This section explores proposals for unifying two monetary theories: the emergence of money as debt (credit theory) and the emergence of money as a commodity (Mengerian theory). We will examine the unification proposal presented by Lyn Alden in her book, "Broken Money".

Here, Alden refers to Bitcoin.

Saifedean Ammous discusses this concept in "The Bitcoin Standard". The stock-to-flow ratio compares the existing stock of a commodity to its annual production (flow). This metric can be counter-intuitive; scarcity is less about total quantity and more about the difficulty of significantly increasing the existing stock. A high stock-to-flow ratio indicates that new production is minimal compared to existing reserves, making the commodity scarce. For example, gold has a large accumulated stock because it is hoarded as a store of value, while its annual production (flow) from mining is only about 1-3% of that stock. In contrast, rhodium may be rarer than gold in terms of total annual production, but it is consumed by industry at a similar rate. This means its stock remains low, and a small increase in new supply could double the existing stock. With gold, at its current rate of production, it would take over 50 years to double the existing stock. In contrast, most consumable commodities have a small existing stock that can be doubled quickly by ramping up production.

A ratio of 25x implies it would take 25 years to double the stock at the current flow rate; a 100x ratio implies 100 years. As Ammous notes, even a doubling of gold's annual production would not significantly impact its price because the increase would still be small relative to the massive existing stock.

This thesis, as described in "The Bitcoin Standard" by Saifedean Ammous, is illustrated by the case of the African tribes who used glass beads as currency. When Venetian merchants arrived with large quantities of industrially produced glass beads, their technological capacity to manufacture the currency allowed them to devalue it. This destabilized the local monetary systems, enabling the merchants to effectively plunder their resources.

This is a crucial point. Even if a Mesopotamian temple manages credit systems, the unit of account was the shekel. There is no definitive proof that the temple officially established the shekel; it may have emerged naturally to meet the trade needs of merchants with neighboring peoples. Evidence for this includes a merchant from Kanesh (as mentioned in Part 1) who imported precious metals not for their commodity value but as a store of value. The key question is whether the choice of the silver shekel was made by merchants or by the temple. However, a strong argument suggests the choice likely originated with the merchants.

The authority governing the register varies. With commodity-money like gold, for example, nature manages scarcity by making mining difficult, which limits supply. The register is decentralized, with possession of the physical coin serving as proof of ownership. For credit money, scarcity is managed by the availability of credit itself. For fiat currency, a central authority manages scarcity by deciding whether to increase the money supply. In the case of physical token money (e.g., banknotes), the register is managed by the token holder; possession of the token proves ownership. Conversely, scriptural money relies on a centralized register managed by an institution, such as a bank, which records ownership.