2. What is money? Money is something that people trust
to maintain its value
or be honoured in trade,
while its actual value can vary.

3. Money is a
Social construction

4. Money versus market exchange
Money seen as alternative to barter
But
Money logically anterior and historically prior to market exchange

5. Modern banking systems
Brings together
PRIVATE BANKING RELATED TO TRADE
CURRENCY CREATING POWERS OF THE STATE

6. Legal tender
The money that banks
was declared
legal tender

7. Banking system Privately generated debts in the market sector
The banking system
Converts
Privately generated debts in the market sector
Into
Transferable state money

8. banks Banks took in commmercial paper and
issued state authorised money in its place.

9. Commercial debt Commercial debt issued between traders
is a liability on the commercial issuer.

10. Commercial debt Commercial debt exchanged for bank-issued money
is a liability on the bank.

11. Commercial debt Commercial debt exchanged for
Bank money that is recognised as legal tender
Is a liability on the state.

12. money MONEY IS A CLAIM UPON SOCIETY
And that claim must be honoured by the state

13. Issue money Being able to issue money
Very important economic and political resource.

14. seignorage
When most money was issued as cash this was regulated by a political authority and gave the issuing authority a seignorage.
Having the monopoly of issue provided a interest-free and cost-free expenditure.

15. Power of the issuer The power of the issuer is not limitless
Debased coinage or devalued money can lose public confidence

16. money issue through debt.
Modern states still issue money through notes and coins
But this is now very limited in comparison with money issue through debt.

17. Modern money In britain only 3% of money consists of notes and coin
The rest is generated through sight accounts at banks.

18. Fiat money versus bank money
Unlike state issued fiat money
money issued by banks
has to be paid back with an interest.

19. Controlof money issue Control of money issue passes
from the state to the banking sector.

20. Money creation and the banking system
The idea
That
banks lend the money that savers have deposited
Misunderstands how banking works

21. banking Fractional reserve banking
Mistake to see banking as barter between savers and borrowers

22. No limits to money creation capacity
Contemporary banking system
Elastic credit creation
Not determined by
Prior deposits
No limits to money creation capacity