Is It Money Because It Is Redeemed in Tax Payments? A Response to Kelton and Wray

This article was prompted by Kelton and is a belated response to Wray (2016), who presents an argument for the so-called chartalist view that government currency is valued because it can be “redeemed” in tax payments. Wray’s article presents historical cases to back up the idea. This article responds to the arguments therein, and the chartalist position in general, by pointing out logical errors in the argument and showing that Wray’s examples fail to support the theory. It demonstrates that the chartalist argument, as presented and argued for by Wray, is flawed and that tax liabilities are insufficient (and unnecessary) to qualify something as money.