Nice try, Julian Wells.  But you're missing the point.  The check card 
is certainly a means of payment but it is not a Unit of Account 
(classical identifier of what is money).  Perhaps, I should have cited 
Adam Smith's explanation to make the point that the modern definition 
that focuses on the medium of exchange function of money as the first 
identifier of money is a switch in concept:  “In treating of opulence I 
shall consider: ... Money as 1st The measure by which we compute the 
value of commodities (as a measure of value), [and] 2d The common 
instrument of commerce or exchange,” and “Money as I observed now serves 
two severall [sic] purposes.  It is first the measure of value. Every 
one tells you that the goods he has to sell are worth so many pounds, 
shillings, etc., believing you know this as a measure. It is also the 
instrument of commerce, or medium of exchange and permutation” 
(/Lectures in Jurisprudence/ 1978: 353, 368).

Also, your check card is an order to pay money.  Your vendor's computer 
ascertains from your bank's computer whether it will accept the order to 
pay.  Your bank's computer verifies whether you have sufficient savings 
or wealth in your bank account for the amount.  If you do, the 
transaction is authorized.  If not, the transaction will be declined.  
Usually, your bank will spare you the embarrassment of a decline (for a 
"small" amount, anyway) and authorize the payment -- grant you quick 
credit.  Your bank then charges you a fee for the service.  Your bank 
also debits your account (if you have sufficient funds) and causes to be 
transferred out of its reserves (cash) with the central bank the amount 
of your purchase into the account of your vendor's bank. So, your check 
card transaction works just like a paper check transaction, except with 
lightening speed.  All your identifying particulars are already "in the 
system."

So, if we followed the classical definition of money, only a modern 
central bank's currency or cash is money.  All other media of exchange 
or means of payment are money substitutes.  That was my point.  Is it so 
hard to understand?

All those talking about a pure credit system without identifying the 
measure of value are operating in a land of fiction that I cannot 
understand.  They won't explain how we can derive P (price level) from 
H/ky or HV/y, when H = quantity of money, the measure of value, is 
absent!  Rather, they talk about some other claim on the non-existent 
quantity of money, a check.

The classical definition is also very helpful in understanding that a 
central bank does not CONTROL the money supply, M1 or M2. The public's 
savings rate (currency-deposit ratio) and banks' willingness to lend 
(excess reserves-deposit ratio) have a lot to do with the determination 
of M1 or M2.

James Ahiakpor

Wells, Julian wrote:
> On 20/02/2014 05:47, "James C.W. Ahiakpor" <[log in to unmask]>
> wrote:
>
>> Alfred Marshall
>> ". . . 'money' is . . . all those
>> things which are (at any time and place) generally 'current,' without
>> doubt or special inquiry"
>> Irving Fisher
>> ³a bank note is /generally/ acceptable in
>> exchange"
> Contrast these authorities with the Bank of England:
>
> "Our advice is to remain vigilant at all times and check all banknotes
> being passed" (followed by advice about UV scanners and detector pens)
>
> (http://www.bankofengland.co.uk/banknotes/pages/retailers/hintstips.aspx)
>
> In contrast:
>
> Ahiakpor:
>
>> Money doesn't include checks; these don't pass from
>> hand to hand without any special inquiry.
> Wells:
>
> They do (or did) when accompanied by a cheque card; so was cheque + card =
> money?
>
> Similarly, these days when I make an electronic payment from my bank
> account, the only "special enquiry" that takes place occurs when *my bank*
> decides (or its computer decides) to issue the relevant amount.
>
>
>
> n.b. my bank's decision to issue, NOT the recipient's decision to accept.
>
>
>
> Julian Wells
>
>
> This email has been scanned for all viruses by the MessageLabs Email
> Security System.


-- 
James C.W. Ahiakpor, Ph.D.
Professor
Department of Economics
California State University, East Bay
Hayward, CA 94542

(510) 885-3137 Work
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