Seigniorage may be defined as the profit obtained by issuing fiat money. The society uses a fiat money, one whose intrinsic value is zero or negligible, and whose face value is backed by nothing except people’s willingness to accept it as having such face value; someone like a seignior or a government or a banker issues it, and exchanges it at face value with people. The seignior or government or banker commits a thievery, by creating purchasing power out of nothing tantamount to the difference between face and intrinsic value, and wringing it out of people. This of course tends to generate inflation to the degree the amount of money is perceived as exceeding the amount of existing exchangeable products.

Seigniorage may be defined as the profit obtained by lending the fiat money one issues. The society uses a fiat money, one whose intrinsic value is zero or negligible, and whose face value is backed by nothing except people’s willingness to accept it as having such face value; someone like a seignior or a government or a banker issues it, and lends it at face value plus interest to people. The seignior or government or banker commits a thievery, by creating purchasing power out of nothing tantamount to the difference between face and intrinsic value, and wringing it out of people. That the issuer does not profit the principal but only the interest is a flagrant shameless lie comparable to that uttered by a naked individual caught into your wardrobe; in fact, the purchasing power created out of nothing has been exchanged by the issuer in the first place with some form of collateral the issuer will be more than happy to foreclose when the moment comes to pull in the fishnets. The interest is not the only profit from seigniorage at all, it is but a mere additional profit from it.
Maintaining that seigniorage is only the interest charged on the money created out of nothing is like maintaining that the shadow cast by a body does exist, but the body casting it does not.
Furthermore, supposing strictly for the sake of argument alone that something like an interest low enough to be not usurious does exist at all, any interest rate applied to the nil is always usurious because any number divided by zero is equal to infinite.

These definitions have two very important sides: a quasi−money side and an international side.

The quasi−money side is that they not only apply to money, but to any form of purchasing power created out of nothing as well – and that’s why I talk of purchasing power rather than money. You will notice how those who profit from issuing power tend to dilute the very concept of money itself and make it more and more abstract, ambiguous and undefined; well, this is not a fortuitous occurrence but on the contrary a planned one, and its motive is this exact reason: any form of purchasing power created out of nothing can be exploited in terms of seigniorage and gets created for just that.

For the sake of completeness it could be also said that seigniorage and counterfeiting are synonims, because these two labels share the same basis: there is something actually valuable, the seignior and the counterfeiter manufacture something else that pretends to be that valuable something, the raison d’etre of the operation is the “seigniorage”, the difference between its production cost and its purchasing power, and the lower the production cost, the happier the seignior and the counterfeiter, which is one of the reasons why they always push towards dematerialised currencies under their control, the other reasons being their increased surveillance on people, the increased addiction to them imposed on people, their increased faculty to create purchasing power out of nothing with impunity. A cashless society, provided it is under their control, is their suppressive ultimate dream.

The international side of the matter is that if the issuer can ensure want abroad for its fiat money or any other form of purchasing power created out of nothing, then it will be accepted abroad in exchange for real products and as a result the issuer and/or its nation will profit from what is called international seigniorage. As long and to the degree peoples and nations abroad want that fiat money and do not demand that nation and its issuer to redeem it in actual product, that issuer and that nation can go on indefinitely giving nothing in exchange for something. And modern history is dotted with crimes against humanity perpetrated for this very reason.

The case study par excellence of international seigniorage is the United States from the world wars on. Both wars and their entailed destruction took place elsewhere, with a relative minor direct involvement of the United States, and with a bit of suppressive cynicism some noticed that “war is good for the economy”… small detail: on the proviso that, and as long as, it’s in someone else’s house, not in one’s own. Now, where the bombs fall means of production get destroyed and weaponry is needed, hence from there a tide of want for almost anything pours abroad, while at the same time the credit rating worsens and worsens under those bombs… You discover who your friends are in times of need, isn’t it? Then what has the bombed country got that other countries shall accept in exchange for all those much needed foodstuff, consumer goods, various supplies and weaponry? Indeed war is a leverage to persuade the country being bombed to resort to the selling off of family jewels, and indeed its family jewels have rather intrinsic value. Hence world wars produced a flow of gold from Europe to the United States as payment for the various flows of vital supplies in the opposite direction. And by the end of World War II the United States had two thirds of the world’s gold in their reserves.

