Why issue of reserve currency arises - Update 1
Posted by Ivo Cerckel on July 23rd, 2009
Update 1 links “genus” (1) to intrinsic value
If money does not have intrinsic value, the buyer is devouring the seller’s wealth when he gives something of no value in exchange for the seller’s wealth.
This means that the seller should beware and make sure he receives something of value for the good or service he gives to the buyer. (2)
Roman law said that “res perit domino” (the thing is lost to owner) but that “genera non pereunt” (generic goods cannot be lost).
If money is not a generic thing, then it can be lost and the issue of reserve currency can arise.
If money were again a generic thing with intrinsic value, it could not be lost and the issue of reserve currency would never arise.
Ivo Cerckel
honestmoney@maktoob.com
http://twitter.com/ivocerckel/
(1)
“Genus” (sort), genitive “generis”, is the Latin noun from which the adjective ”generic” is derived
http://www.archives.nd.edu/cgi-bin/lookup.pl?stem=genus&ending=
genus (1) -eris , n. [birth, descent, origin; race, stock, family, house]; hence [offspring, descendants; sex]; in gen., [class, kind, variety, sort]; in logic, [genus]; of action, etc., [fashion, manner, way].
(2)
“Caveat venditor” (let the seller beware) is a counter to “caveat emptor”, (let the buyer beware) and suggests that sellers too can be deceived in a market transaction says Wikipedia, verbo “Caveat emptor”
http://en.wikipedia.org/wiki/Caveat_emptor
where it also says that:
Generally “caveat emptor” is the property law doctrine that controls the sale of real property after the date of closing.
July 23rd, 2009 at 14:48
Yes, I know, green paper can be printed at will and is thus also a generic thing [smile].
Smile because Update 1 clarifies that without intrinsic value, there can be no “genus”.
July 23rd, 2009 at 15:47
“Genera non pereunt”
means that
when the thing is lost,
the debtor is released of his obligation to hand over the thing to the owner
only if the thing is not a generic thing
(Henri De Page, “Traité élémentaire de droit civil belge”, Brussels, Bruylant, 1934, 1st ed., Vol II, sections 599 and 605)
July 23rd, 2009 at 17:02
On 15 August 1971, US president Richard Nixon broke the Bretton Woods Agreement which linked the US dollar to gold at fixed parity (then at 40-something dollar an ounce) and all other currencies to the said dollar.
How can the dollar since that day be considered a generic … thing?
Yes, the intrinsic value of paper is …
July 23rd, 2009 at 17:59
Before 15 August 1971, the US dollar had a gold reserve.
Now no more.
But it is still called the reserve currency.
August 3rd, 2009 at 14:30
From The Times
August 3, 2009
China moves to internationalise its currency
Leo Lewis, Asia Business Correspondent
http://business.timesonline.co.uk/tol/business/economics/article6736681.ece
SNIP
A consensus among policymakers has grown from the grudging acceptance that one of the fundamental reasons the country has fallen into the dollar trap is that China’s currency is not international and the global crisis has made the dollar less predictable. UNSNIP
COMMENTS
SNIP
Ivo Cerckel wrote:
Would not a better avenue to prevent falling into the dollar trap be to relinquish the very notion of “reserve currency”?
Gold is money, or at least the free-floating reserve a currency needs to have “some” value.
August 3, 2009 2:20 AM BST