Money, Banks and Finance in Economic Thought

Why fiat money is not money ?

Pérez Cano Joaquín, Universidad Rey Juan Carlos

WHY FIAT MONEY IS NOT MONEY ? Joaquín Pérez Cano Universidad Rey Juan Carlos Abstract In this essay I try to expose what are the origins of money: a spontaneous process that arose freely in the market. Also, I want to show the characteristics of this institution, which is based on a commodity with certain characteristics and qualities, which -by evolution and through a spontaneous order- human beings have coincided in the use of precious metals (gold, silver and copper, mainly) as money. Likewise, I want to expose the history of money, paying special attention to the most important currencies used in the history of civilization, since we have news of its first use in Mesopotamia and Egypt until they were replaced by paper money in the seventeenth century and nowadays, due to the support of central banks and legal tender laws enacted by governments. In the same way, I want to show the opinions of the most famous economists in the history of economic thought (from the scholastics: Martín de Azpilcueta and Tomás de Mercado to the twentieth century economists: Silvio Gesell and John Maynard Keynes) about money; both, those in favor about money as a commodity and those who think that it is a representative sign of value. Finally, I list the characteristics and qualities of which, -in my opinion and that of the main economists on which the Austrian School of Economics is based-, is money and its coincidence with precious metals.

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Keywords: money, commodity, sign, precious metals, History.

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