I studied economics for three years (2007 -2010). What intrigued me most was that in a room full of students, some of them very bright, none of them could plausibly define money, not even my Professor. Economics is a coarse instrument without the lubricant of money. How could a whole subject evolve around a core concept that everyone and his dog had written about, but which nobody had properly defined or, thus, understood.
The most plausible definition was Carl Menger’s ‘money is the most marketable good’. But it was unsatisfactory in that it raised unanswerable questions. Such as, if Gold really is just a good, then how could it be the measure of the value of other goods?
In February of 2011, after a long conversation over a few Proseccos with my good friend Gaetano Elnekave (in Treviso, just outside Venice), I decided to define it myself. In 2015, Dawn of Gold, the Real Story of Money emerged. If I had known that it would take me four years, I would never have begun the journey. But it was worth every moment.
Money is defined: ‘a known weight and fineness (purity) of Gold’.
Money is the measure of value because it is the most stable value known. To qualify as a science a subject must have something to measure, and something with which to measure*. The monetary science is no different. Each science chooses as its measure the most stable element that it has available. Gold money, as the measure of value, has no peer.
Gold’s stability of value was established by the Stock-to-Flow Ratio. It was this ratio that established a known weight and finesse of Gold as money when first it emerged from the temples into the marketplace c1500BC.
A good is properly defined: ‘an exchangeable, quantifiable value’. So, if a good can have its value quantified then, ipso facto, that which does the quantifying, cannot also be a good. If its value could be measured, then how could it be money? A thermometer is not a fever.
Money is not the most marketable good, because money is (rather obviously) not a good at all.
Another way of looking at it is that money is objective value (it could not be the agreed measure were this not so), and goods are subjective value.
* Lord Kelvin