The Seignorage or Social Credit Theory of Money
Executive Summary
- The seignorage theory of money is that money based upon social credit.
Introduction
Promoted by Giacinto Auriti. It is explained in the following quotation.
“This is explained in the following quotation “His theory is that those who accept the convention of a currency’s value, have the right to own it at its inception (the people’s ownership of money). In this sense, the central banks are private corporations, who according to Auriti derive undue profits from seigniorage on the issue of paper money, assuming responsibility for an important source of public debt. Auriti’s theory viewed the issued banknotes as mere promissory notes and false bills of exchange issued by the banks. It was considered false because the bank promise gold that it did not have.[2] Instead of gold, Auriti argued that the currency has an induced value and prediction value, which are created by social convention. The Bank of Italy opposed the request. Consequently, Auriti wrote, “The vision of the currency and monetary functions which the petitioner intends to credit is clearly distorted and completely unfounded” … “Acceptance by the community, far from being due to the value of the coin, it is really just the effect, so the syllogism must be reversed; it is true that the currency is accepted as true, but if anything, as the story and the news are demonstrating that it is only accepted as having value. Hence the need for this value, responding to a fundamental public interest, should be defended and guaranteed by public authorities, were assigned to function in modern central banks.” – Wikipedia
Source: Wikipedia