commodity theory for the claim theory, and subsequently refusing to support,
or explicitly refuting, the quantity theorem. From the start we can see that “heter-
odoxy” must be “so-called” precisely because it proves to be but one of seven dif-
ferent theoretical types that offer an alternative to the orthodox account.
Here I repeat the name “heterodox theory” or “heterodox tradition” strictly
because these terms have now themselves become standard in twenty-first-century
writing on money (Ingham 2004a). Yet it does not require a Derridean to decon-
struct this orthodox/heterodox binary because anyone can see that an enormous
amount of the terrain of money theories lies beyond these two “pure types.”
The word “heterodox” means “not conforming to orthodox standards,” yet the
money matrix makes plain that there are numerous types of theories of money
that don’t fit the mold of strict orthodoxy. Moreover, the characteristics of a sup-
posedly heterodox theory of money, as they have been delineated by both Ingham
and post-Keynesians, are distinct and particular. Numerous major theorists of
money over the years have rejected orthodox tenets without fitting into the B2Y
type. And notice that some really “big names” fall outside these two pure types
– for example, Smith, Marx, and Schumpeter. Even this very crude typology should

proach takes us from Georg Simmel to Michel Aglietta, with Wittgensteinians and everyone else in
between. These important theorists and analysts of money as social form and ritual find no place
within this matrix because their approaches ultimately do not result in a theory of money in an
economic sense; they are all sociological or political explanations of money that subsume money
into the social or political sphere. As the reader can see, some names appear in multiple locations
depending on the stage of their career or their particular interpreter. In the case of Mehrling –
work that I cite throughout this book and discuss most directly in Chapter 6 – I can see no
other plausible location on the matrix to place his work (the location is not all that debatable).
However, while Mehrling’s work is crucially important, it develops not a “theory” of money but
rather a “money view” (as he puts it) of economics based on a close phenomenological study of
banking and money markets (hence the asterisk).
 3 The Matrix 61

serve to disabuse us of the narrow notion that there are only two theories of
money.
I should emphasize that this matrix is by no means exhaustive: by including
questions beyond the primary three, one could easily expand the matrix. More im-
portantly for my purposes here, the matrix is also not determinative. That is, the
matrix provides a typological map, but its coordinates are relative: any A2x theory
will differ from a B2x theory on the basis of a fundamental disagreement about the
nature of economic analysis (real or monetary). But this does not mean that all A2x
theories are the same. Schumpeter wished to claim Fisher and Wicksell for this
category that he himself fits in, but Schumpeter’s articulation and rigorous defense
of claim theory dramatically exceeds anything one will find in those other authors.
Indeed, much of Fisher’s writing appears compatible with commodity theory,
which is perhaps why he is often placed into the orthodox type. Moreover, the ar-
guments that support any particular choice can take significantly different form.
Here are just a few important examples:
1) Real can mean substantialist (physicalist), or it may merely refer to economic
practices and actions; monetary can mean money as distinct from credit, or it
can denote money as credit.
2) Commodity can indicate only metals or it can include any commodity; claim
theory can refer to both state theory and credit theory.
3) The quantity theorem can be understood to posit a strictly causal or merely
relational link; rejections of the theorem can maintain the significance of
the exchange equation, or blow up the entire paradigm.²⁷

To reiterate, this matrix does not itself serve as, provide, or stand in for a theory of
money – it only offers a map. But the work of mapping proves important in its own
right: it leads to a very different understanding of the history of theories of money;
it opens up possibilities for developing new theories; and it provides a basic tool
for situating any such theory in relation to others in particular or to the broad his-
tory of theories in general. Hence it offers us a better way to do the history of the-
ories of money. Finally, the matrix provides the starter kit for building a theory of
money since one can always initiate the process by answering the fundamental
questions, thereby locating one’s own theory on the matrix.

27 Earley’s work on Schumpeter’s struggle with his own theory of money provides numerous ex-
amples of these subtle differentiations (Earley 1994).
Chapter Three
Money “Is” Credit

1 What Is Economic Exchange?

It is easy for opponents of the orthodox theory of money (type A1x) to criticize the
commitment to real analysis, because when taken to a certain extreme, the choice
for real analysis precludes the very possibility of developing a theory of money:
“There is no analytical place for money at all” (Ingham 2001: 307). If the core ele-
ment of economic activity is the act of exchange, and if that act can be theorized in
its pure form as barter – the swapping of one commodity directly for another –
then money could never be more than a secondary phenomenon. All of the de-
scriptions of money as a “technical device” that overcomes inconveniences and
all of the discounting designators of money – as “neutral,” a “veil,” or “skin” – de-
rive from this primary commitment to economic exchange as non-monetary. In-
deed, in a powerful sense what makes the analysis “real” is exactly the fact that
it can be carried out sans money.
But this problematic also vexes those who choose “monetary” over real anal-
ysis, because so many of them continue to presume the validity of a classical ac-
count of economic exchange as not involving money (e. g., Wray 1998). Accordingly,
their preference for monetary analysis always seems like something of a conces-
sion to practical constraints or requirements. In other words, it is only because
our economy today remains so intertwined with money, banking, and finance
that it proves impossible to do real analysis. These theorists choose monetary anal-
ysis only because they are forced to do so. A close reader of Schumpeter catches
repeated glimpses of this logic as his tacit critique of Keynesianism.¹
My own theory of money starts with a reconceptualization of economic ex-
change as fundamentally monetary (Macleod 1889; Hawtrey 1919).² I build this ar-

1 Schumpeter’s lifelong voyage to arrive at a coherent theory of money breaks apart on these
same shores: he could never reconcile his own fervent commitment to real analysis (to economic
exchange as non-monetary) with his highly sophisticated understanding of banking, credit, and
money as claim. He clutched to the circular flow model as a lifeline, but that model’s assumptions
proved untenable and therefore could not save him.
2 As I discuss in Chapter 4, both Wray and Ingham defend the argument that money is prior (both
logically and historically) to market exchange. Here I turn that argument inside out, which does
not mean to invert it. That is, I do not revert to the economists’ story of homo economicus as
the naturally exchanging creature – the argument that Wray and Ingham are rightly refuting.
Rather, I offer an utterly different conceptualization of exchange than the one proffered by classi-

https://doi.org/10.1515/9783110760774-007
 1 What Is Economic Exchange? 63

gument from three distinct but overlapping planks. The first is a set of claims
about history and historical development, and harks back to Chapter 1’s discussion
of capitalist social orders as both historically contingent and unique in their eco-
nomic form. In a technical sense “economic exchange” does not exist in pre-capi-
talist social orders, so this category really only proves intelligible if we confine our-
selves to the horizon of capitalism. This is not to deny that societies without money
have surely existed, but it is likely that they were much rarer than economics text-
books would lead us to believe, and in any case these were just as surely non-cap-
italist social orders. So while it’s fair to say that one could conduct an economic
analysis of those societies, the investigation would necessarily focus on production,
distribution, perhaps in-kind taxation, and maybe even on forms of trade between
those societies and their neighbors. None of this, however, would be a study of eco-
nomic exchange. As a rigorous concept, economic exchange only becomes central to
the analysis of capitalist social orders because these societies’ mode of production
places the capitalist use of markets at the center of a system that circulates money
and commodities for the sake of profit.³ For this reason I circumscribe my argu-
ment by applying the concept, economic exchange, only to capitalist social orders.
Yet this should not be taken as an arbitrary limitation (this move is not cheating)
precisely because the category of economic exchange belongs to capitalist econom-
ics to begin with.
The second plank, supported by the first, is the work done in history and es-
pecially anthropology, to explode the myth of barter. After all, at its bedrock foun-
dation the argument that economic exchange is real (i. e., non-monetary) depends
on the existence of barter as the direct exchange of one commodity for another,
C!C.⁴ Indeed, the preponderance of pure orthodox accounts of money (A1x),

cal political economy and the neoclassical paradigm – a conceptual account in which neither
money nor exchange can be said to precede the other.
3 This crucial point is completely obscured or erased by the common move, in both classical po-
litical economy and neoclassical economics, to project economic categories back across time, ren-
dering them utterly transhistorical. Hence Smith and Ricardo’s ridiculous discussions of hunters
and gatherers exchanging bows and arrows with one another; hence the constant invocations
by economics textbooks of imaginary moments in early or pre-history that always look surprising-
ly similar to twentieth- and twenty-first-century capitalist social orders.
4 The economic model of barter as taught by economics textbooks: 1) has never existed as an actual
practice in pre-capitalist social orders; 2) has never existed within (internal to) capitalist social or-
ders (except where they break down – for example, in prisons); 3) only ever comes to be in the
interstices of capitalist societies, and in the absence of a common money. At the same time, how-
ever, we can see that C!C (as the direct exchange of equivalents, C=C) is in fact brought to a certain
level of actual existence in the world – namely, through and within the capitalist value-form. In a
feudal society any C!C is only ever a random swapping of goods for their use-value; “they are not
64 Chapter Three: Money “Is” Credit

along with the overwhelming majority of contemporary economics textbooks, all

begin with a story of barter, which serves to indicate the grounding of the project
in real analysis.
When it comes to the topic of barter, David Graeber accomplishes a monumen-
tal task, by: a) surveying the writings of economists on the topic and revealing it as
myth-making; b) synthesizing, and presenting in simplified form, the massive an-
thropological literature that time and again disproves the economic narrative; c)
doing all of this in an accessible, popular, and widely read text, thereby exposing
a broad audience to the effects of the myth of barter and the specific reasons why
it is false. Graeber’s reading of both classical political economy (especially Smith)
and contemporary textbooks nicely exposes the trope of asking the reader to
“imagine an economy something like today’s, except with no money” (Graeber
2011: 23, emphasis added). He then shows decisively that the historical record sim-
ply does not support these accounts of barter: “There’s no evidence that it ever
happened, and an enormous amount of evidence suggesting that it did not” (Graeb-
er 2011: 28).⁵ Finally, in a crucial argument that dovetails with our first plank,
Graeber surveys the record to show that the actual historical examples of barter
all come after the development of monetary societies, and usually follow the emer-
gence of capitalist society. Barter is not what pre-monetary societies do to carry out
real economic exchange; barter is what monetary societies do when they find
themselves in emergency conditions, without access to a common money (Graeber
2011: 40).⁶ Without barter⁷ as its basis, the standard account of economic exchange

equal values” (Marx 1981: 447). But in the capitalist circulatory system, the movement of M!C!M’
(money!commodity!more money) brings about and includes within it the equalization of com-
modities for one another. The closest we therefore come to the reality of barter (not as concrete
practice, but ontologically) is within a capitalist social order. We can add this to the long list of rea-
sons why the opening chapters of Capital are so hard to read: Marx illuminates this point about
barter, but he includes no historical context. This fact tempts readers to take him as signing on
to the myth of barter itself. The better reading is to see that Marx is showing us that barter is
only made real under capitalism.
5 The same historical evidence that militates against the theory of barter also undermines any
commodity theory of money – see my discussion of Innes below.
6 In Chapter 5 I more fully develop the concept of money space, which helps to explain what it
means to have money “in common.” But the point here can be made simply: the absence of
money is not an absence of money tokens but a lack of common debtors. Individuals (or represen-
tatives of societies) that engage in barter with one another will quite likely each have money – that
is, tokens of denominated credit held on a solvent debtor. What they lack is credit denominated in
a shared money of account, held on a debtor recognized as viable by both of them. In this context,
Ingham has recently drawn a subtle but crucial distinction between barter and payment in kind.
Usually when monetary systems break down, barter is still unnecessary. Rather, a society can use
commodities, denominated in a money of account, as “surrogates” for money. Russia in the early
 1 What Is Economic Exchange? 65

falls apart; this opens up the possibility of entirely reconceptualizing economic ex-
change.
One reason why the commodity theory of money has proved so seductive and
enduring is that it allows for the introduction of money and monetary phenomena
while preserving the traditional account of economic exchange. It provides a
framework in which the theory of money remains an intrinsic element of real
analysis. If money is by its very nature a commodity, then there is no ontological
difference between barter, C!C, and monetary exchange, M!C. In both cases one
commodity is exchanged for another. The locus classicus for the pure type of the
orthodox theory of money is Jevons and Menger, both of whom commit thoroughly
to real analysis by essentializing money as a commodity (Jevons 2011 [1875]; Meng-
er 2009 [1872]).
It is in this context, and as the third plank of my argument, that I turn to the
work of Innes. I read his particular version of the credit theory of money as itself a
redefinition of economic exchange. Innes’s work has already been acknowledged –
first by Wray, then by Ingham and Graeber – for its insights, its untimeliness, and
its possible influence on Keynes (Wray 1998; Ingham 2004a). Even so, I am not con-
vinced that Innes has yet been read for the truly radical and potentially paradigm-
shifting nature of his work. Ingham naturally folds Innes into the “heterodox tra-
dition,” but this may do more to obscure the distinct nature of Innes’s contribution.
It’s true that Keynes seems to be the only economist to have read Innes’s 1913 and
1914 articles, yet in his opening lines Keynes casually dismisses the entire credit
theory of money as a “fallacy” (Keynes 1914: 419). Schumpeter’s massive and seem-
ingly comprehensive History of Economic Analysis does not mention Innes, most
likely because Schumpeter never read him. I make Innes a primary resource for
radically rethinking economic exchange, arguing that his conception of money
as credit⁸ strikes at the very root of the real/monetary binary. In order for Innes’s

90s, Ingham rightly argues, did not revert to barter (i. e., to the swapping of commodities at ratios
negotiated on the spot); instead they used either rubles or dollars to denominate payment made in
kind (Ingham 2020: 107).
7 I draw only from Graeber’s work on the myth of barter, which is clear, powerful, and illuminat-
ing. Graeber’s account of money, on the other hand, has fundamental problems. It overemphasizes
the role of Smith; misrepresents the Sumerian money system by emphasizing the weight of silver,
when what mattered most was the number of barley grains (see Ingham 2021: 7– 8); reifies the dis-
tinction between money and credit; elides the distinction between state money and credit money;
and confuses the absence of a common money space with the absence of physical cash (Graeber
2011: 24 – 25, 38 – 41).
8 Though his work has been repeatedly noted as foundational to the “credit theory of money” (a
language I echo in this chapter’s title), Innes himself emphatically underscores a point I made back
in the Introduction: credit and debt are two names for the same thing:
66 Chapter Three: Money “Is” Credit

thinking to play this central role, we must read his work beyond the interpretive
frames previously imposed on it.
Innes opens his first of two articles on money by neatly summarizing the basic
account of commodity theory, including the historical narrative in which first com-
modities – “cattle, iron, salt, shells, dried cod, tobacco, sugar, nails, etc.” – and then
intrinsically valuable metallic coins served as money, all while “Emperors, Kings,
Princes, and their advisers vied with each other in the middle ages in swindling
the people by debasing their coins” (Innes 1913: 377). He responds decisively:

Modern research in the domain of commercial history and numismatics, and especially re-
cent discoveries in Babylonia, have brought to light a mass of evidence which was not avail-
able to the earlier economists, and in the light of which it may be positively stated, that none
of these theories rest on a solid basis of historical proof – that in fact they are false. (Innes
1913: 379)

Innes goes on to provide ample evidence against the commodity theory, beginning
with Smith’s famous examples of “commodity money.” Innes proves that Smith’s
“nails” (in a Scottish village pub) and “cod” (in Newfoundland) were not examples
of commodity money but of payments in kind (Smith 1869 [1776]). Such payments
were made in designated moneys of account – “pounds, shillings and pence.”⁹

[T]he word “credit” … is simply the correlative of debt. What A owes to B is A’s debt to B and B’s
credit on A. A is B’s debtor and B is A’s creditor. The words “credit” and “debt” express a legal
relationship between two parties, and they express the same legal relationship seen from two
opposite sides. A will speak of this relationship as a debt, while B will speak of it as a credit.
(Innes 1913: 392)

Innes’s theory of “credit” is thus always and simultaneously a theory of “debt.”

9 Just as it continues to celebrate the genius of Smith, so does modern economics cling to potential
(Smithian) examples of commodity money. Tony Lawson’s arguments about tobacco in colonial
America serve as perhaps the most “live” current example. He repeatedly asserts that “throughout
most of the colonial period, Virginia, and indeed Maryland and North Carolina, used tobacco as
(commodity) money” (Lawson 2019: 181, citing Lawson 2016; cf. Lawson 2022). As evidence, Lawson
observes that in 1619 the Virginia legislature “‘rated’ tobacco at three shillings per pound,” that in
1642 the same legislature made tobacco legal tender, that businesses in Maryland and Virginia
often paid taxes in tobacco, and that North Carolina used tobacco as means of payment up until
the American Revolution (Lawson 2016: 981; Lawson 2019: 181). In both instances Lawson cites
the same two sources, Scharf (1967) and Breen (2001). But these are odd sources to provide in
an attempt to support an argument that hinges mainly on Virginia legislative acts in the first
half of the seventeenth century: the Breen book centers on tobacco farmers in Virginia, but it cov-
ers only the eighteenth century, while the Scharf book is a history of Maryland that begins in 1660.
Not only can neither source substantiate Lawson’s claim, they do not even address the relevant
period. If one undertakes one’s own research by following some of Scharf’s sources, particularly
 1 What Is Economic Exchange? 67

Where Smith believes he has located commodity money, Innes shows that “he has,
in fact, merely found – credit” (Innes 1913: 378).
We can begin to unfold Innes’s credit theory by working through his two best-
known quotes. First, “The eye has never seen, nor the hand touched a dollar”
(Innes 1914: 155). This line has typically been read through the Keynesian frame-
work that I discussed in Chapter 1. This means that readers of Innes – many of
them Keynesians of some sort – take him here to be indicating the primacy of
money of account. As we previously discussed, for Keynes the dollar is only a
name, merely money’s “title,” while any particular form of money thing would
be understood to “answer” to this title. Ingham draws from Keynes’s twofold ac-
count a deeper distinction between “money” (the money thing) and “moneyness”
(the proper concept). Moreover, Ingham argues that “moneyness is conferred by
money of account” (Ingham 2004a: 48). Notice that Ingham here advances Keynes’s
argument significantly since he suggests not merely that the money thing must
“answer” (must be specified in a money of account) but that money of account it-
self confers moneyness to the money thing. And Ingham freely attributes this idea
to Innes: “Money of account is logically anterior” (Ingham 2004a: 38, citing Innes
1913).¹⁰

Streeter (1858), one is likely to reach a very different conclusion than Lawson. In the early seven-
teenth century, colonial Virginia and Maryland found themselves with multiple but inconsistent
moneys of account, inadequate access to credit and credit expansion, and a dearth of financial in-
stitutions (i. e., banks). Under these emergency conditions, economic actors commonly reverted to
payment in kind (tobacco) – payments still very much denominated in extant moneys of account
(hence the need to “rate” tobacco at a given price in shillings). The best contemporary source I have
found on this topic is Dror Goldberg, who carefully details the relevant Virginia history from 1585 –
1645, a messy case from which I draw the following conclusions, listed roughly chronologically. In
the absence of functioning banks, and to resist having Virginians be taxed in money they did not
have, the Virginia legislature passed a law making it legal to pay in kind, in tobacco. They under-
stood this as a stopgap, that they were allowing payment in kind in the absence of money, not try-
ing to make tobacco money; thus there was no golden age of tobacco money but rather a period of
chaos characterized by see-sawing and conflicting legislative acts (e. g., some acts outlawed pay-
ment in tobacco), all seeking an elusive monetary stability. From early on Virginians understood
the need for financial institutions that could expand and contract credit: first they attempted to
create a clearinghouse bank; later they proposed an entire coinage system, including a mint; final-
ly, in 1645, they simply wrote credit money into law by allowing tobacco IOUs (Goldberg 2015). As
with Smith’s cod and nails, tobacco was never money. (See also Feinig 2022: 35 – 37.)
10 In a related vein, one relevant to the context of this section, Ingham also suggests that “econom-
ic orthodoxy” has focused so intently on a model of exchange as exchange of commodities that its
adherents have rendered themselves blind to the significance of money of account. Consistent with
the prioritizing of money of account in his reading of both Keynes and Innes, Ingham wishes to
posit money of account as a “precondition” for any “model of multilateral market exchange” (Ing-
ham 2000: 24). As I elaborate in the sections and chapters that follow, in one sense Ingham’s point
68 Chapter Three: Money “Is” Credit

However, as I indicated briefly in Chapter 1, taking “money of account” as the

primary concept of money is an illicit shortcut – and projecting that argument onto
Innes unnecessarily limits the richness of his text. When Innes says that a “dollar”
has never been seen or touched, he indicates something much more theoretically
significant than the basic concept (important though it may be) of denomination.
Indeed, Innes himself finds the idea of measure or standard “not so extraordina-
ry”; he does not deny the necessity of money of account, but neither does it im-
press him. The point of saying that a dollar cannot be touched is not to say that
dollars are money of account (and therefore that moneyness is to be found in
money of account). Rather, Innes wishes to contrast the intangible dollar with
that which does have a practical reality: “All that we can touch or see is a promise
to pay.” True, there must be some denomination, but Innes asserts that the partic-
ular denomination is inconsequential: “What is stamped on the face of a coin or
printed on the face of a note matters not at all” (Innes 1914: 155).¹¹
Dollars are not things, according to Innes, but neither is “dollarness” equal to
“moneyness.” We cannot ponder the measure of denomination in its philosophical
abstractness and fool ourselves into thinking that we have therefore unraveled the
mysteries of money. Innes’s aim is not to underscore the impalpable nature of “the
dollar” but to direct our attention to concrete money practices. After saying that
denomination does not matter, Innes strikes his keynote:

What does matter, and this is the only thing that matters … : What is the obligation which the
issuer of that coin or note really undertakes, and is he able to fulfill that promise, whatever it
may be? (1914: 155)

Neither “a dollar” nor “dollarness” nor even “dollars as money of account” pro-
vides a proper answer to the question “What is money?” Any adequate explanation
or theory of money must address itself directly to these “promises to pay” and “ob-
ligations of debtors.”
We must interpret our second quote from Innes (this one more famous) in
precisely this context. That line states that “credit and credit alone is money,” a
claim that should serve as the starting point for any credit theory of money
(Innes 1913: 392). Notice in this formulation that while Innes forwards “credit”
as the very definition of money, he does so in a way that distinguishes this concept

holds: there can be neither money nor genuine economic exchange as understood within the neo-
classical model of economics without denomination (money of account). But perhaps he overesti-
mates the difficulty in establishing money of account, and thereby overvalues its importance.
11 In an important sense the denomination can be anything whatsoever – dollars or euros, rupees
or pesos, goats or wizards. I detail this argument in Chapter 5.
 1 What Is Economic Exchange? 69

of credit from the amorphous idea of counting in units of an abstractly denominat-

ed value. Any credit is concrete, because it is always nothing less than a promise to
pay that thereby involves the obligation of an issuer. In other words, there can be
no credit without a specified debtor – the obligated party, the party with respon-
sibility to the agent holding the credit. And Innes stresses that credit therefore im-
mediately raises the question of the debtor’s ability to keep her or his promise –
“this is the only thing that matters.” There can be no credit without a debtor, so we
must therefore directly inquire as to the liquidity and solvency of the debtor.
This brings us to Innes’s extended critique of Smith. Much less discussed (if at
all) in the small literature on Innes, I submit that it has just as much potency as the
earlier lines. Antedating Graeber by a century, Innes refutes the barter myth and
rejects a commodity theory of money. But he goes even further, making it possible
to reorient our understanding of the most basic of economic acts – a sale. Innes
quotes at length from the most famous passages in Smith’s Wealth of Nations –
those that depict the bartering brewer, baker, and butcher, who all agree that
choosing one commodity and using it as money would solve their problems
(Smith 1869). I now quote Innes’s response at length:

Adam Smith’s position depends on the proposition that, if the baker or the brewer wants
meat from the butcher, but has … nothing to offer in exchange, no exchange can be made be-
tween them. If this were true, the doctrine of a medium of exchange [commodity money]
would, perhaps, be correct. But is it true? Assuming the baker and the brewer to be honest
men, and honesty is no modern virtue, the butcher could take from them an acknowledge-
ment that they had bought from him so much meat, and all we have to assume is that the
community would recognize the obligation of the baker and the brewer to redeem these ac-
knowledgements in bread or beer at the relative values current in the village market, when-
ever they might be presented to them, and we at once have a good and sufficient currency. A
sale, according to this theory, is not the exchange of a commodity for some intermediate com-
modity called the “medium of exchange,” but the exchange of a commodity for a credit. (Innes
1913: 391)

This argument provides the foundation for a new and distinct account of economic
exchange.¹² Exchange is not the swapping of two entities of the same kind (both
commodities) but the mutual substitution of two utterly distinct kinds (commodity

12 The move I make here resonates with but remains distinct from the arguments of the nine-
teenth-century “banking school,” whose members argued, as Ingham nicely phrases the point,
that “a monetary transaction was not an exchange of commodities – precious metal for goods;
but, rather, the settlement of the debt with a credit” (Ingham 2020: 31). The banking school attempt-
ed to prioritize “monetary transactions” vis-à-vis “commodity exchange,” while I am trying to de-
construct the dichotomy.
70 Chapter Three: Money “Is” Credit

and credit).¹³ Accordingly, the distinction between real and monetary analysis
breaks down entirely; “real” economic exchange is monetary through and through.
Within capitalism, we can reach one of two conclusions: that there is no such thing
as real analysis (in the sense of analysis sans money) or that real analysis is mon-
etary.
Either conclusion makes it hard to position Innes in our matrix of money the-
ories; in some sense, it shakes the foundations of the entire matrix. Innes testifies
definitively against the commodity theory of money (2), and he withholds support
for the quantity theorem (y). But where does he stand on real analysis versus mon-
etary analysis (A or B)? In constructing the “heterodox tradition,” Ingham natural-
ly situates Innes within that pure type (B2y), suggesting that Innes chooses mone-
tary over real analysis (Ingham 2004b: 242). The post-Keynesian strain of heterodox
economic thought does in fact opt for monetary analysis – in much the way that
Schumpeter describes the early Keynesians of his own day. Ingham reads Innes
as a precursor to today’s heterodox theory, which grows out of, even if it strenu-
ously criticizes, a neoclassical paradigm fully committed to real analysis.¹⁴ Authors
in the B2y type therefore choose monetary analysis in just the way I described in
Chapter 2: as a practical consideration given the “financialized” nature of the mod-
ern economy.
I contend that this is a limited, potentially inaccurate reading of Innes, who
must instead be distinguished from the pure type of heterodox theory (B2y). In
Chapter 2 I foreshadowed my interpretation of Innes by placing him initially in
the A2y category. Put simply, writing outside of academic debates and seventeen
years before Keynes’s Treatise, Innes does not purport to be engaging in a “mon-
etary analysis” that would be distinct from the real analysis of a commodity econ-
omy. Instead, he simply offers a new way of doing “real analysis.” In this chapter I

13 One might pause here to ask how such a substitution is possible in the first place. Metallists
need not address the question – for them, money is a commodity – while so-called heterodox the-
orists (especially the post-Keynesians addressed in the following chapter) have failed to take the
question seriously. Here again we observe the acuity of Konings’s point that heterodox theorists
have ignored something important about the orthodoxy (Konings 2018: 17). In this case, a metallist
theory of money, while nonetheless false, at least has the advantage of explaining why money and
commodities would seamlessly substitute for one another. An adequate answer to this question
would, I suggest, need to combine the full credit theory of money as developed in this book
with the insights of a value-form analysis of capitalism (see e. g., Arthur 2004; Heinrich 2012; Cham-
bers 2018; cf. Ingham 2020: 44).
14 For his part, Wray reads Innes as a fellow traveler with Knapp – that is, a state theorist in cred-
it clothing – marking both as precursors to later Keynesian and post-Keynesian monetary analysis.
As should be evident at this stage, one aim of my reading of Innes, which I call on throughout the
book, is to pry him out of the frame built by Ingham and Wray.
 1 What Is Economic Exchange? 71

push past the binary choice “real or monetary”; my reading of Innes directs us to-
ward a new conception of economic exchange and thereby advances us beyond the
real/monetary binary. To be more accurate, we need to expand or move outside the
matrix to a position marked C2y, where “C” denotes a displacement or overcoming
of the real/monetary dichotomy.¹⁵ Innes’s theory exemplifies category C by show-
ing that there can be no non-monetary economic analysis.
The monetary is real. ¹⁶ To defend this principle means to insist upon the ab-
solute primacy of money to all economic relations (at least under capitalism). We
cannot juxtapose the monetary to “the real,” and thus our “monetary” analysis
cannot and must not be (as it was and still is for many Keynesians) a concession
to practical reality. This redefinition of the basic principle of economic exchange as
the swapping of money for a commodity has a host of important implications. It
renders money and commodities co-constitutive of economic relations; commodi-
ties cannot ground economics, and they cannot be hypostatized as existing in na-
ture.
Moreover, arguing that economic exchange is the exchange of commodities for
credit opens up a space to bring in and take seriously what Mehrling dubs the
“money view.” The money view studies political economy not from the perspective
of the neoclassical paradigm of economics, nor from the perspective of business
school finance theory, but from the on-the-ground perspective of bankers, central
bankers, and those who work directly in money markets (Mehrling 2011). Contem-
porary capitalist economics depends entirely on these markets, in which trillions
of dollars of denominated value are traded every day. Crucially, these are not mar-
kets in goods and services, but, as the name plainly states, markets in money. Here
we have the exchange of credits for other credits – the swapping of IOUs. The stan-
dard definition of economic exchange as C!C has no choice but to dismiss, mar-

15 If space and time permitted, I would advance a similar argument about Cencini’s incredibly
rich and sadly neglected theory of money. I placed Cencini in the A2y category for the same reason
I did Innes: Cencini does not choose “monetary” analysis but rather sees the monetary as real. Cen-
cini also belongs in the newly created C2y category. Cencini’s broader argument hinges on the at-
tempt to prove that money is real, just not in the same way that commodities are real (Cencini
1988). John Milios also offers a reading of Marx and endogenous money that suggests a similar
move beyond real/monetary. As Milios puts it, “the only economic theory inherently formulated
as a monetary one, is Marx’s value theory” (Milios 2002: 2).
16 In the previous chapter I suggested that Schumpeter’s struggle to clarify his theory of money
hinges on his attempt to synthesize real/monetary analysis while affirming the quantity theorem.
In the language used here, Schumpeter was pushing toward category C, but he wanted a theory of
type C2x. However, as I show below, once you make the monetary “real,” it becomes impossible to
affirm a causal relation of M→P. Schumpeter’s lifelong project thus failed out of necessity: he was
aiming for an utterly untenable theory of money.
72 Chapter Three: Money “Is” Credit

ginalize, or explain these markets as epiphenomenal. Our redefinition of economic

exchange instead avows the importance of markets in money, and can even widen
its ambit to include what we might call “financial exchange,” M!M – a task I take
up in Chapter 6. Here we can underscore the following point: by making economic
exchange primary, by making money and commodities co-constitutive of “the eco-
nomic,” we create a space in which “barter,” if and when it occurs (extremely rare-
ly), would also be “economic,” but so would financial exchange when it occurs
(constantly).¹⁷
This major conceptual shift has implications for the entire theory of money.
C2y is not just a version of B2y; rather, it operates in a different dimension,
such that the “C” has an impact on the meaning of the “2” and the “y.” The next
two sections take each transformation in turn.

2 A True Credit Theory of Money

As briefly discussed in the previous chapter, one doesn’t have to dig too deeply into
the literature on money to find references to the distinction between a “monetary
theory of credit” and a “credit theory of money” – a turn of phrase first coined by
Schumpeter (e. g., Schumpeter 1954: 686; see also Ingham 2004a: 38; Mehrling 2000:
397; Wray 2004: 224). Unfortunately, many references to this framing remain too
close to the surface: they limit the scope of the distinction to particular arguments
about exogenous versus endogenous money creation, or to recapitulations of the
generalizing dichotomy orthodox/heterodox.¹⁸

17 I engage Mehrling’s money view in later chapters of this book, but throughout it I constantly
keep in mind Mehrling’s fundamental point about the importance of liquidity. Markets are not nat-
ural; they are made. And while they are made possible by legal structures, by cultural, social, and
political institutions, they are quite literally made by dealers who offer both to buy and to sell at
any time. A “market” only exists because dealers post two sets of prices – “bid” (the price at which
they will buy) and “ask” (the price at which they will sell). The market is founded on this liquidity
provided by the dealer. Mehrling shows that both economics and finance ignore liquidity or as-
sume it away (as a “free good”). Even though I lack the time and space to explore these issues, I
contend that the theory of money as credit, which I develop here, itself points toward the crucial
importance of liquidity. Note that the “dealer function” is constitutive of markets, even before one
considers complications like monopsony or monopoly powers that would otherwise be thought to
“distort” said markets; there is nothing there to distort before a dealer, providing liquidity, makes
it. Thanks to Henry Scott for his constant and justified advocacy of the money view.
18 Ingham frequently leverages this distinction as support for the assertation that there exist only
two incompatible theories of money (Ingham 2004a: 9). I outlined my critique of that account in
Chapter 2; here I merely add that Ingham’s broad framework swallows up the subtlety of Schum-
peter’s distinction and blocks from our view the critical work that can be done with it.
 2 A True Credit Theory of Money 73

Schumpeter’s point was not to create broad categories or to divide the world of
money theories into two. Rather, the distinction emerges as the result of a deft cri-
tique of early work on money. In a series of passages devoted to the theory of credit
in the period 1790 – 1870, Schumpeter observes that most writers on the topic were
jurists. Thus they tended to define money as legal tender; credit instruments were
themselves only claims to (legal) money. This leads them to begin with coins and
bank notes (what they frequently call “currency”¹⁹) and “build up” to an analysis
of “credit.” Schumpeter sees such approaches as unsurprising, reasonable, yet nev-
ertheless wrong:

Logically, it is by no means clear that the most useful method is to start from the coin … in
order to proceed to the credit transactions of reality. It may be more useful to start from these
in the first place. … A credit theory of money is possibly preferable to a monetary theory of
credit. (Schumpeter 1954: 686)

Schumpeter is not marking out neutral categories but rather advancing a sharp
attack. Theorists of this period “failed … to develop a systematic credit theory of
money”; they were unable to grasp the nature of either money or credit because
they were confined by “the strait-jacket of the monetary theory of credit” (Schum-
peter 1954: 687). Schumpeter’s detailed account of the history of economic thought

19 In contemporary usage, “currency” has two distinct, but almost never distinguished, meanings:
1) It denotes concrete bank notes as issued by a commercial or central bank. This is how the term
operates in nineteenth-century money debates: the word “currency” is shorthand for “bank
currency” and refers specifically to bank money (see Schumpeter 1954: 686 – 700).
2) It references national moneys of account (pounds, dollars, etc.), as in “domestic currency” ver-
sus “foreign currency,” with the latter term driving the meaning.

Failure to distinguish these two meanings elides the quite profound differences between concrete
money tokens, issued mainly by commercial (but also central) banks (1), and the general money of
account of a particular (national) money space (2). In both popular discourse and in today’s money
literature, one regularly sees discussions about “dollars” as “currency.” This common usage badly
conflates money proper (the $20 bill as a specific token of bank debt) with money of account (dol-
lars as denomination). By collapsing the difference between “dollars” as general denomination and
specific dollar-credits issued by a bank (or by any other debtor), the term “currency” subtly under-
writes a state theory of money – because it suggests that “currency” (as a general synonym for
money) is largely a state concern. For these reasons, I generally avoid using the term, with the
main exceptions being historical cases (such as the one in the text here) and discussions of foreign
exchange (as exchange of one “currency” for another).
Currency’s etymology traces to the mid-seventeenth century and indicates “the fact or condi-
tion of flowing.” The term’s application to money appears less than fifty years later and refers to
the fact of coins and paper bills being passed from person to person. (See “currency” in the Oxford
English Dictionary).
74 Chapter Three: Money “Is” Credit

nicely throws Innes’s work into relief. Schumpeter argues that writers from the
period before 1790, such as Boisguillebert and Cantillon, “might have set the writ-
ers of 1800 – 1850 on the right track” had anyone but read those early works.
Instead, the weight of the money-first approach was so heavy that when an
author tried to reject it explicitly, “they remained so completely outside the pale
of recognized economics” as to be unintelligible to the field (Schumpeter 1954:
687). Schumpeter here refers directly to the work of Macleod. If the narrative
seems hyperbolic, we need only remember that the basis for Keynes’s first-line dis-
missal of Innes is nothing less than the simple (assumed) fact that Innes “is a fol-
lower of Mcleod [sic]” (Keynes 1914: 419). Macleod’s work is so “outside the pale”
that Keynes can refuse even to engage with a credit theory of money in his review,
merely by identifying Innes as a reader of Macleod and an advocate of such a theo-
ry. One wonders what Schumpeter might have said about Innes, had he read him;
far from being a mere follower, Innes actually advances precisely the fully “devel-
oped” credit theory of money that Schumpeter calls for. Innes provides the core
principles for a rigorous credit theory, one that must be carefully distinguished
not only from later post-Keynesian (“heterodox”) writings but also from both Ma-
cleod and Knapp.
Schumpeter is right: in the context of the emerging neoclassical paradigm of
the time, Macleod’s Theory of Credit (1889) reads like it was dropped from another
planet. Almost the entire first half of the book (running to some 148 pages) consists
of a “Definition of Terms,” a project through which Macleod redefines nearly all
the terms of economics by drawing almost randomly from sources throughout
Western history. Nonetheless, the core claim of the work can be summarized sim-
ply: credit is just like money; it has the same basic nature and performs the same
basic functions (Macleod 1889: 276). Iconoclast though he may be, Macleod begins
by working within the genre established by Walker – money is the functions it per-
forms – but then goes on to demonstrate the failure of this approach to distinguish
money from credit in any proper sense. Credit instruments perform all the same
functions as “money.” Schumpeter is right again: this is, indeed, an effort to devel-
op a much more robust theory of credit by refusing to “start with the coin.” None-
theless, I argue that Macleod comes up short, because he never lets go of the dis-
tinction between money and credit. While he insists that credit is of the “same
nature” as money and that it can do what money does, he also contends that credit
is “inferior in degree” (Macleod 1889: 276; cf. Mehrling 2012). Macleod expresses
this difference in terms of time: the holder of money “may keep it as long as he
pleases,” while “credit is always created with the express intention of being … ex-
tinguished” (Macleod 1889: 276 – 277).
Innes goes well beyond Macleod, arguing not that credit is like money but that
money is credit. When Innes writes that “credit and credit alone is money” he re-
 2 A True Credit Theory of Money 75

fuses any effort to distinguish money and credit, either by kind or degree.²⁰ This
does not mean, however, that we cannot make ordinal distinctions between vari-
ous types of money; it does not mean all money is the same. Money is credit/debt.
As such, money always and immediately involves two parties: creditor and debt-
or.²¹ If I hold money in my hand, I hold a credit against some other entity. They,
in turn, owe me a debt. It therefore matters a great deal how legitimate or reliable
that creditor is. As Innes puts it, “a first class credit is the most valuable kind of
property” (Innes 1913: 392). But the difference between a first-class credit and a
second-class credit (let alone “junk” credit) is nothing more than a slide down
the scale of money forms. This hierarchical ranking of money cannot be made
to reflect Macleod’s purported distinction between money that we can hold indef-
initely and credit that must be extinguished. Because money is credit, it is always
temporal and temporary: it always points toward future “redemption” of the cred-
it, even if such redemption never comes. Rather than redeeming the credit with
our debtor, we almost always transfer the credit instead (by spending the
money). That is, money is circulated: when I make a purchase I transfer my
claim on a debtor to someone else, who then holds a claim on my previous debtor.
In a sense then, contra Macleod, credits need not be temporary because their re-
demption can be indefinitely deferred. On the other hand, and again contra Ma-
cleod, money is never good indefinitely because my money always depends on
my debtor. Bank runs and hyperinflation are just two of numerous examples
that undermine the idea of holding money as long as we please. As money, my
credits always remain subject to destruction or disappearance. Money is that
thing which allows its holder to extinguish a debt, an act that may itself destroy
money.²²
In vainly trying to preserve a money/credit distinction, Macleod remains root-
ed in a long tradition that has always adamantly insisted on the difference be-

20 The rest of this paragraph provides a short rehearsal of an argument I defend in greater depth
in Chapter 5.
21 It can be easily demonstrated that the most basic exchange of money for a commodity, if paid
for with bank-deposit money (check, ACH, direct debit, etc.), actually involves: five parties (buyer,
seller, buyer’s bank, seller’s bank, central bank); two types of money (commercial bank money and
central bank reserves); and seven sequential (sometimes instantaneous) steps through which the
commodity and monies move. Hyman Minsky was probably the first to underscore (and popular-
ize) the crucial point that when banks pay one another they need credits on some other bank lo-
cated further up the hierarchy of money (Minsky 2008: 258).
22 Whether money is destroyed hinges on the relation between the payee and the debtor: paying
off my mortgage with bank deposits and paying my US taxes with US Federal Reserve notes both
destroy money, but a person buying something on Craigslist with cash (again, US Federal Reserve
notes), or one company buying out another (by purchasing all shares of public stock), does not.
76 Chapter Three: Money “Is” Credit

tween a mere promise to pay (credit) and an actual payment (money). For any com-
modity theory, maintaining such a distinction proves trivial: only the commodity is
actual money, and anything else is credit because it promises future payment in
the form of the commodity. Here we see clearly for the first time a crucial issue
that animates much of the discussion in Chapter 5: by thoroughly rejecting the
commodity theory’s insistence on positive, intrinsic value, the credit theory puts
enormous pressure on the money/credit distinction.
Indeed, even at this stage of the argument we can already indicate that with-
out grounding in a commodity theory, the money/credit distinction can never truly
hold. If money is credit, then when we pay in money, we pay in nothing less than
another promise to pay. For example, if you make me a loan denominated in USD,
then at the time of the loan’s creation, we could say that you hold a credit (my
promise to pay you), not money. Yet at the time of payment, precisely what I
give to you is another form of credit: if I pay you with a check, then my payment
is the transfer of credit I hold against my bank. I am no longer obligated to pay you,
my bank is. And when you deposit that check into your bank account, you are
again only transferring the credit in the sense of swapping out your debtor: first
I owed you; then my bank owed you; and now your bank owes you. The so-called
“actual” payment that would constitute money never actually arrives, but is always
deferred.
To grasp money as credit means always seeing money as a social relation in
the specific sense of the money array. There is no positive, intrinsic value to
money; there is only, as Schumpeter emphasizes, a claim on some future product.
But as Innes helps us see, that claim cannot come from the ticket alone; the ticket
is only ever a receipt that confirms our relation to our debtor. Of course we must
verify the authenticity of the ticket, but doing so does not verify the money. The
latter requires us to prove the legitimacy and solvency of the debtor.²³
To forge a ticket (whether it be coin, paper bank note, or a credit default swap)
is to commit fraud by claiming to hold a credit (to have a legitimate relation to a
debtor) that one does not in fact have. But this has nothing to do with the validity
or reliability of money. Forgeries are not “unsound money”; they are not money at
all. Any question of the relative “soundness” of money only arises after the legiti-

23 As I show in detail in the next chapter, to theorize money as an array entails resisting the ten-
dency to conflate the idea of money as fundamentally relational with the notion that money is a
social institution, one chosen by society or its leaders. “Verification” also cannot be carried out at
the level of society itself. That is, the existence of the “institution of money” (a phrase often favored
by post-Keynesian thinkers) does not itself legitimate any particular money claim. The institution
can persist while particular forms of money (credit) fail all the time. We obscure the nature of
money as credit when we describe it as an institution.
 2 A True Credit Theory of Money 77

macy of the claim has been settled. The “quality” of money concerns only the reli-
ability of the debtor. It therefore matters not how much gold or silver is in a coin; if
it has the proper stamp, it is money (because it is a denominated claim of credit/
debt).²⁴ Commodity-gold must be assayed for its metallic purity because the buyer
buys a specific quantity (measured in weight) of gold.²⁵ Money-gold need not be
assayed or even weighed; as token or claim, we must only verify that it is not a
fake.²⁶
Whether credit money proves to be a “first-class” credit depends on the debtor,
the issuer of the coin or paper or spreadsheet entry. Innes puts the point this way:
“The value of a credit depends not on the existence of any gold or silver or other
property behind it, but solely on the ‘solvency’ of the debtor, and that depends on
whether, when the debt becomes due, he [the debtor] in turn has sufficient credits

24 This point chimes with Schumpeter’s critique of the commodity theory of money, elaborated in
the previous chapter. Schumpeter shows that paper money, old money, and coins “below par” all
continue to circulate in a properly functioning monetary system. We can now add to this point:
money fails when we lose faith not in the token itself but in its issuers.
25 Christine Desan’s otherwise illuminating history of money in England frequently founders on a
lingering belief in “commodity money,” in particular on a failure to see that the mint price is pre-
cisely what establishes the difference between commodity-silver and money-silver. Desan argues
that the mint “charged users for money creation” in that “users pay for money at the mint.”
She allows her work to be underwritten by metallist theory when she assumes that because a
minted coin of £1 denomination has less metal in it than £1 worth of metal bullion, that this
means the mint must be “charging” the individual (Desan 2014: 8 – 9). This account ignores the fun-
damental fact that the £1 coin is not a commodity; it is a token of denominated value. As such, it
absolutely must, of necessity, have less metal in it than £1 worth of commodity metal. If it had the
same or more, then it would fail to function as money. All of this means, contra Desan, that the
existence of the mint price props up the market value of commodity-silver. Silver as a commodity
is only worth as much as it is because the mint stands willing to pay such a high price for it in
money. The mint overpays for commodity-silver, and its overpayment influences the market
rate. Moreover, the quantity of silver in the money token is mostly irrelevant (to everyone
other than silver miners); as long as the token remains money-silver, it simply is not commodi-
ty-silver. This also means that there is no lower bound to the amount of commodity-silver contained
in the money-silver token. It’s true that should the money system itself collapse such that the
money token fails to circulate, then the holder of a coin may treat it as commodity-silver. At
that point they will hold less total commodity-silver than they did back at the start (i. e., when
they sold their original commodity-silver to the mint). But under these circumstances it makes little
sense to describe this difference in metal as a “charge” because in this context we have no viable
money of account with which to measure value. People brought bullion to the mint not to turn it
into less bullion but to turn it into money.
26 The denomination of money-gold is usually stamped on the face of the coin, but even in cases of
coins without such stampings, the denomination is fixed by the mint, the sovereign, or by custom
(not determined by weighing the coin). Everyone knows that the smallest US coin is worth $0.10,
though the coin itself only contains the colloquial “one dime” on its reverse.
78 Chapter Three: Money “Is” Credit

on others to set off against his debts” (Innes 1913: 393).²⁷ My bank deposits are cred-
its at my bank, who is my debtor, and my credits remain good up until the point
that my bank itself either becomes insolvent or runs out of liquidity.²⁸
A rigorous credit theory of money affirms what Mehrling helpfully names “the
hierarchy of money,” a concept that raises the crucial relation between a credit
theory of money and a state theory of money (Mehrling 2012; cf. Minsky 2008).
That is, at some point as we move up the hierarchy, it is likely (or in modern so-
cieties, inevitable) that we will encounter state money – that is, government-issued

27 As Mehrling lucidly argues, we must always be careful to distinguish between liquidity and sol-
vency, but we often find it hard to do so because mainstream economics consistently ignores and
elides questions of liquidity – often assuming that liquidity is just a given (Mehrling 2011: 59). The
distinction is simple to draw definitionally but often hard to keep separate in practice. Solvency
describes a condition in which total assets exceed total liabilities (when liabilities exceed assets,
the result is insolvency). If we conceive of any economic agent (bank, firm, household or individ-
ual) according to their balance sheet of assets and liabilities, then that agent is solvent if the former
are greater than the latter. Solvency is a measure of stocks, in the sense that we must count up total
assets and liabilities. On the other hand, liquidity is a measure of flows; specifically, it is a measure
of periodic (usually daily) flows of money (understood in some sense as “cash” – for more on this,
see Chapter 6, Footnote 14). An agent remains “liquid” as long as their daily incoming flow of cash
(or available strategic stock that can be liquidated – hence the term) exceeds their daily outgoing
flow of cash. A healthy financial entity will obviously be both solvent and liquid, while a bankrupt
institution will be both insolvent and illiquid. The tricky situations occur when an agent is: 1) si-
multaneously insolvent and liquid or 2) simultaneously solvent and illiquid. In the first case, an in-
solvent bank, dealer, or firm can remain in business long enough to return to solvency so long as
they can make their money outflows line up in time with their money inflows. In the latter case,
despite being solvent, if they fail to have adequate daily cash flow to pay current commitments,
they will still be in trouble. Hence Mehrling’s mantra: “illiquidity kills quickly.” Obviously these
two conditions are related: solvent institutions will find it much easier to get access to loans need-
ed to meet liquidity constraints; illiquid agents will find that the value of their assets gets reas-
sessed based on their funding problems, and this fact could lead to their becoming insolvent.
But Mehrling’s main points are: 1) liquidity cannot be subsumed under solvency, and 2) in most
circumstances, liquidity matters more than solvency.
The first use of the term “liquidity” in the economic sense appears in Hawtrey’s Currency and
Credit (1919). Written a decade prior, Innes’s credit theory of money contains a fascinating section
wherein he articulates the newer concept of liquidity (i. e., having “immediately available credits at
least equal to the amount of his debts immediately due and presented for payment”) using the
older language of “solvency” (Innes 1913: 394). In other words, Innes understands the primary im-
portance of the concept of liquidity, which he describes clearly, even if at the time he lacked the
terminology to name it.
28 To repeat: when I use my bank credits to pay for something (say, to pay a friend my share of the
costs of dinner), this involves: my bank debiting my deposit account (they now owe me less); my
friend’s bank crediting his deposit account (they owe him more); my bank transferring central
bank reserves to his bank (see Minsky 2008: 231; also cited in Wray 1998: 35).
 2 A True Credit Theory of Money 79

debt that circulates in and helps establish the primary money of account – dollars,
euros, etc. Recent post-Keynesian work at various times asserts or assumes that
state theory is a natural development out of credit theory. Ingham grounds
much of his project on the earlier work of Ellis, who, in surveying German Mone-
tary Theory, places Knapp and his followers at the center of the narrative. Ellis,
however, makes a subtle distinction between “orthodox nominalism” and “state
theory,” one that later writings tend to elide (Ellis 1934: 42; cf. Ingham 2004a; Ing-
ham 2004c).
It proves crucial to articulate the relation between the credit theory and the
state theory, but I argue that we must magnify, not minimize, the differences. I
again take my cues from Schumpeter, who very early on sounded a prudent warn-
ing that seems to have gone unheeded by contemporary writers. In his 1917 article
on the quantity theorem, Schumpeter was already worried about Knapp’s state
theory taking up all the air available in the anti-metallist camp. Schumpeter is em-
phatic: “A sharp distinction must be drawn between ‘nominalism’ and ‘state theo-
ry.’ The nominalist idea has received in the latter a special form which is not es-
sential to it, and which exposes it to objections that would otherwise not apply”
(Schumpeter 1956: 161). Both in this article and at much greater length in HEA,
Schumpeter positively rails against Knapp. This critique is essential for at least
three reasons:
1) It helps to correct the historical record, showing that there was never a direct
line running from Innes and Knapp to Keynes, Schumpeter, and today’s post-
Keynesians (without that lineage, the very idea of a heterodox tradition must
be scrutinized). Quite the contrary, when we look closely at the enormous
quantity of writings on money between 1870 and 1940, we uncover a conten-
tious dispute within the claim theory (or “nominalist”) category.
2) It allows me to refine and augment my particular presentation of the credit
theory of money, a specific variant of claim theory that rejects a hard
money/credit distinction while resisting appropriation by state theory.
3) It shines a bright light on contemporary political debates over money, especial-
ly as they crystalize around modern money theory (MMT); Schumpeter’s with-
ering appraisal of Knapp reads like a powerful and important attack on MMT,
avant la lettre.

