Let us say that some miners have discovered a new silver vein, and the emperor Augustus issues more coins. The coin is called a denarius and denarii contain a certain amount of silver.
Firstly, what is a denarius?
“It’s Roman money.”
Ok. Fine. Now then, let us say that Augustus stamps a new denarius, but the coins contain absolutely no silver as he’s decided to use the silver for something else. The coins have the emperor’s image and a face value on them, but they’re merely brass coins. And the Roman government accepts these coins for tax payments. What are they now?
“The coins aren’t money.”
And what leads you to that conclusion?
“Because they aren’t silver coins.”
Again, what is a denarius?
The Latin word for silver is ‘argentum’ not ‘denarius’.
“So? What’s your point?”
The denarius itself is the money.
“Yeah, I got that already.”
Really? So, why did you contradict yourself?
You most certainly did. First you said that a denarius is Roman money. Then you said that a denarius without silver is not money. And, later, when I said that the denarius itself is the money, you replied, “Yeah, I got that already”.
“I mean that it’s not money without the silver. How is it still money without the silver?”
Because the emperor says so.
Why? The coins bear his image and a face value, they are issued by the emperor and Rome accepts them as payment for taxes.
“Because the emperor is literally declaring that lead is now gold.”
What? I do not understand.
“Lead isn’t gold regardless who says it is. Lead is always lead and gold is always gold. And in this case, brass is brass and silver is silver.”
I’m not sure what this has to do with anything.
“You said Augustus stamped brass coins containing no silver and then he declared them to be denarii.”
“Well, he’s declaring that brass is silver, which is stupid.”
No, he is not.
“Yes he is.”
Remember when I said that the Latin word for silver is ‘argentum’ not ‘denarius’?
Well, a denarius and silver are two entirely different things, just like a banana and an olive, or brass and silver are two different things. Were he declaring brass to be silver, he’d have said, “I declare that brass is now silver”, but he didn’t. Augustus is declaring that a denarius without silver is still a denarius.
“You yourself said that a denarius is a silver coin.”
These denarii don’t have silver in them.
“Then they aren’t money.”
Yes, they are. Again, you yourself said that a denarius is money. I said, “The denarius itself is the money”, and you said, quote, “Yeah, I got that already”.
“But without the silver…”
What you meant to say is that a denarius is a denarius and silver is silver.
“Nope. I did not.”
Would you be willing to declare that a silver fork without the silver is no longer a fork?
You said that by declaring a denarius to be a denarius, Augustus is, quote, “declaring that brass is silver, which is stupid”, end quote. Therefore, it is the same thing as you declaring that a silver fork without the silver is no longer a fork, which is stupid.
“If a denarius is supposed to be a silver coin, then without the silver it is no longer money.”
You did it again. You’ve just declared that a silver fork without the silver is no longer a fork, which according to you is, quote “stupid”, because, as you said, “Lead isn’t gold regardless who says it is. Lead is always lead and gold is always gold.” And in this case, a fork is a fork and silver is silver.
Regardless of whether or not a fork has silver in it, it is still just a fork. Likewise, a denarius without silver in it is still a denarius: Roman money.
“But a silver fork isn’t money.”
Why? According to you, silver is money.
“Because a fork is not a coin.”
But, a denarius is a coin.
“Right, but without the silver…”
a silver fork is no longer a fork.
“No, damn it. Some forks are not made of silver, but that doesn’t mean that they aren’t forks. We are talking about coins.”
And coins are round. Got it.
You’re telling me that your perception of money involves both the type of metal contained within the object, and the object’s shape as well.
Coins are round metal objects and a silver fork isn’t round. So, according to you, silver forks aren’t money because they are not round?
“This is stupid. You’re just playing games now.”
Am I? Let’s recap. According to you thus far, you’ve told me that a denarius without silver isn’t money, a fork without silver isn’t a fork, and a silver fork isn’t money because it’s not a coin.
According to your logic, if we’d just melt down the sliver fork and form it into the shape of a coin, then it magically becomes money. You declaring lead to be gold and all that.
“God almighty! The coin is the money you idiot, not the silver fork.”
