Goods, Money and Purchasing Power: Who Owns Money?
It’s time to introduce a subject called “the ownership of money” that is, “who owns money?”
Apparently, the quids in your hands now are yours and that’s all, isn’t it? Even if you borrowed them, thanks to the fact that money has the additional qualities listed above, you are free to use them as yours, provided you return the agreed amount as agreed.
Well, it’s not exactly true that those quids in your hands now are simply yours, but you will bring this all into focus later. The point here is that now we’re talking about the birth of the purchasing power. That is, the exact meaning of “the ownership of money” is, “when and how does the purchasing power of money gets born, and who is the owner of money the moment its purchasing power gets born?”
When those quids begin to circulate, after they’ve been produced and accepted the first time, it’s only partially true that they belong to those who have them in their hands at that moment. Because you will discover that someone is charging an interest on those quids.
Property is the legally protected right to the enjoyment of goods. And this includes the power of disposition over them, transferring them, receiving something in exchange for transferring them, lending them, and demanding and charging an interest for loaning them. Each of these characteristics proves that the natural person or legal person in whose availability the purchasing power of money gets born actually owns it, despite, above and beyond and so much for any legalese gaps, throwing off track and bad faith. He or she, natural person or legal person, who has the power of disposition of money and its purchasing power the moment it gets born is the owner of that money and its purchasing power the moment it gets born, period. So much for what is often, rightfully and accurately called “property of money upon issuance”.
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So if those quids are charged with an interest, they are not yours: they are on loan to you. Where is “the property of money”, then? It is with those who loan it: banks; central banks and other banks as well. We’ll not get into detail now, here the point is that if they can give it in exchange for purchasing power it is their property, and even more that if they can afterwards charge an interest and demand it back, it continues to be their property, not yours.
You and your fellows are like the parts of the body, to exchange your products and purchasing power to survive you need the blood circulation; and you find yourself borrowing that blood from someone who charges a bloodsucking interest on it and can demand it back at will, leaving you without blood.
We’ve said that basically purchasing power is acknowledged production: you produce a product, the product is acknowledged as valuable so the acknowledged product is purchasing power. Its purchasing power gets born after it is produced, when it is acknowledged as valuable. It is worth noting how this takes place even before it is accepted in exchange for the first time, because the reason it is accepted in exchange is obviously that it is acknowledged as valuable. The product you just produced is yours, so you give it in exchange, and therefore its purchasing power is yours. Purchasing power is earned with production.
In producing something one incurs in certain costs and work, so there is a certain ratio between the amount of these and the resulting purchasing power produced. Moreover, supply and demand can have an influence, in that if the product is scarce and needed, its purchasing power is raised, or the other way around. This ratio is a matter of ethics and exchange: does one give a fair amount in exchange for what one receives, or is one stealing purchasing power?
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The same applies to money having intrinsic value, such as gold. Let aside now whether this intrinsic value was fraudulently induced in the past by a monopolist, as of now money having intrinsic value is treated just as a commodity: the purchasing power of that gold was born when that gold was first exchanged after being mined, and it belonged to those who did the mining and incurred the costs of mining it.
The same applies to currency without intrinsic value, too, if it is treated as a commodity. If currency is treated as a commodity – let’s underline this – its purchasing power was born when that currency was first exchanged after being produced, and – here lies the magic trick – it was treated as if it belonged to those who produced it and as if they incurred the costs of producing something having intrinsic value. But notice currency does have quite a peculiarity in this aspect. It does not have any intrinsic value, not at all. And the costs and work to produce it tend to zero, when compared to its purchasing power, corresponding to its face value.
Currency being treated as a commodity means that people considers that currency has intrinsic value, which is false. But this leads people to consider that if currency has intrinsic value, then it also has comparable production costs just as commodities do, which is false. Or that there is a limited quantity of it available, just like a commodity, which is false, because there can be as much currency as those producing it arbitrarily decide to produce. And all this leads people to the idea that those who produce currency are entitled to the amount of purchasing power indicated on the currency’s face value, which is utterly false.