Schumpeter aims to warn his readers, to prevent them from concluding – as both
Knapp and his followers (as well as advocates of MMT today) often insist on doing
– that Knapp’s state theory is the only alternative to a standard, commodity theory
of money (Knapp 1924: viii). Schumpeter cannot control his outrage: “This absurd
claim was widely accepted” (Schumpeter 1954: 1057). The notion that rejecting com-
modity theory leads straight to an embrace of state theory – this idea so appalls
80 Chapter Three: Money “Is” Credit

Schumpeter that he avers we might be better off sticking with commodity theory (a
false theory, according to Schumpeter) than taking up state theory.²⁹
When it comes to the relation between money, on the one hand, and the power
of the state, specifically the power of law, on the other, Schumpeter conceives of
two viable theses a writer could proffer: 1) the state can declare what counts as
legal/legitimate/viable “pay-tokens”; 2) such state declarations “will determine the
value” of those tokens. Schumpeter says thesis 1 is true but boring, while thesis
2 is interesting but false (Schumpeter 1954: 1056). The former fails to offer any
real challenge to metallism: that money as legal tender is established by state
law tells us nothing directly about the inherent nature of money. The latter
would provide such a challenge (if state edicts constitute money’s value, then sure-
ly money is not a commodity), yet that thesis is untenable (Schumpeter 1956: 160).³⁰
To his detriment, says Schumpeter, Knapp pursued neither thesis. Knapp es-
chewed the question of money’s “value”; instead, he constructed an ontology of
money, developed out of its factual existence as a “creature of law” (Knapp 1924:
30, 1; cf. Schumpeter 1954: 1056). It will perhaps come as a surprise to those who
have read Wray or Ingham but not Knapp to learn that the last builds his entire
project on top of a standard commodity-theory story of money. Knapp takes the
Mengerian narrative as his starting point: “We observed the fact that in human
society a definite commodity, or, more accurately, a definite material grew into a
means of payment” (Knapp 1924: 25). Knapp’s question simplifies to the following:
How do we understand the nature of money when debts measured in material
value get transformed – through historical development and the growth of the
modern state – into legal tokens? Knapp does not just tacitly presuppose the com-
modity-theory narrative; he explicitly adopts it (Knapp 1924: 35).
It would therefore be hard to overestimate the distance that separates Knapp
from Innes. Knapp embraces the standard (yet already outdated) history of coinage
as a series of metallic standards of weighted value – the very history that Innes
takes as his chief critical target. In this context we can better hear Schumpeter’s
plaint: Knapp offers no deep or rigorous challenge to the core tenets of metallism,
and what he does provide in terms of the nature of chartal money turns out rather
empty. Schumpeter formulates his most forceful charge against Knapp in the shape
of a repeated and extended analogy:

29 Schumpeter stresses that the only good explanation for the enduring influence of Knapp is that
he (over)simplifies the choices for a theory of money (Schumpeter 1954: 1057). Over this chapter
and the previous one, I trace some of the enduring legacy of this oversimplification, which, as I
show in the next chapter, we see in contemporary contributions to the theory of money.
30 For a much more generous and productive reading of Knapp, see my discussion of Ingham’s
development of Weber’s interpretation of Knapp (Chapter 5, Section 4).
 2 A True Credit Theory of Money 81

Money is as little and in no other sense a creature of the law than is any other social
institution[,] such as marriage. … Marriage [is] regulated by law[,] and to that extent [its] con-
crete form [is a] creature of the prevailing legal system. But no-one can explain marriage by
this legal system. Rather, the relevant legal provisions themselves are comprehensible only on
the basis of the social nature and the social functions of the relations and modes of behavior
which these legal provisions regulate and which, to be sure, never exist without them, but
also never exist only through them: the essential nature of marriage relations explain the
legal provisions which regulate them, but the legal provisions do not explain the essential na-
ture and causes of marriage relations. Similarly, money transactions are regulated or shaped
by the legal system, but as an object of regulation they retain a separate existence apart from
the legal system itself and can be explained only by their own nature or by the inner neces-
sities of the market economy. (Schumpeter 1956: 160–61, emphasis added; cf. Schumpeter 1954:
1056–57)

The power to regulate a complex social institution is not the power to create that
institution, to literally bring such social relations into being. More to the point,
identifying the state power to regulate money does not give us insight into the na-
ture of money itself.
In today’s hierarchy of credit money, state money indeed plays an absolutely
central role. Sovereign government debt is always one of the highest forms of
money, and in the case of US sovereign debt, it is also a form of world money –
with US Treasury bonds playing the chief role of Innes’s first-class credits, other-
wise known as a high-quality liquid assets (HQLA) (Pozsar 2018). Nevertheless,
we cannot think that admitting the significance of state money and the role played
by states (and today, central banks) brings us directly to a deep understanding of
the ontology of money. Knapp’s own work proves otherwise: he fails to offer an
alternative to metallism’s singular ontology; instead, he substitutes the legitimacy
of sovereign legal decree (chartal tokens) and sovereign taxation powers for the
validity of metallic content.
This extended critique of Knapp opens up large holes in the heterodox lineage,
and perhaps gives us some explanation for the staying power of both the commod-
ity theory and the so-called orthodoxy. To put the point bluntly, I am trying to show
that heterodoxy bet on the wrong horse: of the many varieties of claim theory
(type 2), Knapp’s is the weakest by far. Worse still, contemporary reconstructions
of a so-called heterodox theory of money tend to erase the gap between Innes and
Knapp, to reduce everything down by forcing it into a “non-orthodox” crucible. De-
spite never mentioning Innes himself, Schumpeter warns strongly in advance
against just this move. Indeed, Schumpeter’s own defense of claim theory proves
far more rigorous and tenable than Knapp’s work. Yet those warnings have not
even been heard – much less heeded – perhaps because Schumpeter’s perduring
82 Chapter Three: Money “Is” Credit

commitments to both real analysis and the quantity theorem mean that he cannot
be made to fit into the pure heterodox type.³¹
Schumpeter shows that a viable claim theory will not only distinguish itself
from Knapp and the tradition his work founds but also decisively oppose that tra-
dition. Schumpeter’s challenge to Knapp serves to sharply contrast state theory
with credit/claim theory. From here we can zoom in and focus, by pointing out
the detailed differences between Schumpeter’s claim theory and the particular
theory of money as credit that I develop from Innes. The chief variance in the
two arguments lies in the context of the presentations. As I have shown above,
Innes effectively replaces the theory of barter with a distinct theory of economic
exchange involving a commodity and a credit. We can thereby understand Innes as
offering: 1) an alternative to the commodity theory of money (i. e., the credit theory
of money) and 2) a distinct account of economic activity itself.
Schumpeter, as I detailed in the previous chapter, rejects commodity theory di-
rectly and entirely: “Money is not a commodity” (Schumpeter 1956: 161). But he
does not plant claim theory in new ground, beyond the fields of neoclassical eco-
nomic thought. Rather, Schumpeter derives his claim theory from the mode of eco-
nomic analysis that had become standard in the early part of the twentieth centu-
ry: “The basic process of economic life is clearly a circular flow of production
expenditure and consumption uses within each economic period” (Schumpeter
1954: 150 – 151, emphasis added). This “continuous and automatic” process circu-
lates goods and services, and each individual’s share (whether worker or capitalist)
of the product “depends upon the market value of his personal or material contri-
bution to production” (Schumpeter 1954: 152). The circular flow model is a form of
real analysis, sans money. To describe the model in monetary terms means to de-
fine money as money income, which is nothing other than “the monetary expres-
sion of the goods consumed” (Schumpeter 1954: 153, emphasis added). From
these apparently simple assumptions (widely shared across neoclassical econom-
ics, then and now), Schumpeter produces his unorthodox theory of money:
“Since money income is acquired on the market for the means of production
only to be spent on the other market for consumer goods, the essential nature of
money is obviously correctly described by the analogy of a ‘claim ticket to goods’”

31 Ingham sometimes tries to pull off this impossible feat. He continually points to Schumpeter as
a resource for the heterodox theory, going so far at one point as to name Schumpeter as an alter-
native to “the orthodox quantity theory of money” propounded by Fisher (Ingham 2004a: 160). But
this is to ignore: the extended praise Schumpeter gives to Fisher; the extra lengths to which Schum-
peter goes to suggest that Fisher himself might be understood as a claim theorist; and most of all
Schumpeter’s lifelong project to prove the compatibility between claim theory and support for the
quantity theorem (Schumpeter 1954: 1081; Schumpeter 1956: 163).
 3 Beyond the Quantity Theorem 83

(Schumpeter 1956: 153 – 154, emphasis added). This is an impressive accomplish-

ment: Schumpeter successfully derives the claim theory from a standard textbook
account of the circular flow model – “Money is a claim ticket and receipt voucher”
(Schumpeter 1956: 155).
This general conclusion, and the fundaments of a claim theory of money,
prove completely compatible with Innes’s credit theory of money. Both agree
that the claim or credit has no metallic or commodity basis, that even if a commod-
ity is used to produce the credit token, the purchasing power of that claim (its
power as a credit) has no footing in the commodity’s use-value. But the key differ-
ence also proves clear: Schumpeter’s account remains tethered to the circular flow
model. Doubtless this explains both Schumpeter’s commitment to real analysis (his
theory of money starts with no money present) and his support for the quantity
theorem. Indeed, this model authorizes Schumpeter to make the crucial assump-
tion that all money is spent each economic period (no savings) specifically so
that he may conclude that an increase in the “supply” of money (more tickets)
will necessarily lead to a rise in prices (Schumpeter 1956: 163). More speculatively,
Schumpeter’s commitment to a version of claim theory grounded in this larger eco-
nomic model may itself offer the best explanation for his lifelong failure to perfect
his theory of money: the circular flow model cannot but constrain the potentially
radical implications that the claim theory of money otherwise entails.
Removed from that model, Schumpeter’s basic notion of money as claim com-
plements (if it does not merely repeat) Innes’s assertion of money as credit. The
accounts of Innes and Schumpeter blend together nicely to refute the commodity
theory. Innes’s work has the advantage of generality, in the sense that his ontology
of money can be used to develop a more sophisticated account of money and value
under capitalism. Meanwhile, Schumpeter’s theory remains trapped within the
context of a capitalist social order that it assumes but for that reason cannot ex-
plain.

3 Beyond the Quantity Theorem

By the time we reach the third row in our table of money choices, we have already
placed enormous pressure on the money theory matrix. This makes it possible to
dispense with any extended discussion of the quantity theorem and instead merely
indicate why the theory of money we are developing can largely avoid it entirely.
In general terms we may say that by committing itself to (1) the idea of the real as
monetary and (2) a deep understanding of money as credit, the theory developed
in this chapter unravels the very problematic in which the quantity hypothesis
84 Chapter Three: Money “Is” Credit

would be raised. In other words, it’s not just that the causal relation, MV!PQ,
proves false, but that the variables themselves cease to make sense ontologically.
This argument starts with our redefinition of economic exchange. The quantity
theorem incorporates a framework of real analysis as the direct exchange of goods
and services. That is, fundamentally the quantity theorem poses the question:
What happens to economic exchange when an economic order experiences mon-
etary fluctuations? More precisely, what happens to the circulation of commodities
when the “supply” of money changes? As I detailed in the last chapter, the quantity
theorem is developed from the much older exchange equation: MV = PQ. By pre-
suming that M and Q can symbolically express money and commodities – sepa-
rately and on opposite sides of the equal sign – the equation itself tends to presup-
pose real analysis, and it remains thoroughly embedded in the traditional
framework of economic exchange. Yet a capitalist social order turns out to be pre-
cisely the sort of system that calls such simple assumptions into question.
I want to emphasize a more straightforward and, I think, uncontroversial
claim: the exchange equation assumes traditional economic exchange at the
most fundamental level since it posits the existence of commodities and prices
(PQ) as distinct from money (M). Put differently, every argument in support of
the quantity theorem relies on the traditional, real-analysis conception of econom-
ic exchange as the swapping of two commodities.
Let us take two contrasting examples. First, the standard metallist account,
which holds that an increase in the supply of the money commodity leads directly
and inevitably (definitionally) to a decrease in the “value” of money. This decrease
in money’s “value” necessarily entails a decrease in the purchasing power of
money, which is just another name for inflation. Second, Schumpeter’s account,
which combines a claim theory with the circular flow model, assumes that all is-
sued claims (money) must be used (spent), and thus concludes that increases in
money income must drive up prices. Both arguments obviously affirm the quantity
theorem (attesting that M!P), but we can also observe a much deeper connection
between them. In each of these cases – indeed, likely in all arguments supporting
the quantity theorem – we always find one mass confronting another mass, such
that the increase in the money mass relative to the commodity mass leads to a
rise in prices.
However, none of this makes any sense at all – that is, the very terms become
unintelligible – if we reject the standard account of economic exchange and sub-
stitute the account derived earlier in this chapter. In other words, if exchange in-
volves the swapping of a commodity for a credit (money), then there is no longer
reason to believe that an increase in credits will have any necessary impact on the
prices of commodities. Money is not a mass. The existence of more credits (or
fewer) has no inevitable effect on price levels whatsoever. The reason is deceptively
 3 Beyond the Quantity Theorem 85

simple: one can hold more credits without spending them.³² If Jeff Bezos and Tim
Cook have millions more dollars in their account at the end of the month than they
did at the beginning, this phenomenon in itself does not directly shape price levels.
Moreover, under capitalism one often strongly desires to hold credits without
spending them.³³ To understand money and capitalism today we must often see
the movement of credits as separate and separable from the movement of goods
and services, just as we must at other times grasp the links and connections be-
tween them.
For clarity, let me state plainly that the theory of money I have started to de-
velop, when faced with the “yes or no” question of the quantity theorem, can only
and unequivocally respond in the negative. At the first level, I reject the quantity
theorem and affirm the basic idea, which can be traced back to the currency de-
bates, that to the extent we wish to suggest any causal relation, it operates in the
opposite direction: not M!P, but P!M. If we seek to track the movement of price
levels, we must start with the basic economic activity of buying and selling com-
modities. The fundaments of supply and demand prove much more helpful here
than the quantity theorem: more buyers and fewer sellers will, ceteris paribus,
drive prices up (and vice versa). The “quantity of money” – which can only be
measured in the total amount of credits and debts – will generally respond to
those movements in prices. Put otherwise, money is created (endogenously) in a
boom and destroyed in a bust.³⁴ The above positions are not new or unique.
They can be traced back to classical political economy (Quesnay, Law), were devel-
oped in thinkers like Minsky, and are advocated forcefully today by representatives
of MMT and other post-Keynesians. I seek not so much to advance those positions
as to displace the entire quantity theorem framework.

32 This is a lesson that was learned by central bankers during the GFC, which repeated American
experience in the 1930s: sometimes expanded availability of money-credits manifests not in in-
creases to economic activity (much less prices) but merely in “expanding bank reserves” (Mehrling
2011: 42).
33 Keynes, of course, understood this phenomenon to a certain extent, and described it in the lan-
guage of “liquidity preference” (Keynes 1936). Unfortunately, Keynes’s original presentation of the
concept lent itself to appropriation by a model that reconciled this notion with “supply and de-
mand” of money, making many Keynesians and post-Keynesians into supporters of the quantity
theorem. I explore the issue of liquidity, and Keynes’s unique understanding of it, in some
depth in Chapter 5.
34 To investigate the nature of that value destruction requires something more than a theory of
endogenous money creation. It also requires a thoroughgoing rejection of any trace of positive
money value, which makes it possible to see that value can disappear instantaneously precisely
because money, at one and the same time, both has no value and is the form that value takes.
86 Chapter Three: Money “Is” Credit

This chapter has begun to elaborate a new theory of money. My account uses
the previous chapter’s money matrix as a guide, but also places that matrix under
significant torsional pressure. Hence my own location on the matrix actually lies
outside of it, or at least requires its expansion. My theory is of the variety C2y:
1) It deconstructs or displaces the real/monetary binary by redefining economic
exchange as the swapping of a commodity for a credit, therefore insisting that
the monetary is real.
2) Going back to Innes, it details a theory of money as credit, resisting any onto-
logical money/credit distinction while also distinguishing the credit theory
from state theory (sharply) and from a claim theory linked to the circular
flow model (more subtly).
3) It rejects the quantity theorem, and goes further to dispute the entire ontology
implied by the exchange equation.

Each of these particular positions is not wholly unique when considered in the
context of today’s best money theories. Indeed, many theories of money today –
often catalogued under the broad entry “heterodox” – complement and elaborate
the positions I have staked out in this chapter. Heterodox theories prosecute a vig-
orous critique of theoretical metallism, consistently reject the idea that money is a
commodity by nature, refute the notion that money is a “neutral veil,” and dismiss
the austerity politics attendant to supporting the quantity theorem.
In order to draw out the novelty and distinctiveness of my theory, the next
chapter will probe the limitations and weaknesses of the dominant theories of
money circulating today. Ultimately, the main and best representatives of this “het-
erodox tradition” develop theories of money that still retain traces of positive
value; such accounts reject commodity value as money’s basis but tacitly smuggle
in a substitute. More specifically, while numerous theorists today attest that all
“money is credit,” they refuse the idea that all credit is potentially money; instead
they opt to hold the line, by drawing a firm (if shifting) distinction between money
and credit. In Chapter 5 I advance a more radical argument, by demonstrating that
ontologically we cannot tenably distinguish “credit” from “money”; there is only
one ontological “substance,” and we can call it money-credit. First, in Chapter 4,
I address the dominant voices of money theory today, and show how and why
they remain unwilling to affirm the most radical and also most salient claim,
one articulated in distinct ways by thinkers as diverse as Schumpeter and Marx:
money has no value.
Chapter Four
Money Theories Today
The previous two chapters aimed to map the matrix of money theories in broad
terms, and then to locate a thoroughgoing credit theory of money on that matrix
(or slightly off it, as the case may be). The goal was to give the reader a wider sense
of the diversity of historical theories of money, and then to use that context to pro-
vide clarifying contrast for the particular flavor of credit theory I am beginning to
propound. While surveying a broad range of thinkers and theories, and in an at-
tempt to make the previous presentation as lucid and succinct as possible, I have
largely eschewed engagement with contemporary debates – both theoretical and
practical, as Schumpeter might say. This chapter turns to the two most important
writers on money over the past twenty-five years, Randall Wray and Geoffrey Ing-
ham. The work of the former has inspired the most significant new policy ideas on
money since Milton Friedman’s monetarism. The writings of the latter have served
as the starting point (and often the ending point) in the study of money for a gen-
eration of students – at all levels and across a variety of fields.
I intend neither to summarize their oeuvres (each of which proves sizable) nor
to definitively refute their theories or positions. My own work on money would
never have been possible were it not for the writings of Ingham, and I certainly
would never have read the central source for my own theory were it not for
Wray’s rediscovery of Innes. I agree with each author much more than I disagree.
Nonetheless, my differences with their work matter to just the extent that tracing
them allows me to provide a fine-grained account of a more thoroughgoing credit
theory of money. A critical engagement with Wray and Ingham enables me to aug-
ment, hone, and clarify the specific contours of my theory and to make plain its
distinctiveness.
As I have now indicated on multiple occasions, I simply cannot accept the idea
that there are only two theories of money – orthodox and heterodox. Such a fram-
ing does no justice to the complexity and diversity of the history of money theories,
while it also tends to obscure some crucial insights from past thinkers – insights
we need for theorizing money today. Therefore, I eschew the notion that to theo-
rize money outside the terms of the neoclassical mainstream (orthodoxy) means to
contribute to a heterodox tradition. As I suggested in Chapter 2, a better path for
thinking money in the twenty-first century can be traced by drawing out the dif-
ferences among heterodox thinkers. I do that here through circumscribed encoun-
ters with Wray and Ingham. My ultimate aim: to show that a more far-reaching
and thoroughgoing credit theory provides a distinctive account of money. Such a
theory, in turn – and to put it in the most straightforward terms – helps us

https://doi.org/10.1515/9783110760774-008
88 Chapter Four: Money Theories Today

make better sense of the economics and politics of money today. From the 2008
crash, to crypto, to the global health and economic crisis brought on by COVID–
19, we do better with a radical credit theory of money than with a state theory.

1 Money and Credit Redux

In standard accounts of money, from classical political economy through the neo-
classical paradigm, we can easily locate a fundamental – indeed, ontological – dis-
tinction between money and credit. I described this idea briefly in Chapter 3: cred-
it is nothing more than a promise to pay, while money is the medium of exchange
or means of payment itself. Any commodity theory of money insists on differenti-
ating money, which possesses positive intrinsic value, from agreements or con-
tracts that specify terms according to which such positive value will be delivered
at some future date. In the previous chapter I noted that Macleod’s effort to ques-
tion this sharp distinction between money and credit – by carefully demonstrating
that credit instruments could perform all the exact same functions as money –
rendered his work unintelligible to the economic establishment of his day (and
of ours). But I went on to argue that Innes’s essays afford a deeper conceptualiza-
tion of money as credit/debt, and as such, I suggested that a more incisive and in-
sightful theory of money would need to do away with or deconstruct the money/
credit distinction.
This is not at all the path taken by today’s leading lights of money theory.¹ In
saying as much, I am not denying or deprecating the fact that Wray himself discov-
ered the lost writings of Innes, nor forgetting that Wray’s work brought Innes to
the attention of Ingham. Certainly both Wray and Ingham affirm at various points
Innes’s fundamental idea, which I advance in the previous chapter: money is a

1 By no means do Wray and Ingham advance the same theory of money. While both slot comfort-
ably into the B2y matrix location, and while each insists that modern money is state money, when
analyzed closely their differences prove dramatic. Wray is a post-Keynesian economist (a student
of Minsky) who turns to money theory in a focused effort to support a specific policy proposal – a
national jobs guarantee, or the state as employer of last resort. Wray always tethers money to mac-
roeconomic models of national spending and saving. Ingham is a Weberian sociologist who stum-
bled upon money theory as a genuine intellectual puzzle and pursued it to its furthest ends. Wray
tends to think of economics as a universal discipline that studies transhistorical forces (produced
by the actions of homo economicus), while Ingham insists on historicizing the emergence of cap-
italism as a distinct social order, and grasping capitalist money as a unique invention of such a
social order. My aim in the text is not to deny or elide any of these important differences but to
use the points of overlap between Wray and Ingham as a foil to sharpen my own theory and clarify
its distinctiveness.
 1 Money and Credit Redux 89

form of credit/debt (Wray 1998: 34; Wray 2004: 238; Ingham 2004a: 46; Ingham
2004b: 225). However, both authors – each in his own way – insist on a distinction
between money and credit.
Wray, for his part, does not belabor the point but rather writes as if it were
obvious to his readers that money and credit are different things. To flesh out
this idea we can look at an edge case, as found in Wray’s authored chapter within
the volume on Innes that he himself edited (Wray 2004). Even here, in a section
titled “The Credit Theory of Money,” Wray repeatedly invokes the distinction be-
tween money and credit. As he puts it, during economic expansion, “newly created
credits create new claims on money,” while a credit/debt clearing system functions
“without the use of money.” In this context, Wray draws a stark dividing line be-
tween a “credit theory of money” – which he attributes to Schumpeter (and also to
Innes) – and a “‘pure credit’ approach with no place reserved for money” (Wray
2004: 238, emphasis added). For Wray, the latter is an obvious mistake; Schumpet-
er, he declares, “is not guilty of propagating” such a theory. Twice, Wray repeats
that Innes and Schumpeter “reject a ‘pure credit’ approach” (a phrase that Wray
always presents with the included quotation marks) because they maintain “a
place for ‘real’ or ‘lawful money’” (Wray 2004: 240, 242).² In acquitting Schumpeter
and Innes, Wray makes the lesson clear: failure to reserve a place for money as
distinct from credit would be a crime. A credit theory of money, Wray demands,
must stop at a certain point so as to inscribe the line between money and credit.
Unlike Wray, who cannot countenance the notion of what he disparagingly
names “pure credit,” Ingham makes a series of arguments that directly address
whether, how, and where to distinguish money from credit.³ In his first of many
attempts to capture the nature of money, Ingham separates himself from Wray
and other post-Keynesians, whose views on money are trapped within the lan-

2 The role of “lawful money” as “real” money proves critical for Wray because in his account the
ultimate and overriding money is always state money. Thus, while it may be possible for “credit” to
be created endogenously and privately within a society, real money is always a “creature of the
state.” Blurring the line between money and credit (as a careful reading of Innes demands we
do) would undermine Wray’s entire project of theorizing money as ultimately controlled by the
state – through spending, taxing, and monetary policy. I note here that this larger morphology, cen-
tered on state control, provides the perfect foil for the “crypto imaginary,” the dream of money as
utterly untethered from state control. See my discussion of bitcoin and crypto in Chapter 7.
3 Although Ingham regularly cites Wray over the years (e. g., Ingham 2012) and contributed to
Wray’s edited volume on Innes (Ingham 2004b), his first direct and sustained engagement with
MMT comes in a forthcoming chapter in an edited volume, wherein he faintly but genuinely
praises MMT’s challenge to orthodoxy, especially as it requires MMT thinkers to “cross … discipli-
nary boundaries,” while taking his distance from a number of the simplifications of the MMT
model that pull it back into the gravity well of the neoclassical paradigm (Ingham, forthcoming).
90 Chapter Four: Money Theories Today

guage of neoclassical economics; as he puts it here, “the conventional textbook dis-

tinction between ‘money’ and ‘credit’ is not merely anachronistic, but it is based on
a conceptual confusion” (Ingham 1996: 509 – 510). As his theory of money develops
over the years and as he engages critically with his interlocutors, Ingham will
sometimes go so far as to offer a plain and direct denial of the dividing line:
“The distinction between ‘money’ and ‘credit’ is false” (Ingham 2006: 266).
However, in a later restatement of his position, Ingham moderates his stance,
less forcefully indicating that “the absolute distinction between ‘money’ and ‘cred-
it’ is misleading” (Ingham 2012: 121, emphasis added). I italicize the word “abso-
lute” because Ingham typically wishes to hold back from denying the distinction
altogether. To the contrary, though Ingham embraces (more fully than Wray) In-
nes’s primary thesis, he resists the corollary: “Whilst we may agree with Innes
that all money is credit (or debt), it does not follow that the converse is true.
Not all credit (or debt) is money” (Ingham 2004b: 185, emphasis added; cf. Ingham
2020: 41). Given Ingham’s resolute refusal to accept the money/credit distinction as
a base assumption, given his insistence that the distinction can never be absolute,
and given his embrace of Innes’s claim that all money is credit, we need to move
slowly here and answer carefully the question “Why is not all credit money?”
As always, this conceptual question has both historical conditions and implica-
tions, and Ingham provides a rich and important account of the novel development
of capitalist credit money as circulating (monetized) public debt.⁴ Nonetheless, the
historical account cannot substitute for a rigorous theoretical answer. Rather, as I
suggested in my discussion of the theory–history relation in Chapter 1, each de-
pends on the other. Attempting to maintain fidelity to Ingham’s own texts, I recon-
struct the conceptual argument by starting with Ingham’s 2012 clarification of the
2004 money/credit distinction: “In this I have merely followed Simmel’s clear, well-
established and essentially sociological distinction between bilateral and multilat-
eral, or ‘private’ and ‘public,’ relationships” (Ingham 2012: 128). In other words, log-
ically we can distinguish between the holding of a credit, wherein party A holds a

4 This account is one of Ingham’s most potent and perhaps his unique contribution to our under-
standing of money today. He summarizes the point concisely in a later essay:

The social mechanism by which private debts are transformed into public money is one of the
most important and distinctive elements of the capitalist system. … Loans from banks to their
customers are private contracts in which the banks create deposits for borrowers. In the act of
spending, these private debts become public money. This is accomplished through institutions
that have developed between states, public banks and banking systems since the sixteenth cen-
tury in Europe. (Ingham 2012: 131)

For a critical engagement with this argument, see Chapter 6, Footnote 5.

 1 Money and Credit Redux 91

claim (a credit) against party B (the debtor), and the circulation of that credit,
wherein party A pays party C with that credit. In the latter case, party C thus ac-
cepts the transfer of the credit held on party B, as payment. Not all forms of credit
can perform this latter action; only “money” can do so.
Drawing from Georg Simmel, Ingham is arguing that in my first case (party A
holds a credit on party B), the social relations are “private” and “bilateral,” where-
as in my second case (party A spends the credit by transferring it to party C), the
relations are “public” or “multilateral.” In other words, the assertion that not all
credit is money is meant to be deducible from the argument that not all private
(bilateral) credit relations can function as public (multilateral) credit relations.
In other texts Ingham offers the concluding step to this logic:

Money is transferable credit. (Ingham 2006: 267)

Cash [money] is “portable credit” that cancels a debt.
(Ingham 2018: 846, citing Gardiner 1993)

On the one hand, the reasoning here seems hard to deny: not every IOU between
two private parties can function as public money generally. On the other hand, the
careful observer might spot the ghost of Francis Walker in the above quotations.
That is to say, at the core of this demonstration designed to prove the claim “not all
credit is money,” we find functionalism. “Money is that money does”; hence that
which functions as money is money, not credit.
But as with all functionalist arguments, we may have the tail wagging the dog
because the last step in our deduction only returns us to the original question –
What is “that which functions as money”? The answer is obvious: “Credit and cred-
it alone is money” (Innes 1913: 392). Indeed, Ingham’s definitional quotes above ex-
press just this essential point: “money” is a type or class of credit. Both putative
definitions of money declare that money is credit – credit that functions in a par-
ticular way. Far from rigorously distinguishing money from credit, the argument
merely shows that not all credit is the same. As I suggested in the previous chapter
(drawing from Innes’s account of “first-class credits”), and as I elaborate below,
there can be no doubt that credits differ in quality; some can function in ways
that others cannot. But we cannot bestow upon the name money the magical or
alchemical power to alter the essential nature of some credits vis-à-vis others.
The thing that functions as money remains nothing less, nothing more, and abso-
lutely nothing other than credit. Therefore, to interpret it in its best light, we would
need to reconstruct Ingham’s “not all credit is money” assertion so as to widen the
gap between, on the one hand, that particular claim, and, on the other, the money/
credit distinction that runs like a red thread through the entire history of economic
92 Chapter Four: Money Theories Today

thought (right up through today’s post-Keynesians), and which Ingham himself con-
sistently and sometimes forcefully rejects (e. g., Ingham 2006: 266).

2 The Myth of Community Debt

In the following chapter I propose what I see as a more perspicacious move: to

push past Ingham’s claim here and instead to make a stronger, but still negative
argument – namely, that ontologically we can never securely draw the line be-
tween money and credit. At the level of ontology there are not two entities,
money and credit, but only money-credit.
To build up the underlayment for that argument, however, I first need to ad-
dress – in this section and the next – the deeper reason why Ingham hangs on to a
weak form of the distinction in the first place, and to show why both Ingham’s so-
ciological account and Wray’s post-Keynesian, chartalist project repeat (in much
more modest form) some of the same errors as the commodity theory of money.
Faced with the absence of money’s intrinsic value (as a commodity with use-
value), both authors (more or less subtly) smuggle in a conception of positive
value that rests on society or the state. By refusing to accept that money has no
value, each ends up with an account that tries (but always necessarily fails) to
ground money – that is, relations of credit/debt – in something larger or deeper.
Wray and Ingham both wish to identify an independent source for money’s exis-
tence (at the least) or perhaps even for its value (at the most). This move is directly
tethered to, and expressed in, their commitment to some form of money/credit dis-
tinction. We can illuminate this phenomenon by first surveying the wide swath of
Ingham’s writings.
In positing a money/credit distinction, Ingham relies heavily on the sociology
of Simmel, whose major work, The Philosophy of Money (2004 [1907]), appeared
just two years after the ur-source for Wray’s work – namely Knapp’s The State
Theory of Money (1924 [1905]). Over the course of his nearly thirty years of writings
on money, Ingham has quoted one key passage of Simmel’s work at least ten differ-
ent times. Indeed, on a minimum of seven different occasions, Ingham quotes this
passage at length (offset from the main text), and he always does so at a pivotal
moment in his argument, because the Simmel quote is meant to provide the socio-
logical grounding for a theory of money that Ingham always (rightly) sees as lack-
ing in most economic accounts.
More importantly for our purposes, Ingham usually turns to this quote from
Simmel in an effort to explain the money/credit relation or distinction. In earlier
writings Ingham uses the quote to reject the distinction entirely (Ingham 1996:
 2 The Myth of Community Debt 93

525 – 26; Ingham 2006: 266 – 67). In later work Ingham uses Simmel to explain and
justify the claim that not all credit is money. Here is the passage in full:

[In a monetary system] the pivotal point in the interaction between the two parties recedes
from the direct line of contact between them, and moves to the relationship which each of
them … has with the economic community that accepts money. This is the core of the
truth that money is only a claim upon society. Money appears so to speak as a bill of exchange
from which the drawee is lacking. … It has been argued against this … that credit creates a
liability, whereas metallic money payment liquidates any liability; but this argument over-
looks the fact [that] … [t]he liquidation of every private obligation by money means that
the community now assumes this obligation to the creditor. (Simmel 2004: 177; Ingham 2012:
128, text in brackets Ingham’s, emphasis mine)⁵

Ingham’s first essay on money provides the best context to begin unpacking this
passage; it shows lucidly why he originally turns to Simmel to provide a richer so-
ciological alternative to the exceedingly thin classical and neoclassical economic
explanation of money as deriving functionally from a “natural” state of barter.
Like all state-of-nature theories, the commodity theory of money proves thorough-
ly asocial precisely because it derives “money” from, but also within, a pre-social
(pre-political, pre-historical) state of affairs. Following the earlier lead of John
Locke, both Smith and Ricardo assume that individuals in a state of nature will
simply “agree” to the use of money. Menger’s theory of money as the most “sale-
able commodity” or Jevons’s description of “the system of exchange, being one of
perfected barter” merely augment and (perhaps) refine those early, crude argu-

5 The passage is also quoted at length in Ingham 1996: 526; Ingham 2000: 23; Ingham 2004b: 178;
Ingham 2006: 266 – 67; Ingham 2020: 10; Ingham, forthcoming. It is quoted less fully in Ingham
2004a: 64; Ingham 2001: 319; Ingham 2018: 846. The quote in my main text above is the longest sin-
gle version Ingham ever offers, but in an earlier essay (2000) he begins the quote later in the pas-
sage and extends it for another nine lines. This is not the place to conduct an extended critique of
Simmel, but it can be useful to note the incompatibility between the claims he makes here and the
credit theory of money I am articulating. Describing the historical shift of a society toward a de-
veloped monetary system, Simmel refers to “the community that accepts money” and paints a pic-
ture of money as “a bill of exchange from which the drawee is lacking.” My version of credit theory
responds as follows. First, “the community” is never the one that accepts money. Speaking broadly
and historically, we might say that some societies use money more than others, but the “accept-
ance” of money in any such society can only ever be the acceptance by specific entities (individ-
uals, households, firms, agencies, governments). Second, a bill of exchange with no drawee is
like a check written without a bank; it is like a note or coin without an issuer – a credit without
a debtor. This concise concept is nonsensical. A credit without a debtor is nothing at all. As I show
below, the only way in which money could circulate as credit without a debtor is if the tokens
themselves were somehow imbued with intrinsic value. For my own discussion of bills of ex-
change, see Chapter 7.
94 Chapter Four: Money Theories Today

ments (Menger 2009: 36; Jevons 2011: 31). These accounts make possible a perspica-
cious view of what Ingham means by “private” and “bilateral”: the neoclassical
commodity theory purports to account for money in just these terms. And in his
1996 essay, Ingham directly contrasts Simmel with “Alfred Marshall’s schoolyard
barter” (Ingham 1996: 525).
This context helps to clarify how it is possible that Ingham can read the Sim-
mel quote as both undermining the money/credit distinction, and as expressing a
new version of it. On the one hand, if the point is to challenge a metallist theory of
money that asserts intrinsic value (as opposed to credit, a mere promise to pay),
then Simmel demonstrates that metallic money itself symbolizes at once a claim
(a credit) and an obligation (a debt). As Simmel puts it a few lines later, “Metallic
money is also a promise to pay” (Simmel 2004: 177; quoted in Ingham 1996: 526).
Hence Ingham’s early conclusion that all forms of money “are essentially social,
and the conventional economic distinction between ‘money’ and ‘credit’ can
only obscure this principle” (Ingham 1996: 526 – 27).
On the other hand, if money depends on society, then strictly private, bilateral
credit relations would not be money. Despite quoting it so often, I wonder if Ing-
ham has fully considered the strengths of Simmel’s claims: the arguments in
this passage extend far beyond the anti-metallist critique for which Ingham initial-
ly uses them. Simmel argues not just that money (as claim or credit) entails com-
plex relations between multiple parties, involving a wide range of practices, across
various social, political, and economic institutions. Rather, he goes much further to
assert that money is itself a claim on society. The implication appears to be that
with the appearance of fully circulating public monies, the credit/debt relations
of money become relations between the individual and the social totality. Making
this move is the only way to render coherent Simmel’s claim that to hold money is
to hold a credit on (or against) society, and that “the community” itself “assumes
this obligation to the creditor” (Simmel 2004: 177). The argument surely supports
Ingham’s later conclusions: within this framework, an IOU from my neighbor is
merely a credit on one individual, while money must be a special credit held
against the entire community; hence not all credit is money.
This brings us finally to the crux of the problem: in Simmel’s account money is
not a particular quality of credit but a unique kind; in his own words, money is a
credit on society, a symbol of the community’s obligation to the individual cred-
itor.⁶ At some point this line of argument ceases to be an account of money and

6 In the very different context of contemporary French sociology, Aglietta echoes this language:
“Money is the means by which society gives back to each of its members what it judges each of
them to have given to it” (Aglietta 2018: 65).
 2 The Myth of Community Debt 95

becomes a theory of society. Or, put differently, it takes a theory of social order and
subsumes money within it: a society is defined by bonds of mutual obligation, and
money is merely epiphenomenal. Again, if one seeks a source for the distinction
between bilateral and multilateral relations, Simmel surely fits the bill. Yet, in
terms of a theory of money, Ingham’s otherwise impressive work is weakened, I
think, by his over-reliance on Simmel’s claims, which cannot not bear the weight
of closer scrutiny.⁷ The basic difficulty is that while the complex social relations of
credit/debt, which are money, certainly depend on many other elements of the so-
cial order – norms of reciprocity and trust, expectations about the moral obliga-
tions of debt, patterns of exchange and distribution – these relations are not equiv-
alent to, nor does their existence support, the significant suggestion that money is
a claim on the entire community, on society.⁸ That latter argument will not hold.
Money is always and only a claim on a debtor. Contra Simmel, the drawee on
the bill of exchange (similar to the bank name on the check) must always be pre-
sent. Without the drawee, the credit is not a “credit” because it is not a debt (be-
cause there is no debtor). The debtor can take many forms: an individual, a firm, a
community organization, a sovereign nation-state, an international organization.
But the debtor is always specifiable as such. The debtor is never “the community”
or “society” writ large.⁹ A claim on everyone would not be a credit at all, and any
credit only remains a credit in light of the specific liquidity and solvency of the
particular debtor. The difference between an IOU from my neighbor and a $20
bill is neither equivalent nor reducible to the difference between a credit against
an individual and a credit against society. The credit I hold in the form of the $20
bill is not a claim against the community or its individual members; society is not
my debtor. No, the $20 bill is quite clearly, explicitly, and in a certain sense narrow-

7 The fact that the key Simmel quote forces Ingham into changing his mind on money/credit al-
ready provides readers a clue that there is something amiss here.
8 In his essay in the edited volume devoted to Innes, Ingham sets up his favorite Simmel quote by
suggesting that Innes “would have agreed with his contemporary, the sociologist Georg Simmel”
(Ingham 2004b: 178). And in his recent book, Ingham weaves the famous Simmel quote directly
into a paragraph that begins with Innes (Ingham 2020: 10). My arguments in this section, combined
with my reading of Innes in the preceding chapter, indicate the extent to which such presentations
subtly misrepresent Innes in limiting ways.
9 Ingham argues that “a money transaction differs from barter in that the burden of trust is re-
moved from the participants in the actual transaction and placed on a third party – the issuer of
money” (Ingham 2004a: 72). This is a valid distinction, but it only goes so far. And it certainly does
not produce a qualitative difference – first, because the participants still must trust that the ex-
changed pay-tokens and goods are not fraudulent (just as they would in “barter”), and second, be-
cause whether I accept an IOU or cash from my neighbor, my “trust” is still trust in the debtor. Only
the identity of the debtor has changed. For further discussion of trust, see Chapter 5.
96 Chapter Four: Money Theories Today

ly a claim on the US Federal Reserve banking system, a claim itself supported by

the United States Treasury and ultimately backed by the US government.¹⁰
We should assess the Fed as our debtor the same way we would assess any
other debtor – in terms of solvency and liquidity. Regarding solvency, first we con-
sider the Fed’s link to the US Treasury, then we take into account the US govern-
ment’s monumentally significant power to tax, a power that enables them to ren-
der any citizen their debtor (a debtor to the US government). In crude terms, we
could only imagine an insolvent Fed in the context of an insolvent US govern-
ment.¹¹ When considering the Fed’s liquidity, we note its power to generate central
bank reserves instantaneously.
These facts make the Fed, other things being equal, a much better debtor to
have – a much better entity against which to hold our credits, i. e., money. But it
does not change the fact that the Fed is a debtor: perhaps unlike any other in
some ways, but very much the same in most respects. The quality of my credit
thus depends on the solvency and liquidity of the Fed¹² as a central bank.¹³ There-
fore my neighbor’s obligation to the US government (in the form of her tax burden)
must not be conflated with either her obligation to me (in the form of the IOU I
hold against her) or the Fed’s obligation to me (in the form of the $20 bill). In
no case do we render tenable or even intelligible (other than in a vague and amor-

10 Discussions of money and the nature of debt typically assume that national currencies (coins
and notes) are direct debts of national governments. That is, a £5 note is the debt of the United
Kingdom, while a $20 bill is the debt of the United States. But that’s not actually true. These nation-
al currencies are bank money, debts of the Bank of England and the US Federal Reserve, respec-
tively. Yes, because those banks have direct support from their national treasuries, the notes are
effectively debts of the national government, but the difference matters for both conceptual and
practical reasons. Practically, US Treasury bonds (which are direct debt instruments of the US gov-
ernment) have a massively important role to play in money markets, especially when compared to
Federal Reserve notes (see Chapter 6), and conceptually, we underscore here again the significance
of bank money. The primary example of “state money” is nothing less than another form of bank
money.
11 Given their taxation power, government insolvency usually goes beyond the balance sheet to
include a crisis of legitimacy or power, but in the text I narrow the analysis to money terms.
12 Debts owed in sovereign-denominated monies are a special case in which liquidity concerns
appear to be beside the point. As MMT frequently proclaims: the US government can always create
US-dollar reserves at the click of a mouse. Nonetheless, government solvency remains a relevant
concern because a government – like any other debtor – can always default. Moreover, some ad-
vocates of MMT tend to forget that most governments also owe debts denominated in foreign mon-
eys of account. Under such circumstances the liquidity constraint is real.
13 It is worth noting that the US Federal Reserve is a banking system, not a single institution; that
system nevertheless acts like a central bank.
 2 The Myth of Community Debt 97

phous way) the assertion that money is a claim on society. Simmel has merely hy-
postatized this “community obligation.”
The problem described above might well be understood as an overreaction to
economists’ Robinsonades. Neoclassical economics rests on a theoretical founda-
tion in which “economics” precedes “society.” Exchange, trade, and money all
emerge in a pre-social state of nature. In this framework, “man” is homo econom-
icus, and it is he who founds – who literally creates through willful consent and
contract – society (the gendered language belongs to the neoclassical scheme).
In this context we can see that sociological accounts¹⁴ such as Simmel’s only invert
this framework, offering a theory of society that develops the institution of money
– including the concept of money of account and a system of valuation – organi-
cally, and separately from (if not prior to) economic exchange. In this counternar-
rative, the human being is a social animal but not an economic animal; society it-
self founds economics.
Ingham reaches for Simmel’s thick sociological account of community obliga-
tions as an alternative to the neoclassical economists’ myth of barter. He finds
there a far superior theory of society, but a still inadequate theory of money.
Both points must be emphasized. First, a Robinsonade is a fantasy, a mythical
tale that certain societies tell, but it cannot even begin to be a theory of society.
Simmel poses the question of society’s very existence, and his response surely pro-
vides a deeper and more rigorous theory of society than any state-of-nature tale
ever could. Second, I have a much narrower and sharper point: a theory of
money cannot be derived from a theory of society, even if the theory of society
is a very good one. I am not offering (and do not mean to imply) a critique of either
Simmel’s (or Ingham’s) theory of society, which I would surely choose over a state-
of-nature theory. But I am providing a critique of his theory of money, which I con-
tend suffers precisely because it remains contained within, as a derivation of, that
social theory.¹⁵

14 Another, quite powerful way of reading Simmel has been suggested to me by John Seery. On this
take, Simmel’s most salient point is neither “economic” nor “sociological” but philosophical –
namely, as Seery puts it, that “capitalism turns everyone into a philosopher” (pers. comm.). In
other words, all agents under capitalism must, to some degree or another, engage in the metaphy-
sics of money and commodities most famously presented by Marx in volume I, chapter 1 of Capital.
15 Arguably my theory of money presupposes some sort of theory of society or social order, at
least to the extent that I eschew Simmel’s question, “How does society exist?” (For my own set
of arguments on this topic, see Chambers 2014.) Thanks to Geoff Ingham for provocation and in-
sights regarding Simmel.
98 Chapter Four: Money Theories Today

3 Origin Stories: From Barter to Wergeld and Chartalism

The roots of this issue run deeper, and in tracing them we can again link Ingham
and Wray and contrast their accounts with a deeper credit theory. Although they
develop them in distinct ways, both Ingham and Wray proffer alternatives to the
neoclassical narrative of barter as leading to the development of commodity
money. Ingham turns to wergeld (“worth payment” or “blood money”) – historical
practices in which compensation was paid to the family of someone killed or in-
jured – while Wray calls on ancient tax levies and the putative power of the
state to declare a money of account (along with his own, thinner account of wer-
geld). I will show that across differences in both historical detail and the scholarly
sources upon which they rely, these arguments insist on the possibility of the de-
velopment of money before or outside economic exchange. They thereby smuggle in
an untenable conception of money as positive value.
In London in 1970, Philip Grierson, the Cambridge University historian and nu-
mismatist, delivered the Creighton Lecture in History titled “The Origins of
Money.”¹⁶ The text plays a singular role in Ingham’s writings, as Grierson contrib-
utes the alternative source for the concept of money. ¹⁷ Grierson quickly surveys
some of the examples (all European) of wergeld, including the minutely detailed
and elaborate system of offenses and payouts, but the essential line reads as fol-
lows: “The conditions under which these laws were put together would appear
to satisfy much better than the market mechanism, the prerequisites for the estab-
lishment of a monetary system” (Grierson 1978: 13).¹⁸ The central idea here is that
if we set out the theoretical “requirements” for an abstract money of account, wer-
geld seems more likely than barter to provide the historical explanation. As a hy-
pothetical, that might well be true, but it’s not much of a comparison since it pits
history against fiction. Whatever else we might say about wergeld systems (and I
remain skeptical that they tell us much at all), there can be no doubt that wergeld
practices were real historical events, while the idea of pre-monetary societies with
internal systems of barter has been repeatedly proven false.

