A money is something that is a medium of exchange.  Money isn’t a creature of the state.  It might seem that way because money has come from the politburo our entire lives.  The first money was a market determined money.  In fact, it’s impossible that it could’ve come from a central committee, social contract, politburo, etc.  The idea that the state should only issue money can only come from ignoring economics.

The paper used around the world could never emerge as a money.  It functions as a medium of exchange, but not a good money.  As Carl Menger pointed out, “Money is not an invention of the state.  It is not the product of a legislative act.  Even the sanction of political authority is not necessary for its existence.  Certain commodities came to be money quite naturally, as the result of economic relationships that were independent of the power of the state.”

A commodity must first be used as a medium of exchange.  The first, and best, money will always be a commodity.  It had to have had value on the market.  However, when it functions as a money, it’s neither used for consumption nor production.  It’s impossible that it could’ve emerged any other way.  Paper came to be used as money on the back of commodity money.  It took a secret meeting to create a politburo so they can print endless cash.

If one wants to trade a good for another good, it must improve their life.  Paper tickets won’t improve anyone’s life.  People would exchange one good for another good because they know it can be used at a later date.  Today, people accept paper because they have to, legally.  The paper tickets aren’t goods.  Gold does improve one’s life.  It’s not just a good that can be used on the market, it has unique qualities so it can be traded at a later date.

The paper used today represents a debt to the central bank.  A long time ago when a commodity was used, the money substitute that was used could be exchanged for gold or silver.  It was representative of a real good.  Just because the politburo has issued money your entire life, in no way means it can only issue money.  The politburo can’t print goods.  Welfare can only decrease by its actions.

Reference

Ludwig von Mises; The Theory of Money and Credit