Base money basics Paul Krugman and Steve Randy Waldman both have
a gift for writing. But when they write about base money their
prose becomes fuzzy and vague, at least to me. Just like the
writing of many market monetarists, by the way. I’ve tried to
figure out where and why I lose track of all this writing. It
turns out to be the concept of ‘base money’, as it’s used by
these writers (or by me). The point is: there are in fact
different kinds of base money and Krugman and Waldman do not
really seem to differentiate between the different kinds. What’s
the matter? Different organisations produce different kinds of
money in our society. A (non-exhaustive) list: I. The government
not only creates money but also produces the ultimate design:
coins, made of copper, platinum, whatever, with names like
Dollars, Yen or Guilder which serve, very important, as the
template for the unit of account. II. The central bank produces
banknotes which the government accepts, by fiat, as payment by
banks for coins at a 1:1 ratio