Just as the rule of law is often mere brute force or deceit that become law, in the same way the brute force or deceit to seize an oligo−monopoly on monetary sovereignty are the obvious requisite to start many crimes against humanity such as international seigniorage and the ambiguous money cycle discussed ahead. And by the end of World War II the United States had a strong position: they were among the winners, they didn’t have war at home, their production and economy had grown while those of Europe had suffered, and their gold reserves had swelled while other’s had shrunk. That strong position was formalised in the “Bretton Woods system”; the winners of World War II gathered at Bretton Woods and agreed to establish the United States Dollar as global reserve currency: other goverments committed to anchor their national currencies to the United States Dollar and to regulate their international payments in it, on the assumption that the United States Dollar were fully backed by, and fully convertible in gold.

The world had accepted what the French leaders then denounced as the “America’s exorbitant privilege”, publicly stygmatised by their then leader Charles De Gaulle as follows:
“The fact that many countries accept as a principle dollars on the same footing as gold leads Americans to get into debt, and to get into debt for free towards the rest of the world, since they pay what they owe them with dollars that only they are allowed to emit. We consider it necessary that international trade be established, as it was the case before the great misfortunes of the world, on an indisputable monetary base, and one that does not bear the mark of any particular country. Which base? In truth one can’t see any that could really be a standard criterion other than gold.”

Such “America’s exorbitant privilege” is nothing more than international seigniorage; as pictured in Orwell’s Animal Farm, “all Countries are equal, but one is more equal than others”: in order to purchase anything from any other country, all countries have to obtain the medium of payment, the United States dollar, by producing and delivering something in exchange for it; with the sole exception of the country issuing that medium of payment. That country more equal than others will “purchase” anything for nothing: just run the mint. And what is there to check its running it at will, if not even ad infinitum? Almost nothing, in actual fact.
Here gold reserves enter the scheme, a scheme I discuss later as the ambiguous money cycle; suffice here to say that at the onset of the Bretton Woods system the United States commit to convert their dollars in gold upon request; that is, what forces them to back their dollars with intrinsic value is that anyone may claim that intrinsic value at any time. But as I detail later on, this commitment gets progressively hollowed out into a profitable chimaera by the same trick the goldsmiths used when they became bankers by defrauding the community through the creation of more claim checks than the gold deposited in their vaults. Based on the small proportion of dollars actually redeemed in gold at any given time, in Bretton Woods the United States start the fractional reserve scam on a global scale, getting everything in exchange for nothing… worldwide.

From then on it’s just a matter of keeping the foreign want for dollars up, and to conversely keep the foreign demands for redemption of dollars down. Whatever failure in keeping the proverbial finger in the dyke would bring about the same imaginable consequences if the rest of the world begun to demand something in exchange for that mass of paper: gold, goods, foreclosures…
The finger in the dyke partially runs by inertia, out of the strong position of the United States at the end of the war, but as the reservoir of foreign confidence in United States’ credit rating begins to show signs of leakage, it get patched up. By hook or by crook. Some see fit to call imperialism the reinvestment of a fraction of the loot of international signiorage in such more or less routinary maintenance operations.
For instance, it would be instructive indeed to investigate why oil−producing countries did so inflexibly and for so long the United States the considerable favour to accept only dollars in payment for their much coveted “black gold”, and it would be as much instructive to investigate what favours did they get in return, and what their repercussions on the rest of us might be… Some insinuate that such favours may be not only comparable, but unspeakable as well.

Fact is that the “country more equal than others” exploits its exorbitant privilege and out of nothing creates, spends and lends abroad unprecedented amounts of its money, with which the sky appears to be the limit, and indefinitely so, too. Ironically, international seigniorage enables one to seduce the hearts and souls and the dreams of the robbed, too. An old forgotten joke goes, “If you’re good, I’ll take you to the restaurant to watch the lords who eat…” and you realise it must be a hungry parent trying to comfort a hungry child, between irony and naivety. One runs rather regularly across some critics of the United States calling them “imperialists”, and across the United States calling those critics “commies”; such criticisms can be summarised into a spoiled brat that not only fattens on food stolen from the others but fully intends to continue to live above his means, too.

Well, this is what the “american dream” is made of: we’re on the outside, nose against the glass, watching the more equal than others enjoy Playland and filling our dreams with it, and we don’t realise that the abundance that makes it all possible in the first place is composed of what we’ve been robbed of. And not that being the United States, Playland or Whateverland makes any difference, as red herring would lead the ingenuous to think; it’s a matter of plain and simple out exchange: getting something in exchange for less, or even nothing, and maybe even seizing it by hook or by crook. So the relevance and the specificity of this United States case must not in any way obfuscate our ability to grasp the mechanism in itself and thus detect it everywhere and in any way it materialises in history.

