The word game - Legal Tender v Lawful Money

[doug555]

But is it efficacious to ask whether FRNs or USNs have value? My understanding is that neither currency actually carries value. Rather, both represent promises of future value. They serve the function of being accounting devices only.

The paradox of non elastic USNs being tied to elastic FRNs in value is really irrelevant, since there is no value associated with either currency (other than that which is imparted by currency traders).

Any value associated with a transaction resides in the goods or services traded. The currency merely serves as a medium of exchange wherein titles are transferred, and as a convenient measure of value. There is no store of value, since the value is undefined by either instrument.

It seems to me the main distinction between FRN and USN is found in the forum wherein goods and services are passed. Redeeming legal tender for lawful money simply removes the transaction from one forum and places it in another. Therefore the question of value becomes moot.

I agree.

The medium of exchange is moot. Its VALUE is determined by its ACCEPTANCE at the time of the transaction, in terms of (denominated by) the product or service accepted/received.

This is why "indorsed bills" make sense, as a convenient and expedient medium of exchange... facilitating the flow (currency) of goods and services intrinsically identified therein.

USNs have a detriment of being tied to FRNs in "value".

FRNs have the detriment of incurring an "income tax" USAGE FEE, and also are incapable of passing TITLE, being liability (IOU) instruments.

And guess what? BILLS will never stop coming, even in a crash or depression, so they will always be in "circulation" and available as "currency" by simple indorsement!