16 In 1977 the lecture was published as a short standalone book by Athlone Press, and the next
year it served as the lead article in the inaugural issue of the journal Research in Economic Anthro-
pology.
17 Ingham typically follows Keynes in thinking that the primary “concept” of money is money of
account. I have marked my distance from this notion in Chapters 1 and 3.
18 This passage is also quoted in Ingham 1996: 519; Ingham 2000: 25; Ingham 2004a: 91; Ingham
2012: 124.
 3 Origin Stories: From Barter to Wergeld and Chartalism 99

The bogus comparison leads Grierson to conflate the mythical idea of “barter”
with a distinct economic conception of “the market.” We observe this starkly in his
closing lines (which Ingham cites repeatedly): “Behind the specific phenomenon of
coin is the more general phenomenon of money, the origins of which are not to be
sought in the market but in a much earlier stage in communal development, when
worth and wergeld were interchangeable terms” (Grierson 1978: 23; cited in Ing-
ham 1996: 518 – 19; Ingham 2000: 36; Ingham 2004b: 163.). The logic here is faulty:
just because money’s origins do not lie in barter does not prove that money ante-
dates “the market,” at least if we take that term in a general sense as pointing to
economic activity, to economic interactions and exchanges broadly conceived.¹⁹ In-
deed, within a model in which all money is credit (an idea Ingham himself consis-
tently affirms), it makes no sense at all to suggest that we could have money rela-
tions that were separable from or prior to economic relations.
Yet Ingham flirts with just such a notion, and Wray positively embraces it.
Each author in his own way tells a story in which money comes into being not
just as a series of social relations but as a societal institution – an institution
prior to and separable from economic forces and relations (Ingham 1996: 516; Ing-
ham 2000: 26; Wray 2004: 245). Ingham draws this conclusion directly from Grier-
son, whom he takes as providing “very good theoretical grounds for arguing that
the idea of money – that is to say, its logical origins as the social practice of ac-
counting for value – originated outside the market” (Ingham 2000: 26). Elsewhere
Ingham defines money as “constituted by social relations that exist independently
of the production and exchange of commodities” (Ingham 2004c: 25). Here again, if
the point is merely to refute the silly-yet-dangerous claims of neoclassical econom-
ics – which purports to found all social orders on primary economic forces – by
insisting that money as credit/debt remains intimately intertwined with social, cul-
tural, and political forces and relations, then obviously the claim can only be met
with our assent. But Ingham’s formulation seems much stronger than all this, and
we must resist resolutely the notion that money is constituted by strictly non-eco-
nomic relations. Doubtless the economic can never be isolated from society. Never-
theless, and at the very same time, monetary relations can never be generated and
maintained independently from relations of exchange, production, distribution,
and consumption (i. e., economic relations).
For his part, while Wray does cite Grierson and mention wergeld practices
(Wray 1998: 49), he develops his own particular line of argument for the origins

19 If we interpret “the market” in strict historical and etymological terms, then we must admit
that it was not invented until sometime in the early twentieth century, and therefore the list of
things that antedate the market grows very long indeed (Rebrovick 2016).
100 Chapter Four: Money Theories Today

of money. Unfortunately it goes even further than Ingham in propagating this un-
tenable idea of money before the economic. Ultimately Wray roots the origins of
money in the power and declarations of the state (this is the core idea of chartal-
ism). Like Ingham, Wray takes as his point of departure an argument against the
standard, neoclassical account, and like Ingham, his critique ultimately inverts its
target. For Wray, money’s origins lie entirely with the power of the state; he there-
fore bases his overall conception on the foundations of Knapp’s state theory. The
core claim here is best expressed in the opening line of Knapp’s book: “Money
is a creature of the law” (Knapp 1924: 1).²⁰
As I made clear in the previous chapter, starting with Knapp proves problem-
atic for many reasons, most of all because Knapp himself hardly questions the
standard neoclassical narrative in which commodity money develops organically
from barter practices. Knapp makes no effort to provide an alternative origin
story for money, remaining perfectly content to work with the orthodoxy of his
day.²¹ Because he bases his account on Knapp’s framework, Wray must graft
onto it a distinct account of money’s development. To do so, Wray follows Keynes
in asserting that money of account must be primary, and that money of account
can only be established by the state. The following are representative quotes:

The state announces the money unit and may define its value.
(Wray 1998: 49.)²²

20 As a properly trained late twentieth-century economist, and a student of Minsky, Wray draws
his primary intellectual and scholarly sources mainly from the very same neoclassical paradigm
that he otherwise challenges. Wray therefore cites Lerner, who himself – in a line that truly
gets at the essence of Wray’s own approach – merely paraphrases Knapp as follows: “Money is
a creature of the state” (Lerner 1947: 313; cited in Wray 2000: 58). Here it is worth noting that
Wray repeatedly contends his argument does not hinge on legal-tender laws. In this context he
also claims (falsely) that Schumpeter’s critique focuses narrowly on such laws. When I say
Wray rests his argument on Knapp’s fundamental idea, I do not mean the narrow notion of
legal-tender law. Rather, law for Knapp is but one example of the declaration and expression of
state power. State taxing power, state monopoly of violence – these are Knapp’s sources for money’s
existence and value. And they are Wray’s as well. All of this explains how Wray gets from Knapp’s
famous line “creature of law” to the phrase quoted in Lerner above, “creature of the state” – a
move that almost seems like an invisible edit or quiet translation. But the problem is the same
in both instances, and Schumpeter’s critique cuts to the heart of Knapp’s claims about determina-
tive state power. (Legal-tender laws are a red herring.)
21 This is not to say that the resources for such an alternative story cannot be found in the history
of theories of money. Quite the contrary, in his The Closed Commercial State, Johann Gottlieb Fichte
builds an account of what Stefan Eich calls “pure fiat money”; Fichte develops a money narrative
with no basis in metallism (Fichte 2012 [1800]; Eich 2022: 77).
22 Wray’s line paraphrases Knapp: “A proclamation is made that a piece of such and such a de-
scription shall be valid as so many units of value” (Knapp 1924: 30; quoted in Wray 2014: 5).
 3 Origin Stories: From Barter to Wergeld and Chartalism 101

The state defines money. (Wray 2014: 18)

The state defines money as that which it accepts at public pay offices, mainly in payment of
taxes. (Wray 2000: 48; cf. Wray 2012: 24)
The state determines the nominal value of money. (Wray 2000: 56)

In other words money (as money of account) can only be brought into being
through the actions of a significant, central power.²³ Barter cannot create money
– only the state can. This distinct account of money’s origins leads Wray to con-
clude, even more forcefully than Ingham, that money somehow comes “before eco-
nomics.” Presented, ironically, in the midst of his reading of Innes,²⁴ Wray puts the
point this way: “Once the state has created the unit of account and named that
which can be delivered to fulfill obligations to the state, it has generated the nec-
essary preconditions for development of markets” (Wray 2004: 245).²⁵ Where neo-
classical economics locates the source of money in markets (modeled as the inevi-

23 This narrowly focused approach overlaps or aligns at times with the argument from Simmel
drawn on by Ingham because it leads Wray to conclude that money is a “social institution,” by
which he means not merely that money relations are overdetermined by other social relations
but that there is something substantive and “sticky” (my word) about money as a singular institu-
tion. Wray explicitly compares money with language, suggesting that money gets its value the way
language gets its meaning (Wray 2004: 231). To simplify the response I develop in the text, we might
say that while society itself may be formed by all sorts of institutions of trust and reciprocity, and
while the ultimate viability of money may even be linked to those institutions, money is not an
“institution” in any meaningful sense. In an otherwise penetrating analysis of the logic of specu-
lation, Konings sometimes flattens money into an institution in the sense described here. He puts
the point this way: “Money functions as one of the most unambiguous norms and predictable sour-
ces of control that we have in modern life, a uniquely objective fact, the social institution that we
have least reason to question” (Konings 2018: 55). This claim, I suggest, says more about a certain
societal self-understanding of “the money institution” than it does about either the ontology of
money (which is always credit/debt, and therefore never an objective fact) or about the concrete
money practices or movements of money markets (where traders almost never forget the riskiness
and precariousness of all money).
24 In this same context, and apparently as an interpretation of Innes, Wray suggests that “the mar-
ket, then, is not viewed as the place where goods are exchanged, but rather as a clearing house for
debts and credits” (Wray 2004: 239). This, however, is a backward reading of Innes, who (as dis-
cussed in the previous chapter) redefines a sale as the exchange of money for goods. Wray has
confused historically concrete “fairs” (the word Innes uses), which served as clearing sites for cred-
it and debt, with the generic economic idea of “the market.” It is true that monies can sometimes
be swapped without the presence of goods, but those very swaps (clearing houses) themselves pre-
suppose the existence of money, which does not arise through them.
25 Wray sometimes goes further and suggests that the state itself can determine the value of
money (e. g., Wray 2000: 56). There is no space to address this claim in detail, but following Schum-
peter, and consistent with my own theory, I do reject it entirely (see Schumpeter 1954: 1056).
102 Chapter Four: Money Theories Today

table interactive creations of homines economici), Wray sees the state as the ur-
source of money, which itself comes before and grounds “the market.”
The fatal flaw in these accounts is that they attempt to meet the standard nar-
rative of the discipline of economics on its own terms – that is, they seek to sub-
stitute a new theory of positive, intrinsic value for the old one. If wergeld systems
or state proclamations establish money and its value, then we have achieved
through societal explanations what orthodox theories sought to construct through
the myth of barter. However, the problem with the neoclassical account – whereby
the barter of goods leads naturally to a commodity theory of money – was never
just how it arrives at positive, intrinsic value, but that it does. Tacitly, and surely
unintentionally, Wray and (to a certain extent or at certain times) Ingham both re-
place the commodity “backing” for money’s value with community or state “back-
ing.” The pure orthodox theory of money (A1x) has persisted for so long because it
tells a comforting tale: it insists that money is real, that it has positive value, and
that to hold money is to possess value directly. Wray and Ingham rightly refute the
false logic and bad history of these types of theories, but they refuse to peer into
the abyss²⁶ – to see that money has no depths, no value at all. We therefore witness
in both of their cases an illicit positing of community obligations or state power as
a kind of “backing” or support for money. This move serves to fill the void created
when the theory of money as commodity with intrinsic value is rightly rejected.
But the void cannot be filled.
Contrasting their accounts with my own development of Innes in the previous
chapter, we can now observe that both Wray and Ingham – the closest readers of
Innes we have to date – have both missed some of the insights to be found in or
developed out of his work. Innes’s account of the history of coinage repeatedly re-
turns to the same conclusion: money is never “backed” by anything at all since
money is only ever credit/debt.²⁷ If we think money is positive value, then we
wind up having to admit there is no money, only ever promises to pay, along
with actual clearances of debt or creations of credit. Understood radically as cred-

26 To be fair, Ingham does repeatedly look down, but he also frequently turns away.
27 We must distinguish between the idea rejected here, that all credit instruments are “backed”
by commodities of positive, intrinsic value, with the separate but related question of the solvency
and liquidity of the debtor. My bank does not hold gold bars in a one-to-one ratio with my deposits.
But my bank does have assets (which theoretically could include commodities) that exist in some
proportion to my deposits (which are liabilities for the bank). The bogus idea of backing – including
the elision of the difference between “commodity money” (a myth) and commodities as assets on
the balance sheets of financial institutions (a not uncommon practice) – has played a central role
in the rise and fall of crypto. For more, see Chapter 7.
 3 Origin Stories: From Barter to Wergeld and Chartalism 103

it/debt, money needs no backing because money has no value. ²⁸ We do not seek
“truer” money; rather, we seek higher-quality credits, which means we seek the
most solvent, liquid, trustworthy, stable, and reliable debtors, against whom to
hold our credits.
The best alternative to the myth of barter and its attendant origin story is in
some sense no alternative at all. In order to understand money today, we must re-
ject the specific barter origin story while also refusing the general requirement
that we provide such an origin story in the first place.²⁹ Here Graeber’s work of-
fers a tonic, as he illustrates the point lucidly, simply, and somewhat humorously.
Early in his book, Graeber quotes a representative example from an economics
textbook. The text tells a simple tale of two people, Joshua and Henry, each of
whom owns one good and wants another, but neither of whom wants what the
other has (Stiglitz and Driffill 2000: 521; Graeber 2011: 23 – 24). This lack of a “mu-
tual coincidence of wants” is meant to be the determinative defect of the mythical
“barter system,” a defect whose existence inevitably leads to the invention of
money as the solution to this “problem.”
A different way of describing what I see as the limitations of Ingham’s and
Wray’s respective turns to the community, society, or the state as the foundation
of money would be to say that they leave far too much of the barter myth intact
(as Knapp himself explicitly did). By insisting that money is created prior to and
independently from “the market,” their narratives problematically suggest that
economic relations are a late addition to a social order.³⁰ But what if money rela-

28 This conclusion can, of course, be reached without going through Innes. In Chapter 2 I quoted
from Schumpeter’s early essay, in which he defends the thesis that “money can never have value of
its own” (Schumpeter 1956: 161). Here again we can also call on the work of Cencini, who argues the
point directly: “The physical qualities of material used as money are totally irrelevant precisely
because money cannot be identified with its physical substratum. In itself, money has no value
at all” (Cencini 1988: 12, emphasis added). Finally, while defending this claim requires greater exe-
getical and hermeneutic work than I can here provide, in another context I would argue that Marx
too grasped the same point: for him, money is the necessary form in which value must appear
within a capitalist social order, but money is not itself value, nor does money have value.
29 It is plausible to read Hawtrey as taking such an approach. In his opening chapter he suggests
that rather than imagining a state of nature with no social or economic development, and only
then trying to tell a logical story about money’s emergence from barter, we ought instead to imag-
ine an advanced capitalist society just as it is, only without the presence of money. Hawtrey then
proceeds to show, à la Macleod, that all of advanced economic activity can go on just fine as
long as there are dealers in credit. There is no need for “money” in the sense of gold with metallic
value, i. e., Menger’s most saleable commodity (Hawtrey 1919: 1 – 16).
30 Sgambati has recently issued a similar critique of the strand of money theory that he calls
“nominalism.” Specifically, Sgambati contends that Ingham goes awry in making moneyness
both “logically anterior and historically prior” to “the market” (Ingham 2004a: 25). According to
104 Chapter Four: Money Theories Today

tions, which are nothing other than social relations of credit/debt, are inseparable
from economic relations?
To pose this question is absolutely not to revert to a notion of “the economic”
as the prior and natural ground for money’s origin. Rather, it is to suggest that eco-
nomic and social relations are always intertwined. We therefore need not posit an
“origin” for money any more than we must posit an “origin” for society. Human
beings have always lived in social orders of some sort. But if we must, for heuristic
purposes, think our way through the problem of money’s creation, we can tell a
simpler, more logically powerful and compelling tale than either the myth of bar-
ter or the narrative of community obligation. Here’s how Graeber narrates that
story as an alternative to the economics textbooks:

How could … money come about? Let us return to the economics professors’ imaginary town.
Say, for example, that Joshua were to give his shoes to Henry, and, rather than Henry owing
him a favor, Henry promises him something of equivalent value. Henry gives Joshua an IOU.
Joshua could wait for Henry to have something useful, and then redeem it. In that case Henry
would rip up the IOU and the story would be over. But say Joshua were to pass the IOU on to a
third party – Sheila – to whom he owes something else. He could tick it off against his debt to
a fourth party, Lola – now Henry will owe that amount to her. Hence is money born. Because
there’s no logical end to it. Say Sheila now wishes to acquire a pair of shoes from Edith; she
can just hand Edith the IOU, and assure her that Henry is good for it. In principle, there’s no
reason that the IOU could not continue circulating around town for years – provided people
continue to have faith in Henry. (Graeber 2011: 46 – 47)

This is not a substitute for detailed historical work on the emergence and transfor-
mations of money over time. But it captures a great deal more about the nature of
money (as credit) than Simmel’s notion of money as community obligation or
Knapp’s concept of money as state declaration. Graeber’s story can be read as a
playful elaboration of Innes’s succinct (re)formulation of a sale as the exchange
of goods for credit.
Crucially, Graeber’s account – one that, as he goes on to show in his review of
various anthropological accounts, squares with actual historical events – answers

Sgambati, Ingham wrongly “enforces an ontological separation between money and states” (Sgam-
bati 2020: 422). Clearly I share this specific concern of Sgambati. However, I do not sign on to his
Keynesian critique of nominalism. To my eyes, that argument goes off the rails because it rests too
much weight on Keynes’s notion of “liquidity preference,” one of Keynes’s weaker concepts, espe-
cially as mobilized in IS/LM theory. Briefly, Keynes deploys a sharp distinction between, on the one
hand, “cash,” which both earns no interest and is “riskless,” and “securities,” which are risky and
earn interest (Keynes 1936; Sgambati 202: 425 – 28). As I show in the chapters that follow, such a
distinction cannot hold because it’s wrong on both sides: cash can be risky and earn interest,
while bonds are a form of money.
 3 Origin Stories: From Barter to Wergeld and Chartalism 105

to Ingham’s question concerning how we get from bilateral to multilateral trans-

actions, and it does so without recourse to community obligations or proclama-
tions by a state power. Indeed, we can see in Graeber’s text that the hard distinc-
tion between bilateral and multilateral was never tenable: all it takes to cross
between the two is for one party to a bilateral arrangement to offer credits to a
third party, who then accepts them. Innes documents such historical practices in
great detail in the form of the medieval use of tally sticks, which, while eventually
accepted by the state, were certainly not originally issued by the state (Innes 1913:
394). Wray fairly underscores the former point, but he problematically underplays
the latter.
Again, Graeber’s fanciful narrative is not itself a theory of money or a full ex-
planation of money’s historical or logical origins. A skeptical reader can raise
many questions. For example, how do we deal with the problem of a standard
money of account, i. e., in what units will the credits on Henry be denominated?
More to the point, how is the transition to a standard money of account and the
implementation of a full monetary system brought about? We should not roman-
ticize Graeber’s lighthearted account, and we must insist that monetary systems
are not just willed into being by a small group of individuals. On the other
hand, despite Wray’s claims to the contrary, monetary systems are also not de-
creed into being by the state. As Innes shows, moneys of account develop histori-
cally in complicated and dynamic ways, and the emergence of a standard usually
depends on a dialectical interplay between social practices, customs, and tradi-
tions, on the one hand, and state actions, interventions, and regulations, on the
other.³¹
Wray and Ingham find themselves trapped in the dilemma of trying (even if
unintentionally) to provide an alternative account for the commodity theory’s con-
ceptualization of economic exchange. In their efforts to resist the false and danger-
ous notion that economic exchange naturally produces money as its logical (and
historical) outcome, they turn to the community and the state to provide a prior

31 This means that the most plausible scenario for the emergence of a new money of account
would likely involve the circulation of a private money that was then taken over by or incorporat-
ed into state money – through legal-tender laws, taxation, or the like. Note also that if by “stan-
dard” we mean something like the stability of monetary value, then we must immediately
admit that even the most advanced forms of state money cannot solve such problems, because
there quite simply are no enduring standards. States cannot set or maintain the “value of
money” because money has no value. And any particular money’s purchasing power (a rough an-
alogue for “value” but not reducible to it) will always vary relative to the purchasing power of
other credits, i. e., other forms of money. The IOU from Henry might trade at a discount (less
than “par” – its face value) but so might any other form of money (see Mehrling 2016: 13).
106 Chapter Four: Money Theories Today

substantive ground. In so doing they fail to see what was carefully demonstrated in
the previous chapter: a credit theory of money completely undermines that theo-
retical structure, while also providing an immediate alternative account of eco-
nomic exchange – one that is, to the core, thoroughly monetary. To avoid these
traps we have to take a leap into the abyss that most “heterodox” theories carefully
avoid: we have to refuse any definitive distinction between money and credit.
Chapter Five
From Money/Credit to Money-Credit

1 The Ontology of Credit

As we have seen over each of the previous two chapters, even the most apparently
radical, “heterodox” theorists of money ultimately insist on maintaining the dis-
tinction so central to “orthodoxy” – namely, that between credit and money. The
commodity theory asserts that credit is a mere promise to pay actual money;
hence the two (credit and money) differ fundamentally in kind. Money is a com-
modity with intrinsic value; credit is a legal or social obligation. Therefore, onto-
logically money and credit are inherently incompatible. Wray’s MMT purports
to fully contest the commodity theory, yet he explicitly affirms the money/credit
distinction, going out of his way to spurn the idea of a “pure” credit theory. Con-
sistent with what Schumpeter calls a theoretical metallism, Wray insists that
any tenable theory of money must maintain a place for “real” money. The case
of Ingham proves far more complicated, as he first rejects but then later struggles
to hold on to a money/credit distinction, albeit in a manner quite different from
the traditional account.
In tracing Ingham’s thought as he vacillates on this key issue, we further illu-
minate the contours of a thoroughgoing credit theory of money. We can start with
the basic fact that, like Wray, Ingham also rejects entirely the orthodox account.
Ingham consistently refutes any and all commodity theories of money, arguing in-
stead that money in its “specific nature … is a token credit denominated in money
of account”; for just this reason, money must be “ontologically distinguished” from
commodities (Ingham 2018: 839, 844). At this stage, the argument maps out like this:
for the commodity theory, money must be distinguished from credit because
money and credit are different ontologically; for Ingham, ontologically, money is
credit, and therefore distinct in its being from that of a commodity.
This raises the obvious question: If money is credit in its nature, how could we
maintain a money/credit distinction (and why would we want to)? Ingham details
an answer that emanates from his own extensive historical and sociological study
of the emergence of capitalism. In the previous chapter I both quoted the takeaway
line, “money is transferable credit,” and glossed Ingham’s basic argument: any
credit can be created, held, and even repaid (destroyed), but not all credit can
be transferred to and held by another party (or redeemed by them). Not all credit
circulates (Ingham 2006: 267).

https://doi.org/10.1515/9783110760774-009
108 Chapter Five: From Money/Credit to Money-Credit

Ingham derives this argument from the key element in the story he tells about
the emergence of capitalism: “It is the extensive transferability of debt and the cre-
ation of a hierarchy of acceptability that was crucially important in the develop-
ment of the form of (circulating) credit money” (Ingham 2004b: 185, emphasis
added). Ingham rightly insists that money can and has “undergone fundamental
change during historical development” (2004b: 186). More succinctly, “Capitalism
is founded on the social mechanism whereby private debts are ‘monetized’ in
the banking system” (Ingham 2004a: 13; same line appears in Ingham 2004c: 26).
Ingham traces this transformation to two key elements. First, bills of exchange
begin to circulate widely, creating a commonly used “private money.”¹ Second, a
transformation occurs when sovereigns begin to borrow from their own merchant
classes. These loans become “national debt,” and the sovereigns’ promise to repay
forms “the basis for public credit money” (Ingham 2004b: 187). Money can be dis-
tinguished from credit, Ingham contends, because earlier historical forms of credit
did not circulate (were not transferable) in the way that later forms of capitalist
money do (and are).
Ingham remains quite clear that his defense of the money/credit distinction
rests on, and even remains limited to, the historical register. He repeatedly sustains
Innes’s position that all money is credit, but supplements it with the assertion that
“in order to understand the historical distinctiveness of capitalism, the admittedly
confused distinction between money and credit should not be entirely abandoned”
(Ingham 2004b: 213). He formulates the point concisely in his recent book: “All
money is credit, but not all credit is money” (Ingham 2020: 41). I think we can
best make sense of Ingham’s desire to maintain the very distinction that he admits

1 Bills of exchange were arguably the most important money for most of the history of merchant
capitalism, yet they were obviously not state money. Moreover, as I discuss in greater detail in
Chapter 7, bills of exchange were very early derivatives; as such, they serve as stark evidence
for the centrality of money markets to capitalism – from the very start. Ingham nicely underscores
the importance of bills of exchange, and in his recent book he concisely and accurately describes
them (Ingham 2020: 29; see Ingham 2015: 172 – 73). However, in earlier writings Ingham sometimes
appears to mischaracterize bills as “detachable from any particularistic creditor-debtor relation” or
as establishing money that is “anonymously transferable” (Ingham 2004b: 187, emphasis added;
Ingham 2004a: 115). In these passages Ingham may mean only that as bills circulate more widely,
the sphere of trust broadens, but at times he seems to echo Simmel’s language about money as “a
bill of exchange from which the drawee is lacking,” and thereby to advocate the idea of anonymous
money (Simmel 2004: 177). I thus feel the need to emphasize that such a concept is no more tenable
historically (for Ingham) than it is theoretically (for Simmel). While the fact of “anonymous
money” surely often seems to be true under capitalism, it is never in fact the case. Any and
every example of money is a credit, and as such we can discern the debtor. Typically today the
debtor is a bank or a central bank, but there is never no debtor at all. To hold a credit on an un-
known debtor is not to hold a credit. Anonymous money is not money.
 1 The Ontology of Credit 109

is confused by clarifying the difference between an ontological and an empirical

approach to money. Innes’s contention that all money is credit is an ontological ar-
gument (an argument about the being of money), one which Ingham supports,
whereas Ingham’s defense of a limited version of the money/credit distinction is
an empirical claim (based on our observations of which credits circulate). As I
show below: “transferability” sounds like an ontological concept, but as Ingham
implements the idea, it serves only as an empirical definition.
The point can be thrown into clearer relief by returning once more to Innes:

Credit and credit alone is money. Credit and not gold or silver is the one property which all
men seek. … The word “credit” is generally technically defined as being the right to demand
and sue for payment of a debt, and this no doubt is the legal aspect of a credit today; while we
are so accustomed to paying a multitude of small purchases in coin that we have come to
adopt the idea, fostered by the laws of legal tender, that the right to payment of a debt
means the right to payment in coin or its equivalent. And further, owing to our modern sys-
tems of coinage, we have been led to the notion that payment in coin means payment in a
certain weight of gold. Before we can understand the principles of commerce we must wholly
divest our minds of this false idea. (Innes 1913: 392, emphasis added)

Innes was no philosopher, but throughout his two essays on money he develops the
outlines of an ontology of money. Innes focuses primarily on the claim that money
is credit, but here he indicates a significant second argument: credit is all there is.
“Credit” provides the best answer to the question “What is money?” and when
dealing with “the principles of commerce,” we find nothing above or beyond cred-
it.
Over the entire history Schumpeter covers, he sees but one or two thinkers
who even dare to contemplate the notion of “the fundamental sameness” of all
credit (Schumpeter 1954: 688; see Thornton 1802). But for Innes the point is
plain: “A credit redeems a debt and nothing else does” (Innes 1914: 154, emphasis
added). Innes refuses the money/credit distinction precisely because he sees
money and credit as indistinguishable at the ontological level.² Again, most com-

2 I focus intently on Innes’s writings here, for a number of reasons: his articles are some of the
earliest to advance a credit theory of money; they are certainly the most lucid on the topic; and
they are now well known by most interlocutors in today’s money debates. However, I certainly
do not mean to suggest that Innes was alone in pushing the case for money as credit (nor credit
as money). As I noted in Chapter 3, Macleod’s work appeared twenty-five years earlier. And Haw-
trey, whose book appeared just six years after Innes’s articles, makes a series of complementary
arguments. On the particular topic of the credit/money distinction, for example, Hawtrey writes:
“Credit and money are both equally media of exchange. Credit is often said to be a substitute
for money. It would be just as accurate to say that money is a substitute for credit” (Hawtrey
1919: 15).
110 Chapter Five: From Money/Credit to Money-Credit

mentators on Innes come at this text from the perspective of his “theory of
money,” thus rightly reading him as defending the thesis that all money is credit.
However, they rarely take heed of the other dimensions of the argument, and thus
fail to note how far Innes truly pushes his case. Yet we need not read anything into
Innes’s text to see the ontological angle: “All forms of money are identical in their
nature” (Innes 1914: 154, emphasis added). Innes was no fool; he was well aware,
and indicates clearly to his readers, that not all forms of money (as credit) are
the same; some credits are indeed much better than others. In practice we find
that differences in forms of credit abound, but in terms of the nature of money,
we can discern no differences at all. Here I am reading Innes not for his theory
of money but for his ontology of credit.
I do so in order to link back to the key element in Ingham’s defense of the
money/credit distinction: transferability. The basic idea seems relatively straight-
forward: it names the capacity to be transferred. The entire point of the concept
would be to determine if a credit has this capacity. Faced with a handful of credits,
we sort them into two piles: the transferable credits have or partake of transfera-
bility – transferability is an aspect of their being; the non-transferable credits lack
this aspect.
I contend that if we start with this simple framework, and then consider In-
nes’s ontology of credit, we can only conclude that every credit partakes of trans-
ferability because every credit has the capacity, in the sense of latent potential, to
be transferred. This is not to say that we can know in advance that a credit can or
will transfer, but only to insist that we cannot know in advance that it will not or
cannot. Any credit might be transferrable, though many (perhaps even most) will
not actually transfer.
Ingham rightly shows that both historically, and in any given instance, some
credits actually circulate and some do not. We can therefore make an empirical
distinction between money and credit. We simply observe which credits circulate:
those that do, meet the definition of money; those that do not, do not. But it would
be illicit logically to conclude from this account that we can discern an inherent
capacity for transferability in some credits and not in others. We cannot move
from the empirical (ontic) fact that a particular credit has failed to circulate, to
the ontological conclusion that such a credit permanently lacks the capacity for
transferability – a capacity that some other credit (which does circulate) is
taken to possess.³ Just because I’m not currently swimming doesn’t mean I can’t
swim.⁴

3 To make this move would be to assume that whether a credit circulates depends strictly on
something intrinsic to the internal nature of the credit: only transferable credits (money) circulate,
 2 Five Theses on Credit and Money 111

2 Five Theses on Credit and Money

This argument now has a number of elements in play across multiple levels. To
clarify, let me specify a series of theses, which I will then elucidate:⁵
1) Empirically and ontologically, all money is credit
2) Empirically, money is credit that circulates
(credit that is transferred)
3) Ontologically,⁶ all credit is transferable
(might potentially be transferred)

while non-transferable credits (mere credit) do not. Below I demonstrate that this logic fails to cap-
ture the being of money, while also flying in the face of the history of money.
4 I use this metaphor as a rhetorical device – to try to drive home the basic point about transfer-
ability – not as a strictly formal analogy. That is, we might say that “transferability” is unlike “abil-
ity to swim” in that some human beings really cannot swim. Nevertheless, the primary point holds:
we cannot tell who can swim and who cannot merely by observing who swam yesterday. Moreover,
while at first it might seem theoretically possible to test for swimming ability, this too may prove
impossible: some individuals who think they cannot swim (and would fail a basic test by refusing
to get into the pool) might surprise themselves in an emergency situation, discovering an unknown
ability to stay afloat; and some who would easily pass the pool test might panic in a crisis and
drown. My metaphor here is not random, but rather a variation on the much older and well-es-
tablished trope of liquidity. Modern bank stress tests are eerily like my example of the swimming
test (with the same stark limitations). I discuss liquidity in more depth in Section 3 of this chapter.
5 My theses on money must be read in the context of the money array – creditor, debtor, and de-
nominated token. The arguments of this section do not replace, but rather elaborate that wider
project. Thus, for example, when I assert in Thesis 1 that “money is credit” this should not be un-
derstood as a new definition or theory of money, which would supplant my account of the money
array. To the contrary, in the context of the broader theory, this thesis asserts that the money stuff
is a token or symbol of credit, denominated in some money of account, held by a creditor as a
claim on a debtor, while the name money describes this entire concatenation.
6 At this juncture I aim to raise ontological questions, in contrast to empirical questions – to con-
sider the question of money’s being, rather than stating facts about money things. The idea of pos-
ing ontological questions (concerning money) must be sharply distinguished from the project of
developing a fundamental ontology. We do not need an ontology to ground the theory of money
or to answer all of its questions. Rather, in developing that theory we can pose ontological ques-
tions, as well as historical, empirical, and other questions. In this section I go beyond the ontic to
analyze money ontologically, but my theory is not an “ontology of money” – and these five theses
must not be taken as derivations from a deeper ontology. In this I distinguish my project from Law-
son, who makes social ontology fundamental. Lawson takes the being of money as prior to the
question of its social positioning (Lawson 2016: 966). Regarding Lawson, I concur with Ingham’s
powerful response: “I cannot see how money as an anterior value can be securely established on-
tologically without recourse to a non-monetary theory of value” (Ingham 2018: 838). Wilkins and
Dragos unintentionally affirm Ingham’s critique when they favorably cite Lawson as support for
their claim that “whatever is positioned as money must already have some form of value” (Wilkins
112 Chapter Five: From Money/Credit to Money-Credit

4) Ontologically, we cannot distinguish “money” from “credit”;

there is only one “substance” or thing – namely, money-credit
5) Ontologically and empirically, monies are always plural
(there is a hierarchy of money)

Previous chapters have already made the case for Thesis 1 in detail (and it is not in
dispute here). The foundations of the argument can be located in the prescient
work of Innes, but many of the precepts are taken up and developed (if not
fully embraced) by a variety of early twentieth-century writings (e. g., Macleod,
Hawtrey, Schumpeter). Ingham, Wray, and other post-Keynesians regularly affirm
this point even if they do not pursue it to its furthest conclusions.
Thesis 2 is my redescription of Ingham’s defense of the money/credit distinc-
tion. Working within a credit theory of money, we can start with Ingham’s defini-
tion of “transferable credit” and then operationalize that definition through empir-
ical observation and categorization. That is, to make this conceptualization
“robust,” we need to gather data on which credits circulate and which do not –
and then assess that data in some way. I affirm this basic thesis. But I insist
that we circumscribe our understanding of it: “Money is credit that circulates”
must be understood as an empirical claim, not at ontological one. To say money
is transferable credit is to claim that we can know what is money and what is
not by observing which credits circulate and which do not. If we weigh the (signif-
icant) bulk of Ingham’s writings, we find that his only attestations of the money/
credit distinction are backed by historical descriptions. Ingham has no ontological
account that would differentiate money from credit, and like Innes, he refutes the
commodity theory’s bogus account (premised on the claim that money is a com-
modity while credit is not).
Nevertheless, nothing prevents us from exploring the following hypothetical,
which we will call Thesis 2x: “Ontologically, money is transferable credit.” This
is little more than an ontological rendering of Thesis 2 (Ingham’s thesis). The asser-
tion seems plausible at first: if money in its being is transferable (has the capacity
to be transferred), then Thesis 2x is valid. The problem is not that 2x is false but
that it fails entirely to distinguish money from credit, as it says nothing about the
ontology of credit vis-à-vis transferability. In other words, Thesis 2 entails a valid
corollary: “Empirically, some credits do not circulate and therefore are not money.”
However, Thesis 2x cannot sustain its own corollary – “Ontologically, some credits

and Dragos 2022: 4). Moreover, in general terms, I reject this entire approach to money’s “being”
because for me the being of money cannot be understood apart from its “positioning,” i. e., its dy-
namic historical becoming. I discuss this dialectical relation between theory and history in Chap-
ter 1. Thanks to Rothin Datta and Ben Taylor for helpful discussion on this point.
 2 Five Theses on Credit and Money 113

are not transferable” – because there is no way to analyze the being of a credit and
know in advance that it will not, cannot, circulate. This is why our third thesis (see
below) directly refutes this corollary of Thesis 2x. Ultimately then, Thesis 2x proves
empty, tautological; it describes an ontological feature of money but not one that
distinguishes money from credit. Thesis 2 can only uphold a money/credit distinc-
tion if taken as a knowledge claim that we verify through historical or empirical
examples.
Another way of expressing this crucial point would be to say that we can only
ever distinguish money from credit post hoc. Money is credit that circulates in a
particular way, but there is nothing in the nature of any specific credit that reveals
in advance whether it will in fact circulate. And there is nothing in the nature of
any specific money stuff that guarantees it will continue to circulate. My argument
above may at first seem like nitpicking, but it turns out to have profound practical
implications because, when we turn to the historical analysis and practical study of
money and money markets (see Chapters 6 and 7), we find that what we call
money is never guaranteed to circulate. Money that circulated yesterday may sim-
ply fail to circulate tomorrow; this is the nature of money.
This leads me to Thesis 3, the point at which my argument goes beyond any
extant theory of money.⁷ The core of the argument is straightforward: ontological-
ly, all credits are transferable in the very literal sense that their being includes a
potential for transferability.
Let me develop this thesis by starting with its ontological character. I loosely
follow Heidegger in taking ontology as the inquiry into the being of beings, or as
the study of being “itself.” Being is not a genus (Heidegger 2000: 85). Being cannot
be grasped as a category or type or property of an entity; those are all “ontic” de-
scriptors – that is, “facts about things.”⁸ To ask after the being of a thing is not to
find facts about its empirical existence but to pose the very question of its exis-
tence. For our limited purposes here in clarifying the ontology of money and cred-
it, we can creatively appropriate Heidegger’s notion of an “existential”: an essential

7 The previous chapter showed that this move beyond the money/credit distinction proves a
bridge too far for so-called heterodox money theorists. At the same time, I have also demonstrated
that the effort to hold the line between money and credit leads even the most sophisticated and
intelligent writers into a kind of cul-de-sac, sharing space with those theories on the matrix
that see money as positive value. In trying to justify the money/credit distinction, they must resort
to a hand-waving form of explanation in which money is an “institution” created and controlled
outside of and before economic activity. In this chapter I deal only narrowly with the very best
articulation of the money/credit distinction, in Ingham.
8 The phrase is a common gloss on ontic, drawn, it would seem, from a footnote in John Macquar-
rie and Edward Robinson’s translation of Heidegger’s Being and Time (1962: 31n3).
114 Chapter Five: From Money/Credit to Money-Credit

characteristic or feature of the being of an entity.⁹ On the one hand, we can see
that transferability (the capacity or potential to be transferred) is an existential
of all credit. It is in the very nature of a credit as a relation of denominated
debt between two parties that the holder of the debt could try to pass it on to a
third party – and that third party might accept it. A credit that utterly refused
this possibility would not be a credit at all.¹⁰
The argument for the existential of transferability as applying to all credits
must be highly specified and narrowly circumscribed. My claim is not that we
can know in advance that a credit will or definitively can circulate but that we can-
not know in advance that it cannot circulate (hence my repeated use of “might”
above). To say that transferability is an essential characteristic of any credit
means that no credit can be ruled outside the bounds of possible transfer to anoth-
er party. The fundamental nature of a credit is to remain permanently (potentially)
transferable.
One might challenge my argument for transferability as an existential of all
credit by pointing to the conditions of possibility for transferability itself. For ex-
ample, a credit can only transfer if it is denominated in a recognizable money of
account.¹¹ I have three responses to this line of argument. First, I readily affirm
that some broader social conditions prove necessary for something like monetary
circulation to be possible in the first place. This is one reason why I confine my

9 I say creatively appropriate here, just as I say loosely follow above, because I am drawing mainly
on Heidegger’s very idea of ontology, of the question of being (including its meaning). Most Heideg-
ger commentary today still centers on his magnum opus, Being and Time, wherein Heidegger raises
this question within the terms of the “ontological difference,” the difference between Being and
beings. Less attention is paid to the fact that in his later writings Heidegger argues quite directly
that the proper approach to being is to go beyond or outside of the ontological difference (Heideg-
ger 1972). Heidegger thereby indicts much of his earlier conceptual framework for tethering its ac-
count to Dasein – Heidegger’s novel reformulation of “man” or the human subject as “there-being.”
The term “existential” comes from the framework of Being and Time and thus applies strictly only
to Dasein, not to other entities. I am therefore intentionally misusing the term when I invoke it for
the case of money, but in so doing I am also taking my cues from the later Heidegger, who insists
that ontological questions be posed outside a framework of the human. Under the technical terms
advanced in Being and Time, the determinations of the being of all entities that are not Dasein
would be restricted to the rubric “categories.” However, Heidegger himself does not develop
such a rubric in Being and Time, and in his widely read lectures on metaphysics (published the
year before Sein und Zeit), he explicitly reserves the concept “category” for the history of metaphy-
sics that he hoped to escape (Heidegger 2000: 202).
10 We could imagine a contractual obligation that legally precluded transfer; perhaps we could
call this a debt contract, but not a credit.
11 Sincere thanks to Geoff Ingham for pressing me on this point and for advancing the counter-
argument I address here.
 2 Five Theses on Credit and Money 115

arguments to capitalist social orders, which are precisely monetary social orders.
Second, however, while those broad conditions might tell us whether something
like “credit transferability” is even possible in a particular social order, they do
not enable us to distinguish transferable credits from non-transferable credits
(within that monetary order). Put differently, inquiring into the conditions of pos-
sibility for the existential of transferability might underwrite a distinction be-
tween monetary and non-monetary societies, but it will not support a money/cred-
it distinction.
Third, and most importantly, on closer scrutiny it again proves impossible, on-
tologically, to isolate these supposedly “prior” conditions – that is, to render them
properly prior. Even “money of account” will not hold up as a supposed prior con-
dition to determine the existential of transferability, and for a very important rea-
son. Undoubtedly a credit proves more likely to circulate if denominated in a rec-
ognizable money of account, but at the same time it is precisely the circulation of
credits that can bring about a new money of account. Say we have three different
credits in front of us: one for 10 “dollars,” one for 20 “tethers,” and one for 2
“stoats.” The denominated money of account for the last credit, stoats, sounds ri-
diculous, and we might rightly assume it has very little chance of circulating. Nev-
ertheless, there is no way to know in advance that credits denominated in stoats
will not transfer to third parties. After all, just a few years ago we would have re-
acted the same way to tethers as we now react to stoats. And yet, over the course of
2022 between $64 billion and $85 billion worth of Tether bank money, putatively
denominated in tether, circulated. ¹² The paradoxical temporality of money-credit,
in which the fact of circulating helps to establish the conditions that would seem to
make circulation possible to begin with, helps to substantiate my claim for poten-
tial transferability as an existential of all credit.
On the other hand, the guarantee of transfer is not an existential of any credit.
To conceive of a credit that not only may circulate but also is assured of circulating
is, once again, to imagine something other than credit. Guaranteed transferability
would amount to guaranteed liquidity – the idea that this credit can always and
immediately be swapped for other credits or for commodities. But this notion of
“guaranteed liquidity” is little more than a different form of the positive, intrinsic
value that serves as the bedrock of commodity theories of money, and which claim
theories must always reject. Hence a guarantee of transferability would mark the

12 Tethers, of course, circulate within a very small but still quite consequential money space. One
might wish to question the validity of tether as money of account on the basis of the fixed ex-
change rate between tethers and dollars, but if fixed exchange rates invalidated moneys of ac-
count, we would have to erase or somehow invalidate the existence of many national currencies
throughout history. For more on tethers, see Chapter 7.
116 Chapter Five: From Money/Credit to Money-Credit

limit of credit theory – the place where we are no longer dealing with a credit but
rather with some entity of intrinsic value. Credit, of course, has no intrinsic value.
Credit is always a claim on another party (the debtor), and this makes the guaran-
tee of transferability impossible, because no debtor’s liquidity and solvency can
ever be perfectly assured. Just as a credit can always be offered to and accepted
by a third party, it can also always be rejected.
Thesis 3 affirms both that all credit can circulate and that any credit can fail to
circulate.¹³ As an ontological category, transferability is inherent to all credits; it
cannot be the element that allows us to distinguish credit from money in their re-
spective natures. But if our ontology of credit reveals that all credit is transferable,
this means that we must refuse any ontological distinction between money and
credit. At the level of their being, there are not two distinct entities with different
natures.
Put differently, what we take to be “credit” when drawing the money/credit
distinction might in fact circulate in the future, while what we take to be
“money” might not circulate. This leads me to Thesis 4: our efforts to hold the
line between money and credit will always prove futile. In advancing my critique
of the money/credit distinction over the years, I have found it perplexes, con-
founds, or even angers many scholars of politics and economics, yet the point
comes naturally to money-market traders. Here’s how one particularly reflective
trader formulates the idea in terms of the balance-sheet assets that he trades: “Fi-
nancial assets are money-like to the extent that you don’t need money, and very
much not money-like when you’re desperate for cash” (Hobart 2022).¹⁴ “Money”
is money-like credit.
Ontologically, there are not two “substances” (money and credit) but just one.
The existential that would mark money as distinct – transferability – is an existen-
tial of all credit. If at any given moment we analyze the structure and nature of a

13 Note that the empirical argument from above cannot intervene in or arrest this inherent un-
decidability. The empirical definition of money as circulating credit does not tell us much at first. If
we want to really know what money is, we have to go out each day and observe, to see which cred-
its circulate (we can place those in the money column) and which do not (those we will place in the
credit column). At the end of each day, we can update these two tables, but as we do so we may
notice that some items keep jumping back and forth between columns. Yesterday that was money
and this was credit, but today they are reversed. This brings us to the elemental limitation of an
empirical account of money: it cannot rigorously distinguish money from credit (conceptually,
within the very account of the nature of money). At best, this sort of “theory” can only provide
a starting point for empirical data-gathering and analysis.
14 For an unpacking of the latent concept “cash,” see Chapter 6, Footnote 14.
 2 Five Theses on Credit and Money 117

handful of credits¹⁵ of whatever form – from a friend’s IOUs to a US Treasury bill –

we will never be able to sort them into distinct “money” and “credit” categories.
Ontologically, the being of “credit” is indistinguishable from the being of
“money.” Both appear here within quotation marks because the ontological argu-
ment pushes us to see that at the level of being, there is only one entity. I propose
to call this entity money-credit. ¹⁶ In coining the term I replace the slash mark that
would separate money from credit at the empirical level with a hyphen that links
the two at the ontological level. Anything we call “credit” possesses the existential
of transferability just the same as that which we call “money.” There is nothing but
money-credit. And, to return to the language just above, all money-credit may or
may not circulate.
Taken together, Thesis 4 and Thesis 2 expose a profound contradiction between
the empirical account (where a money/credit distinction can be maintained by ob-
serving the success or failure of credit circulation) and an ontological account
(where everything is money-credit – so no such distinction can hold). Crucially,
this is not a contradiction to be overcome or undone. Not in the least, because
this contradiction forms the basis for the inescapable possibility of capitalist finan-
cial crisis: we keep successfully distinguishing money from credit, and thus money
freely circulates, right up to the moment that the distinction collapses and circula-
tion ceases. A deep understanding of money today requires bringing together the
empirical account and the ontological account, while recognizing that they cannot
be reconciled.
To spell this point out, let us see what happens if we attempt to align the two
accounts. Empirically, money is credit actually transferred in practice/history –
credit that does, in fact, circulate. As I suggested above, the only apparent way
to make the ontology of money support this distinction would be to include in
our ontology of money the existential that we have named “guarantee of transfer”
(while excluding this existential from our ontology of credit). But rather than al-

15 In developing this argument we must carefully (though not starkly) delineate credit relations.
Not all relations of obligation and responsibility are relations of credit. For example, we may have
moral or social debts to friends, to family, and to the wider community, the very existence of which
itself rests on a certain basis of (some degree of ) mutuality and co-commitment. But not all forms
of owing, or even of what we call debt in ordinary language, should be understood as credit/debt
for the purposes of a theory of money. As the concept of the money array indicates, a credit/debt in
the monetary sense must specify more or less clearly both the parties (creditor and debtor) and the
denomination.
16 Specifically, the money token is money-credit, but this also means that the wider money array
pivots around this symbol of money-credit. In other words, the money array is itself the money-
credit array: creditor, debtor, and denominated money-credit.
118 Chapter Five: From Money/Credit to Money-Credit

lowing us to support an ontological distinction between money and credit, this re-
quirement of the argument would force us into a very different conclusion – name-
ly, that money does not exist. In other words, if, ontologically, money is that which
includes the existential “guarantee of transfer,” then there is no money – there is
only credit – because nothing is guaranteed to transfer. This is one way, quite rad-
ical yet thoroughly plausible, of reading Innes.¹⁷
Unsurprisingly, and for a host of both conceptual and practical reasons, I es-
chew this conclusion. While the paradox of developing a theory of money that con-
cludes “there is no money” might grab people’s attention, overall it would be less
than helpful in understanding money. Therefore I defend the primary thesis that
ontologically we cannot maintain the position that money is transferable credit;
ontologically we cannot distinguish money from credit because in their being
money and credit are the same (they are money-credit).¹⁸
Finally, Thesis 5 returns to less controversial waters, and like Thesis 1, this
claim holds on both the ontological and empirical levels. We know in practice
that not all money-credit is as good as any other money-credit. Some credits are
of higher quality than others: some seem more sound, some seem more liquid,
and some help to diversify a portfolio of other credits. Yet this conclusion is not
strictly empirical: it is in the very being of credits to be of differing quality; for
this reason it is in the very nature of monies to form an (always shifting) hierarchy.
In his second, less cited article, Innes points out that when different credits are
issued in the same money of account, they are effectively issues of different dollars:
“Everybody who incurs a debt issues his own dollar, which may or may not be
identical with the dollar of any one else’s money” (Innes 1914: 154). We can formu-
late the point more forcefully: “a” dollar is not a thing. The “thing” is a token of
credit/debt denominated in dollars, and some tokens will be better than others –
more stable, more liquid, or wielding more purchasing power – even if they
have the exact same denomination.¹⁹

17 Such a conclusion can also easily be drawn from a study of the history of money and money
markets – even the highest forms of money sometimes cease to circulate – and thus, in some im-
portant sense, cease to be money. For more on this point, see Chapter 6.
18 It might be worthwhile at this point merely to remind the reader that my ontological arguments
are always restricted to the particular historically developed social order that is capitalism. I ob-
viously draw repeatedly on the historical evidence of past societies’ technical uses and practices of
money, but I refuse to speculate about the ontology of pre-capitalist money. I discuss this methodo-
logical point in more detail in Chapter 1.
19 As setup for the conclusion I quoted above (that everyone who issues debt issues their own
dollar), Innes offers an example that brilliantly illuminates how different “dollars” can be:
 2 Five Theses on Credit and Money 119

Money can never be singular because money is always a claim on a debtor,

and debtors are always multiple and of differing quality (i. e., different degrees
of solvency and liquidity). There is never money, but always only monies – even
ontologically. Hence the inevitability of the money hierarchy. When we refuse
the money/credit distinction (there is only money-credit), we must never forget
that not all money-credit is the same. Thesis 5 must always be kept sharply in
mind when considering the implications of Thesis 4: to refuse the money/credit dis-
tinction is not at all to level the differences between various forms of money-credit.
There are always different dollars.²⁰
Before moving on, it is worth noting that this argument could easily be con-
strued as overly abstract or narrowly terminological (the differences often seem
semantic), yet the stakes are quite high and therefore worth foregrounding. The
history of money – both theoretical and practical – has been marked by a series
of efforts to draw the line between money and credit, and each has been in the
service of a broader effort to maintain some sphere in which money has stable
value. Yet all of these arguments have failed.²¹ The argument here indicates why
they were always doomed to fail – precisely because money has no value and
thus can never be a guarantor of value. The nature of money as credit and the on-
tology of credit show us that the “value of money” (money’s purchasing power) can
always disappear at a moment’s notice. And every financial crisis demonstrates
the same point. There is never any place, nor any time, where money exists as

Suppose that I take to my banker a number of sight drafts of the same nominal value. … For the
draft on the Sub-Treasury and for that of the bank in the city, my banker will probably give me a
credit for exactly the nominal value, but the others will all be exchanged at different prices. For
the draft on the New York bank I might get more than the stated amount; for that of the New
York merchant, I should probably get less; while for that on the obscure tradesman, my banker
would probably give nothing without my endorsement, and even then I should receive less than
the nominal amount. All these documents represent different dollars of debt, which the banker
buys for whatever he thinks they may be worth to him. (Innes 1914: 154, emphasis added, punc-
tuation altered for clarity)
20 There is all the difference in the world between higher-quality and lower-quality credits, and if
we wish to reserve the moniker money for only the higher-quality forms, then there may be no
harm in that. But in trying to grasp money conceptually, we must resist the temptation to reify
the semantic distinctions of everyday discourse. We cannot pretend that the dividing line is
ever clear or fixed, and we absolutely must remember that it can shift or seemingly disappear
at any moment.
21 Put differently, whenever a person, an institution, or even a larger society seems overly confi-
dent that it has fixed and preserved the money/credit distinction, that it has found credits with
guaranteed transferability – that is the moment to worry. Contemporary readers might be remind-
ed of the algorithmic stablecoins that blew up in 2022: their promise was precisely the guarantee of
fixed, stable value.
120 Chapter Five: From Money/Credit to Money-Credit

money and not as credit. In practice we can surely distinguish circulating money
from non-circulating credits, but no theory of money will ever be able to draw a
rigorous, tenable conceptual distinction between the two.