Somewhat correct. You’d still need to stamp the identity of the issuer of the coin on the coin and a face value.
“That goes without saying. But the silver fork melted down into a silver coin is money.”
The coin with the issuer’s name and a face value is the money.
“That’s what I just said.”
No, you said both the silver and the coin is what makes it money.
But if the emperor melts down a plain old fork, makes a coin out of it, and then stamps his likeness on it with a face value, and the Roman government accepts it for tax payments, then it is still money.
“No! That’s not money.”
“Without the silver, it isn’t money.”
So, then according to you a silver fork is money.
“You are stupid. A silver fork is not money.”
“Because it’s not a damn coin, that’s why.”
Now we’re back to the ‘silver forks aren’t money because they are not round’ thing again.
“This is an idiotic conversation.”
According to you it is. But, then again, I am not the one making it idiotic.
“Yes, you are.”
I’m not the one arguing that silver forks aren’t money because they are not round metal objects.
“I didn’t say that.”
Then what did you mean by, “the silver fork melted down into a silver coin is money”?
“Dumb ass. I mean that a fork is not a coin. But, you can melt down the silver fork and reform it into a coin. And, as everyone and their grandmother knows, silver coins are money.”
The coin is.
“The silver in the coin is the money!”
Is a penny money?
How about a nickel, dime, and a quarter?
How much silver is contained in these coins?
So, now, according to you, because pennies, nickels, dimes and quarters have no silver in them, they aren’t money.
“No. Wait. Wait! That’s not what I am saying. You’re talking about American money now.”
What’s the difference? Are you about to argue that sometimes money isn’t money?
“The difference is we were talking about Roman money and then we got on to something different: American money.”
Again, the difference is? Roman money is money, but American money is not money?
“No, a denarius is different.”
What? A denarius is just a coin, no different than an American quarter.
“A denarius is made of silver. The silver is the god damned money!”
So, according to you, a Roman denarius is money and an American quarter is not money.
“A Roman sliver denarius has real value. An American quarter has no value. That’s the difference!”
A quarter has value.
“No, it doesn’t. All American money is worthless. The quarter has no value.”
The quarter has value. Its value is equal to exactly twenty-five pennies; twenty-five cents, or one fourth of one US dollar. Hence, the name of the coin: a ‘quarter’. The Latin word ‘denarius’ means ‘containing ten’. It just so happens that when the denarius was first introduced, it was worth exactly ten Roman pounds of bronze. Hence, the name of the coin: a ‘denarius’. An American dime is no different than a denarius. A dime ‘contains ten’ of something, and that is ten pennies or one tenth of one US dollar, not one tenth of an ounce of silver, not one tenth of a pound of wheat, nor one tenth of any other commodity that you can think of. Whether we are talking about the denarius, or the dime, or the quarter, silver does not factor into what makes the denarius, the dime, or the quarter monetary instruments, or ‘money’ as you call it.
“Ok, now I’m lost. If silver isn’t the money part, then what is the money part?”
It’s not what is in the coin that makes it a monetary instrument. It is what is stamped on the coin that makes it a monetary instrument.
“I don’t understand.”
It doesn’t matter what material the coin is made of. The coin could be made of wood. The material contained in the coin is not the money part. What makes the coin a monetary instrument is the fact that somebody issued it, placing their name upon the coin and a declared face value on the coin, and that the issuer promises to accept the coin back as payment for something.
“Expand on that, especially the accepting it back as payment for something.”
Ok, is a silver fork money?
Is a fork money?
The reason why is because the US government doesn’t issue silver forks nor plain forks with “The United States of America” and a face value stamped on them, and, most importantly, the US government will not accept a silver fork nor a plain fork as payment for federal taxes. The tax is what makes the monetary instrument widely-accepted and also what gives the monetary instrument its value.
“Federal taxes? How the hell does that give a quarter value?”
I’ll show you how. Let’s go back to the denarius. Do you agree that as emperor of Rome, Augustus could put to death anybody if he chose to?
