Money is a social relation. It is a generalised claim on a part of the product of the economic domain of the authority which supports it. Being legal tender means that this claim is supported by property laws, contract laws etc.
The banks money making trick is that it can take an IOU (a loan contract) and turn it into a bank asset - and - corresponding to the bank asset, create a deposit of legal tender.
Any repayments on the loan then writes down the value of the bank asset and disappears.
Money then also has a scope (or domain) which is defined by the extent of the reach of the authority which supports it. Within this domain money is not a commodity, but the unit of account in which commodities express their relative value.
Money only becomes a commodity when it leaves its domain and confronts money from other domains.
Money is a social relation. It is a generalised claim on a part of the product of the economic domain of the authority which supports it. Being legal tender means that this claim is supported by property laws, contract laws etc.
The banks money making trick is that it can take an IOU (a loan contract) and turn it into a bank asset - and - corresponding to the bank asset, create a deposit of legal tender.
Any repayments on the loan then writes down the value of the bank asset and disappears.
Money then also has a scope (or domain) which is defined by the extent of the reach of the authority which supports it. Within this domain money is not a commodity, but the unit of account in which commodities express their relative value.
Money only becomes a commodity when it leaves its domain and confronts money from other domains.