Money as a social contract

Money as a Social Contract / by Martin R. Carbone / September, 2008 --
Perhaps it will be helpful to the analysis of money if we consider that all aspects of money are derived from the concept of contracts.

Contracts have a long legal history in English Common Law and an extraordinary written record in our law books -- both statutes and case law.
Definitions for all words and principles used in contract law are well established in law books.
If we establish that all paper money is essentially a contract between two human entities, it should be relatively easy to describe “paper money” in legal terms and perhaps accounting terms -- because the law is very familiar with accounting.
Remember, contracts can either be verbal, written or implied.
Perhaps it can be shown that barter was originally, and still is, simply a contract between two traders.
The use of gold and silver to facilitate trading could also be shown to be a contract .
The law generally and specifically prohibits the Federal or State governments from interfering with contracts unless the contracts violate existing laws.
Therefore, it should lead to a simple conclusion that traders can either use paper money, gold or whatever in their transactions as long as (a) they both understand and agree to the terms of the contact and (b) the contract does not violate any law.
Since the government may not interfere with private contracts, the government should not pass laws that would prohibit the use of paper money or the use of gold money. Both should exist unhampered by government interference.
Under this concept our entire money system would be run by individuals and the government would have virtually no control of the system.
It seems to me the concept of treating money this way should appeal to Libertarians, The Austrian School and Ron Paul.

Tentative Conclusions:
(1) All money transactions should primarily be considered contracts and should be governed by contract law.
(2) This might help us all discuss our money system more rationally.
(3) Double-entry bookkeeping (the systematic tracking of assets, liabilities, income and expense) should be used to keep track of all money transactions. I think the law generally regards double entry bookkeeping as being valid.

See a pretty good discussion of Contract Law at Wikipedia / http://en.wikipedia.org/wiki/Contract

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