No: Money Is Not Debt
A quick note in response to recent twitter thread, and to a widespread usage that I find to be deeply problematic.
You constantly hear very smart thinkers about money saying that money is debt. I strongly disagree. It’s not a useful way to think about money. Quite the contrary.
Balance-sheet assets designating the value of claims may have offsetting liabilities/debts on other balance sheets. (Not all do; that’s why, for instance, U.S. households have positive net worth — assets minus liabilities, credit minus debt — of $88 trillion.) But in any case, the asset being “held” is credit, not debt. A holder of a Target gift card is holding Target credit, not debt — the “claim” side of the tally stick.
“Holding debt” is handy and ubiquitous (Wall Street) shorthand, but it’s conceptually incoherent. You can’t own an obligation; it’s not an asset. Money is not “debt.” Exactly the opposite.
I think this “money is debt” confution cripples our our conversations, our collective thinking, and our collective understanding.
Semi-aside: a dollar-bill is best thought of as a handy, exchangeable physical token representing a balance-sheet asset. Sure, that asset has an offsetting nominal “liability” on the government balance sheet (which we devoutly hope will never be “paid off”). That’s immaterial; the dollar bill represents credit, an asset. It’s incoherent to suggest that when you have a dollar bill in your pocket, you are holding “debt.”
Even if the asset you’re holding will someday be redeemed by the original issuer, the thing you’re holding holding is an asset, which you can transfer to someone else’s balance sheet in exchange for work, or real stuff or…some other financial instrument, be it a Euro bill a bond, a title to land, or whatever (which is also a credit, or asset). They’re all financial instruments (with various rights designated). Claims. Credits.