CHAPTER VII

DODO-BONES

Quantity theory doctrine that valueless objects can serve as money; Nicholson's assumption: money made of dodo-bones 130-131

Fisher's view also 130

And Ricardo's 131-132

Will dodo-bones circulate? Dodo-bones and poker chips; circular reasoning 132

Both medium of exchange and standard of value must be valuable 133

Is inconvertible paper an exception? 133-134

Doctrine that money gives legal claim to things in general 134

Kemmerer's assumptions; money made of commodity, once valuable, now used only as money 135

Commodity theory requires present commodity value 135

Historical _vs._ cross-section view: possibility that such money would circulate 135-136

Value not tied up with marginal utility or commodities: social value theory; derived values often become independent of original presuppositions, in economic as well as legal and moral spheres 136-139

But this no basis for quantity theory: social psychology, not mechanics 139

"Banker's psychology" _vs._ psychology of blind habit: India, Austria, United States; monetary phenomena of war times; "credit theory" of Greenbacks 139-142

Question-begging definitions 142-143

Assumptions of quantity theory: blind habit and fluid prices 143-144

Extreme commodity theory denies that money-use adds to value of money; usually not true; analysis of money-functions 144-150

Hypothetical case in which whole value of money comes from commodity value 150-152

Money must have value apart from monetary employments, but, in general, gains additional value from employment as money 152-153