3 Liquid Goat Money and Illiquid US Treasuries

In a certain sense, ontological arguments must by definition separate themselves

from daily lived experience in order to ask properly the question of ontos (being)
as distinct from ontic questions (related to particular beings). But such separation
can and should be temporary, and it must not lead to a divorce from practical re-
ality or concrete concerns. I explore the ontology of money and credit because an
ontic approach proves incapable of adequately accounting for both the nature of
money and the practices of money today. Thus, having worked through the concep-
tual argument (and the five individual theses) in defense of this overall frame-
work, I want now to contour further these arguments, by building out two exam-
ples.
To help make the case that all credit can become money and all money can
revert to credit²² (and thus that there is only money-credit), I draw examples
from opposite ends of the money hierarchy. The first case explores the lowest-qual-
ity credits imaginable, so as to demonstrate that even here credit can be/become
money. The second turns to “first-class” money, but proves that even there the cred-
it nature of money can reveal itself in a flash (i. e., a crash).²³
Starting at the bottom, let us assume that I offer my neighbor some food today
in exchange for a future credit. That credit takes the specific form of an IOU, signed
by my neighbor, for “1 goat.”²⁴ In holding the goat IOU, I hold a credit; my neighbor

22 The phrase “revert to credit” works within the terms established in the preceding section: em-
pirically, money is credit that circulates, so when it ceases to circulate it reverts to its merely credit
form. In practice, “reversion” would serve as a euphemism for a bank run or an all-out financial
crisis. If your debtor becomes illiquid your money turns into worthless credit held on a failed or
failing institution. Ontologically, of course, there is only ever money-credit, but the empirical ques-
tion cannot be ignored because it matters a great deal whether that money-credit circulates.
23 These exemplars lack parallelism: one is an empirical case from very recent history; the other
is utterly hypothetical (and ahistorical), a stylized heuristic device. The ontological account is not
restricted to the empirical example, and thus the hypothetical proves significant because it serves
to illuminate both future possibilities and potentiality as such.
24 Ingham rightly challenges a minor tendency in orthodox accounts (commodity theories) of
money to explain money’s emergence from a prior state of barter through the introduction of
IOUs (in his case, pig IOUs). The orthodox idea is that, first, there is barter; then, at some stage
of development, the party who lacks a commodity to barter instead provides an IOU as substitute;
 3 Liquid Goat Money and Illiquid US Treasuries 121

is my debtor (the denomination is “goats,” and the quantity is 1). I may also hold a
US $20 bill. The latter is not qualitatively different from the former: the $20 bill is
also a credit; my debtor is the US Federal Reserve banking system (the denomina-
tion is “dollars,” and the quantity is 20). It should go without saying that these are
very different credits, but that important fact, addressed in Thesis 5, must not be
allowed to distract us from the essential validity of Thesis 4: there is no difference
in kind. Both the goat IOU and the $20 bill are money-credits.
To repeat, there are vast practical differences between these two credits, but
we can explore those differences in a way that underscores their ontological same-
ness. To elaborate this point let us analyze my “goat credit” more closely. I can ex-
change it for a goat from my neighbor, but can I use it to buy milk at the corner
store? Probably not.²⁵ But why not? What exactly prevents this credit from circu-
lating widely, from circulating as money? ²⁶ The answer has nothing to do with its

finally, the IOU “could be held by the co-trader and later handed back for cancellation on receipt of
a real pig,” and thus the IOU would be “money.” Ingham dismisses this nonsense, pointing out that
money must be a transferable debt (denominated in money of account) and not just a claim on a
specific commodity (Ingham 2004c: 25). Just to be clear: my story in the text above also starts with
an IOU, but it is not preceded by barter, it does not support a commodity theory of money, and it
does seek to explain the idea of transferable debt.
25 This would be Ingham’s point in his critique of the orthodox theory: the goat IOU is a credit but
not money, because: 1) the debt is denominated in a specific commodity (goats), not in an abstract
money of account, and 2) the credit/debt is not transferable (Ingham 2004c). As I show, however: if
in fact the credit circulates (which is not a given, but always possible), then in so doing it will ren-
der “goats” the money of account. And at precisely that moment, just as with gold, commodity-
goats and money-goats will become two distinct entities. Moneys of account have often been de-
nominated in commodities – a fact that in no way proves the validity of a commodity theory of
money. If debts are actually paid in the commodity (rather than in the denominated credit),
then they are not paid in money, but this is largely beside the point (as it is a question of assets
that render the debtor solvent, a question that persists whether or not the money of account pur-
ports to be commodity backed). The initial denomination of the credit does not matter as long as it
remains quantifiable in discrete units. (As discussed previously, “I owe you love and support” is not
a credit.) Whether it be goats (a real animal, possibly a commodity) or dragons (a mythical crea-
ture, an utterly abstract idea), the crux of the issue pivots on the same question: Do credits denomi-
nated as such circulate from hand to hand? I imagine that the idea of owing someone 47 dragons
will sound bizarre to many readers (and this is why I use goats in my example in the text), but as
Innes would remind us, the idea of owing someone 47 dollars is not one bit less fantastical. “The eye
has never seen, nor the hand touched a dollar” (Innes 1914: 155).
26 Geoff Ingham has suggested a different answer than the one I give in the text. He proposes an
ontological distinction between personal and impersonal trust. This would be a fundamental differ-
ence between the trust I have in my neighbor (personal) and the broader social trust I have that
the credit could circulate to other parties (impersonal). Without this impersonal trust, credits can-
not circulate (Ingham 2022, pers. comm.). It seems to me that such a distinction may tell us some-
122 Chapter Five: From Money/Credit to Money-Credit

nature (as a credit) and everything to do with the quality of the credit. Few people
will want to hold credits denominated in goats; fewer still will wish to hold credits
against my neighbor. But these significant practical facts do not change the nature
of the credit; they do not alter its ontological existence as money.
And we can easily imagine an example wherein the practical conditions look
quite different: perhaps I reside in a small community populated by numerous
goat herders and dairy farmers. These folks might be quite keen to take and
hold goat credit, not only because it could have direct purchasing power for
them but also, and more importantly, because they know that others in the com-
munity will also value such credits. Therefore I could use the credit when in need
of another goat (by cashing it in with my neighbor), but I could also exchange it
with a different neighbor for some other good entirely (because that neighbor
too will be happy to hold goat credit). Moreover, it may be that in such a small,
tight-knit community, a large number of people know my neighbor (either person-
ally or by reputation) and therefore know that she is both an upstanding member
of the community and one who possesses a healthy household balance sheet with
excellent cash flow (and healthy goats, of course). In other words, as a debtor she is
solvent (her assets exceed her liabilities) and liquid (she has available money on
hand, daily). Given all of this, we were wrong to assume at the outset that I
could not buy milk at the corner store with my goat IOU. Quite the contrary, the
grocery store owner is likely to have dealings and interests in the various local
goat businesses. He may be more than happy to “cash” my goat IOU and give me
store credit, allowing me to buy not just milk today but groceries and supplies

thing important about the difference between monetary societies and non-monetary societies: the
former require some degree of impersonal trust. But my concern here, as throughout, lies only
with monetary societies, and within such societies there must already be some degree of such im-
personal trust, because some credits do, in fact, circulate as money. The condition of impersonal
trust fails to ground an ontological distinction between money and credit. After all, impersonal
trust is a condition of the social order itself, not of any particular credit. Properly directed,
trust in money should always be trust in the specific debtor on which the money-credit is held.
That said, Ingham’s point raises a separate set of important and complicated issues: sometimes
trust in money is misplaced, precisely because the holder of money does not consider the debtor.
Put in Ingham’s language, individuals may be fooled because their “impersonal trust” (their trust
in societal institutions) prevents them from seeing the risky debtor in front of them. This seems to
be part of the explanation for significant investment in crypto shadow banks that promised guar-
anteed, high yield: these were incredibly risky, uninsured, and unregulated investments, but many
individuals who put their money in them thought of them as safe investments like bank certificates
of deposit. I offer this as further evidence against Simmel’s thesis that money is a claim on society;
when your crypto shadow bank goes bankrupt and loses all your money, society will not pay you
back (even if it was society you trusted to begin with). For more on crypto, see Chapter 7.
 3 Liquid Goat Money and Illiquid US Treasuries 123

for weeks to come. As Innes says, a sale is the exchange of goods for credits. The
goat IOU from my neighbor is exchangeable credit; it is money.²⁷
Obviously this example is stylized, but nothing in it requires altering the na-
ture of the goat credit, and following through on the logic allows us to see the ex-
tent to which (and context in which) all credit has the potential to circulate. Fur-
thermore, the example makes clear that if money is circulating credit, the issue
before us is not where to draw a line between credits that “count” as money
and credits that do not, but how to locate the specific money space in which
such credits do in fact “count.”
The concept “money space” can be thrown into relief by comparing it with one
of the constitutive elements of the money array – namely, denomination. All tokens
of credit/debt must be denominated in some money of account, and we might say
this creates a kind of virtual space in which those tokens can circulate. However, I
distinguish between, on the one hand, the logical requirement that any money
token be denominated, and on the other, the domain in which it circulates. My con-
cept of money space is not abstract or virtual, but quite concrete. Money space is
that area in which credits circulate (as money).²⁸ The idea is simple, yet forceful,
because it demonstrates that all credit may circulate within a specified domain
(the money space). Even if I live in San Francisco in 2020 (and not in the fanciful
goat-herding community of our earlier example), the goat IOU is still in an impor-
tant sense money as long as the money space consists solely of me and my neigh-
bor – I can always cash the IOU with her (a bilateral relation).²⁹
We can easily conjure a slightly larger money space: say a group of twenty
friends play poker regularly, but rather than exchange bank deposits or central

27 If we were to extend this hypothetical, we might well end up describing a community in which
goats were the money of account within the community’s money space. This is the final response to
Ingham: the mere fact that a bilateral credit relation is denominated in something other than the
already given money of account does not in and of itself prevent that credit from circulating. There
are always multiple moneys of account. And market liquidity (what Mehrling calls “shiftability,”
the capacity to move one’s credits from one form to another, including across moneys of account)
is never a given, but rather always established by some sort of market maker.
28 Although it departs from and goes well beyond his arguments, my concept of money space was
originally inspired by Ingham’s claim – articulated in his summary of the state theory of money –
that “monetary space is sovereign space” (Ingham 2004a: 56).
29 We could use this example to rework the empirical distinction between money and credit, as
follows: if the money space consists of two parties, then we have only credit, which can be re-
deemed with the debtor but not transferred to a third party. Once the money space expands to
three parties, then we have money, which can be transferred. On the other hand, ontologically
there is no way to know in advance that the money space will not be expanded, precisely by trans-
ferring the credit to a third party. My neighbor example anticipates a point I demonstrate in the
text below: inside a predetermined money space, all credit is money.
124 Chapter Five: From Money/Credit to Money-Credit

bank notes at the end of each night, they simply keep a ledger of credits and debts,
occasionally reconciling the books to clear the accumulated entries against one an-
other. In this context the Google spreadsheet listing the credits and debts would
itself be the site of real money among this group. To buy five pounds of coffee
from Tim, Steve could simply transfer $50 in credits held against Akim. Before
the coffee sale, Akim owed Steve; after the sale, Akim owes Tim. Of course, if
the spreadsheet already lists a credit/debt between Steve and Tim, then we can
leave Akim out of it: the coffee sale would either reduce Tim’s outstanding debt,
or increase Steve’s. (Or, if Tim owed Steve less than $50 to start, the sale would
turn Tim’s debt into credit.) In this example the money space extends to the twenty
poker players (multilateral relations), because the poker players agree to allow the
transfer of poker debt as payment for goods (or to cancel other debt). The credits/
debts listed as assets/liabilities on the Google spreadsheet will not circulate beyond
the group, but within the group they circulate just as freely as other monies would.
Both these examples depend on relatively small money spaces. Distinctly, and
importantly, these are also relatively “low” forms of money³⁰ – that is, falling far
down the hierarchy described so well by Mehrling.³¹ We can formulate the point

30 My examples happen to be both small (size of money space) and low (in the hierarchy of
money) but there is no necessary relation between the two. That is, the size of the money space
does not directly determine where the money-credit will fall on the hierarchy. Obviously there
will be a general tendency for smaller-scale money spaces to produce lower forms of money,
but this is not a universal law. In the text immediately below, and then again in Chapter 7, I briefly
discuss IMF special drawing rights (SDR): the SDR money space is quite circumscribed, but SDR are
a very high form of money-credit. Thanks to Ben Taylor for this insight.
31 Mehrling’s thesis for the “natural hierarchy of money” takes as its point of departure a tacit yet
powerful rejection of the money/credit distinction. He puts the point this way at the beginning of
the second lecture of his introductory course:

Always and everywhere, monetary systems are hierarchical. One way that economists have tried
to get an analytical grip on this empirical fact is to distinguish money (means of final settlement)
from credit (promise to pay money, means of delaying final settlement). This is fine so far as it
goes. But in one sense it doesn’t go far enough because it posits only two layers of the hierarchy.
And in another sense it goes too far because what counts as final settlement depends on what
layer we are talking about. (Mehrling 2012: 1)

Mehrling neither proposes nor defends the thesis that all credit is money, and the “bottom” of his
hierarchy is still many rungs above the locations I am exploring here, but his fundamental insight
concerning the hierarchy of money already undermines any strong defense of a money/credit dis-
tinction. Mehrling’s enterprise only rarely bumps up against the explicit project to develop a theo-
ry of money, but when it does, I believe Mehrling resists both any orthodox commodity theory and
the state theory variant of heterodoxy. For example, see Mehrling’s sharply critical review of
 3 Liquid Goat Money and Illiquid US Treasuries 125

this way: goat IOUs and poker dollars are not very good credits, and this means
they aren’t very good money, but they are money nonetheless. Yes, these monies
circulate in very small money spaces, but this just underscores the crucial point:
all money circulates in some circumscribed money space. The structural limitations
that apply to the goat IOUs and the poker ledger also apply to every other form of
money. I cannot pay for my milk at Whole Foods in poker dollars, but I also cannot
pay for it in rubles. And I cannot pay my friend for coffee in the special drawing
rights (SDR) issued by the International Monetary Fund (IMF). Money outside its
money space is always “merely” credit, yet money inside its proper money
space is also nothing but credit – money-credit.³² Once again, rather than struggle
to shore up an untenable money/credit distinction, we do better with the combined
claim: there is only one thing, money-credit, but not all money-credit is the same.
To complete the logic that substantiates this claim, we can now turn to the op-
posite end of the money spectrum and consider the highest forms of money – the
first-class credits of which Innes speaks. Every attempt to defend a money/credit
distinction – whether in the form of commodity, heterodox, or post-Keynesian the-
ories of money – must ultimately assume or assert that as we move up the hier-
archy we eventually cross the line. That is, at a certain point we leave behind
mere private credit (bilateral relations) and shift over into the domain of genuine
public money (multilateral relations). On these accounts we necessarily get a con-
cept of money as that which can always circulate.
This is one way of expressing the notion that money is liquid. The basic idea
holds a superficial seduction: it tells us that money is not credit because credit can-
not always be exchanged for goods, while money can.³³ The existence of this
“money” would indeed be reassuring, and nothing can stop us from imagining
such an entity. We merely posit or define “money” as that which is “liquid” be-
cause it always circulates. In calling money liquid we mean that it must necessarily
be accepted in exchange for our desired goods, services, or credits.
But this is a fantasy. There is no such thing as a credit of such high quality that
it is guaranteed to be accepted. This is an ontic fact about any empirical example of
money-credit, but as I showed above it is also an ontological truth about money as
credit. No credit can be guaranteed because every credit is held on a debtor, and no

Wray’s first book, which, according to Mehrling, “miss[es] the credit nature of modern money …
[and] misconstrues the nature of the modern state that issues currency” (Mehrling 2000: 401).
32 On the question of a global or universal money space, see the discussion of “world money” in
Chapter 7.
33 This is another way of depicting money as that which has an existential of “guarantee of trans-
fer.” To keep the example clear, I leave out the ontological terminology.
126 Chapter Five: From Money/Credit to Money-Credit

debtor’s solvency or liquidity can be permanently assured. Money can never be

stable or fixed. Money itself cannot meet the criteria of our fantastical concept
of pure liquidity; to the contrary, this phrase is a contradiction in terms, at odds
with the very nature of money-credit.
We need to pause for a moment to consider a broader clutch of concepts. First,
the basic idea of “liquidity” can prove useful in indicating the relative degree to
which a particular money-credit or asset freely circulates or trades. A market in
specific financial assets can plausibly be understood as more or less “liquid” de-
pending on how easy or difficult it proves to buy and sell. Second, the idea of
“purely liquid money” is an absurdity, because, as I have shown, no money-credit
can be guaranteed to circulate. Finally, and most significantly, the concept of
“money liquidity” should be grasped as one of those “deranged” concepts that
manifest within capitalism.³⁴ If we read the phrase as suggesting money is liquid
by definition, then it becomes nonsensical; it collapses into the second concept
(purely liquid money). But if we take it as indexing the relative liquidity of
money, as indicating the space across which various monies range in their actual
and potential transferability, then the concept proves essential to any account of
money under capitalism.
This book has already raised the question of liquidity in terms of the “liquidity
constraint” placed on any financial entity (usually banks): Do daily incoming cash
flows “line up” with outgoing cash flows (Mehrling 2011)? This usage is consistent
with, but not reducible to, a standard definition of liquidity in circulation today:
from the discipline of economics to money managers to ordinary language, “liquid-
ity” is almost always taken to mean “convertibility into money.” An asset is more or
less liquid depending on how easy (that is, with the least delay and lowest trans-
action costs) it is to sell it.³⁵ This common usage tacitly assumes a conceptual
framework in which money is liquid by definition. For modern economics and fi-

34 The word “deranged” comes from Hans-Georg Backhaus’s reading of Marx, and his translation
of Marx’s term, Verrückung. Backhaus sees this concept as pivotal both for understanding Marx’s
critique of classical political economy and for grasping the objective facts of capitalism:

Economic forms are deranged. Marx here intentionally makes use of the ambiguity of this word,
an ambiguity which is innate to the German language alone. Thus, on the one hand, money is a
“deranged (verrückte) form” in the sense that it is the “most nonsensical, most unintelligible
form,” that is, it is “pure madness” (reine Verrücktheit). On the other hand, money is a deranged
form also in the other, spatial sense of “derangement” (Verrücktheit), as an object which is de-
ranged (verrücktes), dis-placed out of its natural locus. (Backhaus 1992: 61 – 62, citing Marx 1973:
928)
35 Where I consistently ask whether a bank is liquid (can it meet daily cash demands), the stan-
dard approach asks whether a particular asset is liquid (can it be sold at its value).
 3 Liquid Goat Money and Illiquid US Treasuries 127

nance, “money liquidity” is thus understood not as derangement (as I have char-
acterized it above) but as a mere tautology. This logic subtly implies that to hold
money is to hold permanent, stable value.³⁶ In this way the concept “liquidity” rei-
fies a false understanding of money, as it tacitly returns us to the notion that
money has value.
Crucially, Keynes offers a completely different way of understanding liquidity,
defining it not as “convertibility into money” but as “stability of value.” This allows
Keynes to compare the relative “liquidity of money” to the liquidity of other assets
and commodities. (Houses, Keynes argues, are sometimes more liquid than cash.)
For Keynes, “liquidity of money” is a question, not a tautology. Keynes thus makes
it possible to ask about “money liquidity” not as a tautological fact but as an on-
going concern: How liquid (how shiftable into some other asset) is this particular
money-credit? In concluding, above, that “purely liquid money” is untenable, we
are implicitly developing Keynes’s insight. Pure liquidity is a synonym for perma-
nent, stable value, and therefore a contradiction in terms because value (exchange-
value) is never permanent; value is always relative, always futural. In consistently
rejecting any ontological rendering of the money/credit distinction, we always face
the same key question: How good is the credit? How stable is the “value” held in
the commodities or represented in the credit? One type of credit, one form of
money, and even one type of commodity, may be more or less liquid than another.
For Keynes, the entire point of the concept was to compare relative liquidities;
hence there is no such thing as pure liquidity (see Hicks 1962; Keynes 1930; Keynes
1936; Hayes 2018).³⁷
Nonetheless, as we move up the money hierarchy, the quality of credit increas-
es, and this tells us something significant about all credits (and hence all money).
Yet as we travel this path, there simply is no point at which we “cross over” from
unreliable credit to reliable money. As Mehrling puts it, “What looks like money at
one level of the system looks like credit to the level above it” (Mehrling 2012: 1). In
extraordinary times, even the reverse can be true, a phenomenon we witness
when people no longer wish to hold money-credits (typically) located very high
up the hierarchy. Perhaps better put, the rankings themselves are never fixed,

36 Of course, every banker and money trader knows better: credits or assets that seem “money-
like” today may look very different tomorrow.
37 It is a notable irony of the history of economic thought (though, to my knowledge, one that has
not been noted before) that the author responsible for coining the word “liquidity” is Hawtrey, who
does so within his general defense of a radical credit theory and in the particular context of point-
ing out that the Bank of England faces no liquidity constraint: “The liquidity of the Bank of England
is secured by its power of printing notes, and the interchangeability of its deposits with cash is
absolute” (Hawtrey 1919: 83; Oxford English Dictionary: “liquidity”).
128 Chapter Five: From Money/Credit to Money-Credit

and thus they can always be shuffled. In any case, we are always better off analyz-
ing the actual hierarchy of money-credit, rather than positing a stable money/cred-
it dichotomy that will never hold.³⁸
In other words, we are always dealing with the same fundamental phenomen-
on: money-credit. At times credit performs adequately as money, but its facticity as
credit can reveal itself at any moment. For example, in the normal course of af-
fairs, we see US Treasury bonds as one of the highest forms of HQLA we can imag-
ine, the finest of Innes’s “first-class” credits. Nevertheless, nothing can permanent-
ly assure such status; nothing guarantees the liquid, money-like nature of these
credits. Even the highest forms of money can still reveal themselves (show their
nature) as mere credits.
Observers of financial markets witnessed this phenomenon in March 2020
when for a time even US Treasury bonds were no longer “liquid.” To say the
bonds weren’t liquid means that no one was willing to “make a market” for
them, literally to buy and sell them. This description of the “liquidity” of markets
actually combines the standard meaning of convertibility (to cash) with Keynes’s
notion of stability (of value). Bonds cease to be “liquid” because “market makers,”
who typically always stand ready both to buy and sell (at the proper bid and ask
prices), have exited the market – or better, they have refused to make a market at
all. Hence it becomes difficult or impossible for one to convert bonds. And these
market makers have left the scene precisely because they are worried about the
stability of bond values. They are concerned that the volatility of the market is
so severe that it is no longer “safe” to make a market, because even with a higher
spread between bid and ask prices, one might end up buying or selling at utterly
“wrong” prices – and in so doing lose massive amounts of financial value.³⁹
At this moment in 2020, even one of the highest and most stable forms of
money-credits lost liquidity; that is, US Treasury bonds ceased to be transferable
and became unstable in their value. In so doing, this “money” revealed its ontolog-
ical nature as mere credit; a higher form of money came to look much like lower

38 Ingham’s position thus contains a great deal of truth when rewritten from the fixed language of
ontological being into the dynamic language of historical becoming: all money is credit; not all
credit is money; but all credit can become money, and all money can degenerate into mere credit.
Importantly, these are ontic, not ontological claims. If we read Ingham as sharply distinguishing
between credit that is money and credit that is not money, we might take him to be falling
back into the trap that snares Macleod – namely, the idea that ultimately money and credit are
different creatures. This is why I prefer to read Ingham as making only a narrower empirical argu-
ment to support the money/credit distinction.
39 The idea of market makers, so central to contemporary banking and finance, quickly and clear-
ly pierces any hypostatization of markets as “natural.” For more, see Chapter 6.
 3 Liquid Goat Money and Illiquid US Treasuries 129

forms – a particular credit rather than general value incarnate. The “high-quality”
nature of HQLA is itself relative to other forms of value. In a truly severe crisis, the
most “liquid” form of “money” may turn out to be canned goods and toilet paper.⁴⁰
The conclusion to this line of logic will surprise no one: liquidity is itself a hierar-
chy. Just as there was no magic line that transported us from “credit” to “money,”
there are not separable domains of “liquid” and “illiquid” money-credits. Since all
money is credit, any particular money can always become illiquid.
If we fix in place a specific money space, we might say that within that space
certain “credits” will successfully circulate as “money,” while beyond that space
the very same credits will fail to circulate (and thus fail to be money). However,
we absolutely cannot allow the concept “money space” to shore up a new version
of the ontological money/credit distinction. It cannot do so because money spaces
are themselves plural, shifting, and unstable. We cannot actually fix them in place:
old money spaces erode, disappear, or find themselves colonized by different
money spaces; new money spaces emerge, grow, and change. As money spaces
alter, that which counts as “money” or “credit” is altered as well, and with those
alterations comes another shuffling of the hierarchy of money-credits. Rather
than allowing us to map a stable ontological difference between “credit” and
“money,” the concept “money space” underscores that money-credit is all there
is. We can express the point differently by way of a productive tautology: money
only circulates … where it circulates.⁴¹ Moreover, where money circulates it does
so always and only as credit. There is nothing other than money-credit, but not
all money-credits are the same.

40 Obviously canned goods and toilet paper are not actually money; they are commodities. The
point of the severe-crisis example is to show that crisis can undermine the viability of all monies
– of any form of credit – creating conditions under which commodities with intrinsic use-value
prove more liquid (both more stable in value and, accordingly, easier to convert into other
forms of value) than any variety of money. It is exactly this sense of liquidity that Keynes under-
stood so well.
41 My line of logic in the text above extends an argument from Minsky: “Everyone can create
money; the problem is to get it accepted” (Minsky 2008: 255). One can read Minsky here as support-
ing both Thesis 4 and Thesis 5: there is only money-credit, but not all money-credits are the same.
My tautological line in the text points once more to the radical temporality of money (to the fact
that all value is future value). Anyone can issue credit/debt at any time. We can say that such credit
is not money until it circulates, but only if we also maintain that once it circulates, it was always
already money.
130 Chapter Five: From Money/Credit to Money-Credit

4 Money and State Money

This conclusion returns us to some of the key engagements of the previous chapter,
as we are now in a position to advance a number of arguments that distinguish the
credit theory of money defended here from the work of post-Keynesians and other
heterodox thinkers. The above framework can be used to clarify some crucial
points about credit money and state money. I suggested in the previous chapter
that the lineage of the credit theory was too often swallowed up by the develop-
ment of state theory. Scholars writing on money today frequently fail to heed
Schumpeter’s warning about collapsing these two strains of analysis; they ignore
the relevance of his vigorous critique of state theory. We see this consistently in
the work of Wray and sometimes in that of Ingham; both tell a kind of monetary
bildungsroman culminating in state money. In Wray’s case this extends so far that
he reads Innes as merely one element, a stepping stone perhaps, in a “tradition”
that runs from Knapp through Keynes to Minsky.⁴² The credit theory of money
does not ignore or deny the obvious fact that state power and state money
today prove central to all monetary and economic practices. But the analysis devel-
oped in this chapter gives us the tools to resist the assumption, made commonly
within state theory, that state power simply establishes (declares) state money,
which itself is money, full stop.
To start, we can take up a core tenet of state theory, one that often goes un-
stated, but which Ingham has formulated explicitly and concisely: “Monetary
space is sovereign space” (Ingham 2004a: 56). Using the concept of money space,
we affirm the following point: whatever the money space is, we can accurately at-
tribute to that space a sort of “sovereignty.” In other words, within a defined
money space, a particular money has validity, authority, and thus “supreme
power.” In its proper money space, money is sound and credible – it is sovereign.
Nevertheless, the power and validity of money – the capacity for credit to circulate
as money – never derives strictly from or depends solely on a singular prior power,
and this holds regardless of whether such putative power be social, political, legal,

42 Wray explicitly interprets Innes as: 1) rejecting a “pure credit” theory; 2) endorsing Ingham’s
thesis that not all credit is money; and 3) emphasizing the role of the state just like Knapp –
“The similarities are remarkable” (Wray 2004: 238, 240, 242). My work over the course of the
past two chapters already indicates decisively that I see all three claims as significant misreadings
of Innes. I will not relitigate this dispute here but would like to emphasize that Innes consistently
rejects the idea that state money is always dominant money, and never endorses a money/credit
distinction: “The notion that we all have to-day that the government coin is the one and only dollar
and that all other forms of money are promises to pay that dollar is no longer tenable in the face of
the clear historical evidence to the contrary” (Innes 1914: 154).
 4 Money and State Money 131

or otherwise. This means that the sovereignty of money (within its limited money
space) neither originates in nor can be reducible to a separate or prior sociopolit-
ical power (community or state). This point proves essential but is frequently for-
gotten by those writing today within the heterodox tradition.
How then do we understand the relationship between, on the one hand, state
power (and state sovereignty) and, on the other, money validity (and money sov-
ereignty)? In a clutch of recent writings, including a short book titled Money, Ing-
ham develops a powerful answer to this sort of question, an argument perhaps la-
tent but not clearly present in his earlier work (Ingham 2020; Ingham 2021;
Ingham, forthcoming). Ingham attempts to reread Knapp through Max Weber’s
own reading (of Knapp) in order to make much more of Knapp’s foundational
text in “state theory” than Schumpeter sees there. In these new writings Ingham
formulates and reformulates the basic point many times, but a concise version
reads as follows: “States cannot directly determine the substantive validity of
money: that is, its purchasing power at any point in time. But they can declare
and impose its formal validity” (Ingham 2020: 36; cf. Ingham 2021: 4; Ingham, forth-
coming: 7). This argument proves well worth unpacking.
While I have consistently taken my distance from Knapp, I should like to em-
phasize the extent to which Knapp’s work supports the core thesis of this book.
Knapp insists that “we should not apply the concept ‘value’ to this [valid] means
of payment, and therefore not to this money itself. … [I]n the case of value we al-
ways use the current means of payment as a standard” (Knapp 1924: 30). Knapp
argues for the centrality of the state in establishing the validity of money, not
the value of money. As I indicated in Chapter 3, this argument failed to impress
Schumpeter. However, as Ingham carefully reminds his readers, Weber sees some-
thing important here, deriving from Knapp the distinction between “materiale Gel-
tung” and “formale Geltung” (Weber 1978: 76). Weber’s translators render this in
English, quite reasonably, as the difference between “substantive” and “formal”
validity, yet materiale clearly indicates “material” (as well as “substantive”) and
in that context Geltung suggests “value” (as well as “validity”). Hence we see in
Weber’s German the distinction between material value and formal validity. Ing-
ham wields these terms to draw out the difference between, on the one hand, “pur-
chasing power” – money is not a commodity and therefore has only substantive
validity, not material value – and, on the other, “valuableness” (Ingham 2021: 4; Ing-
ham, forthcoming: 7). In other words, states can declare what counts as legal ten-
der – Knapp calls this “validity by proclamation” – but they cannot establish “sub-
stantive validity” or “substantive value” by decree (Ingham 2021: 4; Ingham 2020:
132 Chapter Five: From Money/Credit to Money-Credit

35).⁴³ Ingham always rightly insists that the latter only gets sorted out in the con-
crete economic “struggle between issuers, users, debtors, and creditors” (Ingham,
forthcoming: 7).
How, then, do we understand the state’s role in these definite struggles? We
can schematize as follows: the state’s powers to tax, to police, and to define
legal tender give it the capacity to partially determine a money space. ⁴⁴ Further,
the state may constrain, spur, or control to some degree the power and validity
of various forms of money-credit (up and down the hierarchy). We can quickly
enumerate examples:
1) Through currency and bank regulation, counterfeit and money-laundering
laws, the state can reduce or eliminate monies that circulate in small, local
money spaces.
2) By establishing what counts as legal tender⁴⁵ – i. e., that which extinguishes a
court-adjudicated debt – the state can significantly and directly influence the

43 As I make clear with the citations, Ingham himself moves back and forth across the possible
translations of Weber’s materiale Geltung that I suggest – that is, from validity to value.
44 The state can determine a money space because it has twin powers: to issue its own debt, and
to indebt its citizens by taxing them. However, the state cannot determine the money space because
money spaces are always plural. Undoubtedly the state can try to police various money spaces, but
it can never fully control them.
45 As pointed out previously (Chapter 4, Footnote 20), there is a broader debate within (and
against) state theory about the status and importance of legal tender. Wray emphasizes that the
fundamental claim of state theory – “Money is a creature of the state” – should not be reduced
to the power of the state to declare legal tender (Wray 1998: 18). Rather, state power is much great-
er than this. In particular, the power to tax, and to determine the money of account in which taxes
are paid, proves far more significant (Wray 1998: 55). In response, a few brief points. First, Wray’s
defense of state theory on this count fails to address Schumpeter’s critique (discussed in Chapter 4),
which targets not legal-tender laws but the entire complex of powers by which the state regulates
the “institution” of money. Second, we can view this debate as a minor variation on a larger theme
– namely, the money/credit distinction. Having rejected that distinction, our own account here
need not worry much about legal-tender laws. Our question is always the same: “How good are
these credits?” If the answer is “quite good,” then we will care very little whether they are legal
tender (a point Wray accepts), or even whether they are acceptable for tax payments (a point
he does not consider). Chinese citizens hold massive amounts of US Treasury bonds because
they think such bonds are good credits, despite the fact that USD-denominated debt cannot be
used as legal tender or to pay taxes in China. It is only as we move down the hierarchy of
money (and the quality of credits gets weaker) that legal-tender laws, taxation laws, and other reg-
ulations, customs, and norms come into play. If I have to choose between two equally solvent debt-
ors, but one will owe me in a money of account with which I can pay my taxes and legally extin-
guish my own debts – then that’s a bonus.
 4 Money and State Money 133

money hierarchy. Other things being equal, legal-tender credits will be prefer-
red to non-legal-tender credits.⁴⁶
3) By taxing its citizens and requiring payment in the form of specific monies,
the state can quickly establish state money as exactly that credit capable of ex-
tinguishing citizens’ tax debt.⁴⁷
4) State money will usually, but not always, dictate that a state money space
roughly coincides with the geographical borders of the nation-state itself.
The tax power gives the state both incentive and means to establish and main-
tain a state-issued money as one of the highest forms of money within the
country.
5) States can establish central banks as the bankers’ bank, giving states enor-
mous potential influence over commercial banking and the economic condi-
tions of a country.

Cumulatively, these powers all press toward a consolidation of three elements: na-
tion-state geographic sovereignty, state money, and national money space. In other
words, the phenomenon that we typically take as natural or given⁴⁸ – that nation-

46 Even this point proves more complicated than it might at first seem because most of us, most of
the time, are paying one another in non-legal-tender monies. Confining myself to the US context,
both federal statute and Supreme Court precedent establish the coins and notes of the Federal Re-
serve banking system as legal tender. Indeed, US law makes the “coins and currency” of all national
banks legal tender. See 31 U.S.C § 5103 (1983). National banks are established by federal charter, and
are separate from state banks under the US “dual banking system” (OCC 2003). But this leads to a
curious result in practice. First, legal-tender law allows a long list of banks to issue their own notes
and coins as legal tender, but of course today none of them do so. Second, a number of very sig-
nificant banks by size are not national banks at all. Finally, even for those properly designated as
national banks, the law does not, to the best of my knowledge, establish that payments of deposit
accounts (checks, ACH transfer, digital transfer) count as legal tender. My deep gratitude to Emily
Zackin for research help on this important topic.
47 This power extends far beyond the influence on money itself, as we know from numerous col-
onial examples. By taxing a local population in the colonizer’s money of account, the colonial
power can coerce the people of the colonized country to work for wages paid in the colonizer’s
money of account. In numerous examples, such money is first made available when the colonizer
pays its occupying soldiers in state money (i. e., tokens of state debt). However, soldiers are only
able to spend this money if and when the state imposes a tax burden on the local population.
Such a burden creates “demand” for this new money. That is, it forces local merchants to accept
the money as payment, and it requires many other members of the colonized community to
seek waged work.
48 However, anyone can see that such a tendency must not be confused with a natural law be-
cause many sovereign nation-states – from France to El Salvador – lack a sovereign money of ac-
count. Money space and sovereign territory do not always line up, and even when they appear to
134 Chapter Five: From Money/Credit to Money-Credit

states have their own “sovereign currencies” – must be understood as a complicat-

ed balance of dynamic forces. And these forces have knock-on effects that reinforce
the primary tendency. UK citizens want to hold their credits in GBP for all the rea-
sons listed above: because local money has been outlawed; because GBP is legal
tender;⁴⁹ and especially because GBP is the money in which such citizens must
pay their taxes. But as a US citizen, none of the above are reasons for me to
hold credits in GBP. Nonetheless, when I fly to London for a conference, I wish
to hold some credits in the form of GBP for the basic reason that in the UK
money space, GBP is the dominant money of account, and only credit/debt denomi-
nated in GBP will be useful for me there. Put differently, the money space for USD
(where I currently hold most of my credits) does not incorporate pubs and shops in
London.⁵⁰
Nonetheless, and to reiterate, the above phenomena must not be conflated
with the distinct and overly simplistic idea that money is itself a “creature of
the state,” that which is declared as such by a sovereign power (Lerner 1947:
313; cited in Wray 1998: 36; also cited in Wray 2000: 58). Weber himself grasped
this point well. Perhaps the subtlety of Weber’s position has been missed by
some state theorists (though surely not by Ingham), for while Weber makes
much positive use of Knapp, he also takes his distance, describing Knapp’s theory
as “incomplete for substantive monetary problems” (Weber 1978: 78). Weber sus-
tains the fundamental distinction (in Knapp) between formal validity (valuable-
ness) and substantive value, but he rejects the idea that the state itself retains
full control over formal validity. Weber writes:

It does not, however, seem reasonable to confine the concept [of validity] to regulations by the
state and not to include cases where acceptance is made compulsory by convention or by
some agreement. There seems, furthermore, to be no reason why actual minting by the
state or under the control of the political authorities should be a decisive criterion. … As

do so, the spaces are not clearly circumscribed. Indeed, money spaces cut across sovereign spaces
in multiple dimensions.
49 Here my formulation echoes standard discourse today, in which GBP, “pounds,” comes to ap-
pear as “money.” Technically, however, my statement in the text is false, for as I discussed in Sec-
tion 2 of this chapter, GBP is not a thing. GBP cannot be “legal tender” because “GBP” is not money
but merely the denomination (the money of account) for any particular and concrete money-cred-
it. The difference matters, because some credits denominated in GBP may well be legal tender, but
certainly not all are. The general logic I articulate in the text still holds: UK citizens will prefer
money-credits denominated in GBP because GBP is a common money of account, and those
money-credits that are legal tender in the UK are also denominated in GBP.
50 Although, it does extend in complicated ways to London City financial institutions. But that’s
another story, partially told in Chapter 7.
 4 Money and State Money 135

Knapp would agree, it is only the existence of norms regulating the monetary form which is
decisive. (Weber 1978: 79)

In the following chapter I suggest that the norms to which Weber refers here may
well manifest in the precepts and practices of today’s money markets. For now, I
draw a more circumscribed conclusion: while the formal validity/substantive value
distinction proves quite helpful in illuminating the scope of state power vis-à-vis
money, we must resist any tendency to assume that the state determines even
the formal validity of money.
On the one hand, we can readily accept that because nation-states have the
power to regulate banking and money practices and establish legal-tender laws,
along with the higher powers of taxation and policing, credit/debt denominated
in state moneys of account will therefore usually circulate freely within the bor-
ders of the nation-state. On the other hand, here as elsewhere, when it comes to
money, there are no guarantees, and there are always limits. First, those state mon-
ies will usually be unable to circulate outside state borders, yet money does not
stop at the border but rather crosses it all the time. Second, there is absolutely
no assurance that nation-state money will always circulate within its borders –
see Russia in the late 1990s or Venezuela in 2019.⁵¹
In the previous chapter I mentioned Innes’s account of tally sticks. Wray and
Ingham both refer to this history as well, and in each case they see it mainly as
part and parcel of the story of state money. But it’s not at all that simple. Tally
sticks were not state money. Rather, they were private monies circulating in rela-
tively small money spaces that only later became acceptable payment for taxes – a
move that dramatically increased the money space in which they could circulate.
To say the state does not have the power merely to declare and determine money
is not at all to deny that the state does have the power to dramatically affect money.
If the US government announced tomorrow that citizens could pay their taxes in
bitcoin, this would surely have an impact on the circulation of bitcoin, or at

51 Adam Tooze paints a vivid picture of the US-dollar money space invading the post-Soviet Rus-
sian-ruble money space, thereby creating conditions in which Russian political sovereignty was
helpless to prevent the undermining of ruble sovereignty:

As the new millennium began, dollars made up 87 percent of the value of all currency in circu-
lation in Russia. Outside the United States, Russia was the largest dollar economy in the world.
International investors in Russia were required to pay their local taxes in American currency.
Russia became the ultimate experiment in dollarization, a nuclear-armed, former superpower
with a currency supplied from Washington. (Tooze 2018: 120)
136 Chapter Five: From Money/Credit to Money-Credit

least on its value as measured in USD.⁵² Put in more colloquial terms, we might say
that the state cannot create and determine and control money by declarative fiat,
but surely the state can sometimes co-opt non-state money.
Above I noted that the state frequently holds the power to regulate private
monies into near-extinction. Here we see an alternative option that also betokens
state power: the state can legitimate a money already circulating in smaller money
spaces, and in so doing both enlarge the viable money space and in some sense
render that private money a “state money” – this is roughly what happened
with tally sticks. Thus I have unpacked the genuine potency of state power vis-à-
vis money, but crucially, I have also called into question a narrow understanding
of state money as a concept, by showing that state money must be understood as a
“creature of the state” not in the sense that the state brings it into being sui generis
but only in the sense that an already existent money can be transformed into, can
take the form of, state money. In the end, the state is neither the ultimate origina-
tor nor the supreme controller of money.⁵³
This conclusion has obvious and massive consequences for how we think
about practical money questions today. Speaking more broadly, this new theory
of money, which affirms all five theses, provides a novel framework for grappling
with what we might call today’s most pressing “money problems.” To carry out that
work, however, requires much more detailed engagement with today’s markets in
money.

52 This would not turn bitcoin into money any more than allowing citizens to pay taxes in barrels
of oil would make oil money. See Chapter 7 for extended engagement with bitcoin.
53 As I allude in a number of places, my argument here could be read as a fuller development of
Schumpeter’s early critique of state theory for its flawed logic in positing money as an institution
of the state (Schumpeter 1956: 160 – 61; cf. Schumpeter 1954: 1056 – 57). As a final note, heterodox
theorists never fail to mention that money is created “endogenously” when banks make loans,
but I have now shown that the basic principle of money as credit/debt goes much further than
this. Any two parties can “create money” by issuing credit, and there is no logical reason (though
there are surely many practical reasons) why such credits cannot come to circulate more widely.
Therefore the argument for “endogenous” money, while valid, cannot be claimed only by state the-
ories of money; indeed, state theory tends to misconstrue the argument – to turn money creation
into a state power, not so much “endogenous” as “sovereign.”
Chapter Six
Money Markets

1 Money Problems

The previous chapter filled in the final elements of the new theory of money de-
veloped over the course of this book, and crystalized that theory by defending the
five theses. While these moves highlight the distinctiveness of the theory, it is cer-
tainly not completely new; it draws from, at the same time that it partially recon-
structs, the previous history of theories of money. First, building from the primary
insights of Innes, and the broader claim theory as described by Schumpeter, it con-
sistently maintains that all money, in its nature, is credit. Second, reading Ingham
supportively, it defends the empirical claim that we can observe a difference be-
tween money tokens that circulate and credit instruments that do not. However,
third, taking some critical distance from Ingham, it advances the more radical
claim that ontologically, in its very being, all credit has the capacity to be trans-
ferred. This primary position leads directly to a more portentous fourth thesis –
that at an ontological level all credit “is” money because ultimately there is nothing
other than money-credit.
Such a claim need not prove as controversial as it may sound to some ears be-
cause it must always be heard in conjunction with the fifth and final thesis: all
money-credit forms a hierarchy, so affirming the ontological sameness of money
and credit does not negate empirical differences among various instances of
money-credit. There is never money but always monies. The requisite hierarchy
of money means that while there is only ever money-credit, money is not all the
same precisely because some money-credits are better than others.
Most importantly, Chapter 5’s arguments must be sited within the wider con-
text of the money array. Though we need to analyze the money token in great
depth and detail, we must also follow where it points: toward the concrete cred-
itors who hold this token, and the definite debtors on which the token makes a
claim of denominated debt. In the methodological remarks that opened Chapter 1,
I emphasized that to develop a theory of money is not in itself to explain the entire
history of money. Nor is it, I would now add, to solve all the concrete money prob-
lems we face today. Understanding money does not “fix” money, nor does it deduc-
tively determine monetary policy. But to say that is not to suggest that the theory
developed here be understood as purely abstract, nor that it be taken as a formal
model designed to operate according to its own internal principles. On the contra-
ry, as I have stressed from the beginning, a theory of money is a way of seeing

https://doi.org/10.1515/9783110760774-010
138 Chapter Six: Money Markets

money, of grasping it conceptually in its particular manifestations. Developing

such a theory therefore does not lead to remainder-less solutions to all the prob-
lems that money poses to societies today, but it should equip us with better tools
for understanding those problems such that we can construct better responses.
To start to prove this point, we can begin at the meta-level by indicating how
our theory of money improves upon the two pure types – orthodoxy and hetero-
doxy. First, we can now append to the long list of weaknesses that plague the or-
thodox, commodity theory of money (A1x on our matrix) the fact that rather than
equipping us to solve contemporary money problems, it positively encourages us to
evade them. With this assertion, I have in mind everyone today who advocates
some version of “sound money”: this includes so-called gold bugs who explicitly
call for a return to a gold standard; implicit and explicit defenders of deflation
and deflationary polices; and anyone else lured by the promise that if only we
could force money to have an essential, intrinsic value, then value itself might
somehow be fixed, preserved, and protected.
From Milton Friedman’s monetarism in the 1960s to President Donald Trump’s
2019 nomination of Judy Shelton¹ to the Federal Reserve Board, the hope remains
the same: as a natural, market-regulated entity (i. e., a commodity), money will
take care of itself. The idea appears to be that we only face money problems
when state interference – from the issuing of “fiat currency,” to running govern-
ment deficits, to central bank intervention – creates such problems. Therefore,
the “solution” is always to deny that there are any “naturally” occurring problems,
eliminate all regulations, and deal with money only through a fixed set of techno-
cratic rules. Monetarism originally suggested controlling the “money supply” and
allowing it to increase gradually, but all attempts to do so were spectacular fail-
ures. The reason for such failure is plain: money is not a commodity, so there is
no supply of or demand for it.² However, rather than coming to the obvious conclu-
sion, and rejecting the overall approach, monetarism’s mission to control the sup-
posed supply of money morphed into the strategy of “inflation targeting” based on
the so-called Non-Accelerating Inflation Rate of Unemployment (NAIRU). This hypo-

1 Shelton’s nomination stalled in the US Senate and was eventually withdrawn by President Biden.
At the time Trump nominated her, Shelton strongly advocated a return to a gold standard and a 0 %
inflation target for the Fed. She had previously argued for a repeal of the US Federal deposit in-
surance fund (Wikipedia, s.v. “Judy Shelton”).
2 We must distinguish between human desire, on the one hand, and the “demand schedule” as
drawn by neoclassical economics, on the other. Obviously people want money, but we cannot trans-
late this desire into a demand curve. This is not to deny the existence of attempts by modern eco-
nomics to draw “the demand curve for money,” but to suggest that the necessary presuppositions
of such a project prove untenable.
 1 Money Problems 139

statization serves only to naturalize a relation that has always been political (that
between capital and labor). The details matter less than the basic point: monetarist
theories only ever deal with money problems by blaming them on “politics.”
The pure type of heterodox theory (B2y) clearly proves superior to the ortho-
dox ideal as both a theory of money and as a framework for grappling with today’s
money problems. Yet in many of its most popular versions, it winds up yet again
inverting the commodity theory. I developed this claim in Chapter 4, by showing
that where a pure metallist theory describes money strictly in terms of naturalized
economic relations (the unfettered free market, including a market in money), the
heterodox theory in its chartalist form tends to transform money into a pure state
function, and thus to project or presuppose an untenable degree of state control –
untenable not just relative to political capacity but in terms of the nature of money.
We witness this phenomenon clearly in the simplified version of MMT that cir-
culates today (especially, it must be admitted, on social media), which so often boils
down to the this claim: “deficits don’t matter.” Worse than the slogan itself (which
does a good deal to correct falsehoods generated by both orthodox money theories
and by neoclassical economics) may be the core of the argument in support of it –
namely, the idea that because state money is “sovereign money,” the state can al-
ways issue as much of it as it likes. On this account the state is always ultimately in
control of “its” money. As a recent, glowing review of Stephanie Kelton’s recent
book puts it, the government “cannot run out of money any more than a score
keeper of a football game can run out of points” (Despain 2020). The reviewer col-
orfully draws out the “points” metaphor, but its source lies in Kelton’s own text
(Kelton 2020: 442) – and it’s a very poor metaphor for money.
Perhaps describing money as points could be helpful in highlighting the differ-
ence between a commodity theory’s commitment to intrinsic value and the
Keynesian emphasis on the importance of money of account. Like points, money
of account concerns abstract denomination and a measure of quantifiable differ-
entiation. But the usefulness of the simile ends there: when the scorekeeper or ref-
eree awards points, they are not creating credits that they then owe to the player
or team to whom they are issued. Points are abstract and nominalist, but once you
have them they are yours; they do not measure a relation of credit/debt to another
party but rather represent a quantity of positive, singular value. Moreover, points
can only be created/granted by the (sovereign) scorekeeper, whereas money-credit
can be issued by anyone at all, and in practical terms most of it is issued not by
governments directly but by banks and other financial institutions. Kelton claims
that when the government taxes you, it is like the scorekeeper subtracting points:
the government/scorekeeper doesn’t actually get anything (Kelton 2020: 442). But
the metaphor again breaks down: the scorekeeper has a magical ability to create
“points” out of nothing. But when the government “creates money,” it only does so
140 Chapter Six: Money Markets

by becoming a debtor to whomever holds those credits (whether they be bonds,

central bank reserves, or central bank coins and notes³). And this means that
when the government brings in tax revenue and thereby destroys money, it
does in fact “get something” – namely, a reduction in its outstanding debt.
It is of course quite true that a government can always issue new debt to cover
current and future spending, but issuing new debt is not the same as awarding
more points precisely because the government is a debtor and the scorekeeper
is not. The government has to face solvency questions that do not affect the referee.
Any team will be happy to be issued new points, but not all creditors will always
want to continue holding the debt of a particular government. Working through
this extended example helps us to see the “inversion” described in Chapter 4:
MMT and other post-Keynesian approaches run the risk of suggesting that all
money problems can be solved in the exact same way – namely, the government
will just issue/create “more money.” And if money were like points in a sporting
match, then the problem would be solved just that easily. But once again, money
is just not that simple.
If we want to deal with our current money problems in a thoughtful and rig-
orous way, we first need to start with a more sophisticated theory of money and
then recognize our need to grapple with these problems in a manner that proves
much more complicated (including technically complex) and messy (including po-
litically fraught). This book has developed such a theory, and in this chapter I begin
to conclude the work by carrying out some of the groundwork necessary for even-
tually addressing our money problems.⁴

2 Money Creation, Part 1; or, What Is a Loan?

One of the challenges in dealing with contemporary issues around money lies in
the vast size and enormous complexity of today’s money markets. For example,
in 2019 the average daily turnover in the foreign exchange (forex) markets was
$6.6 trillion. These are enormous markets, and they are markets in money. As I de-

3 Here I again simplify by referring to central bank notes (“currency”) and central bank reserves
as government debt, when in most cases they are technically debts of a central bank whose bal-
ance sheet is distinct from that of the national treasury. The general point holds because these cen-
tral bank obligations ultimately prove to be obligations of the national government.
4 The point of these engagements is to round out the theory of money defended in the previous
chapters, and to give a sense of how it might approach a subset of the many questions we face
today regarding the economics, politics, and culture of money. This is not a policy text, and thus
these are not policy recommendations or definitive accounts of any of these issues.
 2 Money Creation, Part 1; or, What Is a Loan? 141

tailed in Chapter 3, by reimagining economic exchange as the swapping of a com-

modity for a credit, we simultaneously bring to light the importance of a distinct
phenomenon we can call financial exchange – the swapping of one credit for an-
other, or the exchange of IOUs.
In one sense financial exchange proves simpler than economic exchange, be-
cause the former swaps entities of the same kind (money-credits), while the latter
mutually substitutes entities of two different kinds (money-credits and commodi-
ties). However, looked at from another angle, even the most basic example of fi-
nancial exchange proves complex, if not mysterious. To see this angle we must
bring out the ambiguity or ambivalence of the words “loan” (noun and verb)
and “borrow” (verb) as they apply to our two different entities – money-credits
and commodities. If my neighbor asks to borrow my hammer and I agree to
loan it to them, we can plainly see that there is only one entity (the hammer),
and it remains my property both before and after the loan. My neighbor takes tem-
porary possession of the hammer, but they owe me precisely because it is mine
and they must give it back in the future. It sounds trivial to spell this out, but I
do so to contrast it with the other uses of loan and borrow.
Loaning money bears almost no relation to loaning a hammer. The two actions
prove so very much distinct that, on logical grounds, they shouldn’t even be given
the same name (though we know that language use has never followed the dictates
of logic). It goes without saying that I can only loan my neighbor a hammer if I
already have a hammer; similarly, my neighbor cannot create a new hammer by
borrowing it. When we turn to the case of money, those conditions no longer hold.
To loan or borrow money is to create money, to literally bring into existence
the money that is loaned or borrowed. There is no money before the loan (though
of course there could have been some other money). Unlike the hammer, with a
money loan I do not retain ownership over a single entity. The hammer my neigh-
bor borrowed was always mine; they could use it, but they had to give it back.
Hence there was always just one asset (the hammer). While the money my neigh-
bor borrows is their asset (they can spend it), in loaning to them I create a second
asset, a new claim on them as the borrower, i. e., the loan, which is my asset. This
might seem more confusing than it needs to be, but it is standard practice among
banks, whose typical operations prove far more complex than we are usually will-
ing to admit. To clarify our understanding of money, we need to analyze the most
elemental of those practices.
“The essence of banking,” says Mehrling, “is a swap of IOUs” because “when a
bank makes a loan, it adds to its balance sheet both an asset (the loan) and a lia-
bility (a deposit in the name of the borrower)” (Mehrling 2011: 65). Mehrling thus
describes banking according to the exact terms we have used to define financial
exchange: the swapping of money-credits. Moreover, his account points to the es-
142 Chapter Six: Money Markets

sential role of the banker as the creator of money-credit, which can be illustrated
simply by looking at the balance sheets of the banker and the borrower.

