Credit value and monetary value (conventional)

This strategy of market dominance was based on the confusion, therefore, deliberately intended, among two concepts: of credit value and conventional value. While credit value is defined as those relating to the service which is object of loan, for the conventional value, however, it must be considered the value that is caused by the same Convention.

To clarify this difference, it is useful to give an example: if you establish two acts of reciprocal donation between two person, there is ex post an identical result to that of a swap contract. And it is evident that if two people, instead of doing two acts of donation, make a contract, it means that there is a specific incentive so that in contract performance corresponding utility resides a different and superior to that of the service and the counter-service. This value is caused by the conventional prediction of the others' behaviour as condition of their own. This is what happens to the currency, the value of which is determined by the simple fact that everyone is willing to give money against goods in anticipation of being able to give itself currency against commodity. The monetary values explode thus, through a pure mental activity of the components of the national communities that realize, with the Monetary Agreement, the value of the currency.

In passing off the form of credit title as conventional value, the banking system achieved the purpose of appropriate the conventional values produced by the community. In fact, it took advantage of the fact that the issuance of debt securities is the prerogative of the debtor, appearing as debtor in the deed statement, and arrogating to itself the right to issue the title, it acquired the ownership of the money. With this system, the bank could turn an apparent debt in a substantial enrichment. For example, the tenor of the note document "A thousand lire payable to bearer" would mean that only theoretically, performing this document to the bank, it should be required to pay the equivalent commodity gold. And since, by law, the Bank does not can convert into gold the monetary titles (notes), it is authorized to issue this bill, which is a false a bill of exchange, because it is without expiration term and responsability, and then with the "guarantee" to not pay it.

The bank thus realizes a profit equal to the difference between nominal value and cost of printing currency, turns its debt apparent in a substantial enrichment by means of a macroscopic accounting reversal of which no one is shocked because too obvious, and that allows the banking system to take control of a value that has nothing to do with credit.

While the credit is extinguished by the payment, the money continues to circulate after each transaction indefinitely. And being, moreover, the currency the means to meet and settle the credit, it can not have the same value of credit, even if the credit is sometimes used as a substitute for currency (for example, the bill of exchange used as a means of payment). This is proof that money, even if circulating usually under the guise of credit instrument, incorporates a purely conventional value. The category of Conventional values is still almost completely ignored by economists and by the legal system, so much so that there is still not a valid legal system on the monetary nature. According to traditional theories, when it talks on value, mostly mistakenly refers to the value for costs, such as incorporation of the production cost.

It is historically proven that whenever it is usual to consider a commodity as currency symbol, its value is increased significantly. Because in fact the value of an asset is proportional to its usefulness when a specific goods, in addition to meeting the need for which is naturally destined to be the measure that also satisfies the value for the exchange, obviously increases in value because it increases utility. This happened for example at the beginning the American colonial history in the southern states for tobacco and rice, where the goods were considered as money.

The currency has value for the simple fact that it is the unit of measure of the value of the goods. Each unit has, in fact, the quality corresponding to what must be measured. As the meter has the quality of the length because it measures the length, as the kilogram has the quality of weight because the is the weight measurement, so the currency has the quality of the value because it measures the value. And the value of the currency is conventional, moreover, because each unit is conventionally established.

To be aware of this truth is to discover the enormous potential value of our mental activity of group, so much so that the monetary value exists even when the monetary symbol is zero cost and lacking any form of reserve, as at this day for the dollar and Special Drawing Rights.

That the currency had the dual distinction of being the unit of measure of the value of the goods and then to incorporate the value of the same unit of measurement, it was clearly established by Ezra Pound^[10]: "Money is not an instrument simple as a spade, contains two elements: that of which measures the prices in the market and the one that gives the power to buy the goods."

It follows that the monetary function is cause of a duplication of values and doubles at least the wealth of nations that adopt it, because the sum of the units (currency) expresses an amount of value corresponding to that of all the measured or measurable in real assets in the value. It is time that the public becomes realize that those who create the value of money is not who print or issues it, but those who accept it as a means of payment, that is, the community of citizens. The lack of this awareness, causes that who appropriates the monetary value are not the people, but the international banking system, by virtue of the cultural monopoly of the category of conventional values.

Extract from "The internation regulation of monetary system by Giacinto Auriti