Pretend that you are a Roman citizen. Ok, so Augustus stamps denarii that contain no silver from this point forward and then says, “I will only accept these denarii that contain no silver as payment for taxes. Anyone who refuses to pay their taxes will have their head cut off and their body thrown into the Tiber river.” Let’s say that you have none of these new denarii that contain no silver. What do you do?
“Well, my ass better get some of these new denarii pretty quick then.”
Exactly. Because the penalty for not paying your taxes is your head gets lopped off and your body thrown into the Tiber river.
So, you are demanding denarii. You need them to avoid the punishment for not paying your taxes.
“So, how the hell do I get the coins then?”
Interestingly enough, the merchant in Rome just around the corner from where you live, who sells fruits and vegetables, asked himself the same question. And do you know what he did?
He offered to sell his fruits and vegetables to the Roman government in exchange for the new denarius, because he’d like to keep his head. Suddenly, his life is more ‘valuable’ than silver, you see.
“Huh? Wait! What? Run that by me again.”
His life is more valuable to him than silver and gold, and clearly, you feel the same way. Neither you nor the merchant want to die. So, both of you will do what you must to obtain the new denarius, pay your taxes with them, and save your lives. Augustus demands fruits and veggies for his parties and other government-related things, and so the merchant sells Augustus his fruit and veggies. Augustus pays the merchant in the new denarius that contains no silver. Now the merchant has some.
You can do some things at this point. Either sell Augustus or the merchant something in exchange for the new denarius, or perhaps ask to borrow the denarius from the merchant. If he has more than he needs to pay his taxes, he might lend them to you.
“But sell what to him?”
You know, ask for a job. That one merchant isn’t the only person with the new denarius. Everyone in Rome values their life more than silver, so at this point, many people in Rome have done what they needed to do to get the new coin. Go to the Roman government and offer to work, or ask the merchant or others for a job.
“So, I get a job and the merchant pays me in the new denarius, and I no longer have to worry.”
Right. And you will notice that the moment Augustus imposed the tax and declared how it is to be paid, suddenly you and many people in Rome needed paid employment. That’s because the tax creates unemployment.
“What? How? Surely people had jobs before the new denarius was issued.”
If you currently have a job but are not paid in the coin that will allow you to pay your taxes and save your life, then what good is your job? You might as well be working for no pay at all. And nobody will accept anything as payment for food, clothes, brick, wages, or any good or service that you can imagine accept for the coin that can be used to pay taxes, because nobody else wants to lose their head. Hence, you are unemployed. The force of the tax causes everyone to look to the authority that is taxing them for the coin necessary to pay their taxes and to save their lives. Augustus issues the coin and promises to spare your life if you pay your taxes with it. People, both merchants and labourers, then flock to Augustus offering to sell him what they have in exchange for the new denarius. Augustus now has the labour and the goods that he wants and people in Rome have the denarius that they need to save their lives. The threat of punishment for not paying taxes, and Augustus’ ability to enforce the tax collections, is what gives the new silverless denarius value and drives the demand for it amongst the people of Rome. The denarius is a monetary instrument because Augustus says so.
“But this is Rome that we’re talking about, and besides, this is all hypothetical because Rome always issued silver in its denarius. The US dollar is worthless because it’s not backed by gold, so how does any of this apply to the US dollar?”
The silver still had nothing to do with it. Do you agree that the federal government has the power to imprison you?
Do you agree that the federal government has the power to confiscate your property, or garnish your wages?
Do you agree that US dollar isn’t backed by gold, silver or any other commodity, and that US coins contain no gold or silver?
And you are fully aware that the US government will only accept US dollars as payment for taxes, right? I mean, you certainly can’t pay your federal taxes with a silver fork, right?
Ok, so what do you think will happen to you if you don’t pay your federal taxes with these, as you say, worthless US dollars that have no value because they aren’t backed up by gold, that the US government issues?
The government of Rome issued the denarius, the US government issues the US dollar.
What gave the denarius actual value?
Avoid having your head chopped off, your body thrown into the Tiber river and all that.
What gives the US dollar value?
Avoid being sent to prison, having your property confiscated, your wages garnished and all that.
“Wait! Oh my God!”
Same thing applies in the UK, Australia, Canada, Japan…