The above does not show an example of financial exchange but merely the issuing
of a loan, and thus the creation of money-credit.⁵ The balance sheet demonstrates

5 Failure to grasp that money only emerges through the creation of both an asset and a liability
and thereby involves two distinct parties (bank and borrower) – failure, that is, to picture the bal-
ance sheets – can lead even the most brilliant and astute students of money into ambiguity or con-
fusion. Here, for example, is Ingham’s recent presentation: “Modern banks lend by creating a de-
posit of new money for the borrower with taps on the computer keyboard. … [M]odern bank
money is socially created by the borrower’s legally enforceable promise to repay the debt. The de-
posit is a private debt owed to the bank which becomes public money when it is spent by the bor-
rower” (Ingham 2020: 63). The first sentence isn’t exactly wrong, but it proves obtuse because it
attempts to describe money creation as a one-step process. Yes, the deposit is, in fact, new
money, but it cannot come into being without the corresponding loan. And this leads Ingham
into a definite error when he calls the “deposit” a debt owed to the bank. No, deposit accounts
are the liabilities of banks; they are what banks owe their customers. Of course Ingham knows
this (he says as much three sentences later), but because he has not separated the deposit account
(the credits of the customer) from the loan (the debt of the customer), he does not fully arm himself
to deal with the complexities of what happens when the customer spends. We see this in Ingham’s
conclusion, where he argues that spending makes the private debt “public,” i. e., the party who re-
ceives the money as payment takes its origin as private bank money to be “utterly irrelevant” (Ing-
ham 2020: 63). Ingham’s logic goes from the single origin of credit (private bank money) to its sin-
gular circulation, where it becomes public money. But that’s not what actually happens. A bank can
never issue credit; it can only ever issue debt – debt that functions as credit for its holder. But
when that holder “spends” the credit, they transfer the debt. Let’s say I take out a home-equity
loan from my bank (step 1), and then I swipe my bank debit card at Home Depot (the home-im-
provement store) (step 2). Swiping my card reduces my deposit account at my bank, but it simul-
taneously increases the deposit account at Home Depot’s bank. To complete this transaction, my
bank will send Fed reserves to Home Depot’s bank. However, no new Fed reserves are created
in this process, and the money in Home Depot’s bank account is no different in kind from the
money in my bank account: both are commercial bank deposits. Where, then, does the putatively
“public” money come from? If it is created at all, then that creation occurs at the site of the original
loan and the swap of IOUs. Money creation cannot rightly be understood as the issuance of purely
private credit (Ingham’s “deposit of new money”) that then gets circulated (thereby becoming “pub-
lic money”). The initial swap of IOUs creates bank money that can circulate, but as it does it will
continue to be bank money. The money is just as much “private” and/or “public” every step of the
way.
 2 Money Creation, Part 1; or, What Is a Loan? 143

plainly what I argued above: loaning money to my neighbor creates two assets.
Some readers might protest: I am not a bank and therefore cannot create a new
deposit account for my neighbor; I can only hand over money I already have –
say, a $100 bill – just as with the hammer. In reply I only ask that we look at
the household balance sheets, both before and after the loan.

My overall balance sheet remains the same, though I now hold a claim on my
neighbor rather than on the Fed. But my neighbor’s balance sheet has expanded.
By adding across the two balance sheets, we find total assets have increased from
$100 to $200.
This is money creation. The capacity for capitalist systems and monetary soci-
eties to expand and contract money-credit proves essential to their being; individ-
uals living within such societies need money-credits in order to feed, clothe, and
shelter themselves. As Mehrling emphasizes, the money hierarchy is dynamic:
“At every time scale we see expansion and contraction.” It is also, I would add, un-
predictable and beyond the control of any single agent or group of agents (includ-
ing governments). Moreover, during an expansion everything looks like money,
while during contractions “the hierarchy reasserts itself” (Mehrling 2016: 10).
Here we mark one of the most important differences between our theory of the
money array and any effort to conceptualize money without a debtor. Money cre-
ation occurs neither through mining, nor any other form of commodity produc-
tion, nor through the edicts of states. Only a theory of money as credit/debt can
properly account for the incessant expansion and contraction of money-credits
that is the heart of capitalist societies (and as with human beings, also the
organ most likely to fail us).
The power of the balance-sheet approach does not stop with its capacity to il-
luminate the nature of money loans or to clarify the process of money creation.
144 Chapter Six: Money Markets

Activity in the money markets usually involves financial institutions on both sides
of the transaction, and in this context balance sheets become almost required tools
– without them we may not even understand what is going on. Balance sheets help
us follow the money, to track the movement of the IOUs that bankers are constant-
ly swapping.
To demonstrate, we can look at perhaps the paramount money market in op-
eration today, the so-called “repo” market, in which we observe roughly $2 to $4
trillion in daily transactions (Cheng and Wesell 2020). “Repo” stands for “repurch-
ase agreement,” which is itself an oblique name for a particular type of secured
loan. Secured loans require collateral, which typically takes the form of some
asset that the borrower agrees to forfeit upon default on the loan (for example,
for almost all residential mortgages, the title to the house serves as collateral to
secure the loan). Repo loans entail a distinct, complex, and very strict security
agreement: rather than pledge to forfeit specific assets if he should default, the
borrower in a repo agreement actually hands over the asset (usually a security
such as a government bond⁶) at the inception of the loan.
Concretely, the borrower sells the bond to the lender (at less than its market
value) and simultaneously agrees to buy it back from the lender at a specified
date⁷ for a predetermined price (higher than the initial sale price, but lower
than the market value). The difference between the sale price and the buyback
price of the bond constitutes the interest rate on the repo loan – the repo rate.
The difference between the initial loan amount (the sale price) and the bond’s
market value is known as the haircut – the amount the borrower will lose if he
fails to come up with the cash to buy back the bond. Gary Gorton and Andrew Met-
rick provide a clear and helpful example: “If an asset has a market value of $100
and a bank sells it for $80 with an agreement to repurchase it for $88, then we
would say that the repo rate is 10 percent (= 88 – 80 / 80), and the haircut is 20 per-
cent ([=] 100 – 80 / 100)” (Gorton and Metrick 2009: 3). Repo is a contractual agree-
ment between borrower and lender, not an open market purchase of a security
conducted between a market maker and an investor. Accordingly, the repo contract
does not establish the market price; rather, market price is an exogenous given – a
variable plugged into the repo contract. In other words, when drawing up the repo
contract, the “market price” is just whatever price the security happens to be trad-
ing for at that moment. To reiterate, the contract will typically set both the pur-

6 It is possible to repo many other securities as well (corporate bonds, mortgage-backed securities,
etc.), but the majority of the market is in government bonds, and keeping our focus here simplifies
the explication.
7 Most repo loans have a term of less than three months, and a large percentage are overnight
loans, but they can also have terms of up to a year.
 2 Money Creation, Part 1; or, What Is a Loan? 145

chase and repurchase prices below that market price: the difference between pur-
chase price and repurchase price determines the interest rate; the difference be-
tween purchase price and market price determines the haircut, itself a reflection
of how much collateral the borrower is offering.
All the above describes repo from the perspective of a borrower who is “doing
repo” by borrowing (where borrowing involves selling the bond first and buying it
back later), but the entire transaction can be looked at from the side of the lender
who is “doing reverse repo” by loaning money (which takes the form of buying the
bond today while agreeing to sell it back at a higher price in the future).
Repo sounds confusing because it is confusing, both terminologically and in the
financial and contractual complexity of the loan.⁸ While most explanations of repo
jump directly to the mechanics of the market itself, we must pause to emphasize
the real purpose of the sophisticated engineering. Unsecured loans are a simpler
form of money-credit than secured loans because they are nothing other than re-
lations of credit/debt between two parties. But the lack of security can also lead to
a lack of trust, which translates directly into a lack of liquidity in the money mar-
kets.⁹ Secured loans, by contrast, necessarily require a more complex legal struc-
ture, sometimes involve commodity markets, and often become entangled with
stubborn material realities. The obvious example is foreclosure. If a bank decides
a homeowner has defaulted on their mortgage, at least three things stand in the
way of the bank’s efforts to claim the collateral on the loan: 1) a whole series of
legal protections designed to shield homeowners from losing their house; 2) the
fact of physical possession, which may require police power to evict homeowners;
and 3) even if the bank obtains title (through the courts) to an empty house
(through the cops), they still have to sell the house on the market in order to get
to the end goal – money.

8 The language I use above to describe repo and reverse repo captures the most common usage of
the terms in the United States, because it describes the repo market from the perspective of secur-
ities dealers, who are the dominant players and market makers here. However, when the Federal
Reserve engages in the repo market, the language is transposed: when a securities dealer does
repo, they are borrowing, but when the Fed does repo, they are loaning (and vice versa for reverse
repo).
9 Calling a market illiquid is shorthand to indicate lack of liquidity in the assets traded in such
markets. To say, as Matt Levine frequently does, that “people are worried about bond market liq-
uidity” means people are worried about the liquidity of bonds. As I discussed in Chapter 5, we can
understand the liquidity of bonds as an index of their “shiftability” into other money-credits. Note
that usually, but not always, when someone says a market lacks liquidity, they really mean there
are not enough buyers. (A market is also illiquid if no one is selling, but rarely does this lead to the
same panic as a lack of buyers does.)
146 Chapter Six: Money Markets

In this context we can make sense of the complicated technology of the re-
purchase agreement. Oversimplifying, we might say that repo solves the problem
of unsecured lending without the attendant baggage of (typical) secured lending.
Repo is unique both contractually and legally. The contractual nature of repo
means that neither party needs to trust the other to comply with the agreement,
nor do they need the explicit intervention or backing of outside authorities (such
as courts or deposit insurance).¹⁰ If the borrower fails to repay, the creditor al-
ready has the security and can sell it (thereby realizing the haircut as profit). If
the lender cannot return the security (say they go bankrupt overnight) then the
repo loan turns into a sale without repurchase, forcing the borrower/seller to
take the haircut.¹¹ The distinctive nature of the repo contract means that the de-
faulting party has no standing in bankruptcy court: the non-defaulting party sim-
ply keeps the cash or security (Gorton and Metrick 2009: 9). Borrowing in the repo
market is like getting a mortgage in which you sell your house to the bank (which
now owns the title outright) for the same price as the amount of your home loan,
agree to buy the house back at the cost of your total mortgage payments, and also
waive your right to occupy the house and any legal protections for homeowners
(until such time as you have fully paid off – that is, bought back – the house).
As long as we remind ourselves that markets are never pure and never exist in
nature (they are always made by dealers), then we might call repo a “purer” form
of money market. Just as money is the circulation of exchange-value untethered
from the physical body of commodities, so repo markets allow for the swapping
of money-credits with far fewer entanglements with commodity markets or
legal infrastructure. It is therefore no accident that repo plays such an outsized
role in today’s money markets. Of course, at its core, the repo market is just like
any other market in money: it involves the swapping of money-credits for other
money-credits, all of which can be clearly tracked on the balance sheets of finan-

10 Obviously all markets, but particularly money markets, depend ultimately on relations of au-
thority within the overall social order. One cannot do repo in a state of nature. The point is that
the social technology of a repo agreement isolates the parties to it from other outside legal and
political forces.
11 In the text above I use the stylized example from Gorton and Metrick to explain the basic el-
ements of repo. Their case uses large, round numbers, in order to simplify the math needed to cal-
culate the interest rate and haircut rate. The actual differences between market, sale, and repurch-
ase prices usually prove much smaller (e. g., $100, $99.50, and $99.90, respectively). Indeed, in
practice, dealers will frequently do repo with a zero haircut (sale price equal to market price), be-
cause they are repo-ing securities for a client as more of a service than a money-maker (BIS 2022a).
Note also that for the typical short term of repo loans, it is highly unlikely that the institution mak-
ing the loan will go bankrupt overnight. Thanks to Tim Schere for helpful discussion on this point.
 2 Money Creation, Part 1; or, What Is a Loan? 147

cial institutions. The clearest example of repo involves three agents, which we can
stylize as follows:
1) a money market mutual fund that holds excess cash and would like to earn
interest on it
2) a bank that wants to hold as little cash as possible but often needs short-term
funding of its assets
3) a securities dealer that makes a market in cash and securities by standing be-
tween parties 1 and 2

By their remit, money market funds (MMF) invest in short-term, very liquid assets.
They therefore have a lot of cash, and while they do invest some in direct bank
instruments, such as certificates of deposit, they have far too much to place in un-
secured bank savings accounts (for individuals such accounts are insured by the
Federal Deposit Insurance Corporation (FDIC) up to $250,000, but they are not se-
cured by collateral). They therefore approach a securities dealer who will “do repo”
with them; this means the dealer borrows the cash by agreeing to sell government
bonds to, and then repurchase them from, the MMF. The repo loan is booked as a
liability on the balance sheet of the dealer and as an asset on the balance sheet of
the MMF. At the same time, large banks need to borrow to meet their daily and
overnight funding needs. These banks have significant holdings of US Treasury
bonds as assets on their balance sheets, and they can literally fund those assets
in the repo market. That is, they repo their bonds with the securities dealer pre-
cisely so as to fund ownership of those bonds.¹² From the perspective of the secur-
ities dealer, this second transaction is a reverse repo: they are loaning money to
the bank. Just like any bank or dealer, the securities dealer makes money on the
spread: they loan money in the repo market (to the bank) for more than they bor-
row in that market (from the MMF). We can chart all of this by looking at the bal-
ance sheets of all three agents, and by adding in clarification about the movement
of the security (the bond) and the cash being borrowed.

12 In other words, the bank wants to hold bonds on their balance sheets, and they raise the
money to do this by repo-ing those very bonds overnight. This sounds paradoxical, but it is a stan-
dard practice of many large commercial banks today.
148 Chapter Six: Money Markets

Note that the balance sheets above contain entries only for the repo and reverse
repo loans, and they exclude all the other assets and liabilities that these three in-
stitutions also hold. This is the view of repo from the perspective of the securities
dealer, who never holds the cash or the security.
In his online course “Economics of Money and Banking,” Mehrling explains
the repo market by drawing a chalkboard diagram much like the above (Mehrling
2015).¹³ My own explication of the repo market as a quintessential example of a
money market does not deviate from Mehrling’s account, but it does place it strik-
ingly into context – both in the general terms of our broader theory of money, and
in the particular articulation of financial exchange. Therefore we need to empha-
size something almost always left out of most summaries of repo: the two entities
moving in opposite directions here, bonds and “cash,” are both money-credits. Com-
mentators on the money market typically refer to “cash” quite casually, but we
should never forget that financial institutions do not pay one another with coins
or notes; nor do they pay each other with bank deposits. Individuals pay each
other with bank deposits; banks pay each other with central bank reserves. Thus
the “cash” moving from the MMF, through the securities dealer, and to the bank
is actually Fed reserve funds. The bond moving the other direction is explicitly gov-
ernment debt, and just as obviously a money-credit.¹⁴

13 A Google Images search for “repo market explained” results in many copies of said diagram.
14 I have found over the years of presenting this work that a small minority of readers react quite
negatively to the idea of bonds as money. Perhaps this stems from a tendency to limit the concept
“money” to whatever a particular individual understands as “cash.” In any case, one can offer a
number of replies. First, bonds might well be taken as money-credit par excellence as they starkly
fulfill the conditions of the money array: they are tokens of credit/debt denominated in moneys of
account. Second, I am not breaking new ground by seeing bonds as money. Macleod not only de-
fended that theoretical position in 1889 but also backed it up empirically by citing British case law
showing that not just bonds, but indeed foreign bonds could serve as “currency,” which for Macleod
was the most significant name for money (Macleod 1889: 95, 97– 101, citing Gorgier v. Mieville [3 B.
& C.]; cf. Schumpeter 1954: 1043).
In this context I propose a corollary to Mehrling’s hierarchy-of-money thesis. Mehrling’s the-
sis: there is a hierarchy of money-credits. As one moves up or down the hierarchy, what looks like
money (or credit) changes – in general everything above your current position looks like money,
while below you looks like credit. My corollary: what functions as “cash” similarly depends on both
one’s location along the hierarchy, and distinctly, what type of institution “you” are. For the aver-
age citizen, bank deposits are cash; but individuals are not even allowed to hold, much less spend,
central bank reserves. In contrast, from the perspective of a commercial bank, what individuals
think of as “cash” is nothing of the sort (it’s a liability). For commercial banks, central bank re-
serves are “cash.” Meanwhile, if you are the Central Bank of the Argentine Republic, “cash” be-
comes your dollar-deposit account at a large New York or London bank; or if you are the European
Central Bank, “cash” may be your access to the Fed’s swap lines.
 2 Money Creation, Part 1; or, What Is a Loan? 149

Despite its complexities – or better, in some ways because of them – the repo
market is a market in money, and it illustrates the basic principle of financial ex-
change as the swapping of money-credit for money-credit. As the balance sheets
make clear, we cannot understand these money-market practices under the
terms of the neoclassical model of economic exchange (the exchange of real
goods), nor even under our theory’s reconceptualization of economic exchange
(the swapping of a commodity for money-credit). Markets in money are based
on what we have called financial exchange: the swapping of money-credits for
money-credits. We therefore locate an entire realm dominated by market actors
who, it would seem, could not care less about economic exchange precisely be-
cause they do not exchange goods and services (commodities) but only credits
(money).
These economic actors look nothing like the homo economicus imagined by ne-
oclassical economics. The latter uses money to acquire commodities, which he then
consumes, either directly (in order to live) or indirectly through productive con-
sumption (i. e., consumes so as to initiate or sustain a production process). But
as their name implies, money-market agents deal in money, not commodities. In
one respect, then, money-market dealers simply ignore economic exchange and
focus entirely on financial exchange. In financial exchange the goal is not commod-
ities but rather money itself. The primary and direct aim of money markets is
nothing more or less than making money, manufacturing a profit (M!M’). But
in order to make money from money, actors in money markets must also concern
themselves fundamentally with two other concerns: hedging risk and maintaining
liquidity – with the latter including both the standard sense of access to cash and

Hence we should not confuse cash with money (the theory of which I have been developing
throughout this book). Cash is a limited and relative concept: it’s the type of money that a partic-
ular actor – situated in a particular location – can use most easily to settle debts or buy goods and
services directly (i. e., without first changing the money form). Cash will almost never be located far
down the hierarchy, yet at the same time, for most actors cash is not in fact located at the very top
of the hierarchy. US Treasuries are clearly near the top of the money hierarchy, but they are not
cash for most agents. Of course, in a strange and important way, US Treasuries are cash from the
perspective of the Fed. When the Fed wants to “spend,” they do so by selling Treasuries to com-
mercial banks; the Fed hands over the bonds and takes back its own reserves.
Finally, the entire point of the repo market can be grasped as an alchemical transfiguration of
bonds into “cash” (Fed reserves) and back again. And while the technical configuration of repo is of
recent vintage, over 150 years ago Marx observed the phenomenon of “public bonds, easily nego-
tiable, which go on functioning in their hands [the creditors’] just as so much hard cash would”
(Marx 1990: 918; also quoted in Ingham 2020: 67, though Ingham misattributes the cite to Volume
III rather than Volume I of Capital).
150 Chapter Six: Money Markets

Keynes’s sense of preservation of long-term value. Participants in the money mar-

ket always have these three goals in mind: return, hedging, and liquidity.
Crucially, and as demonstrated in Chapter 3, this process of financial exchange
does not operate in a vacuum; rather, it remains intimately linked to economic ex-
change. Put directly, liquid markets in goods (economic exchange) depend on these
liquid markets in money (financial exchange). This is a different formulation of
Mehrling’s primary thesis concerning what I would call the dialectical relationship
between money markets and commodity markets.¹⁵ Financial exchange in the
money markets is the first source of liquidity, and this liquidity is the very
blood of the capitalist system of circulation. What finance theory calls the “alloca-
tion of capital” – the supply of funding that capitalist firms require in order to en-
gage in economic exchange – therefore cannot be untethered from financial ex-
change. Capitalism cannot exist without banking and the money markets.
This constitutive relationship stands out in a crisis. In a financial crisis (a crisis
of financial exchange) overnight funding seizes – liquidity disappears. Painting a
picture of crisis reveals the second dimension of the dialectic: the money markets
are not sealed off from the rest of capitalist society. Financial exchange depends on
economic exchange, because the collateral from capital markets supports the exis-
tence of money markets. That is, “capital,” in the form of stocks and bonds, is one
of the primary assets on balance sheets of financial institutions. If those capitalist
firms fail, the asset markdowns will directly affect the money markets. At the ex-
treme, those markdowns can make financial institutions insolvent; they will then
become illiquid (no one will lend to them), and then they will fail. This is why
every capitalist crisis includes a financial crisis, even though not all begin with a
financial crisis. Neither financial exchange nor economic exchange can be said
to come first; each presupposes the other. In tracing this dialectic we also identify
the feedback loops that drive both bubbles and contractions.
A basic understanding of money markets both deepens our understanding of
the nature of money and helps us to formulate and map some of the most pressing
money problems today. From the start we need to be very clear about not only
what we learn from an analysis of money markets, but also the limitations and
constraints of the market metaphor. In particular, I address in turn first the
issue of the “price” of money, and then the specificity of the logic of the derivative.

15 Mehrling usually refers to this phenomenon as the “practical intertwining of money markets
and capital markets” (Mehrling 2011: 98). Using the standard terms in finance discourse, Mehrling
insists that short-term funding (“money markets”) is translated into long-term funding (“capital
markets”) (Mehrling 2011: 29). I am using “money markets” in a more capacious sense to include
everything within my theory’s category of financial exchange.
 3 The “Price” of Money 151

3 The “Price” of Money

The theory of money propounded in this book circumscribes – or perhaps better,

deflates – Keynes’s privileging of money of account as itself serving as the concept
of money. As we have shown, denomination is but one aspect of the broader
money array. Nevertheless, on one key point almost everyone – from neoclassical
economists to Keynesians to value-form Marxists – can agree: money as denomi-
nation serves as measure of value. This aspect of money leads to a basic definition
of price: price is an expression of the value of an entity, conveyed in money terms.
Price provides an answer to the question of worth, an answer formulated specif-
ically in the money form.
Based on this logic we might reasonably argue that while a commodity “has” a
price (we can formulate its value as measured in money), money itself “is” price (it
is the mode of expressing that value). Therefore, money itself cannot have a price
for just the reason that money is measure. We can observe a direct analogy with
weight: the kilogram is a measure of weight, but it does not have weight. Various
objects are more or less heavy, and this can be expressed through kilograms, but
kilograms are not themselves heavy.¹⁶ Returning to the language of money, we
might draw a preliminary conclusion: money has no price.
We cannot measure the value of money in price terms (i. e., in terms of
money): first, because as we have argued throughout, money has no value; but sec-
ond, because such an expression would be nonsensical.¹⁷ What is the price of $4?
Would we really want to answer, “$4”? The equation $4 = $4 does not express the

16 Working with the parallel analogy of length, Christopher Arthur suggests that it is “not too ab-
surd” to say that the “standard” meter “measures one metre itself” but that with money the situa-
tion proves more extreme “because money is in effect measure as such” (Arthur 2004: 100). I take
Arthur’s point, which is that money constitutes “the value dimension” itself, but I’m not sure it’s
any less absurd to say a meter measures a meter since the “standard meter” is itself the measure of
the standard meter – i. e., the meter is measure as such (of length in meters) just as much as the
dollar (of value in dollars).
17 Marx states explicitly that “money has no price” and he argues in various ways that £1 = £1 is
nonsensical (Marx 1990: 189; Marx 1977: 75; Marx 1973: 72, 138). I read him as repeatedly affirming
that money as money has no value. That is, the uptake of the passages in which Marx explicitly
states that “money has no price” is to uphold the idea that money has no value. Marx’s framework
assumes that price, expressed in terms of money (denomination), serves as measure of value. Price
is value expressed in money. Money can serve in this role only so long as it continues to be exclud-
ed from the set of commodities that are themselves being measured (i. e., that “have” value). In this
context, to say that “money has no price” is to indicate clearly that money cannot be measured in
value terms – because it has no value. In other words, Marx is making a point not about the nature
of price vis-à-vis money but rather concerning the nature of value vis-à-vis money (see Chambers
n.d.).
152 Chapter Six: Money Markets

price of money; it is merely a senseless tautology. In the writings from his note-
books, wherein Marx grappled most deeply with a theory of money (a project
he effectively abandoned), he brought this line of thinking to a parsimonious con-
clusion: “Exchanging money for money makes no sense” (Marx 1973: 138).
But Marx himself failed to push his investigation to the next level: it may, at
one level of analysis, seem nonsense to exchange money for money, yet we do it
all the time. Exchanging money for money is the definition of financial exchange
and the center of activity in the money markets. We cannot just dismiss exchang-
ing money for money as nonsense; we have to explain (make sense of?) the non-
sense, because financial exchange is not merely something that capitalist social or-
ders do, but something fundamental to their very functioning.
One way of unraveling this paradox is to start by observing that the so-called
tautology of $4 = $4 actually contains a sleight of hand. After all, in the money mar-
kets, it’s quite true that no one ever exchanges $4 for $4; actors in the money mar-
kets would readily agree that to engage in such exchange would hold no purpose or
meaning.
To demonstrate the extent to which money does have a price, we must skip
over the equation $4 = $4, which is only a distraction, and point instead toward
a very different equation, what we might call an “impossible equation.” I borrow
this phrase from an early work of Jacques Rancière, who draws from Marx to
argue that the classical equation of economic exchange – that is, the exchange
of commodity for commodity in some proportion, xA = yB – must be seen for
what it really is: an impossible equation, an “identity of opposites” (Rancière
1989: 106).¹⁸ The equation of economic exchange posits as equal two entities that
are utterly heterogenous insofar as each has a completely distinct use-value.¹⁹
One way to understand capitalism is to grasp it as “that system which makes
such an impossible equation possible” (Chambers 2022: 91). In any case, traditional
economic exchange – and therefore also our updated version of economic ex-
change²⁰ – is based upon this impossible equation, xA = yB.

18 Rancière goes on to show that the difference between Marx and the classical political econo-
mists is that the latter fail to see that the equation is impossible: they simultaneously naturalize
both the existence of commodities and their relative equality with one another. In contrast,
Marx first identifies the equation as “impossible” and then goes on “to theorize the possibility
of this impossible equation” (Rancière 1989: 107).
19 For more on use and use-value, see Chapter 7, Footnote 25.
20 Chapter 3’s reinterpretation of economic exchange, as the swapping of a commodity for a cred-
it, inherits and radicalizes the underlying paradox of traditional economic exchange. Rather than
positing the equality of two distinct use-values (two commodities fixed in given proportions), our
equation posits the equality of two utterly different types – a commodity and a money-credit. Here
again, any explanation for what makes the impossible possible must lie with the capitalist social
 3 The “Price” of Money 153

What, then, is the impossible equation that expresses the nature of financial
exchange? We have already indicated that the equation to express the swapping
of a credit for a credit cannot be $x = $x (e. g., $4 = $4). $4 = $4 is a silly equation,
but not an impossible one.²¹ The impossible equation of financial exchange is bet-
ter expressed as a more direct variant on the equation of economic exchange –
that is, $x = $y. Here we have one measure/amount of a particular denomination
of money-credit posited as equal to a different measure/amount. To return to our
favored example, the equation would look something like this: $4 = $4.07. This
equation clearly seems impossible.
How do we theorize its possibility? As a start, we can turn to the concrete prac-
tices of dealers in the money market. This allows us first to uphold the assertion
“money has no price,” at least in the more limited sense that money does not have
a price. At the same time, and in a different sense, we must reject the notion that
money has no price because, like every other asset, money has multiple prices. $4 =
$4 is a trivial or frivolous equation because no dealer would ever offer to sell $4
for $4. But we must emphasize that dealers are never just offering to sell (or to buy).
Rather, dealers always offer both to buy and to sell money at different prices.
Hence the “price” of $4 will prove multiple, not singular, because it will always de-
pend on whether a dealer is buying or selling. For example, a forex dealer might
buy $4 for the price of €3.30, but they would sell $4 for the price of €3.36. This
means the dealer is exchanging dollars for euros at a rate of 1.212 when they
buy dollars, but at a rate of 1.190 when they sell dollars. The impossible equation
of financial exchange lies hidden, just barely below the surface, in the fact of these
different buy and sell prices (which express different exchange rates). The math is
simple. If we take the dealer buy rate of 1.212 and apply it to calculate the value of
€3.36 – the price the dealer receives when selling $4 – the result is $4.07. In other
words, if the dealer sells $4 and then buys it back, they end up with $4.07. Hence $4
= $4.07.²² This impossible equation is a daily reality for money-market dealers.

order as a whole: capitalism is a system that constantly exchanges money-credit for commodities.
The details of that explanation (see Chambers 2022) go beyond the scope of our narrower treat-
ment in this book of the theory of money.
21 The general formula for the impossible equation consists in positing as equal two things that
are not even of the same kind. $4 = $4 is, in fact, a valid relation of equality (thus not impossible),
but as a tautology it is meaningless (which is Marx’s point).
22 This conclusion does not directly refute Marx’s point, because no dealer will offer to sell dollars
priced in dollars. $4 = $4.07 can only be derived as the impossible equation by going through other
currencies. Money can only “have a price” in a different money, so the price of money depends on
the multiplicity of monies.
154 Chapter Six: Money Markets

The forex example proves the most straightforward, but other money-market
practices, despite operating at dazzling and bewildering levels of complexity, rest
on the same underlying logic (see Mehrling 2016). For example, if a dealer borrows
money through the repo market at rate x, they will loan money through reverse
repo at rate y (where y > x). The term structure, required collateral, and other de-
tails of these transactions may prove incredibly sophisticated, but underlying it all
is the fundamental fact that, after all the math has been done, rate y is greater
than rate x (at least according to the dealer’s own calculations). Interest rate
swaps and credit default swaps can become even more intricate and esoteric,
but the basic logic of the swap of IOUs does not change.
We can tie these threads together as follows. Money has no value, and thus to
the extent that “price” is itself “measure of value,” it makes no sense to assert a
singular price for money. But if we take “price” in the nominal sense as nothing
more than the rate at which two assets exchange, then obviously money can
have a price because money has an exchange-value. Mehrling in fact insists that
we understand an exchange rate not as the value of assets in terms of assets
(the metallist view), nor as the claim value of goods in terms of goods (the chartal-
ist view), but as merely the price of money in terms of (other) money (obviously
the money view).²³ Understood in this circumscribed sense as exchange rates,
the “price of money” proves to be a terribly important phenomenon because the
money markets are in fact driven by the differential and changing prices for dif-
ferent forms of money.
To insist on the importance of the money markets, as we do here, and to af-
firm this nominal notion of the price of money, does not weaken our prior and
fundamental claim that money has no value.²⁴ Money exchanges for money at dif-

23 Mehrling translates the chartalist view into the relative price of goods by way of the argument
for purchasing power parity. But the basic idea is simple: if money is nothing more than a ticket
claim, then economics is still the circulation of goods for goods (with money as claim), not the ex-
change of goods for credits (Mehrling 2016).
24 The discussion in this section intentionally sidesteps the neoclassical paradigm’s blunt answer
to this question. For decades, introductory economics textbooks have told students that “the inter-
est rate is the price of money,” and such a notion is also implicitly built into certain Keynesian
models. Fortunately, today even mainstream economics seems to be moving away from this shib-
boleth. Without taking up the complicated topic of interest, we can say a few things concisely. First,
there is no such thing as the interest rate; there are always multiple rates. And this is because, sec-
ond, interest is not a purely “monetary” or even “economic” phenomenon; at its core it is a relation
of power. As Marx acutely observes, the possession of money-credits (valid claims on valid debtors)
gives one “the power to demand an interest” from those desperately in need of such money-credits
(Marx 2015: 445). Power differentials thus give rise to different interest rates. In the broadest sense,
 4 The Logic of the Derivative 155

fering rates, and the fact of these differing prices, operating along the hierarchy of
money, makes it possible for the money markets to provide liquidity. In this sense,
the prices (plural) of money prove crucial to contemporary capitalism. But the
rhetorical line “money has no price” also indicates something significant: the
claim immediately calls into question the entire classical and neoclassical view
of money as a commodity with a supply and demand. To say money has no
price is to assert that the thing which measures value does not itself possess
value. The valid empirical fact that monies are exchanged for one another (at pri-
ces) should not be denied, but it also should not be allowed to confuse us – to trick
us into believing either that money is a commodity or that it has value. The prices
of money are like, but also very much unlike, the prices of commodities. To explore
these similarities and contrasts requires closer scrutiny of money markets.

4 The Logic of the Derivative

In developing his illuminating “money view,” Mehrling focuses tightly on the

money markets themselves. I have already expanded his conception above by
weaving it into our previously developed conception of economic exchange (as
the swapping of money-credit for commodity) and financial exchange (as the swap-
ping of money-credit for money-credit). Using that framework, I now pose a ques-
tion that is excluded necessarily from the neoclassical paradigm, and simply not
broached by Mehrling: How does the logic of the dealer function and the money
markets reflect back on economic exchange? In other words, what happens
when we treat commodities as if they were money?
The core idea can be formulated parsimoniously: the logic of the money mar-
ket – that is, buying and selling in order to profit, or buying and selling in order to
change risk exposures and maintain liquidity – can be, and frequently is, applied
to other markets.²⁵ This means that many markets that are not literally markets in
money operate the “same” way money markets do. To put this point in our earlier

we can say that “interest is like rent – it is the fee you pay for the use of something you do not own”
(Chambers 2022: 138).
25 As should be clear from the approach described in Chapter 1, I refuse any and all naturaliza-
tion of markets. Thus the many references to “markets” that follow in this section of the text all
consistently presume a massive background of social, political, legal, and cultural work that
makes a “market” possible in the first place. Goods and credits do not circulate in nature; they cir-
culate in, and only in, society, always according to terms dictated and constrained by the social/
legal/political/cultural arrangements of those societies. And finally, we can never forget that mar-
kets only exist if and when dealers make such markets.
156 Chapter Six: Money Markets

language, the suggestion is that individual market actors may choose to engage in
economic exchange but do so for the purposes of financial exchange. Better still,
we might say that such actors appear to be engaging in economic exchange, but
in reality they are engaging in a deranged form of financial exchange – a form
of financial exchange that somehow includes entities that are not obviously
money-credits.
To unpack this idea we can start with an abstract/ideal understanding of eco-
nomic exchange.²⁶ Market actors would engage in economic exchange for one of
two broad reasons: because they find themselves in possession of commodities (ei-
ther recently produced, or old inventories) whose value they seek to realize in
money terms, or because they have immediate need of commodities (either for di-
rect consumption or as inputs to a production process). The raison d’être of eco-
nomic exchange involves swapping money, which is the necessary form of capital-
ist value, with commodities, which are twofold entities existing both as exchange-
value and as use-value.
But what happens when we render that ideal type impure by addressing a
case in which actors take a money-market approach to commodity markets? A
dealer would thus buy commodities not to consume them or use them for produc-
tion; they would acquire commodities strictly for their exchange-values. This is an-
other way of describing merchant capitalism (Banaji 2020). The dealer is therefore
treating the commodity as if it were not actually a commodity (with both use-value
and exchange-value); they are treating the commodity like money. At this juncture
it is worth specifying that like a commodity, money has an exchange-value; indeed,
in a certain sense money-credits are exchange-value untethered from the physical
body of commodities. Money is therefore utterly unlike a commodity because it is a
form of independent and somehow autochthonous exchange-value (Marx 1973:
153). Therefore, when our market actor treats a commodity like money,²⁷ they

26 That is, financial exchange as conceived in this book, not as understood by classical political
economy or neoclassical economics.
27 The discussion in the text completely brackets a crucial issue: in order to treat a commodity like
money, it almost always proves necessary to refashion the commodity so that it truly is more like
money. As we know, each unit in a money of account is completely indistinguishable from every
other unit. This truth about money emanates from its nature as an abstract measure of denomi-
nation. This is but a corollary derived from Innes’s oft-quoted line that “the eye has never seen nor
the hand touched a dollar”: precisely because we cannot see or touch dollars, we can make each
unit the same. In stark contrast, each commodity is a unique product of a human production proc-
ess. If we inspect a group of commodities we will always find variation. For this reason, it is only
possible to make a money market in standardized commodities. Importantly, dealers don’t actually
trade in “bushels of wheat” but, for example, as Donald MacKenzie puts it, in “bushels of Chicago
No. 2 white winter wheat” (MacKenzie 2006: 13; see also Cronon 1991). The latter is a standardized
 4 The Logic of the Derivative 157

are simply focusing on the exchange-value of the commodity to the utter exclusion
of its physical form (and attendant use-value).
For example, speculators in oil do not have any interest in using the oil as fuel;
they just want the price to go up. More precisely, speculators taking a long position
want the price to go up, while those taking a short position want it to go down.²⁸
But the primary point holds: neither plans to heat their house for winter or start
up a manufacturing process. This can lead to real problems at the limit, where the
fundamental differences between, for example, a bond (money-credit) and oil
(commodity) become manifest. I return to this thorny issue below. For now I mere-
ly want to reiterate the basic point: once the logic of financial exchange extends to

category of commodity such that any bushel of Chicago No. 2 white winter wheat is meant/said/as-
sumed to be the same as every other. Therefore, prior to making money markets in commodities,
the “standard commodity” must be defined (practically, legally, contractually) and then brought
into being through standardized production and inspection processes. Note that in the world of
traders, there can be some conceptual slippage and confusion surrounding the word “commodity”
since some traders apply this term only to what we will call a standardized commodity. A custom
leather handbag is still an economic commodity, but it cannot be traded on a commodities ex-
change, nor be used as the underlying asset to create a derivative.
28 A “long” position is one in which the actor profits if the value of the asset goes up; vice versa for
a “short” position. In this context one should also emphasize the ideal-type distinction between
speculating and hedging. Any position, short or long, can be chosen either as an outright bet on
the movement of the asset, or as a hedge against a position already taken. We can imagine
money-market dealers who are “matched book” dealers – this means they hedge every long posi-
tion with a short position (and vice versa), thereby earning money only on their fees or bid–ask
spreads. In practice, of course, there is no such thing as a dealer who has a completely matched
book, but we can apply the same distinction at the level of each dealer – that is, by separating their
balance sheets into a “matched book” portion and a “speculative” section (see Mehrling 2011). A
sense of the significance of hedging reveals as misguided the sometimes popular sentiment that
the “problem” with money markets is the short sellers. In particular, short positions provide hedg-
es to long positions (often enabling those positions to be taken in the first place), and in general,
shorting provides liquidity for markets. Derivatives prove particularly important for short posi-
tions, because it is almost always harder to take a short position in a market. (For example, to
take a long position in a stock, all one has to do is buy it and hold it until the price rises. But
to short a stock requires: borrowing the stock on loan, with interest; immediately selling the
stock for cash; waiting for the price of the stock to drop; then buying the stock and returning it
to repay the loan. Note that if the price of the stock goes up, not down, the potential losses to
the short seller are infinite.) Sometimes the only way to short an asset is through derivatives, a
point illustrated famously in the run-up to the GFC: many market actors noticed the apparent bub-
ble in residential house prices, but had no way to short the housing market. The creation of a par-
ticular derivative, the credit default swap (CDS) on mortgage-backed securities (MBS), solved this
problem. Even here, however, there is no way to take a short position without a counterparty tak-
ing a long position. Sellers of CDS on MBS took in millions of dollars in premiums (from CDS buy-
ers) prior to the period when they lost billions of dollars.
158 Chapter Six: Money Markets

or overdetermines the markets in commodities, we witness within a capitalist so-

cial order the manifestation of a type of “money market” in entities that are not
actually money. Oil is not money, but most of the time nothing stops the oil spec-
ulator from treating oil as a speculative trade in exactly the same way she might
treat German euro bonds or US dollars.
This extension of money-market logic leads to the creation of an entire array
of financial constructs,²⁹ most of which can be accurately understood as money-
credits but many of which include some sort of linkage to commodity markets
or the broader realm of economic exchange. This abstract description uses the lan-
guage we have developed in the preceding chapters in order to give expression and
form to what is usually called a derivative.
The textbook definition of a derivative is straightforward, but without context
it usually does not seem to say very much. A derivative is a specific type of contract
between two parties; most significantly, the contract is tradable (i. e., transferable
to another party). The price of the contract (the derivative) depends on – and there-
fore changes according to changes in – the price of a separate “underlying” asset
that is specified in the contract. By creating a derivative, market actors gain the
ability to take a position (short or long) in an asset without actually purchasing
that asset.
Futures contracts are often cited as the most basic form of derivative. The ex-
ample can helpfully crystalize our discussion by linking the concept of a derivative
to the earlier (rather crude) example of a speculative market in oil. The mainspring
of the futures contract is an agreement that one party will sell to a counterparty a
preset amount of a standard commodity, for a set price, on a specific date in the
future. At the first level, the contract itself merely fixes the terms of the sale.
Many online “explainers” on futures therefore like to imagine what we might
call a “natural” contract between an oil producer who wants to sell oil and a man-
ufacturer who needs to buy it. They sign the futures contract as an essential ele-
ment of economic exchange, but with a slight variation: rather than swapping com-
modities for money-credits today, they commit themselves today to swap

29 These can always be created anew, and we know that the brightest minds on Wall Street often
devote themselves to fabulous forms of fabrication. Nonetheless, as I show in the next chapter with
the important example of the bill of exchange, there is nothing new about the process itself. If we
define so-called financialization in the strict terms laid out here – namely, as the extension of the
logic of financial exchange – then we must also affirm that financialization has been an ongoing
process since the earliest stages of merchant capitalism. For just this reason, I reject the thesis that
today we live in a new stage of capitalism called “financialized capitalism” (implying that previous
capitalist periods were somehow unfinancialized). Shoshana Zuboff offers a prominent and prob-
lematic example of this tendency (Zuboff 2019).
 4 The Logic of the Derivative 159

commodities for money-credits in the future – at a set price, determined today. Be-
cause these contracts are tradable, this relatively simple form of economic ex-
change gives rise to the possibility of financial exchange. It makes possible the cre-
ation of a derivative market that exchanges not the underlying assets, but these
contracts.
This sort of explanation schematizes some basic elements of derivatives, but at
some cost to a more penetrating understanding of markets in commodities and
money. The problem with the standard example is that it presumes a direct con-
tract between two parties in such a way as to reify the idea of a natural market
in the underlying asset. This type of account privileges economic exchange as pri-
mary (the contract is between producers and users of oil) and makes the derivative
market seem, indeed, derivative – merely a secondary phenomenon. In reality,
however, money markets in derivatives function quite differently.
Above all, futures contracts are not agreed between producers and consumers;
they are bought and sold by market makers. All futures contracts are transacted
between one market actor and the dealer who makes the market. And this
makes the derivative much more than a contract in that term’s general or legal
sense. To highlight the differences we can consider a simple forward contract in
which party A contracts to buy a commodity for an agreed price at an agreed
time, and party B agrees to deliver the commodity for that price. This constitutes
a legal commitment to engage in economic exchange (the swapping of money-cred-
its for commodities) at a date in the future, but it is not an example of what we are
calling financial exchange. The basic forward contract is merely a legally binding
private agreement between two parties; it is not a futures contract, and most im-
portantly, it is not a tradable money-credit.³⁰
In contrast, futures contracts are sold by dealers, who make a market in them
the same as any dealer ever does: by setting the bid and ask prices at which they
stand ready to buy or sell such contracts. Regardless of whether I choose to buy
from or sell to the dealer, once I take a position with that dealer through a futures
contract, I have created a claim – this is the futures contract itself, the derivative. If
the price moves in my favor (up, if I have bought; down, if I have sold), then my

30 Forward contracts play a not insignificant role in contemporary capitalist practices because
large companies (and their banks as counterparties) use them to hedge foreign currency and in-
terest rate risk. And forward contracts can be settled in cash, rather than in the commodity itself
– if the price exceeds the contract price, the seller pays the buyer the difference, and vice versa –
making them true derivatives in the sense that they allow one to take monetary positions on the
underlying commodity without directly trading the commodity. But I confine my analysis here to
derivatives that take the form of money-credit as they help to elaborate my conception of financial
exchange and develop the overall logic of the derivative.
160 Chapter Six: Money Markets

stake in the contract (my ownership of the derivative) becomes an asset. This is the
case because I now own the right (through the futures contract) to buy the com-
modity at a price lower than its current market value (or sell it at a higher
price than its current market value). Hypothetically, this means I could wait
until the delivery date, pay the contract price, take ownership of the commodity,
and then sell at market price for a profit. Practically, it means that the value of
the derivative itself is positive, and I can close out my position with the dealer
by having him pay me. If the price moves against me, all of the above logic is re-
versed, and in holding the derivative I hold a liability to the dealer.
Notice the key elements that emerge in this nuts-and-bolts description of the
futures contract:
1) The contract is a form of credit/debt – one party owes the other.
2) The credit/debt is denominated in a money of account.
3) The credit/debt is transferable.³¹

The conclusion here seems inescapable: derivatives are money-credit. ³² In turn,

markets in derivatives are markets in money. As we have shown, the key aspect
of the derivative is not the contract per se. After all, millions of legally binding
agreements between parties are signed and executed every day, but most contracts
are not derivatives. A derivative is distinct because entering into the contract cre-
ates a transferable relation of denominated credit/debt. The elements that mark
the derivative as a singular type of contract are precisely the conditions that
make it money.
This leads us to a second, practical observation about our previously discussed
oil futures market: the largest oil producers are also the biggest players on the fu-