And if all that was still not enough as to the effects of suppression perpetrated through international seigniorage, since its exercise consists of creating fraudulent purchasing power out of nothing just as in any form of seigniorage, its inherent inflationary effects must be added as well, but I will discuss this ahead as part of what I call “ambiguous money cycle”.

By the way, not without reason international seigniorage is also referred to as “exporting inflation”. When a country sets off to exploit its however achieved strong position by creating purchasing power out of nothing and “going shopping” around the world with it, we know the spell holds as long and to the degree other countries consider that purchasing power real. In search of reliable indicators of that reality, other countries may look at its wealth and inflation: if wealth is high and inflation is low, then that country is considered respectable, solvent, and its purchasing power real. What’s the trick? The surplus purchasing power out of nothing is channelled mainly abroad; consequently, the domestic money to product ratio remains stable, while the surplus money is used to acquire product abroad in exchange for nothing, and that product comes home to further boost domestic wealth. Imported wealth in exchange for exported inflation.
In the previous US variant, the strong position was acquired with the victory in war, sanctified in the Bretton Woods fixed exchange rate system, and capitalised in gold reserves: other currencies had to maintain their parity with the dollar, and the dollar in turn had to maintain its own parity to its gold reserves. Obviously enough, the United States began that ambiguous money cycle I’ll discuss later on, the dollar begun to “flood the world”, and this went on despite the suspicions, until it triggered the “French raid on Fort Knox”: France “called the US’s bluff”, and that was the end of Bretton Woods. However, who has given has given, who has had has had.

Ok, enough with the fun; now let’s get serious. Since legalese is usually concocted to allow the sly to screw the honest, let’s set legalese aside and get to the core in plain English. The question, “What is the core of seigniorage?” can be reformulated as, “What is the functional, useful common denominator of its various definitions and forms?” and the answer is, “The common denominator, the core of seigniorage is the profit resulting from the faculty of creating purchasing power out of nothing; that is, that very purchasing power resulting from the faculty of creating it out of nothing.” If we want an effective keyword on our flags, the best foundation is a true, comprehensive, clear, practical and shared definition of it. In other words, so, in terms of definition, we can call seigniorage the faculty, the action, the result: the faculty of creating purchasing power out of nothing, the act of creating purchasing power out of nothing, the purchasing power created out of nothing. All facets of the same crime against humanity.

Once the core is clear to us, we’re immune to the smokescreens and tendentious propaganda and we can see for ourselves. And it makes sense to subdivide the scene for further clarification, and previous subdivisions may look clearer than before, too. In accordance with our practical purposes, I’ll consider a subdivision into the following simple and broad types.

Primary, or monetary, seigniorage is the one based on physical money.
Secondary, or scriptural, seigniorage is the one based on any form of intangible money, of quasi−money actually exploited as money despite the fact that it does not exist.
Tertiary, or financial, seigniorage is the one based on negotiable instruments, on not−money actually exploited as money despite the fact that it is not money. I would offer to you my own draft of a definition, which is: purchasing power created out of nothing in any form, physical or dematerialised, that does not even mind to pretend to be money by carrying its name any more.
It could be said that the difference between secondary and tertiary is that, while in both cases IOUs are exchanged as if they were money, a secondary IOU pretends to be money irself, while a tertiary IOU does not, and promises secondary IOUs, instead: just an additional step, though.
Quaternary, or international, seigniorage is the one based on differences in supply and demand of the same money in different circumstances, on inducing in someone somewhere an artificially inflated want for that money.

Let’s say straight away that, should there ever be any ambiguity within these subdivisions or should the borders between them be ever evanescent, this is caused by the ambiguity in the definition of money itself, actually in the definition of legal tender: what the government demands and enforces as debt settlement. As I said, this comes as no surprise at all; it is intentional and it is as ambiguous and evanescent as the official answers to the question, “What is money and what is not money, then?” Its meaning, its purpose is as usual the profiteering of purchasing power out of nothing, in this case resulting from the faculty of passing as money what is not money. This faculty too is creation of purchasing power out of nothing and therefore seigniorage, falls within these subdivisions, and these subdivisions serve to highlight that, too.

As all the psalms end in glory, etymologically the word “seigniorage” means “profit of the seignior that issues money”, which rhymes with the “property of money upon issuance” discussed before. To the degree the costs borne by the issuer for the intrinsic value of money approach zero, to that degree it’s a rhyming couplet.