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Comment by funklute | Hacker News Reader

> all money is very literally, nothing more, nothing less than debt

This doesn't seem to work for a dollar bill in my hand though?

A dollar in your hand is "redeemable debt". It's future value that you've been promised, presumably for having prior given up something of value, like your time or some tangible good.

So a train ticket is money?

Keyword is redeemable. A train ticket is not exchangeable.

But yes, products can sometimes become accidental foreign currencies when they satisfy all the key properties, even if they’re not printed by a national bank. Casino chips for example. Disney dollars. Etc.

You get easily into quite deep questions with money... Anyway, there are good reasons to argue that dollar bills owned by central banks are not money - at least in any meaningful sense. To see why, let's assume a central bank prints a bill with value of a googol dollars, that is 10^100 dollars and puts it in the vault. Is there any meaningful way that amount of money has just exploded? Do we see e.g. monetary inflation? No.

The moment when bills become money in meaningful sense is when they end up in circulation. And they end up in circulation, when - you guessed it - central bank lends them to banks. The bills are a liability of a central bank, thus they are a note which says that central bank owes that amount to holder, thus they are debt. Yep, I agree, this is confusing and requires very careful thinking.

A dollar bill is just a piece of paper. You can light a fire with it, or wipe your ...uh, nose with it. What gives it value is that society has agreed that it represents a redeemable obligation to receive one dollar's worth of goods or services. That obligation is debt.

Sort of-- a dollar bill is an "IOU Nothing". Still an IOU as pointed out by the other comments, but in practice it's more like a promise of the Federal Reserve to empty it's chest of assets (mostly dollar-denominated debt instruments) to give your dollar bill value.

Pre-1971 it was a claim on a defined amount of precious metals. Historically, precious metals and specifically gold were the sole non-debt currency, because it's a dense store of value whose custody you don't necessarily have to entrust to a 3d person.

That's just mostly debt, a hundred years ago it would have been a promise to pay you ~1/20 oz of gold. At the moment I think a $100 bill costs about 20 cents to produce, so it's 99.8% debt on the Fed's balance sheet.

No, fully debt, by your own words.

> a hundred years ago it would have been a promise to pay you ~1/20 oz of gold.

so 100 years ago, it represented a debt of 1/20 oz of gold.

Their point is that even if the debt went away you can technically prescribe a very small amount of value to the actual object that has been produced to represent that debt (what we call the "paper" note). Although that intrinsic value would arguably be lower than the cost to produce it in the case of the debt actually ceasing to be valid, but for that to happen society would have bigger problems than worrying about the material value of old bank notes.

Take a look at it, upper left corner

"This bill is legal tender for all debts"

Makes it pretty clear to me.

"Legal to offer as payment of a debt" is not at all the same as "is itself debt".

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