Money Is Property. Full Stop.

 

🧨 Money Is Property. Full Stop.

The confusion between money and credit isn’t a minor academic slip—it’s a foundational error that distorts how we understand banking, central banking, and monetary policy. It’s time to stop tolerating it.

Let’s be clear: money is not a promise. It is not a liability. It is not a representation. Money is owned property—the asset itself. Anything less is credit, and credit is not money.

🧱 The Institutional Reality

In the architecture of modern finance, central bank reserves and bank deposits are denominated in money, but they are not money. They are claims—liabilities issued by institutions. Their function depends entirely on the credibility of those institutions to honor conversion. That credibility is not intrinsic to the instrument; it’s external and contingent.

• Reserves are central bank liabilities to depository institutions.

• Deposits are commercial bank liabilities to depositors.

• Neither is money. Both are promises.

The operational choreography of monetary systems makes this distinction unavoidable. Reserves settle interbank obligations. Deposits settle retail transactions. But in both cases, what’s being transferred is a claim, not the asset itself.

🔥 The Austrian Blind Spot

Ironically, many Austrian economists—self-styled defenders of “sound money”—perpetuate this error. They rail against fiat currency and fractional reserve banking, yet treat bank deposits and central bank reserves as if they were money. This contradiction undermines their entire critique.

If you define money as a liability, you’ve already conceded the institutional ground. You’ve accepted that money is a promise, not property. That’s not sound. That’s confused.

🧠 Philosophical Precision

Money is the second form of owned property—after labor—that can be transferred without institutional mediation. It is not a representation of value. It is the thing of value. It ends obligations. It does not begin them.

Credit begins obligations. It is a forward-looking claim. Money is backward-looking compensation. To conflate the two is to erase the boundary between ownership and obligation.

🧭 The Operational Consequence

When the Federal Reserve expands its balance sheet, it issues reserves. These are liabilities. They do not enter the public economy. They do not settle private obligations. They are not “money printing.” They are credit expansion within a closed institutional loop.

Calling reserves “money” is not just wrong—it’s operationally incoherent.

✅ The Correct Frame

Let’s draw the line with institutional clarity:

Instrument	Nature	Function	Is It Money?
Physical currency	Owned asset	Final settlement	✅ Yes
Central bank reserves	Liability	Interbank settlement	❌ No
Bank deposits	Liability	Retail transaction medium	❌ No
Treasury securities	Asset	Collateral/store of value	❌ No

Money is the owned asset that ends the transaction. Everything else is a promise that depends on institutional credibility.

🧨 Final Word

If we want to understand monetary systems, we must stop mislabeling liabilities as assets. We must stop calling promises “money.” And we must stop pretending that institutional credit is equivalent to owned property.

Money is property. Not promise. Not representation. Not liability.

Anything else is a category error—and it’s time we stopped making it.