The De Moneta of Nicholas Oresme and English Mint Documents

Description

Bp. Oresme was the first economist to theorize that money does not have intrinsic value but that it's value is determined by those who use the money (cf. "Nicholas Oresme and the First Monetary Treatise").

Bishop Nicole Oresme (1320-1382), in the first monetary treatise, wrote that inflation caused by tampering with money's value, as in fractional reserve banking, is worse than usury:

The usurer has lent his money to one who takes it of his own free will, and can then enjoy the use of it and relieve his own necessity with it, and what he repays in excess of the principal is determined by free contract between the parties. But a prince, by unnecessary change in the coinage, plainly takes the money of his subjects against their will, because he forbids the older money to pass current, though it is better, and anyone would prefer it to the bad; and then unnecessarily and without any possible advantage to his subjects, he will give them back worse money. . . . In so far then as he receives more money than he gives, against and beyond the natural use of money, such gain is equivalent to usury; but is worse than usury because it is less voluntary and more against the will of his subjects, incapable of profiting them, and utterly unnecessary. And since the usurer’s interest is not so excessive, or so generally injurious to the many, as this impost, levied tyrannically and fraudulently, against the interest and against the will of the whole community, I doubt whether it should not rather be termed robbery with violence or fraudulent extortion.

Bp. Oresme discussed what came to be called Gresham's law regarding how "bad money chases out good money in an economy" (The Internet of Money vol. 2 §6.5.2):

CHAPTER XX

Of other Disadvantages [of altering coinage] to the Community as a whole

[…]

Again, such alterations and debasements diminish the amount of gold and silver in the realm, since these metals, despite any embargo, are carried abroad, where they command a higher value. For men try to take their money to the places where they believe it to be worth most. And this reduces the material for money in the realm.

Wrote to my friends:

…a hardened crapitalist who thinks the Fed is necessary and that it doesn't alter coinage for making a profit (which is worse than usury, according to Bp. Oresme). He also thinks printing more fiat is necessary so the money supply doesn't diminish (is scarcity of money even an issue?). He agrees usury is a sin, but, like Modernists (e.g., De Lubac re: the supernatural order), empties the word usury of all meaning.

What I love about Bitcoin is its fixed supply and inherently deflationary nature (cf. the Fr. Dempsey quote here). Crapitalists seem unable to conceive such a thing, let alone that it a good. I also like Bitcoin's Turing-incompleteness (unlike Ethereum) ∵ it makes one unable to perform chargebacks or force collection of interest on loans, thus making usury within the blockchain impossible.

The best answer to my question "How is money productive? What does it produce?" would seem to be "Money produces transactions", but I'm surprised he didn't even say that.

St. Thomas explains it best: "To take usury for money lent is unjust in itself, because this is to sell what does not exist, and this evidently leads to inequality which is contrary to justice." ("accipere usuram pro pecunia mutuata est secundum se iniustum, quia venditur id quod non est, per quod manifeste inaequalitas constituitur , quae iustitiae contrariatur. "). It "leads to inequality" even when both parties agree to buy/sell "what does not exist" and even if they believe in the "subjective" value of money (money's value cannot be totally "subjective" because transactions don't occur in hermetically sealed "monads"; to think otherwise would be against distributive justice).

Interesting point from Bp. Oresme's De moneta ch. 17:

Saint Matthew, the apostle who had been a moneychanger, did not return to his former calling after our Lord’s resurrection, as Saint Peter, who had been a fisherman, did. And in giving this reason, the Blessed Gregory says: ‘It is one thing to eam a living by fishing, and another to amass money from the profits of receipt of custom. For there are many trades which can scarcely if ever be practised without sin, etc.’

The State does not own currency:

CHAPTER VI: Who owns the Money?
Although it is the duty of the prince to put his stamp on the money for the common good, he is not the lord or owner of the money current in his principality (non tamen ipse est dominus seu proprietarius monete currentis in suo principatu). […] But if anyone object that our Saviour, when a penny was shown Him, asked [Mt. 22:20-21]: ‘Whose is this image and superscription?’ and when it was answered ‘Caesar’s,’ gave judgment: ‘Render therefore unto Caesar the things which are Caesar’s, and unto God the things that are God’s ’ (as though He meant ‘The coin is Caesar’s because Caesar’s image is stamped upon it’), it is clear to anyone who reads the context that He does not say that the money was due to Caesar because it bore Caesar’s image, but because it was ‘tribute.’ […] money belongs to the community and to individuals (pecunia communitatis et singularium personarum). And so say Aristotle in the seventh book of the Politics [upon which St. Thomas did not commentate; he only commentated up to Bk. 3.]