31 To reiterate the conceptual clarification from the preceding chapter, “transferable” means it
has the potential to be transferred, but no guarantee that it finds a willing party to accept the
transfer.
32 Throughout my discussion I focus mainly on derivatives on non-money entities (e. g., oil fu-
tures) because they provide a powerful illustration of how a money market can be constructed
from a commodity market – how the logic of financial exchange can overdetermine the logic of
economic exchange. In the text above I state emphatically that “oil is not money,” but now we
need an addendum: derivatives on oil (oil futures) are money-credits. Moreover, in addition to de-
rivatives on non-money, we can create derivatives on money (e. g., currency futures) and even de-
rivatives on derivatives (e. g., CDO-squared). Aside from the futures contract that I work through
here, the other example often used to explain derivatives is the options contract, which encodes
a right to buy (a call option) or sell (a put option) something (typically a stock) for a specific
price at a specific date. Options contracts are initially bought or sold, and as the price of the
stock moves, the contract can itself be bought or sold (or closed out). Options are therefore
money-credits.
 4 The Logic of the Derivative 161

tures market. They sell the majority of their oil not on the “spot” market, and not
through private forward contracts but through the sale of futures contracts to deal-
ers. Indeed, if we want to understand the market for oil in some broader sense, we
cannot narrow our analysis to a commodity market for oil as determined by spot
prices. The market for oil must also constitutively include the derivative market.
To see what I mean by this last claim, google “price of oil.” All the top hits will
point to a chart showing the price for the current month’s futures contract. Of
course, one can refine the search and google “oil spot price,” but the results will
not be current market prices. Rather, the search will return results that provide
a historical record of previous delivery prices – that is, a post-hoc reconstruction
of the market in oil. And this reconstruction, these historical prices, cannot be un-
derstood to exist independently of the derivative market. For example, the spot
price data for WTI Crude Oil shows a price on 20 April 2020 of −$36.98. But we
know that no one who actually already had oil in their possession on 20 April
2020 was willing to pay someone else $37 to take it from them. Rather, the ones
willing to pay $37 were the futures traders who had buy-contracts they needed
to roll over – precisely so that they could avoid taking possession of any actual
oil.³³
To clarify, logically one could conceive of a scenario in which someone with oil
storage facilities sold oil today for −$36/barrel (meaning they paid someone else
$36/barrel to haul away oil). But this could only possibly occur because today’s sell-
er knew (or predicted/gambled) that they could use their freed-up storage space to
buy oil for delivery tomorrow at −$37/barrel (someone paying them to take the
oil).³⁴ This means that we can only make sense of what’s happening in the “spot
market” by considering movements in the futures market. The only reason to
sell oil “on the spot” today for −$36 is because the derivative market has made
it possible to buy at −$37 tomorrow.³⁵

33 As the price dropped, dealers demanded that traders either provide more cash for their margin
account or close out their position (further pushing down the price) and many traders chose the
latter option. For more on margin trading, see Chapter 7, Section 3.
34 Sincere thanks to Alex Andre for extended discussion of the futures market and futures trad-
ing, and for helpful engagement on this specific example.
35 To tie up the logic here, we could imagine a world with no futures contracts on oil at all. If
there were no oil derivatives, would it still be possible to conduct spot trades in oil for negative
value? I can come up with no viable scenarios to answer in the affirmative. While we can conceive
of spot transactions for negative value, they are only possible within a world that also contains
derivatives on oil. It is tempting to think of spot prices as the present market prices of the actual
commodity, the underlying asset. However, while there surely is the fact of actual cash paid for
actual oil in the world, the concept of a “spot price” as the present-moment market price is itself
something of a conceptual construct – not the reality of “what people pay in the moment” but a
162 Chapter Six: Money Markets

For these reasons, the derivative market cannot be understood as parasitical

or dependent on the primary market in oil (or on the primary contracts between
producers and buyers). Indeed, in a certain sense (and only in a certain sense) the
market in oil is the derivative market in oil futures. And there can be no doubt that
the oil futures market – as a market of money-credits, a movement of prices –
functions more like the ideal conception of “the market” in both classical and neo-
classical conceptions. Yet if we try to get directly at some sort of “natural oil mar-
ket,” we will find the task impossible: there is no way to understand how the entity
constructed and understood as the “oil commodity” is bought and sold without in-
volving the intermediation of the market in oil futures contracts.
This is neither to say that there is no market in the standardized commodity
“oil” (the underlying asset) nor to suggest that the overall oil market is only the
derivative market. The claim is rather that one can never separate the underlying
market from the derivative market. One can never find a distinct commodity mar-
ket with spot prices operating independently of the derivative market. Rather, “the
market in oil,” broadly conceived, entwines the derivative market in oil futures
with the concrete trading of standardized barrels of oil.
Ultimately, only through its operation as a market in money does the market in
the commodity function fully.³⁶ We can unpack this claim by starting with the fact
that a market in derivatives operates like other money markets. Even the briefest
conversation with a money-market trader reveals that, from their perspective (i. e.,
from the structural perspective of the dealer function, see Treynor 1987), it matters
not at all what’s being traded. That is to say, as money-credits (and only as money-
credits³⁷), euros, credit default swaps, and T-bills are all the same. They are money-

reflection of the abstract marginalist idea of a “market in equilibrium.” Spot prices may be better
understood not literally as present market rates available “on the spot” but as “past futures prices.”
They are a historical reconstruction of market prices, one very much influenced by the derivative
market. There is undoubtedly a concrete reality – practices in which barrels of oil are delivered for
money-credit – but that reality does not exist separately from or independently of the reality of the
derivative market. Indeed, the possibility for a market in oil depends on the existence of the de-
rivative. The derivative might not be first, but it is surely not second.
36 And the logic of the derivative sometimes makes it possible to separate those markets in a way
that privileges not the “underlying” but the derivative. This is one way to understand the otherwise
literally incredible story of the nickel market in early 2022 (Levine, 30 November 2022).
37 The other side of this coin cannot be neglected: traders care very much about the difference
between the market in T-bills and the market in euros. Indeed, the differences in cultures between
the traders and dealers who work in one sort of market versus another can prove vast. For exam-
ple, Alex Andre deftly shows that, as a general rule, stock and futures traders have an utterly dif-
ferent relation to risk than options traders (Andre 2021: 60). Nonetheless, at the ontological level,
the derivatives themselves look the same because they look like money-credit. And the investors
whose money is being used to trade these financial assets are not themselves all that concerned
 4 The Logic of the Derivative 163

credits with a market value that may go up or down, which may serve as a better
or worse hedge, and which may be more or less liquid.
The logic of the derivative therefore proves absolutely central to the process
whereby commodity and other markets are treated as if they were money markets
– the process that mediates between financial exchange and economic exchange.
The derivative plays this role for the straightforward reason that while a commod-
ity seems necessarily to belong to the realm of economic exchange, the derivative
on that commodity necessarily belongs to the domain of financial exchange. The
derivative is a form of money-credit, but one necessarily linked (even if sometimes
weakly) to commodities. Money markets and commodity markets are thus inextri-
cably and necessarily entangled by the existence and circulation of derivatives.
Nonetheless, at the next level of analysis, derivative markets are not exactly
like money markets, precisely because of the former’s distinctive relationship to
the underlying asset. All markets are ultimately and indirectly connected in one
way or another (because of global capital flows), but a derivative’s link to the mar-
ket in its underlying asset is unique. A historic frost in Florida that destroys orange
crops may have all sorts of knock-on effects for the Florida economy, especially for
orange-growing companies and their employees. But in addition and related to
those possible effects, it will have an immediate and dramatic impact on the or-
ange futures market. To grasp the relation between a derivative market and the
market in its underlying asset, we need to pay heed to two principles. First, the
price of the underlying asset is not established or maintained independently of
the price of the derivative, and thus the market in the underlying asset is not foun-
dational or determinative of the derivative market. As we have already seen above,
derivative prices can at times drive the price of the underlying asset.³⁸ But second,

about the differences between and among markets; once again, what matters to them is the holy
trinity – return, hedging, and liquidity.
38 The 2000s housing bubble would not have been possible without the market in what we might
call “housing derivatives” – namely MBS (literally a bond constructed through the amalgamation of
individual mortgages, so not technically a derivative) and collateralized debt obligations (CDO). A
CDO on MBS is a derivative on housing-market bonds. All of the (now-infamous) loose and fraudu-
lent lending practices were enabled and encouraged by the market in MBS and CDO: mortgage
originators had no reason to worry whether their customer could repay a mortgage because orig-
inators planned to sell the mortgage on to firms that would then package the mortgages together to
create MBS. Indeed, individual homeowners themselves came to think of the housing market like a
money market, to think of their house like money-credit; thus, many sought “leverage” in the mar-
ket by buying the most expensive house (or multiple houses) they could with the least amount of
money down (i. e., collateral). In the height of the bubble, mortgage brokers would advise high-
credit, high-income customers to take out interest-only mortgages and avoid the standard 20 %
down payment by taking out a second loan for that 20 % (so-called 80/20 loans). The putative
164 Chapter Six: Money Markets

there is nonetheless a concrete reality to the market in the underlying asset that
can impinge more directly on a derivative market (in that asset) than it would ge-
nerically on some other money market. The derivative market is always subject to
major disruption or reshaping by changes in particular practices that affect the
market in the underlying asset.
This clarification does not alter the core argument here: the relation between
financial exchange and economic exchange (between money markets and com-
modity markets) can only be grasped through the logic of the derivative, because
a derivative effectively creates a money market in the very same space as the com-
modity market.

***
I asserted early on in this book that no theory of money could be considered robust
if it did not speak to and account for the massive money markets that lie at the
interstitial center of global capitalism today. This chapter aims to make good on
that claim by utilizing the book’s wider theory of the money array (including
the particular ontological argument for money-credit) in order to illuminate
some of the basic structures of money markets (including markets in derivatives).
Capitalist economics centers on and runs through money. This is why, early on
in the book, I used a radical reading of Innes to make the case for rethinking eco-
nomic exchange. Rejecting both classical and neoclassical accounts of exchange as
the swapping of commodities, we have redefined exchange as the swapping of com-
modities for money-credits. This chapter has explored some of the payoff of that
approach.
That analysis allows us to see starkly that “financialization” and “financial
capitalism” are not new historical events or types of capitalism. Money has always
been the lifeblood of capitalism, and capitalist exchange has always been “finan-

goal in this trade is to maximize a home buyer’s overall market investment, by putting their cash
in other investments, such as stocks and bonds. In other words, for a brief time in the early 2000s,
the housing market in the US became a money market. While similar phenomena emerged across
much of Europe and parts of Asia, the US proved special, partially because of its distinctive laws
concerning mortgage default: in most countries borrowers are obligated for the full amount of
their mortgage; in the US, under most circumstances, only the house itself stands as collateral.
As a concrete example, this means that one could have borrowed $500,000 in 2004 to buy a
$500,000 home and then taken out a second mortgage for $100,000 (withdrawing cash) in 2007
when the house was valued at $650,000. Then in 2009, when the house’s value had dropped to
$400,000, the owner could simply stop paying the mortgage, give up ownership of the house,
and move out – keeping the money that was cashed out in 2007.
 4 The Logic of the Derivative 165

cial.”³⁹ Money markets surely play a larger role today than they did a century ago,
but they are not new, they are not somehow external to capitalism (as if we could
just get rid of the “financial” part of capitalism and return to the goods-producing
parts), and their part in the drama is not necessarily that much bigger. To give just
one key example: late nineteenth-century global capitalism centered on the City of
London and fundamentally depended on both the financial instrument called the
“bill of exchange” and the institutionalized practice of banks “discounting” bills.
But most importantly, as we see in the next chapter, the bill of exchange is nothing
more or less than a derivative. Having a fundamental grasp on money markets and
the logic of the derivative thereby gives us a clearer view of the recent capitalist
history of money, and it offers us purchase to critically consider the biggest issues
in money today.

39 The primary “financialization” thesis presupposes a traditional model of economic exchange,

i. e., one that excludes money. Only from that basis would one be surprised, or see as new, the
rise of trading in money. If one reconceives of economic exchange as the swapping of commodities
for money-credits, then money becomes fundamental to society. Historically, we know that swap-
ping money-credits has been with us since the beginnings of capitalism, if not earlier.
Chapter Seven
Money Today

1 Is It Money?

As we have seen, most thinking about political economy has been dominated by
historically incorrect or, at best, impoverished theories of money. This basic reality
often makes it difficult to figure out if something is or is not money. The legacy of
functionalism continues to enfeeble not only explicit theories of money but also
even the best work on money markets and contemporary money practices. The
former fail to push past the frontline empirical questions in order to explore
more deeply the complicated nature of money. The latter frequently limit their con-
tributions by resting comfortably with standard definitions of money as given in
economics textbooks, or by simply assuming that all things traded like money
must be money (or more generally, that all things traded the same must be the
same). Here we can get a sense of the deep importance not just of the practical
use of derivatives but, as explored in the previous chapter, the logic of the deriva-
tive. That logic makes possible the creation of money markets out of entities that
are not money.
This practice is crucial to contemporary capitalism, but that fact must not lead
us astray – as it can do if we allow ourselves to naturalize the derivative and its
logic. In other words, just because we treat an entity like money does not make
it money. We make markets in all sorts of things that are not money: oil, gold,
and pork bellies are all traded in the same manner as USD and GBP bank deposits,
but this fact is not evidence that pork bellies are money. The essence of money is
not to be found in the fact that money-credits are traded, even if money markets
prove to be one of the most important monetary phenomena in contemporary cap-
italism. Put differently, the being of money is not “to be traded,” despite the fact
that the trading of money always accompanies capitalism.
In specific terms this means that, having developed a working analysis of
money markets in the previous chapter, we now need to draw back from them
and place some markers down that help us attain a perspicacious view on the na-
ture of money. We want to avoid the myopia of those who lose their way in the fog
of the money markets. This is one way of describing what happened in April 2020
to derivatives traders who thought that buying oil futures at a price of less than
$1.00/barrel was a riskless opportunity for profit. Because they tacitly conceived
of the derivate on oil as a pure form of money, like “cash,” they assumed its
price could not go negative and that there were no downsides to holding this

https://doi.org/10.1515/9783110760774-011
 1 Is It Money? 167

form of money. As described in the previous chapter, derivatives contracts are a

form of money-credit, but they are a complicated and impure form. Unlike cash,
the contract in oil futures retains a direct relation to the commodity: the purchaser
of the contract does not just buy something with a denominated value; they also
contract to take delivery of barrels of oil at the agreed price. And because storing
oil itself involves real economic costs, the value of an oil futures contract can go
negative – as owners of those contracts rush to sell them in order to avoid having
to take delivery of oil. Oil is not money, a fact we forget at our peril. Even if oil fu-
tures are a form of money-credit, they are not the same as other forms. In the real
world, those differences matter – sometimes a lot. In this final chapter we return
to the core tenets of our developed theory of money and use its logic and concepts
to cast light on some of the more perplexing contemporary money phenomena – to
answer the question, “Is it money?”
Early in the previous chapter, I made passing mention of “gold bugs,” whose
fundamental precept is that gold, in its very nature, is money. The theory of
money developed in this book shows such a claim to be nonsense, but more
than this, our theory helps to show why it’s nonsense: ontologically, money (as
credit) differs fundamentally from a commodity (as a useful good with ex-
change-value). But as we have seen, to develop such an argument requires a rather
sophisticated level of ontological thinking: to see why gold is not money, we have to
grasp the difference between commodity-gold and money-gold.¹ In itself, gold is a
commodity and not money, yet we can take the commodity and use it as a source
for the creation of tokens of money-credit. In doing so we create coined money
made out of gold, and when one stops to think about it (which we have done
over the course of this book), this is a fantastic creature: in becoming money-
gold it ceases to exist as commodity-gold. And finally, the moment such coins
are hoarded for their intrinsic value, they revert to commodity-gold, ceasing to
be money (i. e., money-gold).²

1 I recur to this distinction throughout the book, but perhaps no one puts the point better (surely
no more succinctly) than Cencini: “Even commodity-money is not a commodity” (Cencini 1988: 17).
2 If we combine this fundamental argument, first mentioned in the Preface, about the difference
between money-gold and commodity-gold, with our discussions of secured loans and derivatives
from the previous chapter, we can build a much clearer picture of silver and gold coins. Take a
US silver dollar. Contrary to a dogmatic version of chartalism (which would ignore the material
basis for the token), we must account for the potential being of the silver dollar as commodity-sil-
ver. The money-silver is a token of debt, but because the token takes the form of commodity-silver,
we have, in effect, a collateralized loan. Your deposit account is a loan to the bank: if the bank
issues you paper banknotes, that loan is unsecured; if they issue you silver coins then the loan
is partially secured by the silver as collateral. This may matter in two very different scenarios.
First, if your bank goes bust, your money (in the form of money-silver) disappears, but you will
168 Chapter Seven: Money Today

2 World Money

This core logic of our theory of money allows us to unravel an important paradox
– namely, that during the height of the “gold standard” gold was not itself money.
The pinnacle of the world monetary system putatively based on the gold standard
extended across the nineteenth and into the twentieth century. But the global
money of account during this period was, first, the British pound sterling and
then, later, the US dollar. International payments were made almost exclusively
in credits denominated in GBP and USD, respectively. It is of course true that for
large stretches of this time, the Bank of England and US Federal Reserve promised
to exchange GBP or USD for a particular weight of gold at a fixed rate. However,
almost no individuals took them up on that offer. Why not? Because such individ-
uals did not want gold bars; they wanted money. Finally, when the stability of the
money of account came under pressure such that it appeared as if many actors
might, in fact, want to exchange GBP or USD for gold – at just that moment the
guarantee of “redeemability” was suspended.³
This raises a much larger and important problem of how and what we under-
stand “world money” to be. Here again our new theory of money can serve as a
useful tool to cut through a great deal of confusion and render the topic much
less opaque. In this case the key is to return to our concept “money space,” that
“domain” (noncontiguous and permeable) in which particular money-credits are

be left with the commodity-silver collateral, which you can sell to recoup some of your loss. Second,
if the silver market skyrockets, your loan may become overcollateralized, tempting you to abandon
the money-silver token and seize the commodity-silver collateral (i. e., by melting down the coins).
To do so will almost certainly be illegal: your debtor has not defaulted on their loan, and thus you
have no legal right to steal their collateral. This case reveals the coin as having what Colin Drumm,
following Mehrling, calls both an “inside” option (token of denominated debt) and an “outside” op-
tion (international silver market) (Drumm 2021; Mehrling 2012). I would emphasize that the “out-
side” choice – seizing the commodity collateral for the money loan – is not really a money option,
but this is not at all atypical: the “outside” of money is often some non-money assets, as one can
easily see by looking at the asset side of central bank balance sheets – and the fact still proves
important for understanding the strange twofold being of the silver coin. Finally, we can consider
a related edge case. Coin collectors speculate in a particular segment of the commodity-silver mar-
ket. If they buy non-legal tender coins, and the silver market craters, the value of their coin could
drop as low as the market will go. Instead, if they buy legal-tender coins, in the event of a silver-
market collapse they will hold the option to treat the coin as money-silver, effectively setting a price
floor of $1 on the commodity-silver purchase. That is, when the coin dealer sells a 2023 American
Eagle silver dollar for $90, he also delivers a put option (with the US Treasury as counterparty) to
sell the coin for $1 at any time. Thanks to Henry Scott for valuable discussion of these issues.
3 No recent text better illuminates this point than Zachary D. Carter’s biography of Keynes (Carter
2020).
 2 World Money 169

in fact routinely and reliably transferred. Using that concept, we understand

“world money” as the name for money whose money space (putatively) reaches
all the way across the globe, traversing numerous local-private and national-public
money spaces. This is not the place to explore the many complex economic and
crucial political issues raised by world money, but the conceptual structure elabo-
rated in this book allows us to frame those issues concisely.
Logically, by understanding all credit as money and all money as circumscri-
bed by its money space,⁴ we see that there will always be a problem when two
agents who occupy different money spaces need to engage in economic exchange.⁵
The first solution would be to abandon money for such a transaction and actually
settle accounts by making payments in commodities. This has surely occurred his-
torically (though it has never been all that frequent or common); under this head-
ing we would place actual payment in gold, which, when it is transferred by weight
between countries, is commodity-gold. Gold has never served as world money but
rather as the standard commodity reverted to world over in the absence of world
money.
In other words, during the relatively brief period of a functional international
“gold standard,” the actual world money was first GBP and then USD,⁶ and the
overwhelming majority of international transactions were covered not by shipping
bars of gold but through alternative solutions, which I discuss immediately below.
When gold was shipped between countries, it was in the form of commodity-gold –
the standard commodity used to “back” money under the gold standard.⁷
A second response to the lack of a common money space would be to intro-
duce a “higher” form of money, one that intersects in some way with the relevant
actors’ respective money spaces. Examples might include the period in which the
euro existed as money of account while euro nations still retained their own cur-
rencies (1999 – 2002) or the limited use of IMF special drawing rights (SDR). If both
agents can access this higher money space, they can conduct economic exchange

4 This is another way of formulating the point that money-credit is all there is. Within the proper
money space, all credits are money, but outside that space they are only credit.
5 In the case of financial exchange, this problem is solved not by having individuals directly barter
money-credits, but through dealers who straddle and traverse various geopolitical and money
spaces in order to make a market in money (by standing ready to buy or sell various money-cred-
its).
6 “GBP and USD” is shorthand here for “credits/debts denominated in GBP and USD.” To para-
phrase Innes, a pound is not a thing; credit (denominated in pounds, and usually in the form of
bank money) is the only thing there is.
7 Here we should emphasize Ingham’s point: such payment would not amount to barter, but to
payment in kind denominated in the standard money of account (Ingham 2020: 107).
170 Chapter Seven: Money Today

despite the fact that their standard money spaces (e. g., national moneys of ac-
count) do not overlap.⁸
The third option proves critical because it demonstrates the interpenetrating
and noncontiguous nature of money space. For this solution, agent A (in country X)
can access the money of account of agent B (in country Y) by becoming the client of
a local bank in country X, which bank itself holds deposit accounts at a bank in
country Y. This abstractly describes the eurodollar market – US dollar–denominat-
ed deposit accounts held in US banks by European banks. This crucial example of-
fers a view of the dollar-denominated money space extending well beyond US gov-
ernment territory.
However, to call the US dollar world money does not mean that everyone can
use US dollars everywhere and for all transactions. When I visit my friend in Eng-
land and we go to his local pub, I cannot pay for our pints with a $20 bill. In prac-
tical terms, I find myself in the money space of the pound sterling, and I need ac-
cess to credits/debts denominated in GBP in order to buy the round. This everyday
example might tempt us to conclude that each country has its own distinctly sep-
arated money space. But such a conclusion would prove hasty because internation-
al markets in money and commodities cross borders each and every day. I might
elbow my way up to the bar next to a wealthy investor. Regardless of whether he is
British, American, or Japanese, he is almost certain to have millions of money-cred-
it in dollar-denominated assets (stocks, bonds, eurodollar deposit accounts, etc.).
Like me with my $20 bill, the investor cannot use these credits to buy a pint,
but he doesn’t want dollar-denominated credits to buy beer: he wants to hold
his credits in dollars for the usual reasons: return, liquidity, and hedging.
In this sense my friend’s local English pub is both inside and outside the US-
dollar money space – it intersects with that money space in some complicated
form of non-Euclidean geometry. Because capital flows globally, US dollars (and
to a lesser extent the other “major” currencies⁹) flow everywhere. Neither the in-

8 The IMF offers a short online explainer on SDRs, wherein they explicitly pose the question “Is it
money?” and answer decisively in the negative. The logic of the IMF answer depends on first equat-
ing “money” with national “currencies” and thereby denying SDRs money status. They say SDRs are
not money “in the classic sense because they can’t be used to buy things.” That’s bad logic that
leads to a bad answer; it’s like saying Fed reserves are not money because I cannot buy groceries
with them. But I can buy groceries with bank money, and my bank will then pay the grocery store’s
bank in Fed reserves. Similarly, country A can exchange SDRs with country B and receive foreign
currency in return, which they then use to buy COVID-19 vaccines.
9 There is no formal definition or assigned status of “major” currencies, but both forex traders
and the Bank for International Settlements often refer to the most-traded currency pairs as “ma-
jors.” The top four pairs are commonly listed as the US dollar paired with, respectively: Japanese
yen, euro, UK pound, and Swiss franc. However, this traditional account does not square with cur-
 2 World Money 171

vestor nor I can use dollars to buy our pints. However, if we happen to be in one of
the many British pubs owned by international conglomerates, the investor could
effectively use US dollars to buy the entire pub itself. In sum, the existence of euro-
dollar bank accounts solves the problem of international economic exchange while
also making it possible for a domestic money of account to serve as world money
in an important sense.
Finally, perhaps surprisingly, and certainly most importantly, the problem of
distinct money spaces can be solved not by moving to a common space “outside”
the separate, native money spaces (option 2), nor by accessing the world money
space directly (option 3), but rather through the creative production of an outside
space that is actually internal to economic and financial exchange. This outside
that is really inside can be produced through the logic of the swap. A swap is a
money-market derivative. It is best understood as a swap of IOUs on each of the
balance sheets of two (or more) agents (Mehrling 2011: 65). Each agent makes a
loan to the other in the lender’s domestic currency, thereby giving each borrower
access to a foreign-currency deposit account.¹⁰ Mehrling explains the origins of
currency swaps under the Bretton Woods system as a technical device of banking
that made it possible to evade capital controls, which explicitly prohibited trading
currencies directly. The parallel loan structure means that “no money ever travels
across national borders.” In our language, the money-credits remain inside their
respective domestic money spaces: “But although there are no net flows, any rea-
sonable person would agree that the deal involves quite substantial notional gross
flows” (Mehrling 2011: 65). The swap therefore makes it possible to reach outside
the money space while putatively adhering to the law that requires money to
stay inside the domestic money space.
Crucially, the swap uses the logic of the derivative to solve the problem of sep-
arate money spaces without the need for an alternative space. As Mehrling insight-
fully recounts, the logic of the swap was later expanded to interest rate swaps and
credit default swaps. We cannot therefore make sense of the dizzying array of de-
rivative products that dominate the money markets today without placing their

rent practice. First, the US dollar completely dominates: in April 2022, for example, “it was on one
side of 88 % of all trades” (BIS 2022b). Second, the US dollar trades with more frequency against the
yuan, Canadian dollar, Australian dollar, and New Zealand dollar than it does against the franc.
10 To be clear, our economic agents (e. g., capitalist firms) almost certainly cannot do this deal di-
rectly: they need a bank to create the swap for them, and the bank only does so by creating a bid–
ask spread that generates a profit. Note also that the swap is a derivative because the value of the
swap contract (which is how banks today actually book swaps on their balance sheets) will move
based on the value of the “underlying asset,” which is the loan itself (and its value can change as
exchange and interest rates shift).
172 Chapter Seven: Money Today

history in the context of trying to solve the basic problem of exchange across
money spaces.
But this phenomenon is itself not really new. Since the days of merchant cap-
italism, derivatives have structured the global flow of goods. From at least the four-
teenth up through the nineteenth century, the bill of exchange was the dominant
financial instrument structuring global trade. We can draw from Mehrling’s ac-
count of the swap and link it to my earlier discussion of the derivative so as to pro-
vide a succinct explanation. As a derivative, the swap makes it possible to construct
world money out of standard domestic currencies. Yet the fourteenth-century bill
of exchange was itself a derivative money-credit that could traverse multiple
money spaces, facilitating economic exchange across multiple countries. In its
basic form, the bill of exchange was a forward contract. Mehrling describes the
late nineteenth-century bill of exchange in Britain as follows:

Firms issued bills in order to buy inputs for their own production processes, and they accept-
ed bills as payment for their own outputs. The bill of exchange was a promise to pay at a spe-
cific future date, perhaps in ninety days. For a fee, banks would “accept” bills, which meant
guaranteeing payment. For another fee, banks would “discount” bills, which meant buying
them for less than face value, the difference amounting to a rate of interest to be earned
over the term to maturity. As payment for the bills, banks would offer either currency or a
deposit account credit. Either way, the proceeds of the discount were most typically not held
as idle balances but rather spent in payment of other maturing bills. In this way, the discount
mechanism was crucial for British firms’ management of their daily cash flow, in and out.
(Mehrling 2011: 22 – 23)

Notice that the bill functions as a derivative in two senses. First, we can look at it
from the perspective of the bank that discounts or accepts bills from those mer-
chants who hold them; the bank is valuing the contract at a different price than
its literal text. This is just the circulation of a forward contract (a simpler form
of a futures contract). Second, we can take the perspective of the merchant who
sells the bill to the bank: that merchant is substituting a credit default exposure
to the firm on which he wrote the bill for a credit default exposure to the bank
that discounts it. Thus the transaction functions something like a credit default
swap. (In essence, any time one switches debtors – e. g., moves money from one
bank to another – one is swapping credit-default exposure.)
The early modern European bill of exchange proved to be an even more com-
plex financial instrument than the British bill described above by Mehrling; the
early modern bill combined the credit swap with a foreign exchange swap.¹¹

11 A bill is like a check because it is a token of credit/debt, written or filled out by the creditor,
“drawing on” a debtor. However, a check draws directly on a bank, whereas a bill is sold to an ex-
 3 Money Creation, Part 2 173

Bills of exchange circulated precisely where national currencies could not. There-
fore for both the twentieth-century swap and the earlier bill of exchange, world
money takes the form of the derivative.

3 Money Creation, Part 2

Many overviews of the theory and history of money give pride of place in their
accounts to the debate over “endogenous money” versus “exogenous money,”
sometimes even suggesting that this axis has been the primary site of contention
in the history of money theories (see Sieroń 2019). This book has taken a very dif-
ferent tack. In Chapter 2’s presentation of the money matrix, we followed Schum-
peter in depreciating this argument – for two important reasons. First, one’s posi-
tion on exogenous versus endogenous money creation will follow directly from
one’s position on commodity versus claim theory. Any claim theory must affirm
that money-credits are brought into being at the moment new loans are issued
(and destroyed when those loans are paid off ). In simple terms, this makes the
money-creation question ancillary to the claim-versus-commodity question. Sec-
ond, the argument for exogenous money creation – that money first comes into
being outside the social and economic order, only then to be introduced into
that order at a subsequent stage – simply does not hold up to the historical record.
Certainly many classical and neoclassical economists have affirmed a commodity
theory of money that therefore saw money creation as exogenous (money comes
from mining), but absolutely no one familiar with banking practices has done
so. As we briefly explored in Section 2 of the previous chapter, the fundamental
act of banking – the swap of IOUs – creates money, and any serious treatment
of the history of commercial banking demonstrates this point decisively. We can-
not forget that banks are capitalist firms in the business of making loans to make

change banker, but draws on a private party. The party being drawn on is the one who owes for
delivered goods (or rendered services), and is thereby being billed by the party who delivered
the goods (or rendered the services). Drumm provides the clearest, most helpful explanation of
medieval bills that I have read, so I will borrow his example of a London merchant, Albert,
who exports wool to an Antwerp merchant, Bernard. Albert then writes out the bill (drawing
on the debt Bernard owes him, specifying both the due date and amount) and then sells that
bill (for London money) to a local London exchange banker. The exchange banker, part of a larger
banking network, remits the bill to a colleague in Antwerp, who then delivers the bill to Bernard. If
Bernard accepts the bill, he commits to pay it (in Antwerp money) by the due date. (Bernard could
also protest the bill, and turn to litigation.) For much more, see Drumm, 2022.
174 Chapter Seven: Money Today

money.¹² Further, any study of the more recent history of central banking practices
shows that the overwhelming majority of money creation still comes from com-
mercial banking. Indeed, the important primers released by the Bank of England
after the 2008 crisis go out of their way to underscore this point (McLeay et
al. 2014a, 2014b). The growing role of central bank policy and interventions has
not minimized the role of commercial bank money creation, but rather leveraged
it for central banks’ own policy ends.
All of this means that the theoretical chapters of the book had no need to ex-
plore money creation in depth. However, this late juncture provides the perfect op-
portunity to speak to the importance of endogenous money creation in today’s
money markets. Standard accounts of money creation focus on the local banker
issuing a loan: whether it be to a capitalist firm starting up production, or to a fam-
ily planning to remodel their home, money comes into being the moment the bank
puts the loan (as asset) and the borrower’s deposit account (as liability) on the
bank’s balance sheet.
Yet the money markets do more than trade money; they create it. A significant
portion of brokerage accounts are “margin accounts”: these are effectively secured
loans from the broker to the customer, using customer cash and portfolio holdings
as collateral. In practice this means that a customer can deposit, for example,
$100,000 in cash into their account, and then immediately buy $150,000 worth of
securities. Alternatively, they could deposit $100,000 in cash; buy $100,000 in US
Treasury bonds; and then withdraw $50,000 in cash. In both cases the extra
$50,000 is endogenous money creation (and in both cases the brokerage customer
will be paying interest). The amounts involved are not trivial: in the United States
alone at the end of 2021, there was over $900 billion in margin debt held at (i. e.,

12 In refuting the standard neoclassical argument that banks act as “intermediaries” between sav-
ers and borrowers, and thus only loan out money that has previously been deposited, Minsky fa-
mously argues that banks create money “out of thin air” through the swap of IOUs process I de-
scribed in the previous chapter. Critics have protested against this phrase from two very
different directions. Some, such as Paul Krugman, have defended the standard account – in
which banks “lend out” deposits (Krugman 2012, quoted in Wray 2015). Others, such as Ingham,
have tried to clarify that the issuance of a loan is not like fairy dust that creates ex nihilo. Rather,
the money created by the bank loan exists because a “legally enforceable promise to repay the
debt” also exists (Ingham 2020: 62). Minsky’s metaphor is obviously constructed as a sharp critique
of the old model of banks as intermediaries, and therefore I read Ingham as offering not a critique
of Minsky but merely a clarification of the limits of the metaphor when taken out of context. See
Minsky (1960) and the lucid discussion of this material by Wray (2015), including a powerful chal-
lenge to the standard Keynesian approach.
 3 Money Creation, Part 2 175

owed to) brokerages. Endogenous money creation (and destruction¹³) goes on con-
stantly in the money markets precisely because in trading money it proves so sim-
ple to create new loans merely by creating offsetting assets and liabilities. The logic
of the swap is the fulcrum for money-market practices, and this logic makes money
creation possible. The basic margin account is only the tip of the iceberg.
To offer just one more example, we can see that short selling also acts as func-
tional money creation. Take a stylized example in which a short seller “shorts” 100
shares of a stock valued at $10/share.¹⁴ This act involves three parties, and their
balance sheets start out this way:

Then the seller “shorts” 100 shares of the stock, which means the seller simulta-
neously borrows the stock from the dealer and sells it to the buyer. The balance
sheets now look like this:

Again we observe the phenomenon of balance-sheet expansion. In this case it all

occurs on the balance sheet of the short seller. Both the dealer and the stock buyer
have merely changed the form in which they hold their assets (still valued at
$1,000), but the short seller started with no assets or liabilities and now holds
$1,000 worth of each. The ultimate difference between assets and liabilities has
not changed (it remains 100 shares and $1,000), but both the assets and liabilities
have increased by 100 shares of stock. In other words, the “long” position in the
stock has increased from +100 to +200, while a new short position exists, –100.
This expansion of credit – in this case in the form of stock – is the very definition
of money creation. And note that the process can continue in sequence because the
buyer in our scenario above could then decide to loan their stock to another short
seller.

13 By June 2022 over $200 billion in money had been destroyed as margin account balances de-
clined to less than $700 billion total.
14 This example assumes away margin rates (interest charged for borrowing stock), movement of
stock prices, or any other complications. The simplifications make the fundamental structure of
money creation easier to identify.
176 Chapter Seven: Money Today

Some readers may encounter the example of stock shorting as money creation
and feel an urge to raise this objection: If the difference between assets and liabil-
ities (+$1,000) has not changed, then how can there be “more money”? Here it can
be helpful to remember two things. First, in the ur-example of money creation as
the issuance of a loan, the banker creates an asset (the loan) and a corresponding
liability (deposits), thereby expanding the balance sheet but not altering the over-
all difference between assets and liabilities. Second, if all loans were repaid, there
would then no longer be any money in circulation. Money is nothing other than
circulating debt: more money always means more debt, and less debt always equals
less money. Put otherwise, with money-credit, one agent’s assets are always anoth-
er’s liabilities. The key to any monetary system lies in how money-credit assets and
liabilities are distributed across the social order – how they are arranged so as to
form the hierarchy of money.
This point allows us to address succinctly another of today’s hot topics in
money: so-called central bank digital currencies (CBDC). The basic idea is neither
technically complex nor conceptually complicated. As we know, central banks issue
their own bank money, which currently takes two forms: 1) physical coins and
notes that circulate widely and can be held by both individuals and commercial
banks; 2) central bank reserves, digital deposit accounts available only to commer-
cial banks. Individuals pay each other in bank money, but then their banks pay
each other in central bank reserves. The creation of a CBDC would allow all citi-
zens of a particular country to hold central bank reserves directly (in digital
form, through a website or smartphone app), just like commercial banks. Advo-
cates of CBDC typically make three arguments in its favor: increased access, re-
duced “friction,” and overall stability.¹⁵ Anyone can open an account, pay for any-
thing with a tap, and never have to worry about losing their money (or its value).
The first argument is valid, laudable, and politically significant. Speaking nar-
rowly to the US context, the problem of access to banking proves dire indeed, and
conceptually, at least, a CBDC would solve this problem by giving “unbanked” US

15 Ironically, these are the same three arguments often made by advocates of crypto stablecoins.
In the case of the CBDC, the idea is a “digital coin” in the sense of a direct claim on the central
bank; in the case of stablecoins, the idea is a digital coin without banks. Of course, as I indicated
in the Preface, while the initial promise of proof-of-work tokens was to eliminate banks (third par-
ties), the rise of stablecoins actually depended on a major departure from the intended path – be-
cause the need for a “trusted third party” was brought back in. And thus we find ourselves in a
strange situation: all the large and viable stablecoins are merely digital tokens issued by shadow
banks. In that reality, the difference between tether and a CBDC comes down to this: holding your
digital deposits on the central bank; or holding them on a very small, almost utterly unregulated,
and severely undercapitalized shadow bank.
 3 Money Creation, Part 2 177

citizens direct access to a Fed bank account. Nevertheless, this very real problem
could be solved without any need for the revolution in money and banking prac-
tices that a CBDC portends, and there is nothing inherent to a two-level system of
commercial and central banks that leads to the acutely American problem of lack
of access to banking. Other countries have commercial banking systems that do not
exclude millions of their citizens from access, and the problem in America could be
solved more simply and directly with regulatory changes. The second argument for
CBDC, reduced friction in transactions, is trivial. Digital money already exists. Most
money in circulation today is commercial bank money, and it can already be trans-
mitted electronically using credit cards, smartphones, and computers.¹⁶ The first
two arguments on behalf of CBDC therefore have nothing inherently to do with
CBDC.
Everything hinges on the third argument, stability. This argument necessarily,
even if tacitly, invokes the recurring dream of money: if only we could have a
money that was sound – a money with stable value. It is easy to see how the
idea of a CBDC would emerge out of the vision of money offered by state theorists:
If money is a creature of the state, then why not just have the state issue all money
straight to (all) citizens? If the value of the dollar is determined by the Fed, doesn’t
it make sense to get my dollars directly from them? The allure of this argument
feels almost palpable, as it seems as though we would solve all the problems of
money in one fell swoop. But if we look carefully, we should also see warning
signs flashing. One can spot at least two major problems with the proposed crea-
tion of a CBDC.
First, the very idea of a CBDC rests on an untenable theory of money. The
CBDC imagines a world in which everyone gains the right to use the same
money – central bank money – rather than having to navigate a hierarchy in
which some institutions can access central bank reserves and some cannot – in
which some institutions get bailed out by the government and some do not, etc.
Eliminating the hierarchy of money sounds and feels radically democratic. But
the hierarchy of money is not a product of bad (anti-democratic) politics; rather,
the hierarchy proves inherent to money as money-credit. Because money is always
a claim of credit on a debtor, there will always be better and worse forms of money
– because there will always be better and worse debtors. In a certain sense, by en-
visioning a world with only one form of money – with no money hierarchy – the
proposal for a CBDC imagines the end of money as we know it. As a thought ex-

16 To be clear, to say that digital money already exists does not mean that everything a CBDC
promises is already reality. Today individuals can hold money digitally, but only as commercial
bank money. Offering digital central bank reserves to individuals would in fact constitute a dramat-
ic transformation of the money system – as I detail below.
178 Chapter Seven: Money Today

periment, one might try to conceptualize such an elimination of the money hier-
archy by starting with a deeply egalitarian social order (where everyone is
equal). The problem here is that from these beginnings, it becomes quite difficult
to see how money would emerge in such a society – much less what money prac-
tices would look like. We wind up where we started: money without the money
hierarchy makes no sense. The problem lies not with the goal of a more equal so-
ciety, but in the misconstrual of the very nature of money.
Money relations themselves encode relations of hierarchy. Because the creditor
holds a claim on the debtor, the money relation is always already a power relation.
A democratic society can justly implement laws and regulations that seek to pre-
vent the money relation from being leveraged into a relation of political domina-
tion, but that does not alter the basic fact of the money array as structured by
power. Money is simply incompatible with the wish for a domain or order outside
of (thereby somehow protected from) power. Indeed, at a certain level of abstrac-
tion, we can say that money is always anti-democratic. If a society could hold a ref-
erendum on money relations, with the choice being (1) maintain current credit/
debt relations or (2) erase them all, the vote would always be to eliminate all
debt, because debtors always significantly outnumber creditors.¹⁷
And this brings us to the second, very much practical, problem with the pro-
posed CBDC. We can see immediately that the CBDC would collapse the hierarchy
of money by effectively eliminating the viability of commercial banks and commer-
cial banking practices. Faced with the simple choice of holding deposits on a com-
mercial bank or holding them at the Fed, only serious regulatory contrivances
could slant the choice in favor of a commercial bank. And given the current regu-
latory regime, commercial banks need a certain amount of deposits; if those go
away, banks are no longer viable as banks. By giving all individuals direct access
to one of the highest forms of money-credit, central bank reserves, the CBDC

17 Indeed, something similar has happened throughout history in the form of debt jubilees, as
Graeber ably shows (Graeber 2011). We must underscore that the type of wide-scale debt cancel-
lation that Graeber discusses was really only viable, or even technically possible, in pre-capitalist
societies in which inequality remained deeply encoded into the social order in ways far exceeding
money relations. If I am a lord with land, arms, good relations with the king, and serfs to work my
land, then I can allow the erasure of debt without significantly altering my overall standing in the
social order. The debt jubilee reduces inequality, but it surely does not eliminate it. In capitalist
societies, however, things look quite different: the overwhelming bulk of our inequalities are mon-
etary inequalities. If Jeff Bezos and I both had all of our money assets eliminated tomorrow, he
would surely still have more than I in the form of yachts and houses and cars. But the bare
fact of these possessions would hardly matter if he no longer had access to the money-credits need-
ed to buy diesel fuel for his yacht, or pay the property taxes and upkeep on his houses – not to
mention the need to buy food.
 4 Bitcoin: Digital Metallism 179

would so shake the current hierarchy of money that it is hard to see what the re-
sults would be.
Money is created and destroyed by commercial banks. In capitalist societies
today, money is (commercial) bank money. Implementation of a CBDC could create
an existential crisis for commercial banks. Surely many advocates of the CBDC un-
derstand this implication and take it as a point in favor of the proposal for a CBDC
– stick it to the banks. I am not sure it’s that simple. In creating a CBDC, the central
bank would be eliminating the very mechanism through which almost all central
bank monetary policy gets implemented. Capitalist economics depends on the ex-
pansion and contraction of money-credits, and this ventilation system is run by
and through commercial banks. Unless so circumscribed in its implementation
as to be nothing other than a public-relations move, a real CBDC would threaten
the viability of this system. Would it lead to post-capitalist utopia, or to our “com-
mon ruin”?

4 Bitcoin: Digital Metallism

With the question of utopia, we come to the final, and most significant, money
topic today – cryptocurrency. In this context, our question from Section 1 of this
chapter has been asked and answered thousands of times over the past few
years: Is bitcoin money? ¹⁸ A November 2021 Google search on that question pro-
duced just shy of 87,000 hits and included a Google “snippet” – the Google algo-
rithm’s best guess as to the “correct answer” – citing a 2015 article to the effect
that “bitcoin is not money because it functions poorly as a medium of exchange,
unit of account, and store of value” (Hazlett and Luther 2020, citing Yermack
2015). David Yermack invokes the spirit of Francis Walker when he states succinct-
ly that economists define money as that which “functions as a medium of ex-
change, a unit of account, and a store of value” (Yermack 2015: 32). From here it
is an elementary exercise to show that bitcoin: can barely be used as medium
of exchange;¹⁹ provides a horrible store of value; and simply does not serve as a

18 Of course, this question presupposes some sort of response to the prior question, “What is bit-
coin?” I provide a concise answer just below in the text, but I point those readers interested in
more of the technical details to two key sources: Levine (2022) and Mariz (2023). For arguably
the sharpest concise critique of what he rightly calls “cryptoassets,” see Diehl (2021).
19 On the rare occasions when bitcoin is used to buy things, its extreme price volatility (as meas-
ured in a major money of account) coupled with the lack of a fast and cheap payments network,
makes such usage extremely limited and compromised. This explains why the use of bitcoin as a
medium of exchange is almost always a public-relations stunt.
180 Chapter Seven: Money Today

unit of account. Yermack therefore provides a scholarly version of an argument

one will find repeated in hundreds of news stories and blog entries: bitcoin fails
to be money because it fails to function as money – and money is that money
does.²⁰
It’s true that bitcoin is not money, but the functionalist argument here, as al-
ways, proves poor because it fails to explain why. Indeed, we could imagine a sce-
nario in which people started to use bitcoin wallets in limited fashion to pay for
goods and services, and at some point the minimal criteria for the functionalist
definition might be met. As I show below, even in this hypothetical case, bitcoin
would still not be money. Bitcoin can never be money.
To prove this point, let us begin at the beginning: the publication of the orig-
inal white paper by the pseudonymous Satoshi Nakamoto. The opening paragraph

20 Ironically, clicking the Google Search snippet link takes the user to the Hazlett and Luther ar-
ticle abstract, which argues the opposite of Yermack: “We maintain that the standard approach
classifies an item as money if and only if it functions as a commonly accepted medium of ex-
change. Then, we show that the demand for bitcoin is comparable to the demand for many govern-
ment-issued monies.” Hence “bitcoin is money” (Hazlett and Luther 2020). Hazlett and Luther stake
out an unconventional position on bitcoin but do so by relying on utterly conventional thinking.
They quibble with Yermack’s tripartite functional account of money, countering with a definition
of money “as a commonly (or, generally) accepted medium of exchange” (Hazlett and Luther 202:
145). From here their logic takes some tortured turns:
1) Equating “accepted as medium of exchange” with “demand for money” (145).
2) Measuring demand for money with the formula: market capitalization as total “money supply”
multiplied by the “price” of money, i. e., its exchange rate with some other currency.
3) Calculating these market caps and comparing bitcoin with all world currencies, where its mar-
ket cap ranks seventh at the time of their writing.
4) Recognizing the weak logic of step 1 and thus distinguishing between “speculative demand” as
measured in market-cap data and “transactions demand” as that which must be demonstrated
to prove that bitcoin is money.
5) Offering this proof for transactions demand: “Bitcoin serves no non-monetary purpose. Its only
usefulness, if it has any use at all, is in functioning as a medium of exchange. Hence, specula-
tion must ultimately be concerned with the extent to which bitcoin will function as a medium of
exchange” (148, emphasis added).
6) Bitcoin is money. QED.

