flavianopolis

I quote professor George Reisman.

"Fiduciary media are transferable claims to standard money, payable by the issuer on demand, and accepted in commerce as the equivalent of standard money, but for which no standard money actually exists.”

As far as I can understand the point of view held by professor Reisman is, in this respect, identical to that of Ludwig von Mises who defined fiduciary media as bank notes and demand deposits beyond actual gold reserves.

However, I have come to differ from that standpoint. I consider all claims to standard money to be fiduciary media. This is why.

If somebody borrows money from a bank a claim to standard money is issued. The borrower issues a claim to standard money. The borrower becomes a debtor in relation to the bank. Although in most cases the document manifesting the debt is kept in the vault of the lending bank until the debt is paid off, it is not ruled out that the lending bank will hand it over to a new creditor in exchange either for standard money or other claims to standard money.

Strictly speaking there is no catallatic difference between such claims to standard money and claims to standard money payable on demand by banks. They are identical in that both can change hands and that both command a value in exchange as long as the debtor/issuer is solvent. And since banks hold all kinds of claims to standard money as security for the more liquid forms of claims to standard money they issue themsleves, one could argue that most claims to standard money catallactically change hands all the time.