I recently started reading, "What the Government has Done to our Money" by Rothbard and have a question. In the beginning of the book, Rothbard explains the process of a media becoming exchanged for so frequently that it become money. What I'm having trouble understanding is if the government creates a legal tender lets say the dollar for example, Won't that become money regardless if it goes through this cummulative exhange process simply because people know that it can purcahse the goods they want? I know this is probably a simple question but I am a little confused. Any help is sincerely appreciated
Thanks
Matt
No, because until it is widely accepted, it's not widely accepted. It is only through a process of gradual exchange that it can become widely accepted. Of course, you can stage a Bolshevik revolution and execute anyone who uses anything other than government issued ration-stamps to exchange anything for anything else and you will have almost instituted "overnight money" but so what? The Mengerian account of money explains how money originated, it does not delimit the ways in which the government can manipulate the market.
Clayton -
Thanks for the quick reply that helped a great deal.