There is no need for a point-by-point engagement with this astonishing piece, but I will highlight
step 5 in the argument, a move which is like assuming the tulip bubble was driven by believers in
the future use-value of tulips. Put differently, their logic rests on the rigid assumption that market
prices for a derivative must ultimately be founded on the value of the underlying asset. In our ear-
lier discussion of the logic of the derivative, we already proved this assumption false, but both the
history and present of market prices in derivatives shows it just as false, and does so on a daily
basis. The fact that people speculate on bitcoin today simply cannot be translated into future “de-
mand” for the use of bitcoin as a medium of exchange.
 4 Bitcoin: Digital Metallism 181

maps the problem that bitcoin and blockchain seek to solve: third-party trust. The
goal of bitcoin and a proof-of-work blockchain²¹ is to make it possible for party A to
pay party B “without the need for a trusted third party” such as a financial or gov-
ernmental institution (i. e., a bank of some sort) (Nakamoto 2008: 1). Put differently,
bitcoin aims to eliminate the need for bank money – and thereby, perhaps, to elim-
inate banks.
To achieve this lofty goal, bitcoin grounds its new vision of money on the very
old idea of a coin, newly reimagined: “We define an electronic coin as a chain of
digital signatures. Each owner transfers the coin to the next by digitally signing”
(Nakamoto 2008: 2). Bitcoin is a computer program that establishes a peer-to-
peer consensus protocol to maintain a decentralized database, using cryptography
to create, specify the ownership of, and allow for the transfer of these “electronic
coins.” The bitcoin blockchain makes it possible to authenticate the transfer of
coins from one user to another, and to create new coins through the verifica-
tion/mining process. The coin itself is a singular entity, not a relation between par-
ties – that is, the coin is nothing more or less than a long, unique string of alpha-
numeric characters.
Although the white paper makes no such suggestion, early enthusiasm around
possible utopian bitcoin futures led some to contemplate the idea of bitcoin becom-
ing a new money of account.²² Of course, bitcoin has failed here too. Indeed, bit-

21 My analysis of bitcoin should apply in a general sense to any proof-of-work blockchain, but it
does not apply to proof-of-stake blockchains or to most stablecoins. In the former case, proof of
stake, despite selling itself as an advancement over energy-burning proof of work, actually fails
entirely to implement a decentralized ledger (see Mariz 2023). In the latter case, the large and dom-
inant stablecoins hardly even pretend to be decentralized. While the tokens exist on the block-
chain, they are very much tokens of debt issued by institutions, and token holders become not
owners of coins but mere depositors at stablecoin shadow banks.
22 Using Keynes’s twofold terminology, we might see bitcoin as promising to become not just a
new form of money-credit instrument (money proper) but a de novo alternative money of account.
This would be a money of account wherein the ledger was held not by banks and other financial
authorities, not by central banks and governments, but distributed across all users/owners of the
money itself. This radical idea that bitcoin might literally replace dollars and euros as the domi-
nant money of account has contributed mightily to much of the confusion around bitcoin. To
state the problem in general terms: to aim to establish a new money of account simultaneously
sets the bar too high and too low. Too high because the emergence of a money of account – that
is, the name of money – happens historically for a series of complicated social and political reasons.
For example, the euro became a money of account because of the political project of the European
Union. So the idea that we would start measuring value in terms of bitcoin – that bitcoin would
become denomination – is not something that could occur solely due to the technical feats achieved
by the blockchain. Too low because we can always create a new money of account simply by cre-
ating a new credit that we denominate in that money of account. In our hypothetical example from
182 Chapter Seven: Money Today

coin’s putative “success” – understood in terms of its increasing value as a specu-

lative asset – attests to this fact. Dollars, euros, and other major moneys of account
all serve to measure bitcoin’s “value.” No one prices things in BTC, even those rare
entities that purport to take payment in BTC, and no one measures their household
balance sheets in bitcoin. This issue remains tangential to the question “Is bitcoin
money?” because “serving as money of account” would just be another functional-
ist category. At the level of our broader theory, for bitcoin to be money we must see
examples of bitcoin-denominated money-credits, held by specific creditors on par-
ticular debtors. “Is it money of account?” is the wrong question.²³ At the particular
level, and as always, functionalism will not work here: US Treasury bills are not
money of account (dollars are), but US Treasury bills are money-credits (while
the abstract “dollar” is not).
Hence we need to ignore the heavenly hopes of the bitcoin believers, and focus
more modestly on the question of bitcoin as money-credit. Every functionalist ap-
proach confines its analysis to the empirical register and therefore limits our ca-
pacity to explore the being of bitcoin. But this is exactly what we need to analyze –
the ontology of bitcoin. Moreover, once we shift to this register, the analysis itself
proves straightforward. This book has shown that the being of money is credit; bit-
coin fails utterly to be money because it fails to be credit/debt. The raison d’être of
bitcoin – to establish transferable digital coins without reliance on a trusted third
party – is antithetical to the nature of money. In the white paper’s rhetoric around
money, in the computer architecture it proposes, and in the implementation of the
code for the first proof-of-work blockchain, bitcoin consistently and quite explicitly
rejects credit/debt.
In a colloquial but illuminating sense, this book argues throughout that money
is bank money. To have money we must have the money array: creditor, denominat-

Chapter 5, “goats” become a money of account, and logically there is no reason why they could not
do so. More to the point, the fact of being the name of money does not tell us anything at all about
that which answers to that name – that is, in Keynes’s terms, “money proper.” To put this point
starkly: dollars are not money in the sense of the money stuff. Dollars are money of account,
the name we give to the denomination of actual money-credits (money stuff ). In almost all respects
the theoretical vision of the bitcoin white paper is dominated by the metallist view – money as a
commodity of intrinsic value and limited supply. Yet in this one respect we might read the early
enthusiasm as also trapped by the Keynesian misstep that I diagnosed in Chapter 1: the belief that
“money of account” somehow is, simpliciter, the full and proper concept of money, and consequent-
ly that the game is to become money of account.
23 Anything can function as money of account in the limited sense that we can express the value
of one asset in terms of some other asset. Nothing stops me from saying my house is worth 8 bit-
coins, but I can just as easily say my house is worth 2,000 barrels of oil. Such statements will turn
neither bitcoin nor oil into money.
 4 Bitcoin: Digital Metallism 183

ed token, and debtor. When I look at the asset column of my household balance
sheet, I find both money and non-money assets. To tell the difference I need
only ask: Which of my assets are listed on someone else’s balance sheet as a liabil-
ity? My bank deposits are liabilities for my bank, and the $20 bill in my wallet is a
liability for the Fed – these are money assets.
Bitcoin is not money, not because it fails to function as money, but because its
purpose is to be something other than money. Despite what its advocates might say,
when we look at the code itself, bitcoin aims to be not-money. As we know, for many
believers the broader goal of bitcoin is to rid the world of banks. This is not mere
rhetoric: vis-à-vis a basic money array (creditor, denominated token, and debtor),
the blockchain code eliminates the debtor and turns the creditor into a simple
owner. Bitcoin cannot be money because the ontology of bitcoin precludes
money-credit. Put differently, the being of a bitcoin proves quite unlike the
being of a £1 coin. The latter is a credit on the Bank of England, for which it rep-
resents a debt (measured in 1 pound sterling). The former also has a quantity and
denomination (1 bitcoin), but it lacks a debtor – and does so by design.
Bitcoin could only hope to be money if the orthodox theory of commodity
money were true. Indeed, bitcoin thoroughly replicates the false ontology of coin-
age that anchors all metallist theories – namely, the idea that coins have positive,
intrinsic value. But we know this idea has never held: historically all coinage has in
fact been token money – a symbol of credit for the holder and of debt for the is-
suer. To repeat just one key line from our initial arguments in Chapter 3: money (as
credit) cannot be singular; it always involves a relation to an outside party (debt-
or). I hold money when I hold a credit against someone else. The quarter in my
pocket is a debt token of the US Treasury.
In contrast, the bitcoin in my digital wallet is singular. By design, bitcoin is
never credit – thus never money. My money-credits are always and only claims
on my debtors. What Nakamoto calls “an electronic coin” turns out to be much
more like a fixed weight of “virtual gold” than an actual denominated money
coin. The blockchain serves to verify that the coin truly belongs to me, that I
have neither stolen nor counterfeited it. If I hold a bitcoin, no one owes me. It
may be an asset, but it is an asset like a commodity. It is not debt, and thus not
a liability for anyone. This means that the blockchain ledger is not a bank ledger
of assets and liabilities, but only a database listing ownership of digital coins – a
property register.
We reach the same simple end point as functionalist and other accounts – bit-
coin is not money – but our conclusion is much richer because we can see that the
being of bitcoin as “not money” is much more than an accident or the result of a
particular historical development. Rather, bitcoin is purposively not money; it is ex-
pressly designed to have a nature other than money, and this means bitcoin can
184 Chapter Seven: Money Today

never become money. The problem that Nakamoto set out to solve, the third-party
problem, is not a problem (and thus not in need of a solution) but is rather inher-
ent to the being of money.²⁴ By designing bitcoin to circumvent this structural fea-
ture of money, bitcoin’s creators guaranteed that bitcoin was not, nor could ever
be, money-credit.

5 The Ontology of Bitcoin

We can therefore answer our initial question in the negative – bitcoin is not money
– without worrying overly much about the specific historical details of bitcoin’s
development and current use. Yet we should not ignore the phenomenology of bit-
coin, because we should not rest with the initial question. If bitcoin is not money,
what is it? Interestingly, while the primary question has been posed repeatedly,
most commentary stops there. Our theory can do more.
In particular, we can write a richer ontology of bitcoin itself. Nakamoto says
that the digital coin created by the blockchain is intended to function like “digital
cash”; hence bitcoin tries to replicate the being “cash.” Of course, as discussed
above, a bitcoin is not really like a $20 bill; it’s like the metallist theory’s mythical
coins of intrinsic value. A bitcoin is like Jevons’s “standard coin” or Menger’s “most
saleable commodity.” If that sounds like the projection of nineteenth-century or-
thodox theories of money on to Nakamoto’s twenty-first-century technological in-
novation, we should note that Nakamoto himself explicitly offers the metaphor of

24 Perhaps the most forceful response, not only to my argument here about bitcoin, but also to the
entire theory of money developed in this book, would be a kind of outright rejection based on the
possibility of a future money radically different from past forms. This would mean accepting the
historical record showing that no concrete money practices have ever met the criteria for a met-
allist theory of money, but then refusing to allow this past to determine the potential future being
of money. In other words, though gold was never money, what if bitcoin could be? What if bitcoin
(or some other future technology) establishes fungible intrinsic value? What if we obviate the need
for money as bank money because we learn how to use easily tradable digital assets as our me-
dium of exchange, means of payment, store of value, and money of account? Answers to these
questions surely fall beyond the scope of this book, but I would indicate two possible lines of re-
sponse for those interested in this hypothetical. First, money as money-credit should not be taken
as a mere historical contingency, because capitalist societies absolutely depend on the endogenous
expansion and contraction of money-credits as part of the production, circulation, and realization
of value that functions as the economic engine of such societies (Mehrling 2012; Marx 2015). The
metallist theory is incompatible with the actual functioning of capitalism. Second, as I noted in
the Preface, the concrete historical development of cryptocurrencies serves as further evidence
that the dream of tradable intrinsic value proves illusory. Crypto set out explicitly to eliminate
bank money – and wound up reinventing bank money.
 5 The Ontology of Bitcoin 185

“gold miners expending resources to add gold to circulation” (Nakamoto 2008: 4).
Combine this with the rule limiting total supply of bitcoin, and we see that despite
all the rhetoric about money, bitcoin always modeled itself on the commodity. The
white paper details a system to transfer “money” wherein money is understood in
just the sense of the commodity theory.
Bitcoin thereby aims to construct a unique, perverse form of commodity. In a
way, the question so frequently posed to bitcoin – Is it money? – has always been
the wrong one. We should ask instead: Is bitcoin a commodity? A proper reply re-
quires a few words on the ontology of the commodity. As Marx shows, commodi-
ties are strange creatures because their nature is twofold (Marx 1977: 6). A com-
modity is, at one and the same time, both a use-value and an exchange-value.
As a use-value²⁵ it has an immediate, technical, and material use to which it can

25 “Use-value” is an apparently obvious but actually somewhat technical concept developed with-
in classical political economy; its meaning has been obscured or eclipsed by the common sense of
the neoclassical paradigm. That is to say, one of the many ways in which the “marginalist revolu-
tion” effected a paradigm shift was in its replacement of use-value with the new concept of utility
(including marginal utility). The two terms are absolutely not synonyms. “Utility” is the name for a
relative property of a commodity, its “usefulness.” The idea of utility is strictly subjective: it indexes
whether (and to what extent) something is useful to the individual actor. While utility is always
social and psychological, use-value is “immediate[ly] physical”; it names the material nature of
a commodity (Marx 1977: 6). This means that use-value is not a “property” of a commodity; it is
the very being of a commodity. The commodity is a use-value. To sharpen these contrasts, let us
take an example – say, a shovel. Neoclassical economists would consider the utility of the shovel
only by asking “Is the shovel useful to me?” If I have no need for digging, either in the present
moment or in my expectations about the future, then the shovel has no utility (“utility to me”
is simply redundant). The classical economist, however, would argue that the shovel is a tool
that digs, and as such, it is a use-value. It is and remains a use-value, whether or not it eventually
gets used. The shovel’s existence as a use-value remains a fact about it, independent of its owner’s
needs or wants. Just as not being used does not negate the being of a commodity as a use-value, so
the fact of general use cannot establish the use-value of a thing. Money is “used” and money is
“useful,” but money is not a commodity and it is not a use-value. This is just the other way of for-
mulating our essential point about money-credit as always pointing outside itself to the debtor. In
and of itself – positively or intrinsically – money is nothing at all. Money only exists as part of
social relations of credit and debt. I can surely “use” money, and it can be “useful,” but my use
of it depends on those social relations. Using money is therefore utterly unlike using a shovel.
An entity such as money can thus be a part of larger social practices that we may deem important
or “useful,” yet still not be a use-value. For Marx, the twofold ontological nature of commodities –
their being as both use-value and exchange-value – proves so important because the being of a
commodity as exchange-value is purely social (the price depends on the market, on needs,
wants, and desires of society), while the being of a commodity as use-value is material and “tech-
nical.” This does not make the concept of use-value essentialist or transhistorical: in a society that
utterly lacked either the concept or practice of digging, the shovel would not be a use-value. Within
our society, however, we can look at the shovel before us and understand it as a tool that can dig,
186 Chapter Seven: Money Today

be directly put; as an exchange-value it has a market price. Use-value is value in

use: a hammer is valuable in or for pounding nails. Exchange-value is the (poten-
tial) realization of value in money terms: a hammer sells for $10.
Bitcoin is not a commodity because it clearly fails to meet these basic condi-
tions: while it is surely an exchange-value as measured in a money of account
such as dollars or euros, bitcoin is not a use-value. A bitcoin itself (a “digital
coin”) – perhaps unlike the blockchain technology on which it is based – cannot
manifest as a use-value. There is nothing one can do with the coin other than
buy or sell it. Let me emphasize that buying and selling (or buying and holding)
are not themselves “uses” in the sense of commodity use-value. The use-value of
oil is not that people speculate on it in oil markets but that it is, among other
things, a source of fuel. To illustrate this crucial point, we can compare bitcoin
to the sort of actual gold coin that it appears to be mimicking. In 1820s Britain
the “sovereign” was a gold coin worth one “pound sterling,” i. e., £1 GBP. As we
know, as money-credit this coin is a symbol of debt of the British government
and circulates as such; it is no different from a £1 note, which is also money-credit.
As money-gold the sovereign (like the guinea before it) is not itself a commodity.
Nonetheless, the underlying token is constructed out of gold, and gold is a com-
modity. The gold metal is a use-value: it can fill cavities or serve as a conductor
of electricity. If the holder of the sovereign melts it down, then they have trans-
formed money-gold into commodity-gold. They might even choose to sell the com-
modity-gold for its exchange-value as a commodity, which could at times be greater
than its denomination in money (£1).²⁶ Gold is a commodity because it is not only
an exchange-value but also a use-value.
Bitcoin is not a use-value and thus cannot meet the criteria for being a com-
modity. We are vexed in our efforts to grasp the nature of bitcoin precisely by the
fact that it is neither money (because it is not credit) nor a commodity (because it
lacks a use-value, and is therefore not twofold in its being), yet it seemingly at-
tempts at every turn to look like commodity money – to take on the form of digital
gold.
The first component of our positive response to the question “What is bitcoin?”
must be that bitcoin is a mimetic technology. Bitcoin mimics the commodity form
(and falsely purports to be money on the basis of this mimesis).²⁷ The rule of a

even if we have no need of digging at the moment. It can be a use-value without that use-value
being realized through current use. As I show in this text: bitcoin fails this test; it is not a use-value.
26 This seems to have been the case around 1819, when the primary supply for France’s coinage
was itself melted-down British guineas (Clancy 1999).
27 Put differently, the bitcoin “play” is dual: first it passes itself off as a commodity, and then it
consequently purports to be money (conceived in metallist terms).
 5 The Ontology of Bitcoin 187

“limited supply” of coins, and the attendant requirement that creating the coins
requires the “work” (including massive energy expenditure) of “mining” them,
are both designed to give bitcoin a commodity-like appearance. The digital coins
are meant to have some intrinsic value (as commodities do in the form of their
use-values), and this is the guiding reason why individuals would want to hold
and transfer such coins, as well as why they would then increase in value. Indeed,
during the price run-up in 2021 (when bitcoin experienced a fivefold increase in
market value), bitcoin was often depicted through comparisons to gold: both bit-
coin and gold were purported, based on the fact of their limited supplies, to
serve as hedges against inflation.²⁸ This leads us to a preliminary conclusion: bit-
coin is a faux commodity – fake gold. ²⁹
I showed above that holding a bitcoin, verified by the blockchain, is nothing at
all like holding money-credit. Now we see, rather, that holding bitcoin is like hold-
ing an asset, for which the blockchain verifies ownership. Holding bitcoins is like
owning land or oil or any other commodity. Of course we are still operating within
the terms of the simile: it is “like” holding land or oil because bitcoin operates ac-
cording to a mimetic logic. But like all mimesis, the bitcoin mimicry of the com-

28 In the face of actual inflation in 2022 and the attendant collapse of bitcoin prices, this narrative
quickly disappeared.
29 As this manuscript was going into production, Matt Levine published “The Crypto Story,” a
major effort to write the definitive account of crypto – an intention signaled in the piece’s alternate
title, “The Only Crypto Story You Need.” In some ways Levine eschews the oft-posed question of
whether bitcoin is money; his concern lies with the practical realities of crypto’s emergence as
part of the landscape of contemporary finance. Nevertheless, at the end of a long footnote, Levine
distinguishes bitcoin from financial assets such as stocks, bonds, and derivatives, a distinction that
dovetails neatly with those I am drawing here. Having defined a financial asset as a contractual
claim on cash flows, he writes:

A lot of crypto is consciously not like [a financial asset]. Bitcoin is “digital gold.” It’s specifical-
ly not a financial asset; owning a Bitcoin doesn’t represent a claim on anyone else. A Bitcoin
exists as an independent thing that you can own, not a contractual relationship between parties
like stock or a bond. In the text I use “financial asset” in the extremely loose sense of, like, “a
thing with a fluctuating price that you can see on your computer screen and that hedge funds
can trade.” But cryptocurrencies aren’t technically financial assets, or not always anyway. (Lev-
ine 2022)

With this last phrase Levine keeps open the possibility that some crypto-firm tokens could act like
stock in the company, not that bitcoin could become money. Later Levine drives the point home
more forcefully: “Bitcoin are not debt. They’re just Bitcoin. They exist in themselves, on the block-
chain, rather than being liabilities of banks” (Levine 2022).
188 Chapter Seven: Money Today

modity never reaches the real, and therefore ultimately holding bitcoin is incom-
mensurable with holding a commodity. Commodities are tangible and material
(even if digital), and they are use-values. I can burn oil for fuel, build a house
on land for shelter, or use a spreadsheet computer application to balance my
household books – but I can do nothing of the sort with bitcoin.³⁰ Indeed, with bit-
coin my only options are those we find for financial assets as expressed in stan-
dard stock recommendations: buy, sell, or hold. It is not difficult to spot the differ-
ence between bitcoin as a kind of faux commodity, and actual commodities
(including digital ones) in the real world. Commodities are entities with specific,
concrete use-values, while at the same time they are also tradable (transferable)
entities with exchange-value. Bitcoin can of course be traded just like any other
commodity, yet bitcoin has no use-value.
We can unpack terms as follows, starting with money and commodities: a
commodity is twofold in its very nature as it is both a use-value and an ex-
change-value; the essence of money-credit is to be exchange-value (measure of
value) untethered from the physical body of a commodity and thus disconnected
from use-value. Bitcoin is a faux commodity precisely because it has the illusion
of use-value but no actual use-value. It can, of course, have an exchange-value be-
cause it has a market price that someone is willing to pay for it. Nonetheless, that
exchange-value, unlike with real commodities, has nothing to do with its physical
use-value because bitcoin has none. And the price at which bitcoin trades, unlike
money-credit (unlike all forms of credit), has nothing to do with the validity of the
credit (the strength of the debtor) because bitcoin is not a credit against another
party.³¹

30 Note that bitcoin’s failure to be a use-value has nothing directly to do with its digital nature,
which is beside the point. Computer software and online services are both digital and very
much real commodities with practical use-values. Bitcoin has no such use-value.
31 At the end of Chapter 5, and in the context of a very different discussion, I raised the hypothet-
ical of the US government deciding to accept bitcoin in payment of taxes. We can now say again
that such an action would not make bitcoin money. It would simply mean that as a legal means
of payment for taxes owed, the US government agrees to accept a specified payment in kind.
That is, they would take payment in the form of a designated commodity – in this case, a faux com-
modity. This would be odd, but certainly not unique. After all, if they wanted to do so, the govern-
ment could accept barrels of oil or any other standard commodity as means of payment.
 6 Crypto Markets 189

6 Crypto Markets

This leads to the most significant question of all: If bitcoin is neither money nor a
commodity, then why is there such a massive market in it – a market that looks
and appears to function just like a money market? This question rarely gets
asked directly, but it underlies the basic sense that bitcoin is important and that
bitcoin might be money after all – or, if not money, at least a revolutionary new
technology. If trillions of dollars have been moved into the crypto universe, then
something must be going on there.³² Perhaps the strongest evidence in support
of bitcoin being money or money-like appears on price-list pages of crypto web-
sites: these read just like the listings for stocks, bonds, derivatives, and national
currencies. Crypto markets appear to be money markets. But are they? Our
work in the last chapter on money markets (and thus on financial exchange)
makes it possible to answer this question.
As of my writing in late 2022, the total value of all “minted” bitcoins is just over
$400 billion, having gone as high as $600 billion in June 2021. Ethereum comes next
at a total value just over $200 billion, followed by three stablecoins totaling approx-
imately $150 billion. The list itself expresses the intuitive appeal of an argument
like that of Hazlett and Luther, who conclude almost solely on the basis of its “mar-
ket cap”³³ that bitcoin must be money.³⁴ Their implicit logic appears to be: if it is

32 That’s a big “if.” While it proved common during both the 2021 crypto run-up and the 2022
“crypto winter” to describe the crypto universe as valued at $1–$3 trillion, the actual amount of
money moved into crypto (as opposed to bogus mark-to-market valuations of issued tokens) proves
drastically smaller than that. For more details on market cap, see Footnote 33.
33 It has become standard practice to refer to the “market cap” of a cryptocurrency or stablecoin,
but this is a misleading use of that terminology. “Market capitalization” names the total value of all
floating shares (or total shares) of a corporation’s stock, and therefore serves as an indicator of the
total value of the company: if you bought all the shares of stock available, it would cost you this
amount, and you would then “own the company” in the sense of owning all its stock. But bitcoin
is not a company – it does not make a product, does not earn profit, and it is not for sale – so
referring to its market cap only serves as a sleight of hand, by suggesting that bitcoin is like the
Walt Disney Corporation (as of my writing, the Disney market cap is just a bit less than the
total value of all bitcoins). As I show, when used to refer to stablecoins, “market cap” is even
more misleading. For the definitive explanation and critique of crypto market cap, see White
(2022).
34 Hazlett and Luther’s article uses data from 2018, estimating bitcoin’s market cap at $129 billion.
Both their number and mine are indeed very large numbers, but we have to ask: Compared to
what? Hazlett and Luther compare the “market cap” of national currencies (against which the bit-
coin number ranks highly), but we have already shown that this comparison is meaningless be-
cause bitcoin is neither “currency” (in this sense of money of account) nor money-credit. And bit-
coin’s so-called market cap number does not seem so impressive if we take other markets as our
190 Chapter Seven: Money Today

traded like money, it must be money (money is that money trades). Of course,
Chapter 6’s development of the logic of the derivative reveals the weakness in
such reasoning. Lots of things are traded like money that are not in fact money.
Nevertheless, the size and scope of the bitcoin market offer a clue to bitcoin’s
nature that can lead us to a better simile: perhaps bitcoin is not-money like oil is
not-money. We know that the market in oil looks like a money market because de-
rivatives are money-credits, and thus the market in oil futures is a money market.
The fact that a derivative on oil exists makes possible a money market in “oil” (i. e.,
oil futures). This line of analysis would suggest that if we want to explain the mar-
ket in bitcoin, we need to locate/discern the bitcoin derivative.
Unfortunately, this is no mean feat for the obvious reason: the bitcoin market
itself is not a futures or options market. Bitcoins are not derivatives on some un-
derlying asset; bitcoins are the assets. When traders buy and sell bitcoins, they are
not swapping futures contracts for bitcoins, as they are for oil. Rather, we want to
say they are buying actual coins – faux commodities but “actual” digital coins – not
a derivative on these coins. How do we explain the bitcoin market as something
that looks like a money market but manages to do so apart from a dominant de-
rivative market?³⁵ This question cuts to the core of the peculiar nature of bitcoin.

comparison: gold ($10 trillion); total outstanding credit default swaps ($1.5 trillion); daily turnover
of the forex market ($6.6 trillion) (BIS 2019).
35 It should come as absolutely no surprise that derivatives on bitcoins – futures contracts (and
even options on futures contracts, i. e., second derivatives) – have in fact been created by dealers
and do trade on exchanges. However, the mere existence of derivatives on bitcoins does not solve
the mystery of the nature of bitcoin, and this for a few reasons. First, as a derivative on a faux
commodity with no use-value, bitcoin futures exist only as a kind of degenerate form of derivative.
They cannot simply be assumed from the outset to be the same kind of entity as a derivative on an
actual commodity. That is, the price of oil is related to, yet distinct from, the price of oil futures, and
the former maintains a link to concrete reality (the production, distribution, and consumption of
oil) – and this matters when we try to make sense of the derivative market in oil. Second, the bit-
coin derivative market is extremely small as a ratio of the overall market in the faux commodity
itself. Derivative markets are typically much larger than the market in the underlying asset; this is
true for both commodity-market derivatives and money-market derivatives (see BIS 2023). This re-
lationship is inverted for bitcoin. For example, where oil futures are roughly eight times larger
than the oil market, the bitcoin futures market is only one fifth the size of the bitcoin market.
Clearly the derivative market is not the same driving force for the bitcoin faux commodity as it
is for other commodity markets. Third and finally, even if the derivative market for bitcoin looked
similar to other derivative markets, and even if we wished to ignore the radical difference between
a faux commodity and a real commodity, we would still be left to explain how the bitcoin market
itself functions like a money market – in a way that does not occur for other commodity markets.
Here we recall Chapter 6’s discussion of futures markets, where we showed that spot prices in
commodities are not an actual daily market price but simply a record of past purchases and
sales that cannot be disentangled from the derivative markets. The “money market” in bitcoin ex-
 6 Crypto Markets 191

The bitcoin market resembles a derivative market, despite the fact that bitcoin is
not money-credit and despite the fact that what is being traded are not derivatives
on bitcoins but actual bitcoins. How is this possible?
The answer lies in the unique nature of bitcoin as a faux commodity, as digital
gold. To unfold this claim we start with the logic of the derivative: the derivative
makes it possible to create a money-credit entity out of a commodity or commod-
ity-like entity. A derivative is a form of money-credit for two reasons: the derivative
contract establishes a relation of credit/debt between two parties, and as a strictly
financial entity, the derivative (partially) disconnects the exchange-value of the un-
derlying asset from any use-value it might have (if that asset is a commodity).
As a technology that mimics commodity-gold, bitcoin is immediately derivative-
like because it is immediately untethered from use-value. Bitcoin is neither money
(because it is not a form of credit/debt) nor a derivative (because the price of bit-
coin is not derived from the price of some underlying asset). Nevertheless, in its
technological mimicry of a commodity, in its capacity to create faux gold, bitcoin
establishes one of the key aspects of both a derivative and money: it is a pure, in-
dependent form of exchange-value. Bitcoin has accomplished what a derivative on
a real commodity aims for: the creation of a homogenous tradable asset. The dif-
ference lies here: a normal derivative establishes its price on the basis of, and in
distinction to, the underlying asset’s value, whereas the faux commodity (bitcoin)
has one, and only one, price. There is no spot price for bitcoin as there is for oil.
Crucially, given the fact that bitcoin is neither money nor a derivative, a mar-
ket in bitcoin cannot form “naturally” or on its own. The mimetic technology that
constructs the faux commodity of “digital cash” is insufficient to create a money
market in bitcoin, so we must be wary of concluding that the trade in bitcoin
emerges directly from the original white paper and the first implementation of
the bitcoin network – or of thinking that any faux commodity would necessarily
circulate organically in money markets.
To see why, we underscore a pivotal fact about the bitcoin network: one cannot
trade bitcoins on the blockchain. The blockchain makes it possible for the owner of
a bitcoin to transfer it to another network user (who then becomes the new owner
of the faux commodity), but financial exchange (or economic exchange) cannot be
carried out on the network. Financial exchange requires swapping money-credit
for money-credit, but there is no way to accomplish such a swap within the block-

isted well before the first bitcoin derivative was created, and even today still seems to function
much more independently of the futures markets than is typically the case.
192 Chapter Seven: Money Today

chain – as that technology cannot circulate credit/debt but only change ownership
of pre-existing assets.³⁶
The crypto money markets would never have emerged were it not for the
emergence of exchanges. These internet sites (or smartphone apps) construct a
space (a market) where users can swap faux commodities for real money. The bit-
coin code and bitcoin network create neither money nor even a space for financial
exchange. They merely construct the faux commodity itself – mine the digital gold
– which can then be exchanged only outside of the bitcoin network. Both the early
(sometimes inefficient, sometimes legally grey) exchanges, and today’s more estab-
lished (yet still sometimes legally grey) exchanges make a market in the faux com-
modity possible by facilitating the transfer of bitcoin from user to user on the
blockchain by literally moving money-credits (bank money) from person to person
outside the blockchain.
Returning to our earlier discussion, we can now conclude that the exchanges
make the market in bitcoin possible because the exchanges act like banks (see Lev-
ine 2022) – and their existence performs a derivative-like function.³⁷ That is, the

36 Arguably one could use the blockchain to accomplish a rudimentary form of economic ex-
change: you give me a commodity (directly, in the physical world), and I transfer bitcoin to you.
Notice, however, that this is not truly economic exchange as we have defined it because rather
than swapping commodity for money-credit, we would be exchanging a real commodity for a
faux commodity. In other words, consistent with its Mengerian vision of money, bitcoin creates
the possibility not for electronic exchange, but merely (one-sided) electronic barter.
37 Crypto markets also look a lot like stock markets, and not just because people are trading both
crypto and stock on their Robinhood app. Despite their ubiquity, stocks are also somewhat bizarre
entities: they are a bit like, but also unlike, many other things. A stock is a share of ownership in a
capitalist firm; stocks are known as equities because each share of stock denotes a percentage own-
ership in the firm. The stockholder therefore owns some portion of a capitalist firm, but the stock
is not a commodity because it has no direct use-value. Owning stock conveys certain rights – for
example, to liquidation value, or to vote on certain company decisions. Yet the stock does not give
any formal rights to future profits (dividends). Stocks do not produce direct rents the way owner-
ship of other properties does. Stocks are classed with bonds as “securities” because both are claims
on a company. But whereas a bond is clearly a money-credit (a loan to the company), the nature of
a stock’s “claim” proves much more amorphous. The stock is not a specifically denominated money
claim (the company does not owe the stockholder a specified debt). We can see two moments in a
company’s history when a stock turns into a money claim: first, if the company is sold; second, if
the company goes bankrupt. In the first instance stockholders themselves will be bought out at an
agreed share price; in the second case, stockholders will hold a claim against the company’s assets,
though those claims have secondary status compared to bond holders.
Stocks get grouped with bonds under the classical definition of a “financial asset” as “a con-
tractual claim on the cash flows of some person or entity” (Levine 2022), but here again their in-
clusion seems odd because the actual contractual claim proves vague or nebulous in the case of a
stock. The bond I hold on Apple Inc. specifies exactly how much they owe me, and when; my shares
 6 Crypto Markets 193

exchanges allow bitcoin, a faux commodity, to circulate the same way a derivative
on a real commodity would do. Summing up, we can identify two necessary (but
insufficient) conditions for a bitcoin money market to come into being:
1) The creation of the mimetic technology itself, the construction of a faux com-
modity, which, by definition, will be a singular entity (not a relation of credit/
debt) posited as having intrinsic value, and capable of being assigned an ex-
change-value. The digital gold mimics real gold, but has no use-value.
2) The emergence of a space where the faux commodity can be traded for money.
Such a space makes possible a unique form of exchange: the swapping of real
money-credits for faux commodities. Only on these exchanges does money
exist and circulate.³⁸ Money circulates through the exchange, while the block-
chain network updates and verifies the transfer of ownership of the digital
coin.

of Apple stock indicate no such thing. Despite all this, a market in stocks exists because dealers
make such a market by offering to buy or sell these partial ownership claims – shares – at speci-
fied prices.
As with the bitcoin exchanges, the creation of a stock exchange performs a derivative-like
function: it transforms a non-money entity (a legal title to partial ownership) into a money-like
entity (a tradable share with a market price). The stock exchange makes stocks appear even
more like bonds: both are claims on a company, where such claims can be priced, bought, and
sold, and companies can fund their operations either by issuing stocks or bonds. As with bitcoin,
stocks are not a derivative on an underlying commodity because the price of the stock is not tied to
some other asset (the stock is the asset). Of course, the comparison to bitcoin hits a hard limit in
the fact that to own stock is to hold legal title over an actual firm that makes and sells products,
generates revenue, and may turn a profit (or might go bankrupt). The stock always points toward
the firm and its real-world practices. To own bitcoin is to be verified on the blockchain as the valid
owner of a unique alphanumeric string. The bitcoin points nowhere else.
In case I have failed to make stocks seem weird, I will conclude with a note about how the
“ownership” above actually works today:

Nobody owns stock. What you own is an entitlement to stock held for you by your broker. But
your broker doesn’t own the stock either. What your broker owns is an entitlement to stock held
for it by Cede & Co., which is a nominee of the Depository Trust Company, which is a company
that is in the business of owning everyone’s stock for them. This system sounds convoluted but
actually makes it easy to keep track of things: If I sell stock to you, I don’t have to courier over a
paper share certificate, or call up the company and have it change its shareholder register. Our
brokers just change some electronic entries at their DTC accounts and everything is cool. (Lev-
ine, 14 July 2015)
38 And when the exchanges blow up, the money disappears. The bankruptcy of FTX, with the loss
of billions of dollars of customer funds (real money, sent to the exchange through bank transfer),
provides the most prominent example.
194 Chapter Seven: Money Today

The faux commodity functions like a derivative if and only if there is an exchange
on which it can circulate. Combining the bitcoin/blockchain technology with the
exchanges for trading bitcoin gives rise to the unique bitcoin market.³⁹
Such a market does not quite fit either of our models for exchange. The market
in bitcoin is not exactly like the market in blue jeans (economic exchange) because
bitcoins have no use-value. Yet it is also not quite like the forex market (financial
exchange) because bitcoins are not a form of money-credit. We might say the bit-
coin market is a deranged form of economic exchange, one in which faux commod-
ities circulate in exchange for real money. Or we might say that the bitcoin market
most closely resembles a futures commodity market. Bitcoin trades like derivatives
on real commodities trade. But even here the analogy is incomplete because bit-
coin itself is the “underlying” asset. There is no need for the derivative because,
as a faux commodity, bitcoin already functions like a derivative.⁴⁰ Bitcoins are
like oil futures without spot prices.

39 To address decentralized finance (DeFi) properly would require another entire chapter, and
much of the DeFi space is dominated by Ponzi schemes and rug pulls. There may be at least
one exception: the “decentralized stablecoin” DAI. DAI is the only example I know that meets
the criteria of “crypto money,” where, by “crypto,” I mean truly decentralized and fully maintained
on the blockchain (thus excluding all the major stablecoins), and by “money,” I mean money as
money-credit (thus excluding all the proof-of-work coins which are not credit/debt). DAI is issued
only when a user takes out a corresponding loan, called a “collateralized debt position” (CDP). It is
a swap of IOUs on the blockchain: DAI is the user’s deposit money, and CDP is the loan. The CDP
loan is secured by locking up 150 % of the value of the loan in ether (ETH) that the user already
holds. If the price of either ETH or DAI moves in such a way as to put pressure on the securitization
of the CDP loan, the smart contract can automatically liquidate the collateral and sell it to cover the
repayment of the CDP loan. DAI therefore functions similarly to both margin trading (using crypto
collateral to take out loans to buy more crypto) and repo (the smart contract functions like a repo
dealer, automatically taking ownership of the collateral for the loan, if need be). DAI therefore
makes possible a tiny amount of money creation within the crypto universe. Here again, Levine’s
recent argument echoes my account: “DeFi is good at lending crypto secured by crypto. The collat-
eral lives on the blockchain; the loan lives on the blockchain; they’re connected by smart contracts
on the blockchain. It’s all pretty neat. But this sort of lending crypto against crypto doesn’t
do much” (Levine 2022). The italicization of that penultimate word means a lot, for as Levine ex-
plains, all DeFi can really do is create margin for trading crypto, whereas “a mortgage lets you buy
a house” (Levine 2022).
40 One might try to interpret bitcoin as a derivative based on the value not of the coin itself
(with intrinsic value) but on the blockchain technology, with the latter serving as the “under-
lying asset.” This will not work for two reasons: 1) buying a bitcoin entails use of the blockchain,
but the owner of bitcoin receives no legal ownership over the blockchain technology; 2) in gen-
eral “technology” does not have an asset price because it is not itself a commodity with speci-
fiable exchange-value. Undoubtedly, the raison d’être of patent and intellectual property law is
to transform technology and ideas into legal commodities, but the blockchain is not and cannot
 7 Money and Capitalism 195

7 Money and Capitalism

It tells us something important – about money and money markets, about capital-
ism today – that in late 2022 bitcoin is trading at over $20,000/coin (having gone as
high as $68,000/coin), yet no one seems to really know what bitcoin is. My point in
making the extended argument for bitcoin as a faux commodity, and for the bit-
coin market as a derivative-like market, is not simply to get bitcoin “right” for
its own sake but rather to expand our theory of money and indicate some of its
suppleness and extensibility – to demonstrate one of the many ways it can link
up with and contribute to a much wider body of work in political economy, polit-
ical theory, and public policy. To reprise the opening line of the book, money is
both the starting presupposition and the logical telos of a capitalist social order.
We live in societies structured not only by but also for money. This means that
any theory of society, any theory of culture, and any theory of politics proves in-
complete, perhaps even unviable, if it cannot account for money and money prac-
tices.
Earlier in this chapter I noted the common move to invoke a definition of
money through a tacit reference to the neoclassical paradigm’s normal science –
that is, by referring to how “economists define money.” But it does not matter
how economists define money if they are wrong. And, lest there be any confusion,
they are completely wrong. Money is not a commodity, and money has no value.
Money is more than the money stuff; it is the entire array that includes denomi-
nated token, creditor, and debtor, all realized within a viable money space. But
even at the level of the money stuff, the money token is always credit/debt, and
all credit/debt, ontologically, proves to be of the same nature – to be money-credit.
Capitalist social orders can thus be redefined as societies organized on the basis of
available money-credit, which they use to organize production to generate more
money-credit. Reformulated within the language of our theory of money, capital-
ism sounds strange indeed. This, I submit, proves to be one of the great merits
of our theory. Only by denaturalizing capitalism can we ever expect to understand
it – and only by understanding it could we ever hope to change it.

be commodified in this way. Much of the blockchain code is open source, but more importantly,
the whole point of a decentralized database is that it’s held publicly. The core tenet of blockchain
is the idea that no one can own it.
Bibliography
ACLU. 2018. A Pound of Flesh: The Criminalization of Private Debt. Report accessed 26 January 2023 at
https://www.aclu.org/report/pound-flesh-criminalization-private-debt.
Adkins, Lisa, Melinda Cooper, and Martijn Konings. 2020. The Asset Economy: Property Ownership and
the New Logic of Inequality. Cambridge, UK: Polity.
Aglietta, Michel, and André Orléan, eds. 1998. La Monnaie Souveraine. Paris: Éditions Odile Jacob.
Aglietta, Michel. 2018. Money: 5,000 Years of Debt and Power. Translated by David Broder, Pepita Ould
Ahmed, and Jean-François Ponsot. New York: Verso.
Anderson, Benjamin M., Jr. 1917. The Value of Money. New York: Macmillan.
Andre, Alex. 2021. “The Concealed Gift.” Anthropological Theory 21, no. 1: 50 – 81; https://doi.org/10.
1177/1463499620912964.
Arthur, Christopher J. 2004. The New Dialectic and Marx’s Capital. Leiden: Brill.
Backhaus, Hans-Georg. 1992. “Between Philosophy and Science: Marxian Social Economy as Critical
Theory.” In Dialectics and History. Vol. 1 of Open Marxism. Edited by Werner Bonefeld, Richard
Gunn, and Kosmas Psychopedis. London: Pluto; 54 – 92.
Bagehot, Walter. 1873. Lombard Street: A Description of the Money Market. London: Henry S. King.
Bal, Aleksandra. 2015. “How to Tax Bitcoin?” In Handbook of Digital Currency: Bitcoin, Innovation,
Financial Instruments, and Big Data. Edited by David Lee Kuo Chuen. New York: Academic Press;
267 – 282.
Banaji, Jairus. 2010. Theory as History: Essays on Modes of Production and Exploitation. Leiden: Brill.
Banaji, Jairus. 2020. A Brief History of Commercial Capitalism. Chicago, Illinois: Haymarket.
Bell, Stephanie. 1998. “The Hierarchy of Money.” Levy Economics Institute of Bard College Working
Paper no. 231.
Benes, Jaromir, and Michael Kumhof. 2012. “The Chicago Plan Revisited.” IMF Working Paper 12/02.
Accessed 26 January 2023 at https://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf.
Bhaskar, Nirupama Devi, and David Lee Kuo Chuen. 2015. “Bitcoin Exchanges.” In Handbook of
Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big Data. Edited by David Lee Kuo
Chuen. New York: Academic Press; 559 – 573.
BIS (Bank for International Settlements), Monetary and Economic Department. 2019. Global Foreign
Exchange Market Turnover in 2019. Triennial Central Bank Survey. Accessed 26 January 2023 at
https://www.bis.org/statistics/rpfx19_fx_annex.pdf.
BIS. 2022a. “What Drives Repo Haircuts? Evidence from the UK Market.” BIS Working Papers
no. 1027. Accessed 29 January 2023 at https://www.bis.org/publ/work1027.pdf.
BIS. 2022b. “Triennial Central Bank Survey: OTC Foreign Exchange Turnover in April 2022.” Accessed
23 March 2023 at https://www.bis.org/statistics/rpfx22_fx.pdf
BIS. 2023. “Global OTC Derivative Market.” Accessed 29 January 2023 at https://stats.bis.org/statx/
srs/table/d5.1.
Breen, T. H. 2001. Tobacco Culture: The Mentality of the Great Tidewater Planters on the Eve of
Revolution. Princeton: Princeton University Press.
Briscoe, John. 1694. Discourse on the Late Funds of the Million-act […]. London: s.n.
Bryan, Dick, and Michael Rafferty. 2006. “Money in Capitalism or Capitalist Money?” Historical
Materialism 14, no. 1: 75 – 95; https://doi.org/10.1163/156920606776690893.
Buchanan, Neil H. 2013. “If You’re Explaining, Everyone’s Losing (Platinum Coin Edition).” Accessed
March 16, 2023. http://www.dorfonlaw.org/2013/01/if-youre-explaining-everyones-losing.html.

https://doi.org/10.1515/9783110760774-012
 Bibliography 197

Buiter, Willem H. 2008. “Can Central Banks Go Broke?” Centre for Economic Policy Research
Discussion Paper Series. Discussion Paper no. 6827.
Campbell, Martha. 1997. “Marx and Keynes on Money.” International Journal of Political Economy 27,
no. 3: 65 – 91; https://doi.org/10.1080/08911916.1997.11643952.
Campbell, Martha. 2017. “Marx’s Transition to Money with No Intrinsic Value in Capital, Chapter 3.”
Continental Thought & Theory 1, no. 4: 207 – 230.
Carney, Mark. 2018. “The Future of Money.” Bank of England. Paper presented to the inaugural
Scottish Economics Conference, Edinburgh University. 2 March 2018. Accessed 26 January 2023
at https://www.bankofengland.co.uk/-/media/boe/files/speech/2018/the-future-of-money-speech-
by-mark-carney.pdf.
Carruthers, Bruce G. 1996. City of Capital: Politics and Markets in the English Financial Revolution.
Princeton: Princeton University Press.
Carson, Rebecca. 2018. “Money as Money: Suzanne de Brunhoff’s Marxist Monetary Theory.”
Consecutio Rerum 3, no. 5: 407 – 427.
Carter, Zachary D. 2020. The Price of Peace: Money, Democracy, and the Life of John Maynard Keynes.
New York: Random House.
Cencini, Alvaro. 1988. Money, Income, and Time: A Quantum-Theoretical Approach. London: Pinter.
Chambers, Samuel. n.d. “Marx’s Unorthodox Account of Money.” Unpublished manuscript (PDF), last
modified November 2019.
Chambers, Samuel. 2014. Bearing Society in Mind: Theories and Politics of the Social Formation.
London: Rowman and Littlefield International.
Chambers, Samuel. 2018. There’s No Such Thing as “The Economy.” Brooklyn: Punctum Books.
Chambers, Samuel. 2022. Capitalist Economics. London and New York: Oxford University Press.
Cheng, Jeffrey, and David Wesell. 28 January 2020. “What Is the Repo Market, and Why Does It
Matter?” Up Front. Brookings. Accessed 3 February 2023 at https://www.brookings.edu/blog/up-
front/2020/01/28/what-is-the-repo-market-and-why-does-it-matter/.
Choo, Kim-Kwang Raymond. 2015. “Cryptocurrency and Virtual Currency: Corruption and Money
Laundering/Terrorism Financing Risks?” In Handbook of Digital Currency: Bitcoin, Innovation,
Financial Instruments, and Big Data. Edited by David Lee Kuo Chuen. New York: Academic Press;
283 – 307.
Chuen, David Lee Kuo, ed. 2015. Handbook of Digital Currency: Bitcoin, Innovation, Financial
Instruments, and Big Data. New York: Academic Press.
Clancy, Kevin. 1999. “The Recoinage and Exchange of 1816 – 17.” PhD dissertation, University of
Leeds.
Connolly, William. 1987. Politics and Ambiguity. Madison: University of Wisconsin Press.
Coy, Peter. 10 December 2021. “Can We Trust What’s Happening to Money?” New York Times.
Accessed 29 January 2023 at https://www.nytimes.com/2021/12/10/opinion/cash-crypto-trust-
money.html.
Cronon, William. 1991. Nature’s Metropolis: Chicago and the Great West. New York: W.W. Norton.
dacoinminster. 2012. “The Second Bitcoin Whitepaper.” Vs. 0.5. Accessed 28 January 2023 at https://
drive.google.com/file/d/18iRKDmZy44YDd3jyEtafouT1PA7dEi5e/view.
Dalton, George, ed. 1978. Research in Economic Anthropology: An Annual Compilation of Research.
Vol. 1. Greenwich, Connecticut: JAI Press.
Davies, Glyn. 2002. A History of Money: From Ancient Times to the Present Day. Cardiff: University of
Wales Press.
198 Bibliography

De Brunhoff, Suzanne. 1973. Marx on Money. Translated by Maurice J. Goldbloom. New York: Urizen
Books.
De Vroey, Michel. 1984. “Inflation: A Non-Monetarist Monetary Interpretation.” Cambridge Journal of
Economics 8, no. 4: 381 – 399; https://www.jstor.org/stable/23596646.
Del Mar, Alexander. 1896. The Science of Money. Second edition. New York: Macmillan.
Desan, Christine. 2014. Making Money: Coin, Currency, and the Coming of Capitalism. Oxford: Oxford
UP.
Despain, Hans G. 22 June 2020. “Book Review: The Deficit Myth: Modern Monetary Theory and the
Birth of the People’s Economy by Stephanie Kelton.” LSE Review of Books. Accessed 29 January
2023 at https://blogs.lse.ac.uk/lsereviewofbooks/2020/06/22/book-review-the-deficit-myth-mod
ern-monetary-theory-and-the-birth-of-the-peoples-economy-by-stephanie-kelton/.
Diehl, Stephen. 2021. “The Intellectual Incoherence of Cryptoassets.” Accessed 29 January 2023 at
https://www.stephendiehl.com/blog/crypto-absurd.html.
Douglas, Alexander X. 2016. The Philosophy of Debt. London: Routledge.
Drumetz, Françoise, and Christian Pfister. 2021. “The Meaning of MMT.” Banque de France Working
Paper no. 833.
Drumm, Colin. 2021. The Difference That Money Makes: Sovereignty, Indecision, and the Politics of
Liquidity. eScholarship, University of California. https://escholarship.org/uc/item/57h0m1x1.
Drumm, Colin. 2022. “Bills of Exchange, Medieval and Modern.” Trial of the Pyx, 10 August. https://tri
alofthepyx.substack.com/p/bills-of-exchange-medieval-and-modern#footnote-anchor-2-68066428
Durand, Cédric. 2017. Fictitious Capital: How Finance Is Appropriating Our Future. Translated by David
Broder. New York: Verso.
Dymski, Gary A. 2006. “Money and Credit in Heterodox Theory: Reflections on Lapavitsas.” Historical
Materialism 14, no. 1: 49 – 73; https://doi.org/10.1163/156920606776690929.
Dyson, Ben, Graham Hodgson, and Frank van Lerven. 2016. Sovereign Money: An Introduction.
Positive Money. Accessed 29 January 2023 at http://positivemoney.org/wp-content/uploads/2016/
12/SovereignMoney-AnIntroduction-20161214.pdf.
Earley, James S. 1994. “Joseph Schumpeter: A Frustrated ‘Creditist.’” In New Perspectives in Monetary
Macroeconomics: Explorations in the Tradition of Hyman P. Minsky. Edited by Gary Dymski and
Robert Pollin. Ann Arbor: University of Michigan Press; 337 – 351.
Edgeworth, Francis. 1887. “Report on Monetary Standard.” British Association for the Advancement
of Science: 284 – 855.
Edgeworth, Francis. 1918. “The Value of Money by B.M. Anderson.” The Economic Journal 28, no. 109:
66 – 69; https://www.jstor.org/stable/i312715.
Ehnts, Dirk, and Nicolas Barbaroux. 2017. “From Wicksell to Le Bourva to Modern Monetary Theory:
A Wicksell Connection.” Berlin School of Economics and Law Institute for International Political
Economy Working Paper no. 92/2017.
Eich, Stefan. 2018. “Between Justice and Accumulation: Aristotle on Currency and Reciprocity.”
Political Theory 47, no. 3: 1 – 28; https://doi.org/10.1177/0090591718802634.
Eich, Stefan. 2019. “Old Utopias, New Tax Havens: The Politics of Bitcoin in Historical Perspective.” In
Regulating Blockchain: Techno-Social and Legal Challenges. Edited by Philipp Hacker, Ioannis
Lianos, Georgios Dimitropoulos, and Stefan Eich. Oxford: Oxford University Press; 85 – 98.
Eich, Stefan. 2022. The Currency of Politics: The Political Theory of Money from Aristotle to Keynes.
Princeton: Princeton University Press.
Elliott, Douglas J., and Larissa de Lima. 2018. Crypto-Assets: Their Future and Regulation. Oliver
Wyman, a Marsh & McLennan Company. Accessed 25 January 2023 at https://www.oliverwy
 Bibliography 199

man.com/content/dam/oliver-wyman/v2/publications/2018/october/Oliver_Wyman_Crypto-as
sets_Their%20Future%20and%20Regulation.pdf.
Ellis, Howard S. 1934. German Monetary Theory, 1905 – 1933. Cambridge, Massachusetts: Harvard
University Press.
European Central Bank. 2019. “Stablecoins – No Coins, But Are They Stable?” November 2019. In
Focus no. 3.
Faure, David. 2006. China and Capitalism: A History of Business Enterprise in Modern China. Hong
Kong: Hong Kong University Press.
Federal Deposit Insurance Corporation. 1984. The First Fifty Years: A History of the FDIC, 1933 – 1983.
Accessed 27 January 2023 at https://www.fdic.gov/bank/historical/firstfifty/.
Federal Deposit Insurance Corporation. 2017. Crisis and Response: An FDIC History, 2008 – 2013.
Accessed 27 January 2023 at https://www.fdic.gov/bank/historical/crisis/.
Federal Deposit Insurance Corporation. 2022. “Capital.” In Risk Management Manual of Examination
Policies, Section 2.1. Accessed 27 January 2023 at https://www.fdic.gov/regulations/safety/
manual/section2 – 1.pdf.
Federal Reserve System. 2016. The Federal Reserve System: Purposes & Functions. Tenth edition.
Federal Reserve System Publication; https://doi.org/10.17016/0199 – 9729.10
Feinig, Jakob. 2022. Moral Economies of Money: Politics and the Monetary Constitution of Society.
Stanford, California: Stanford University Press.
Ferguson, Frances. 2019. “Bitcoin: A Reader’s Guide (The Beauty of the Very Idea).” Critical Inquiry
46, no. 1: 140 – 166; https://doi.org/10.1086/705302.
Fichte, Johann Gottlieb. 2012. The Closed Commercial State. Translated by Anthony Curtis Adler.
Albany: SUNY Press.
Fields, David, and Matías Vernengo. 2013. “Hegemonic Currencies During the Crisis: The Dollar
Versus the Euro in a Cartalist Perspective. Review of International Political Economy 20,
no. 4: 740 – 759; https://doi.org/10.1080/09692290.2012.698997.
Fine, Ben, and Costas Lapavitsas. 2000. “Markets and Money in Social Theory: What Role for
Economics?” Economy and Society 29, no. 3: 357 – 382; https://doi.org/10.1080/
03085140050084561.
Fisher, Irving. 1911. The Purchasing Power of Money: Its Determination and Relation to Credit, Interest,
and Crises. New York: Macmillan. Accessed 27 January 2023 at https://oll.libertyfund.org/title/
brown-the-purchasing-power-of-money.
Fisher, Irving. 2010. The Money Illusion. Milton Keynes, UK: Lightning Source.
Foley, Duncan K. 1983. “On Marx’s Theory of Money.” Social Concept 1, no. 1: 5 – 19.
Foley, Duncan K. 2013. “Rethinking Financial Capitalism and the ‘Information’ Economy.” Review of
Radical Political Economics 45, no. 3: 257 – 268; https://doi.org/10.1177/0486613413487154.
Foucault, Michel. 1978. History of Sexuality: The Will to Knowledge. Volume 1. Translated by Robert
Hurley. New York: Vintage Books.
Friedman, Jeffrey, and Wladimir Kraus. 2011. Engineering the Financial Crisis: Systemic Risk and the
Failure of Regulation. Philadelphia: University of Pennsylvania Press.
Friedman, Milton. 1991. “The Island of Stone Money.” The Hoover Institution at Stanford University
Working Papers in Economics no. E-91 – 3.
Fullwiler, Scott, Stephanie Kelton, and L. Randall Wray. 2012. “Modern Money Theory: A Response to
Critics.” http://dx.doi.org/10.2139/ssrn.2008542.
Funke, Jayson J. 2017. “Demystifying Money: Fictions of Capital and Credit.” Human Geography 10,
no. 1: 20 – 35; https://doi.org/10.1177/194277861701000103.
200 Bibliography

