In a recent critique of Matthew Yglesias’s proposal, Tyler Cowen lists many reasons why it would be hard to abolish paper currency entirely, suggesting in fact that a black-market paper currency might arise (possibly of some foreign currency) if the government tried to banish paper currency entirely. Responding to Tyler Cowen, JP Koning suggests the possibility of keeping paper money legal but restricting paper currency to small bills to make it harder to warehouse large dollar amounts. But Scott Sumner gives the most trenchant response to Tyler Cowen, pointing out that the real problem is the “unit of account” role of paper currency, not the role of paper money as a way to buy things, which is Tyler Cowen’s major concern:
“Money is not special because it is a big part of wealth, or a big part of credit. Indeed it’s not even special because it’s the medium of exchange [a way to buy things]. It’s special because it’s the medium of account [an economic yardstick].”
Trenchant is one of those words I’ve seen 1000 times, but never knew the precise meaning. The internet gives a number of definitions. Here’s one:
This post is a sort of inside joke, which will go over the heads of those who haven’t followed our endless MOE/MOA debate in the comment section of this post.
PS. Saturos; it appears there are at least two blogging lunatics who see MOA as the key attribute of money.