Economics Dictionary of ArgumentsHome
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| Near money: Near money (or quasi-money) refers to assets that are highly liquid and easily convertible into cash, but are not considered actual money. Examples include savings accounts, money market instruments, and short-term government bonds. While they aren't legal tender, they can quickly be used for transactions, acting as a close substitute for cash in an economy. See also Money, Money supply, Banks, Central banks._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Near Money - Dictionary of Arguments
Rothbard III 826 Near Money/quasi-money/Rothbard: Some goods are more readily marketable than others. And some are so easily marketable that they rise practically to the status of quasi moneys. Quasi moneys do not form part of the nation's money supply. The conclusive test is that they are not used to settle debts, nor are they claims to such means of payment at par. However, they are held as assets by individuals and are considered so readily marketable that an extra demand arises for them on the market. Their existence Iowers the demand for money, since holders can economize on money by keeping them as assets. The price of these goods is higher than otherwise because of their quasi-monetary status. Rothbard III 827 In Oriental countries jewels have traditionally been held as quasi moneys. In advanced countries quasi moneys are usually short-term debts or securities that have a broad market and are readily salable at the highest price the market will yield. Quasi moneys include high-grade debentures, some stocks, and some wholesale commodities. Debentures used as quasi moneys have a higher price than otherwise and therefore a Iower interest yield than will accrue on other investments.(1) Bills of exchange: Money-substitutes are claims to present money, equivalent to warehouse receipts. But some critics maintain that in Europe at the turn of the nineteenth century bills did circulate as money-substitutes. They circulated as final payment in advance of their due dates, their face value discounted for the period oftime left for maturity. Yet these were not money-substitutes. The holder of a bill was a creditor. Each of the acceptors of the bill had to endorse its payment, and the credit standing of each endorser had to be examined to judge the soundness of the bill. Mises: In Short, as Mises has stated: „The endorsement of the bill is in fact not a final payment; it liberates the debtor to a limited degree only. If the bill is not paid then his liability is revived in a greater degree than before.“(2) Hence, the bills could not be classed as money-substitutes. Rothbard III 828 Exchange rate between quasi-moneys: (…) if there is more than one medium coexisting on the market, what determines the exchange ratios between the various media? If two or more commodities offer good facilities and are both especially marketable, they may coexist as moneys. Each will be used by people as media of exchange. For centuries, gold and silver were two commodities that coexisted as moneys. (…) Gold, (…), being relatively far more valuable per unit of weight, was found to be more useful for larger transactions, and silver better for smaller transactions. (…) in the late nineteenth century, most Western countries conducted a coup d'etat against silver, to establish a monometallic standard by coercion.(3) >Exchange rate, >Purchasing power parity/Rothbard. Rothbard III 830 History/VsNear money/VsQuasi money: It is impossible for economics to state whether, if the money market had remained free, gold and silver would have continued to circulate side by side as moneys. There has been in monetary history a curious reluctance to allow moneys to circulate at freely fluctuating exchange ratios. Whether one of the moneys or both would be used as units of account would be up to the market to decide at its convenience.(4) 1. Cf. Mises, Human Action, New Haven, Conn.: Yale University Press, 1949. Reprinted by the Ludwig von Mises Institute, 1998. pp. 459-61. 2. Mises, Theory of Money and Credit, New Haven, Conn.: Yale University Press, 1953 and 1957. Reprinted by Liberty Fund, 1995. pp. 285-86. 3. 146] For recent evidence that this action in the United States was a deliberate "crime against silver," and not sheer accident, see Paul M. O'Leary, "The Scene of the Crime of 1873 Revisited,"Journal of Political Economy, August, 1960, pp. 388-92. One argument in favor of such action holds that the government thereby simplified accounts in the economy. However, the market could easily have done so itself by keeping all accounts in gold. 4. See Mises, Theory of Money and Credit, New Haven, Conn.: Yale University Press, 1953 and 1957. Reprinted by Liberty Fund, 1995. pp. 179 ff., and Jevons, Money and the Mechanism of Exchange, pp. 88-96. For advocacy of such parallel standards, see Isaiah W. Sylvester, Bullion Certificates as Currency (New York, 1882); and William Brough, open Mints and Free Banking (New York: G.P. Putnam's Sons, 1894). Sylvester, Who also advocated 100-percent specie-reserve currency, was an offcial of the United States Assay Offce. For historical accounts of the successful working of parallel standards, see Luigi Einaudi, "The Theory of Imaginary Money from Charlemagne to the French Revolution" in F.C. Lane and J.C. Riemersma, eds., Enterprise and Secular Change (Homewood, 111.: Richard D. Irwin, 195 3), pp. 229-61; Robert Sabatino Lopez, "Back to Gold, 1252," Economic History Review, April, 1956, p. 224; and Arthur N. Young, "Saudi Arabian Currency and Finance," The Middle East Journal, Summer, 19 53, pp. 361-80._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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> Counter arguments against Rothbard
> Counter arguments in relation to Near Money
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