Galbraith, James K. 2008. “The Collapse of Monetarism and the Irrelevance of the New Monetary
Consensus.” Paper presented at the 25th Annual Milton Friedman Distinguished Lecture at
Marietta College, Marietta, Ohio. Accessed 27 January 2023 at https://artsonline.uwaterloo.ca/
rneedham/sites/ca.rneedham/files/needhdata/documents/CollapseofMonetarismdelivered.pdf.
Galbraith, James K. 2018. “The Past and Future of Political Economy.” Review Essay. American Affairs
2, no. 4: 79 – 86.
Galbraith, James K. 2019. “Sparse, Inconsistent and Unreliable: Tax Records and the World Inequality
Report 2018.” Development and Change 50, no. 2: 329 – 346; https://doi.org/10.1111/dech.12475.
Ganßmann, Heiner. 2011. Doing Money: Elementary Monetary Theory from a Sociological Standpoint.
London: Routledge.
Gardiner, Geoffrey. 1993. Towards True Monetarism. London: Dulwich.
Gerson, Kelcie, Matthew Hornbach, and Guneet Dhingra. 2019. “Back to a Bigger Balance Sheet.”
U.S. Interest Rate Strategy, North America, Morgan Stanley Research.
Gerson, Kelcie, Matthew Hornbach, Guneet Dhingra, Betsy L. Graseck, Jay Bacow, Zuri Zhao, Philip
Salandra. 18 September 2019. “TOMOs, POMOs, and Bills, Oh My! FAQ on the Repo Surge.” US
Interest Rate Strategy, North America, Morgan Stanley Research.
Goldberg, Dror. 2015. “Money, Credit, and Banking in Virginia, 1585 – 1645.” Draft manuscript.
Accessed 26 January 2023 at https://economics.yale.edu/sites/default/files/goldberg-paper.pdf.
Goldstein, Jacob. 2020. Money: The True Story of a Made-Up Thing. New York: Hachette.
Gorton, Gary B., and Andrew Metrick. 2009. “Securitized Banking and the Run on Repo.” NBER
Working Paper no. 15223. Accessed 28 January 2023 at http://www.nber.org/papers/w15223.
Gould, J. D. 1964. “The Price Revolution Reconsidered.” The Economic History Review 17, no. 2:
249 – 66; https://doi.org/10.2307/2593005.
Graeber, David. 2011. Debt: The First 5,000 Years. Brooklyn, New York: Melville House.
Graseck, Betsy L., Manan Gosalia, Jeffrey Adelson, Ryan Kenny, Brad Fitter, and Emmanuel Nimarko.
23 September 2019. What Large Cap Bank Investors Are Asking: What Happened in the Repo
Market This Past Week? Morgan Stanley Research.
Greenspan, Alan. 1966. “Gold and Economic Freedom.” Accessed 22 December 2017 at http://www.
321gold.com/fed/greenspan/1966.html.
Grey, Rohan. Forthcoming. “Administering Money: Coinage, Debt Crises, and the Future of Fiscal
Policy.” https://ssrn.com/abstract=3536440.
Grierson, Philip. 1978. “The Origins of Money.” In Research in Economic Anthropology: An Annual
Compilation of Research. Vol. 1. Edited by George Dalton. Greenwich, Connecticut: JAI Press;
1 – 35.
Hamilton, Alexander. 9 January 1790. First Report on the Public Credit. Secretary of the Treasury. Report
communicated to the House of Representatives, 14 January 1790. Accessed 28 January 2023 at
https://founders.archives.gov/documents/Hamilton/01-06-02-0076-0002-0001.
Hawtrey, R. G. 1919. Currency and Credit. London: Longmans, Green, and Co.
Hayek, F. A. 1990. “Denationalisation of Money: The Argument Refined; An Analysis of the Theory
and Practice of Concurrent Currencies.” Third edition. London: The Institute of Economic
Affairs.
Hayes, M. G. 2018. “The Liquidity of Money.” Cambridge Journal of Economics 42, no. 5: 1205 – 1218;
https://doi.org/10.1093/cje/bey018.
Hazell, A. P. 1898. “Two Typical Theories of Money: The Quantity Theory of Money from the Marxist
Stand-Point.” Journal of Political Economy 7, no. 1: 78 – 85; http://www.jstor.org/stable/1825461.
 Bibliography 201

Hazlett, Peter K., and William J. Luther. 2020. “Is Bitcoin Money? And What That Means.” Quarterly
Review of Economics and Finance no. 77: 144 – 149.
Heidegger, Martin. 1962. Being and Time. Translated by John Macquarrie and Edward Robinson. New
York: Harper & Row.
Heidegger, Martin. 1972. On Time and Being. Translated by Joan Stambaugh. New York: Harper and
Row.
Heidegger, Martin. 2000. Introduction to Metaphysics. Translated by Gregory Fried and Richard Polt.
New Haven and London: Yale University Press.
Heinrich, Michael. 2009. “Reconstruction or Deconstruction? Methodological Controversies about
Value and Capital, and New Insights from the Critical Edition.” In Re-reading Marx: New
Perspectives after the Critical Edition. Edited by Riccardo Bellofiore and Roberto Fineschi. London:
Palgrave Macmillan; 71 – 98.
Heinrich, Michael. 2012. An Introduction to the Three Volumes of Karl Marx’s Capital. Translated by
Alexander Locascio. New York: Monthly Review.
Herian, Robert. 2019. Regulating Blockchain: Critical Perspectives in Law and Technology. London:
Routledge.
Hicks, J. R. 1962. “Liquidity.” The Economic Journal 72, no. 288: 787 – 802; https://www.jstor.org/stable/
i338976.
Hobart, Byrne. 14 November 2022. “Money, Credit, Trust, and FTX.” The Diff (blog). Accessed 29
January 2023 at https://www.thediff.co/p/money-credit-trust-ftx.
Howell, Alison, and Melanie Richter-Montpetit. 2020. “Is Securitization Theory Racist? Civilizationism,
Methodological Whiteness, and Antiblack Thought in the Copenhagen School.” Security Dialogue
51, no. 1: 3 – 22; https://doi.org/10.1177/0967010619862921.
Huber, Joseph. 2013. “Modern Money and Sovereign Currency.” Real-World Economics Review no.66:
38 – 57.
Hull, John C. 2009. Options, Futures, and Other Derivatives. Seventh edition. London: Pearson Prentice
Hall.
Ingham, Geoffrey. 1996. “Money Is a Social Relation.” Review of Social Economy 54, no. 4: 507 – 529;
https://www.jstor.org/stable/29769872.
Ingham, Geoffrey. 1998. “On the Underdevelopment of the ‘Sociology of Money.’” Acta Sociologica,
41, no. 1: 3 – 18; https://doi.org/10.1177/000169939804100101.
Ingham, Geoffrey. 2000. “‘Babylonian Madness’: On the Historical and Sociological Origins of
Money.” In What Is Money? Edited by John Smithin. London: Routledge; 16 – 41.
Ingham, Geoffrey. 2001. “Fundamentals of a Theory of Money: Untangling Fine, Lapavitsas and
Zelizer.” Economy and Society 30, no. 3: 304 – 323; https://doi.org/10.1080/03085140120071215.
Ingham, Geoffrey. 2004a. The Nature of Money. Cambridge, UK: Polity.
Ingham, Geoffrey. 2004b. “The Emergence of Capitalist Credit Money.” In Credit and State Theories of
Money: The Contributions of A. Mitchell Innes. Edited by L. Randall Wray. Cheltenham, UK: Edward
Elgar; 173 – 221.
Ingham, Geoffrey. 2004c. “The Nature of Money.” Economic Sociology: European Electronic Newsletter
5, no. 2: 18 – 28; http://hdl.handle.net/10419/155831.
Ingham, Geoffrey. 2006. “Further Reflections on the Ontology of Money: Responses to Lapavitsas
and Dodd.” Economy and Society 35, no. 2: 259 – 278; https://doi.org/10.1080/
03085140600635730.
202 Bibliography

Ingham, Geoffrey. 2012. “Revisiting the Credit Theory of Money and Trust.” In New Perspectives on
Emotions in Finance: The Sociology of Confidence, Fear, and Betrayal. Edited by Jocelyn Pixley.
London: Routledge; 121 – 139.
Ingham, Geoffrey. 2015. “‘The Great Divergence’: Max Weber and China’s ‘Missing Links.’” Max
Weber Studies 15, no. 2: 160 – 191; https://www.jstor.org/stable/24579905.
Ingham, Geoffrey. 2016. “The Nature of Money: A Response to Stefano Sgambati.” European Journal
of Sociology 57, no. 1: 199 – 206; https://doi.org/10.1017/S0003975616000060.
Ingham, Geoffrey. 2018. “A Critique of Lawson’s ‘Social Positioning and the Nature of Money.’”
Cambridge Journal of Economics 42, no. 3: 837 – 850; https://doi.org/10.1093/cje/bex070.
Ingham, Geoffrey. 2019. “Money, Credit, and Finance in Capitalism.” In The Oxford Handbook of Max
Weber. Edited by Edith Hanke, Lawrence Scaff, and Sam Whimster. Oxford Handbooks. Oxford:
Oxford University Press; 69 – 87; https://doi.org/10.1093/oxfordhb/9780190679545.013.4.
Ingham, Geoffrey. 2020. Money: Ideology, History, Politics. Cambridge UK: Polity.
Ingham, Geoffrey. 2021. “In Defence of the Nominalist Ontology of Money.” Journal of Post Keynesian
Economics 44, no. 3: 492 – 507; https://doi.org/10.1080/01603477.2021.1913755.
Ingham, Geoffrey. 2022. Email message to author, 4 November 2022.
Ingham, Geoffrey. Forthcoming. “Modern Money Theory: Sociology and Economics.” Cheltenham,
UK: Edward Elgar.
Ingves, Stefan. 2018. “The e-Krona and the Payments of the Future.” Paper presented at Di
Framtidens betalningar, June 2018. Accessed 25 January 2023 at https://www.bis.org/review/
r181115c.pdf.
Innes, A. Mitchell. 1913. “What Is Money?” Banking Law Journal 30: 377 – 408.
Innes, A. Mitchell. 1914. “The Credit Theory of Money.” Banking Law Journal no. 31: 151 – 168.
International Monetary Fund. 2022. “Special Drawing Rights: 7 Things You Need to Know about SDR
Allocations.” Accessed 29 January 2023 at https://www.imf.org/en/Topics/special-drawing-right/
seven-things-you-need-to-know-about-sdr-allocations.
Itoh, Makoto. 2006. “Political Economy of Money, Credit and Finance in Contemporary Capitalism:
Remarks on Lapavitsas and Dymski.” Historical Materialism 14, no. 1: 97 – 112; https://doi.org/10.
1163/156920606776690974.
Jaag, Christian, and Christian Bach. 2015. “The Effect of Payment Reversibility on E-commerce and
Postal Quality.” In Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and
Big Data. Edited by David Lee Kuo Chuen. New York: Academic Press; 139 – 151.
Jessop, Bob. 2015. “Hard Cash, Easy Credit, Fictitious Capital: Critical Reflections on Money as a
Fetishised Social Relation.” Finance and Society 1, no. 1: 20 – 37; https://doi.org/10.2218/finsoc.
v1i1.1369.
Jevons, William Stanley. 2011. Money and the Mechanism of Exchange. New York: D. Appleton and
Company. Accessed online 28 January 2023 at https://oll.libertyfund.org/title/jevons-money-and-
the-mechanism-of-exchange.
Kahn, Charles M., Francisco Rivadeneyra, and Tsz-Nga Wong. 2018. “Should the Central Bank Issue
e-Money?” Federal Reserve Bank of St. Louis Working Paper no. 2019 – 003 A. https://doi.org/
10.20955/wp.2019.003.
Kalecki, Michał. 1937. “A Theory of the Business Cycle.” Review of Economic Studies 4, no. 2: 77 – 97;
https://doi.org/10.2307/2967606.
Kelton, Stephanie. 2020. The Deficit Myth: Modern Monetary Theory and the Birth of the People’s
Economy. New York: Public Affairs.
 Bibliography 203

Kemmerer, Edwin Walter. 1935. Money: The Principles of Money and Their Exemplification in Outstanding
Chapters of Monetary History. New York: Macmillan.
Keynes, John Maynard. 1914. “What Is Money? By A. Mitchell Innes.” Review essay. The Economic
Journal 24, no. 5: 419 – 421.
Keynes, John Maynard. 1930. A Treatise on Money. Two volumes. Cambridge, UK: Cambridge
University Press.
Keynes, John Maynard. 1936. The General Theory of Employment, Interest, and Money. London:
Palgrave Macmillan.
Keynes, John Maynard. 1978. The Collected Writings of John Maynard Keynes: Volume 5, A Treatise on
Money. Edited by Elizabeth Johnson and Donald Moggridge. London: Royal Economic Society.
Killeen Alyse. 2015. “The Confluence of Bitcoin and the Global Sharing Economy.” In Handbook of
Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big Data. Edited by David Lee Kuo
Chuen. New York: Academic Press; 485 – 503.
Kim, Jongchul. 2011. “How Modern Banking Originated: The London Goldsmith-Bankers’
Institutionalisation of Trust.” Business History 53, no. 6: 939 – 959; https://doi.org/10.1080/
00076791.2011.578132.
Kincaid, Jim. 2006. “Finance, Trust and the Power of Capital: A Symposium on the Contribution of
Costas Lapavitsas; Editorial Introduction.” Historical Materialism 14, no. 1: 31 – 48; https://doi.org/
10.1163/156920606776690992.
Knapp, Georg Friedrich. 1924. The State Theory of Money. London: Macmillan.
Koddenbrock, Kai. 2017. “What Money Does: An Inquiry into the Backbone of Capitalist Political
Economy.” Max Planck Institute for the Study of Societies Discussion Paper no. 17/9. Accessed
28 January 2023 at https://www.econstor.eu/bitstream/10419/162118/1/889808678.pdf.
Kofman, Sarah. 1993. Nietzsche and Metaphor. Translated by Duncan Large. Stanford: Stanford
University Press.
Konings, Martijn. 2018. Capital and Time: For a New Critique of Neoliberal Reason. Stanford, California:
Stanford University Press.
Kregel, Jan. 2019. “Democratizing Money.” Levy Economics Institute of Bard College Working Paper
no. 928. Accessed 28 January 2023 at https://www.levyinstitute.org/publications/democratizing-
money.
Kristof, Andras. 2015. “National Cryptocurrencies.” In Handbook of Digital Currency: Bitcoin, Innovation,
Financial Instruments, and Big Data. Edited by David Lee Kuo Chuen. New York: Academic Press;
67 – 80.
Krugman, Paul. 27 March 2012. “Minsky and Methodology (Wonkish).” The Conscience of a Liberal.
New York Times. Accessed 3 February 2023 at https://archive.nytimes.com/krugman.blogs.ny
times.com/2012/03/27/minksy-and-methodology-wonkish/.
LabCFTC. 17 October 2017. “A CFTC Primer on Digital Currencies.” Commodity Futures Trading
Commission. Accessed 30 January 2023 at https://www.cftc.gov/sites/default/files/idc/groups/
public/documents/file/labcftc_primercurrencies100417.pdf.
Lanchester, John. 2016. “When Bitcoin Grows Up.” London Review of Books 38, no. 8. Accessed 16
January 2018 at https://www.lrb.co.uk/the-paper/v38/n08/john-lanchester/when-bitcoin-grows-
up.
Lange, Elena Louisa. 2019. “Money versus Value? Reconsidering the ‘Monetary Approach’ of the
‘Post’-Uno School, Benetti/Cartelier, and the Neue Marx-Lektüre.” Historical Materialism 28,
no. 1: 51 – 84; https://doi.org/10.1163/1569206X-00001851.
204 Bibliography

Lapavitsas, Costas. 2000. “Money and the Analysis of Capitalism: The Significance of Commodity
Money.” Review of Radical Political Economics 32, no. 4: 631 – 656; https://doi.org/10.1016/S0486-
6134(00)90004-4.
Lapavitsas, Costas. 2003. “Money as ‘Universal Equivalent’ and Its Origin in Commodity Exchange.”
Working Paper. Accessed 25 January 2023 at https://www.soas.ac.uk/sites/default/files/2022-10/
economics-wp130.pdf.
Lapavitsas, Costas. 2005. “The Social Relations of Money as Universal Equivalent: A Response to
Ingham.” Economy and Society 34, no. 3: 389 – 403; https://doi.org/10.1080/03085140500112137.
Lapavitsas, Costas. 2006. “Relations of Power and Trust in Contemporary Finance.” Historical
Materialism 14, no. 1: 129 – 154; https://doi.org/10.1163/156920606776690956.
Lau, Jeffrey. 2006. “The Capitalist Development of China: A Monetary and Financial Analysis.”
Unpublished manuscript.
Lavoie, Marc. 2003. “A Primer on Endogenous Credit-money.” In Modern Theories of Money: The
Nature and Role of Money in Capitalist Economies. Edited by Louis-Philippe Rochon and Sergio
Rossi. Cheltenham, UK: Edward Elgar; 506 – 543.
Lavoie, Marc. 2013. “The Monetary and Fiscal Nexus of Neo-Chartalism: A Friendly Critique.” Journal
of Economic Issues 47, no. 1: 1 – 32; https://doi.org/10.2753/JEI0021 – 3624470101.
Lavoie, Marc. 2019. “Modern Monetary Theory and Post-Keynesian Economics.” real-world economics
review no. 89.
Law, John. 1705. Money and Trade Considered: With a Proposal for Supplying the Nation with Money.
Glasgow: R. & A. Foulis.
Lawson, Tony. 2016. “Social Positioning and the Nature of Money.” Cambridge Journal of Economics
40, no. 4: 961 – 996; https://doi.org/10.1093/cje/bew006.
Lawson, Tony. 2018a. “Debt as Money.” Cambridge Journal of Economics 42, no. 4: 1165 – 1181; https://
doi.org/10.1093/cje/bey006.
Lawson, Tony. 2018b. “The Constitution and Nature of Money.” Cambridge Journal of Economics 42,
no. 3: 851 – 873; https://doi.org/10.1093/cje/bey005.
Lawson, Tony. 2019. The Nature of Social Reality: Issues in Social Ontology. London: Routledge.
Lawson, Tony. 2022. “Two Conceptions of the Nature of Money: Clarifying Differences between MMT
and Money Theories Sponsored by Social Positioning Theory.” real-world economics review
no. 101.
Lee, Benjamin, and Randy Martin, eds. 2016. Derivatives and the Wealth of Societies. Chicago:
University of Chicago Press.
Lerner, Abba P. 1947. “Money as a Creature of the State.” American Economic Review 37, no. 2:
312 – 17.
Levin, Richard B., Aaron A. O’Brien, and Madiha M. Zuberi. 2015. “Real Regulation of Virtual
Currencies.” In Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big
Data. Edited by David Lee Kuo Chuen. New York: Academic Press; 327 – 360.
Levine, Matt. 14 July 2015. “Banks Forgot Who Was Supposed to Own Dell Shares.” Money Stuff.
Bloomberg. Accessed 26 January 2023 at https://www.bloomberg.com/opinion/articles/2015-07-
14/banks-forgot-who-was-supposed-to-own-dell-shares.
Levine, Matt. 14 February 2022. “Shareholders Like Any Old Merger.” Money Stuff. Bloomberg.
Accessed 26 January 2023 at https://www.bloomberg.com/opinion/articles/2022-02-14/share
holders-like-any-old-merger.
 Bibliography 205

Levine, Matt. 30 November 2022. “The Nickel Market Almost Broke.” Money Stuff. Bloomberg.
Accessed 26 January 2023 at https://www.bloomberg.com/opinion/articles/2022-11-30/matt-lev
ine-s-money-stuff-nickel-market-almost-broke.
Levine, Matt. 2022. “The Crypto Story.” Bloomberg Businessweek, 31 October 2022 edition. Accessed
17 December 2022 at https://www.bloomberg.com/features/2022-the-crypto-story/.
Levrero, E. S. 2018. “Sraffa on Taxable Income and Its Implications for Fiscal Policy. Cambridge
Journal of Economics 42, no. 4: 1087 – 1106; https://doi.org/10.1093/cje/bex050.
Lewis, Michael. 2010. The Big Short: Inside the Doomsday Machine. New York: W.W. Norton.
Lim, Jonathan W. 2015. “A Facilitative Model for Cryptocurrency Regulation in Singapore.” In
Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big Data. Edited by
David Lee Kuo Chuen. New York: Academic Press; 361 – 381.
Macfarlane, Laurie, Josh Ryan-Collins, Ole Bjerg, Rasmus Hougaard Nielsen, and Duncan McCann.
2017. Making Money from Making Money: Seigniorage in the Modern Economy. London: The New
Economics Foundation. Accessed 28 January 2023 at https://research.cbs.dk/en/publications/mak
ing-money-from-making-money-seigniorage-in-the-modern-economy.
MacKenzie, Donald. 2006. An Engine, Not a Camera: How Financial Models Shape Markets. Cambridge,
Massachusetts: MIT Press.
Macleod, Henry Dunning. 1889. The Theory of Credit. Volume 1. London: Longmans, Green, and Co.
Mankiw, N. Gregory. 2010. Macroeconomics. Seventh edition. New York: Worth Publishers.
Mariz, Paul. 2023. “Blockchain for Everyone.” Accessed 31 January 2023 at https://inquisitivists.s3.us-
west-2.amazonaws.com/Blockchain_For_Everyone.pdf.
Markell, Patchen. 2006. “Ontology, Recognition, and Politics: A Reply.” Polity 38, no. 1: 28 – 39;
https://www.jstor.org/stable/3877088.
Marx, Karl. 1858. “Money as Means of Payment.” Second Draft of Critique of Political Economy. In
MECW. Volume 29: 430 – 507.
Marx, Karl. 1973. Grundrisse. Translated by Martin Nicolaus. New York: Penguin.
Marx, Karl. 1977. A Contribution to the Critique of Political Economy. Translated by S.W. Ryazanskaya.
Moscow: Progress Publishers.
Marx, Karl. 1978. Capital: A Critique of Political Economy. Volume 2. Translated by David Fernbach.
Edited by Frederick Engels. New York: Penguin.
Marx, Karl. 1981. Capital: A Critique of Political Economy. Volume 3. Translated by David Fernbach.
Edited by Frederick Engels. New York: Penguin.
Marx, Karl. 1990. Capital: A Critique of Political Economy. Volume 1. Translated by Ben Fowkes. New
York: Penguin.
Marx, Karl. 1996. Later Political Writings. Edited by Terrell Carver. Cambridge, UK: Cambridge
University Press.
Marx, Karl. 2015. Marx’s Economic Manuscript of 1864 – 1865. Translated by Ben Fowkes. Edited by
Fred Moseley. Leiden: Brill.
Massa, Annie, and Caleb Melby. 21 May 2020. “In Fink We Trust: BlackRock Is Now ‘Fourth Branch
of Government.’” Bloomberg Businessweek. Accessed 28 January 2023 at https://www.bloomberg.
com/news/articles/2020-05-21/how-larry-fink-s-blackrock-is-helping-the-fed-with-bond-buying.
Mattick, Paul, Jr. 1997. “Editor’s Introduction.” International Journal of Political Economy 27, no. 3: 3 – 5;
https://doi.org/10.1080/08911916.1997.11643949.
Mazzucato, Mariana. 2018. The Value of Everything: Making and Taking in the Global Economy. New
York: Public Affairs.
206 Bibliography

McKinney, Ralph E., Jr., Lawrence P. Shao, Duane C. Rosenlieb, Jr., and Dale H. Shao. 2015.
“Counterfeiting in Cryptocurrency: An Emerging Problem.” In Handbook of Digital Currency:
Bitcoin, Innovation, Financial Instruments, and Big Data. Edited by David Lee Kuo Chuen. New
York: Academic Press; 173 – 187.
McLeay, Michael, Amar Radia, and Ryland Thomas. 2014a. “Money Creation in the Modern
Economy.” Bank of England. Quarterly Bulletin 54, no. 1: 14 – 27.
McLeay, Michael, Amar Radia, and Ryland Thomas. 2014b. “Money in the Modern Economy: An
Introduction.” Bank of England. Quarterly Bulletin 54, no. 1: 4 – 13.
Mehrling, Perry. 2000. “Modern Money: Fiat or Credit?” Journal of Post Keynesian Economics 22, no. 3:
397 – 406; http://www.jstor.org/stable/4538686.
Mehrling, Perry. 2011. The New Lombard Street: How the Fed Became the Dealer of Last Resort.
Princeton: Princeton University Press.
Mehrling, Perry. 2012. “The Inherent Hierarchy of Money.” Paper prepared for Duncan Foley
festschrift volume and conference, 20 – 21 April 2012. Accessed 28 January 2023 at https://ieor.
columbia.edu/files/seasdepts/industrial-engineering-operations-research/pdf-files/Mehrling_P_
FESeminar_Sp12-02.pdf.
Mehrling, Perry. 2014. “Why Central Banking Should Be Re-Imagined.” Re-Thinking the Lender of Last
Resort. BIS Papers no. 79: 108 – 118. Accessed 28 January 2023 at https://www.bis.org/publ/
bppdf/bispap79i.pdf.
Mehrling, Perry. 2015. “Economics of Money and Banking.” Online course, Columbia University.
Accessed 15 January 2023 at https://www.coursera.org/learn/money-banking.
Mehrling, Perry. 2016. “The Economics of Money and Banking.” Handout for ECON V3265, Barnard
College, Columbia University. Fall 2016.
Mehrling, Perry. 2017. “Financialization and Its Discontents.” Finance and Society 3, no. 1: 1 – 10;
https://doi.org/10.2218/finsoc.v3i1.1935.
Mehrling, Perry. 2020. “Payment vs. Funding: The Law of Reflux for Today.” Institute for New
Economic Thinking Working Paper no. 113. https://doi.org/10.36687/inetwp113.
Meister, Robert. 2016. “Liquidity.” In Derivatives and the Wealth of Societies. Edited by Benjamin Lee
and Randy Martin. Chicago: University of Chicago Press; 143 – 173.
Meister, Robert. 2017. “Reinventing Marx for an Age of Finance.” Postmodern Culture 27, no. 2.
Accessed 28 January 2023 at https://www.pomoculture.org/2020/09/24/reinventing-marx-for-an-
age-of-finance/.
Menger, Carl. 2009. On the Origins of Money. Translated by C.A. Foley. Auburn, Alabama: Ludwig von
Mises Institute.
Michaelides, Panayotis, and John Milios. 2004. “Hilferding’s Influence on Schumpeter: A First
Discussion.” Paper presented at the European Association for Evolutionary Political Economy
Sixteenth Annual Conference on Economics, History, and Development. Crete, Greece. 28 – 31
October 2004.
Michell, H. 1951. “The Gold Standard in the Nineteenth Century.” The Canadian Journal of Economics
and Political Science 17, no. 3: 369 – 376; https://www.jstor.org/stable/137693.
Milios, John. 2001. “Marx’s Critique of (Ricardian) Political Economy, the Quantity Theory of Money
and Credit Money.” 2001. Paper presented at the Year 2001 Mini-Conference on Value Theory
and the World Economy. Crowne Plaza Hotel, Manhattan. 23 – 25 February 2001.
Milios, John. 2002. “Theory of Value and Money: In Defence of the Endogeneity of Money.” Paper
presented at the Sixth International Conference in Economics, Economic Research Center.
METU, Ankara. 11 – 14 September 2002.
 Bibliography 207

Milios, John. 2003. “Marx’s Value Theory Revisited: A ’Value-form’ Approach.” Proceedings of the
Seventh International Conference in Economics. Ankara: METU. Accessed 28 January 2023 at
http://users.ntua.gr/jmilios/F2_3.pdf.
Milios, John. 2006. “Capital after Louis Althusser: Focusing on Value-Form Analysis.” Paper presented
at the Conference Rileggere Il Capitale: La lezione di Louis Althusser. Department of Historical
Studies of the University Ca’ Foscari. Venice, Italy. 9 – 11 November 2006.
Milios, John. 2009. “Rethinking Marx’s Value-Form Analysis from an Althusserian Perspective.”
Rethinking Marxism 21, no. 2: 260 – 274; https://doi.org/10.1080/08935690902743518.
Milios, John. 2015. “Marx’s Monetary Theory of Value, Fictitious Capital and Finance.” Paper
presented at the Second International Seminar on the 150th Anniversary of The Capital
(1867 – 2017). Bogota, Columbia: 3 – 6 November 2015.
Minsky, Hyman. 1960. “The Pure Theory of Banking.” University of California Department of
Economics, Fall Semester.
Minsky, Hyman. 2008. Stabilizing an Unstable Economy. New York: McGraw Hill.
Mirowski, Philip. 1988. Against Mechanism: Protecting Economics from Science. Lanham, Maryland:
Rowman and Littlefield.
Mirowski, Philip. 1989. More Heat than Light: Economics as Social Physics; Physics as Nature’s
Economics. Cambridge, UK: Cambridge University Press.
Miyazawa, Kazutoshi. 2006. “The Anarchic Nature of the Market and the Emergence of Money.”
Historical Materialism 14, no. 1: 113 – 128; https://doi.org/10.1163/156920606776690875.
Moseley, Fred, ed. 2005. Marx’s Theory of Money: Modern Appraisals. London: Palgrave Macmillan.
Moseley, Fred. 2016. Money and Totality: A Macro-Monetary Interpretation of Marx’s Logic in Capital
and the End of the ‘Transformation Problem.’ Leiden: Brill.
Mosler, Warren B. 1994. “Soft Currency Economics.” Accessed 28 January 2023 at https://mosler
economics.com/wp-content/uploads/2018/04/Soft-Curency-Economics-paper.pdf.
Mueller, Reinhold C. 2019. The Venetian Money Market: Banks, Panics, and the Public Debt, 1200 – 1500.
Baltimore, Maryland: Johns Hopkins University Press.
Munro, John H. n.d. “The Bill of Exchange, Draft, or Acceptance Bill.” Accessed 18 July 2018 at
https://www.economics.utoronto.ca/munro5/THE%20BILL%20OF%20EXCHANGE.pdf
Murray, Patrick. 1993. “The Necessity of Money: How Hegel Helped Marx Surpass Ricardo’s Theory
of Value.” In Marx’s Method in Capital: A Reexamination.” Edited by Fred Moseley. New Jersey:
Humanities; 37 – 61.
Nakamoto, Satoshi. 2009. “Bitcoin: A Peer-to-Peer Electronic Cash System.” Accessed 3 February
2023 at https://bitcoin.org/bitcoin.pdf.
Nesiba, Reynold F. 2013. “Was Money Created to Overcome Barter?” New Economic Perspectives.
Accessed 14 April 2020 at https://neweconomicperspectives.org/2013/09/money-created-over
come-barter.html.
Newcomb, Simon. 1885. Principles of Political Economy. New York: Harper.
Nian, Lam Pak, and David Lee Kuo Chuen. 2015. “Introduction to Bitcoin.” In Handbook of Digital
Currency: Bitcoin, Innovation, Financial Instruments, and Big Data. Edited by David Lee Kuo
Chuen. New York: Academic Press; 5 – 30.
Nietzsche, Friedrich. 1967. On the Genealogy of Morals. Translated by Walter Kaufmann and R.J.
Hollingdale. New York: Vintage Books.
Nietzsche, Friedrich. 1979. Philosophy and Truth: Selections from Nietzsche’s Notebooks of the Early
1870s. Edited and translated by Daniel Breazeale. New Jersey: Humanities Press International.
208 Bibliography

Noizat, Pierre. 2015. “Blockchain Electronic Vote.” In Handbook of Digital Currency: Bitcoin, Innovation,
Financial Instruments, and Big Data. Edited by David Lee Kuo Chuen. New York: Academic Press;
453 – 461.
OCC (Office of the Comptroller of the Currency), Administrator of National Banks. 2003. National
Banks and the Dual Banking System. Accessed 28 January 2023 at https://www.occ.treas.gov/pub
lications-and-resources/publications/banker-education/files/pub-national-banks-and-the-dual-
banking-system.pdf.
O’Hara, Phillip Anthony. 2000. “Money and Credit in Marx’s Political Economy and Contemporary
Capitalism.” History of Economics Review 32 no. 1: 83 – 95; https://doi.org/10.1080/10370196.2000.
11733343.
Ong, Bobby, Teik Ming Lee, Guo Li, and David Lee Kuo Chuen. 2015. “Evaluating the Potential of
Alternative Cryptocurrencies.” In Handbook of Digital Currency: Bitcoin, Innovation, Financial
Instruments, and Big Data. Edited by David Lee Kuo Chuen. New York: Academic Press; 81 – 135.
Orrell, David. n.d. “Quantum Economics.” Accessed 28 January 2023 at http://etdiscussion.worldeco
nomicsassociation.org/wp-content/uploads/2017/10/Orrell-july-18.pdf.
Palermo, Giulio. 2017. “Competition: A Marxist View.” Cambridge Journal of Economics 41, no. 6:
1559 – 1585; https://doi.org/10.1093/cje/bex006.
Palley, Thomas, & Matías Vernengo. 2018. “Milton Friedman’s Presidential Address at 50.” Review of
Keynesian Economics 6, no. 4: 419 – 420.
Palley, Thomas. 2019. “What’s Wrong with Modern Money Theory (MMT): A Critical Primer.” Hans-
Böckler-Stiftung Macroeconomic Policy Institute Forum for Macroeconomics and
Macroeconomic Policies Working Paper no. 44.
Peacock, Mark. 2013. Introducing Money. London: Routledge.
Pieters, Gina C. 2018. “How Global Is the Cryptocurrency Market?” Accessed 25 January 2023 at
https://www.atlantafed.org/-/media/documents/news/conferences/2018/1018-financial-stability-im
plications-of-new-technology/papers/pieters_bitcoin_international.pdf.
Pozsar, Zoltan. 29 January 2018. “Repatriation, the Echo-Tapper, and the €/$ Basis.” Credit Suisse
Global Strategy. Global Money Notes no. 11.
Pozsar, Zoltan. 21 August 2019. “Sagittarius A*.” Credit Suisse Economics. Global Money Notes
no. 24.
Pozsar, Zoltan. 31 March 2022. “Money, Commodities, and Bretton Woods III.” Credit Suisse
Economics.
Public Address. 2021. “Love is a Rose.” Accessed 31 January 2023 at https://thispublicaddress.com/
2019/11/21/love-is-a-rose/.
Quarles, Randal K. 2021. “Parachute Pants and Central Bank Money.” Paper presented at the 113th
Annual Utah Bankers Association Convention, Sun Valley, Idaho, June 2021.
Rancière, Jacques. 1989. “The Concept of ‘Critique’ and the ‘Critique of Political Economy.’” In
Ideology, Method, and Marx: Essays from Economy and Society. Edited by Ali Rattansi. London:
Routledge; 74 – 180.
Rebrovick, Tripp. 2015. “Routine Maintenance: Forming, Reforming, and Transforming Social
Formations.” PhD dissertation, Johns Hopkins University; https://jscholarship.library.jhu.edu/bit
stream/handle/1774.2/40285/REBROVICK-DISSERTATION-2016.pdf?sequence=1.
Ricardo, David. 2001. Principles of Political Economy and Taxation. Kitchener, Ontario: Batoche Books.
Robinson, Joan. 1953. “The Production Function and the Theory of Capital.” The Review of Economic
Studies 21, no. 2: 81 – 106; https://doi.org/10.2307/2296002.
 Bibliography 209

Robles-Báez, Mario L. 1997. “On Marx’s Dialectic of the Genesis of the Money Form.” International
Journal of Political Economy 27, no. 3: 35 – 64; https://doi.org/10.1080/08911916.1997.11643951.
Rubin, Isaak Illich. 1924. “Fundamental Features of Marx’s Theory of Value and How It Differs from
Ricardo’s Theory.” In Responses to Marx’s Capital: From Rudolf Hilferding to Isaak Illich Rubin.
Edited by Richard B. Day and Daniel F. Gaido. Leiden: Brill; 536 – 582.
Saito, Tetsuya. 2015. “A Microeconomic Analysis of Bitcoin and Illegal Activities.” In Handbook of
Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big Data. Edited by David Lee Kuo
Chuen. New York: Academic Press; 231 – 248.
Samid, Gideon. 2015. “How Digital Currencies Will Cascade up to a Global Stable Currency: The
Fundamental Framework for the Money of the Future.” In Handbook of Digital Currency: Bitcoin,
Innovation, Financial Instruments, and Big Data. Edited by David Lee Kuo Chuen. New York:
Academic Press; 403 – 415.
Sapovadia, Vrajlal. 2015. “Legal Issues in Cryptocurrency.” In Handbook of Digital Currency: Bitcoin,
Innovation, Financial Instruments, and Big Data. Edited by David Lee Kuo Chuen. New York:
Academic Press; 253 – 266.
Scharf, J. Thomas. 1879. History of Maryland from the Earliest Period to the Present Day. 3 vols.
Baltimore: John B. Piet.
Schumpeter, Joseph A. 1956. “Money and the Social Product.” Translated by A. W. Marget.
International Economic Papers no. 6: 148 – 211.
Schumpeter, Joseph A. 1954. History of Economic Analysis. Edited by Elizabeth Boody Schumpeter. New
York: Routledge.
Seaford, Richard. 2004. Money and the Early Greek Mind: Homer, Philosophy, Tragedy. Cambridge, UK:
Cambridge University Press.
Semenova, Alla. 2011. “The Origins of Money: Evaluating Chartalist and Metallist Theories in the
Context of Ancient Greece and Mesopotamia.” PhD dissertation, University of Missouri-Kansas
City; https://doi.org/10.1111/j.1536-7150.2011.00779.x.
Sgambati, Stefano. 2015. “The Significance of Money: Beyond Ingham’s Sociology of Money.”
European Journal of Sociology 56, no. 2: 307 – 339; https://doi.org/10.1017/S0003975615000144.
Sgambati, Stefano. 2020. “Historicizing the Money of Account: A Critique of the Nominalist Ontology
of Money.” Journal of Post Keynesian Economics 43, no. 3: 417 – 444; https://doi.org/10.1080/
01603477.2020.1788396.
Sharpe, William F. 2019. Retirement Income Analysis with Scenario Matrices. Accessed 29 January 2023
at https://web.stanford.edu/~wfsharpe/RISMAT/.
Siegel, Rachel. 1 September 2020. “A Penny Pinch: How America Fell into a Coin Shortage.”
Washington Post. Accessed 26 January 2023 at https://www.washingtonpost.com/business/2020/
09/01/coin-shortage-pandemic/.
Sieroń, Arkadiusz. 2019. Money, Inflation and Business Cycles: The Cantillon Effect and the Economy.
Translated by Martin Turnau. London: Routledge.
Simmel, Georg. 2004. The Philosophy of Money. Third edition. Edited by David Frisby. Translated by
Tom Bottomore, David Frisby, and Kaethe Mengelberg. London: Routledge.
Skingsley, Cecilia. 2016. “Should the Riksbank Issue e-Krona?” Paper presented at FinTech Stockholm
2016, Stockholm, November 2016. Accessed 25 January 2023 at https://www.bis.org/review/
r161128a.pdf.
Smith, Adam. 1869. The Wealth of Nations. Books 1 – 3. London: Penguin Books.
Smithin, John, ed. 2000. What Is Money? London: Routledge.
210 Bibliography

Sraffa, Piero. 1951. “Introduction.” In The Works and Correspondence of David Ricardo. Vol. 1. Edited
by Piero Sraffa and Maurice H. Dobb. Cambridge: Cambridge University Press; xiii–lxii.
Steuart, James. 1767. An Inquiry into the Principles of Political Economy. Vol. 1. London: Millar & Cadell.
Stiglitz, Joseph, and John Driffill. 2000. Economics. New York: W. W. Norton.
Streeter, S. F. 1 February 1858. “Sketch of the Early Currency in Maryland and Virginia.” Historical
Magazine: 42 – 45.
Tarasiewicz, Matthias, and Andrew Newman. 2015. “Cryptocurrencies as Distributed Community
Experiments.” In Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big
Data. Edited by David Lee Kuo Chuen. New York: Academic Press; 201 – 222.
Taylor, Charles. 1985. Philosophy and the Human Sciences. Vol. 2 of Philosophical Papers. Cambridge,
UK: Cambridge University Press.
Teo, Ernie G. S. 2015. “Emergence, Growth, and Sustainability of Bitcoin: The Network Economics
Perspective.” In Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big
Data. Edited by David Lee Kuo Chuen. New York: Academic Press; 191 – 200.
Tether. 2014. Tether: Fiat Currencies on the Bitcoin Blockchain. Accessed 29 January 2023 at https://as
sets.ctfassets.net/vyse88cgwfbl/5UWgHMvz071 t2Cq5yTw5vi/
c9798ea8db99311bf90ebe0810938b01/TetherWhitePaper.pdf.
Thornton, Henry. 1802. An Enquiry into the Nature and Effects of the Paper Credit of Great Britain.
London: n.s.
Tooze, Adam. 2018. Crashed: How a Decade of Financial Crises Changed the World. New York: Penguin.
Tooze, Adam. 2021. Shutdown: How Covid Shook the World’s Economy. New York: Viking.
Tooze, Adam. 27 February 2022. “Sanctions and MAD: Will a financial panic in Moscow accelerate
the “logic” of escalation?” Chartbook #88. https://adamtooze.substack.com/p/chartbook-88-sanc
tions-and-mad-will
Treynor, Jack L. 1987. “The Economics of the Dealer Function.” Financial Analysts Journal 43, no. 6:
27 – 34; https://www.jstor.org/stable/4479073.
Tribe, Laurence H., and Jeremy Lewin. 15 April 2022. “$100 Billion: Russia’s Treasure in the U.S.
Should Be Turned against Putin.” New York Times. Accessed 29 January 2023 at https://www.ny
times.com/2022/04/15/opinion/russia-war-currency-reserves.html.
Trivellato, Francesca. 2019. The Promise and Peril of Credit: What a Forgotten Legend about Jews and
Finance Tells Us about the Making of European Commercial Society. Princeton: Princeton University
Press.
Ugolini, Stefano. 2017. The Evolution of Central Banking: Theory and History. London: Palgrave
Macmillan.
Vernengo, Matías. 2022. “The Inflationary Puzzle.” Catalyst 5, no. 4: 90 – 113.
Vinketa, Darko. 2022. “From Labor as Bondage to Labor as Tragedy: Scenes of Production in Hegel
and Nietzsche.” Chapter, PhD dissertation, in progress at Johns Hopkins University.
Walker, Francis A. 1878. Money. New York: Henry Holt.
Walker, Francis A. 1879. Money in Its Relations to Trade and Industry. New York: Henry Holt.
Walton, Jo Lindsay. 2022. “Bitcoin and Stone Money: Anglophone Use of Yapese Economic Cultures,
1910 – 2020.” Finance and Society 8, no. 1: 42 – 66; https://doi.org/10.2218/finsoc.7126.
Weber, Beat. 2016. “Bitcoin and the Legitimacy Crisis of Money.” Cambridge Journal of Economics 40,
no. 1: 17 – 41; https://doi.org/10.1093/cje/beu067.
Weber, Max. 1978. Economy and Society: An Outline of Interpretive Sociology. Edited by Guenther Roth
and Claus Wittich. Translated by Ephraim Fischoff, Hans Gerth, A.M. Henderson, Ferdinand
 Bibliography 211

Kolegar, C. Wright Mills, Talcott Parsons, Max Rheinstein, Guenther Roth, Edward Shils, and
Claus Wittich. Berkeley: University of California Press.
Werner, Richard A. 2014. “Can Banks Individually Create Money out of Nothing? The Theories and
the Empirical Evidence.” International Review of Financial Analysis 36: 1 – 19; https://doi.org/10.
1016/j.irfa.2014.07.015.
White, Molly. 17 July 2022. “Cryptocurrency ‘Market Caps’ and Notional Value.” Molly White (blog).
Accessed 29 January 2023 at https://blog.mollywhite.net/cryptocurrency-market-caps-and-no
tional-value/.
Wicksell, Knut. 1962. Interest and Prices: A Study of the Causes Regulating the Value of Money.
Translated by R.F. Kahn. New York: Sentry.
Wikipedia, s.v. “Judy Shelton.” Last modified 28 March 2022, 19:28. Accessed 3 February 2023 at
https://en.wikipedia.org/wiki/Judy_Shelton.
Wilkins, Inigo, and Bogdan Dragos. 2022. “Money as a Computational Machine.” Finance and Society
8, no. 2: 110 – 28; Accessed 30 January 2023 at http://financeandsociety.ed.ac.uk/article/view/
7762/9683.
Williams, Michael. 2000. “Why Marx Neither Has Nor Needs a Commodity Theory of Money.” Review
of Political Economy 12, no. 4: 435 – 451; https://doi.org/10.1080/09538250050175127.
Wood, Ellen Meiksins. 2002. The Origin of Capitalism: A Longer View. New York: Verso.
Wood, Gavin, and Aeron Buchanan. 2015. “Advancing Egalitarianism.” In Handbook of Digital
Currency: Bitcoin, Innovation, Financial Instruments, and Big Data. Edited by David Lee Kuo
Chuen. New York: Academic Press; 385 – 402.
Wray, L. Randall. 1998. Understanding Modern Money: The Key to Full Employment and Price Stability.
Cheltenham, UK: Edward Elgar.
Wray, L. Randall. 2000. “Modern Money.” In What Is Money? Edited by John Smithin. London:
Routledge; 42 – 66.
Wray, L. Randall. 2004. “Conclusion: The Credit Money and State Money Approaches.” In Credit and
State Theories of Money: The Contributions of A. Mitchell Innes. Edited by L. Randall Wray.
Cheltenham, UK: Edward Elgar; 223 – 262.
Wray, L. Randall. 2012. “Introduction to an Alternative History of Money.” Levy Economics Institute of
Bard College Working Paper no. 717.
Wray, L. Randall. 2014. “From the State Theory of Money to Modern Money Theory: An Alternative
to Economic Orthodoxy.” Levy Economics Institute of Bard College Working Paper no. 792.
Wray, L. Randall. 2015. “Minsky on Banking: Early Work on Endogenous Money and the Prudent
Banker.” Levy Economics Institute of Bard College Working Paper no. 827.
Wray, L. Randall, and Stephanie Bell. 2004. “Introduction.” In Credit and State Theories of Money: The
Contributions of A. Mitchell Innes. Edited by L. Randall Wray. Cheltenham, UK: Edward Elgar;
1 – 13.
Yermack, David. 2015. “Is Bitcoin a Real Currency? An Economic Appraisal.” In Handbook of Digital
Currency: Bitcoin, Innovation, Financial Instruments, and Big Data. Edited by David Lee Kuo
Chuen. New York: Academic Press; 31 – 43.
Zelizer, Viviana. 2000. “Fine Tuning the Zelizer View.” Economy and Society 29, no. 3: 383 – 389;
https://doi.org/10.1080/03085140050084570.
Zuboff, Shoshana. 2019. The Age of Surveillance Capitalism: The Fight for a Human Future at the New
Frontier of Power. New York: Public Affairs.