First, “money” is not a natural resource that humans dig out of the ground, or catch in the sea, or cultivate with water and sunshine. Money is a social invention created in people’s minds (using paper or metal or digital symbols to keep track of.) The purpose of the money-invention is to facilitate the trading of “debts” amongst individuals in a very large, collective society. The debts are for goods and services individual members of the society provide to each other. It should be obvious to anyone’s common sense that these goods and services are NOT limited by the number of paper, metal, or digital symbols that keep track of the debts, but are instead limited ONLY by the actual goods and services individuals are willing and capable of providing each other. The paper, metal, or digital symbols (the “money things”) are created, as needed, to accommodate the actual goods and services that are exchanged.
Second, people cannot individually create their own paper, metal, or digital symbols (“money”) because it would be impossible to know the value of one person’s money compared to another’s with respect to the quantity of various goods and services the money symbols can be exchanged for. The money invention can only work if the social group collectively agrees to a common unit of currency, and assigns the task of creating or “issuing” that currency (producing the paper, metal or digital symbols) to a Central Authority.
Third, while money could simply be created “by law”—with the central authority threatening to put citizens in jail if they refuse to provide goods and services in exchange for the authority’s money-symbols— it is less effort and more effective to use a more dynamic method: Federal Taxes. Instead of requiring citizens to provide goods and services in exchange for the money, the central authority levies a tax on the citizens which can only be paid with the money the authority issues. Having given each citizen a debt which can only be paid with the authority’s money—taxes due—the collective state sets in motion the dynamic whereby it is now able to issue paper, metal or digital symbols (money) and the citizens are willing to provide real goods and services in exchange for those symbols.
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