Steve Keen, “What Is Money And How Is It Created?,” Forbes, 28th February, 2015.Steve Keen points to the work of Augusto Graziani, the Italian monetary circuit theorist, and gives an interesting, if perhaps a little idiosyncratic, perspective on what money is and the nature of a monetary production economy.
I think the whole discussion would benefit from distinguishing (1) high-powered money from (2) credit money. Any private-sector agent can create credit money, including negotiable bills of exchange, negotiable promissory notes, negotiable cheques, or bank money. The trouble is having your credit money (which is simply a promise to pay in a higher money that can finally extinguish debt at a later date) accepted as payment in a transaction, because that money creates a debt/credit relationship that almost always must be extinguished by high-powered money. High-powered money can be either (1) commodity money or (2) state-issued fiat money.
As an aside, one of Graziani’s most important books was The Monetary Theory of Production (Cambridge University Press, Cambridge, 2003).
