Isn't the reason why it would be stupid of the government to assign a value of 5 cents to an ounce of pure gold bullion, that nobody in his right mind would value it at 5 cents but would value it at the spot price for gold bullion, precisely because that is the market value of goods and services it could serve as a medium of exchange for?

Jardine,
"Isn't the reason why it would be stupid of the government to assign a value of 5 cents to an ounce of pure gold bullion, that nobody in his right mind would value it at 5 cents but would value it at the spot price for gold bullion,"
Not quite, as even if only a few people would value it at the spot price for gold bullion, the government would still be able to get that price for it.

"precisely because that is the market value of goods and services it could serve as a medium of exchange for?"
No, it's because that's the market value for bullion. Supply and demand, driven mainly by speculation, determine the price.

To the extent people value gold for its monetary characteristics, such as a medium of exchange or store of value, then neither gold, nor fiat currency, has "whatever value the government assigns to it" in terms of the purchasing power of money; and your theory is wrong for that reason.

And to the extent you are ignoring the monetary characteristics of gold, which is what you've just done, your theory is wrong for that reason.

Your theory is just a description of what the statists dream the government's fiat powers could and should be, not a description of reality.

It's like your absurd theory of the State that no-one enforces the law by the initiation of force - baseless nonsense: not even the State agrees with you.

However you have embarrassed yourself enough with your floundering attempt to defend government undervaluing of money.

But you can fare no better with over-valuing.

According to your theory of money and credit, the government could take a Tally-ho cigarrette paper, impress its stamp denoting a money note to the value of Australia's GDP, and this would or could increase the material wealth of the nation.

Yes? Not misrepresenting you in that proposition, am I?

Jardine,
Nearly everything is priced in actual money nowadays, so gold's "monetary characteristics" are irrelevant. Gold isn't a particularly good medium of exchange, and generally the only people who regard it as one are the ones who predict the collapse of civilisation!

Fiat money really does have whatever value the government assigns to it, but in terms of purchasing power it's a to stage process: the assignation sets the face value, but the fiat is needed to give purchasing power to the currency.

"According to your theory of money and credit, the government could take a Tally-ho cigarrette paper, impress its stamp denoting a money note to the value of Australia's GDP, and this would or could increase the material wealth of the nation."
No. And you're not merely misrepresenting me, you're also being stupid! Spending the entire GDP in one transaction would be far too inflationary.

For an increase in money to result in an increase in wealth, it must result in an increase in production. Or possibly something that directly improves people's standard of living (as intangibles are important even though they are hard to measure).

BTW I never claimed that "no-one enforces the law by the initiation of force". I make a distinction between force and violence. Of course the state can initiate force when enforcing the law, but except in the defence of themselves or others, they should not do so with an intent to cause injury, nor with a reckless disregard for whether or not they cause injury.

Aidan
So money has whatever value the government assigns to it; but it doesn't, it depends on the (unspecified) context, and whether it would be an "inefficient use of govt resources"; but it does, because the "face value" is whatever the govt says it is; but it doesn't, because of commodity value and numismatic value; but it does have "whatever value the government assigns it"; but it doesn't, in terms of what it could buy; but it does; but not if a good can be valued in terms of any other goods or services for which it could be exchanged?

And making a "$1GDP" note would not result in an increase in physical wealth; except if anyone relied on its fiat assignation to produce something, in which case it would?

And no violence is used to maintain the State and enforce obedience, except when they're enforcing obedience; and the police only ever act in "self-defence" except when they're initiating force; and initiating force is a crime of aggressive violence when a subject of government does it, but not when government does it?

Perhaps you should read back what you've been writing?

Struth, Jardine, you do have terrible trouble with comprehension!

"So money has whatever value the government assigns to it; but it doesn't,"
When valued as money it ALWAYS does.

"it depends on the (unspecified) context,"
NO. I NEVER CLAIMED THAT DEPENDED ON CONTEXT. I wonder if other readers appreciate the irony of taking my comment about context out of context?

What I said would depend on context was whether it's stupid to say "just because it costs more to make doesn't mean it's worth any more that".

"and whether it would be an "inefficient use of govt resources";"
Again, you're quoting me out of context. What I said would be an inefficient use of govt resources was for the government to assign a lesser monetary value to an item with greater commodity value.

"but it does, because the "face value" is whatever the govt says it is;"
As I said.

"but it doesn't, because of commodity value and numismatic value; "
I accept the fact that money can be use used as things other than money, and in certain circumstances its value as scrap metal or as a collectors item may exceed its value as money.

"but it does have "whatever value the government assigns it";"
As I said.

"but it doesn't, in terms of what it could buy; but it does; but not if a good can be valued in terms of any other goods or services for which it could be exchanged?"
It's quite simple: although the value of a particular note is set by the government, the value of the currency itself is set by the market, though the government remains a major player in the market, with fiat remaining one of the main determinants of value.

"And making a "$1GDP" note would not result in an increase in physical wealth;"
Correct.

"except if anyone relied on its fiat assignation to produce something, in which case it would?"
No. Firstly, governments assign currency, not shares of GDP. Secondly the economy would not be able to absorb any transaction that big.

(TBC)