Money versus Currency

Money then has two separate values: intrinsic value and face value. Well, actually three separate values: the third is its production cost.

The intrinsic value, whatever the source of our consideration of such intrinsic value, is the value of the money as an object, regardless of what is written on it. The example is the gold coin: its intrinsic value is the value of the amount of gold in it.

The face value is the value written on it, regardless of its intrinsic value. The example is a banknote: its face value is the number of units written on it, while its intrinsic value is roughly zero.

The production cost of money, just as that of any product, depends upon the costs of its ingredients, and all those costs in turn are influenced by the value of those ingredients and so on.

Comparing face value with intrinsic value and production cost will be of great interest hereinafter; for now let’s just point out that that comparison does not produce merely two simple cases – “gold” money with both intrinsic value and face value equal to x, and “paper” money with face value equal to x and intrinsic value equal to zero – oh, no: these two are the extremes of a graph that lists many degrees of the ratio among these values, where intrinsic value is progressively less and less than face value until practically zero.

These various types of money are called in various ways, so for now let’s just say that “gold” money with intrinsic value is often referred to as “money”, while “paper” money without intrinsic value is often referred to as “currency”.

And, by the way, let’s underline that the theft committed by inducing and exploiting the growth of the intrinsic value, when committed on money, is not limited by the type of money; after all, value is a consideration, the operation consists in inducing this consideration, therefore this “intrinsic” value can be induced into anything, regardless of what that thing is – gold, paper, whatever.