Issue: Does the government, after an exchange of money for goods/services, retain legal title [ownership] of money
Nyberg v Handelaar (1892) In sale of goods/services transactions, the ownership of the seller, the transfer of which, for a money consideration is the hallmark of a sale is called the general property [and is being delivered as other than the special property].
Special property is used to signify the possessory entitlement of a pledge.
Possession & ownership together exhausting the category of legal property rights in a chattel. It follows that the general property is the ownership, in view of the identification of special property with possession.
Sale of Goods Act 1908
s3(1) A contract for a sale of goods is a contract whereby the seller transfers or agrees to transfer the general property in goods to the buyer for a money consideration, called the price.
Dublin City Distillery v Doherty  delivery means voluntary transfer of possession from one person to another. Delivery is a bilateral matter. The buyer must simultaneously demonstrate an intention to assume control.
Kuwait Airways Corp. v Iraqi Airways Co  (HL): there are many common situations where the owner may not, in fact, be in a position to enjoy the property objrct in question, because the right to possession has been given up.
Young v Hitchens (1844): possession as a legal concept consists of two elements: [i] the exercise of factual control over the chattel [ii] the concomitant intention to exclude others from exercising control.
Analysis: The analytical question of whether a bank note is a chattel or a chose in action may shed a little light on the question.
A banknote was once a promissory pledge: redeemable to a specific weight in gold/silver. As this is no longer the case, the banknote has become a chattel. Thus, money, in the form of a banknote, is capable of becoming general property and being delivered.
Delivery, gives possession, to the other party. Therefore, when I exchange my labour for the chattel money, and it is delivered to my possession, certain elements of the various requirements are made.
The issue that remains is: do I have the intention to exclude others from exercising control? Clearly, the answer in the majority of cases is yes.
As the quality of redemption has been defaulted upon, there is of course an argument that control/possession of ‘real’ money, viz, an exchangeable commodity good is retained, viz, ownership.
To some of your specific points:
Alternatives to money, are valued in money. The value of bonds, insurance contracts or deposits is expressed in Dollars.
Yes they are. They however reflect the time preference quality of money and pay you interest [except insurance contracts]
Incidentally, if your reserve currency is the US$, you are merely allowed the decency to call your currency the Pound Sterling or the Yen. But you are arithmetically tied to the US$ so you have, for all intents and purposes, dollarized your economy. The utility of assimilating other economies in your monetary system is due to the diminishing marginal utility of debt. When a country chooses to make its currency convertible to the US$, this effectively constitutes an expansion of US GDP if only by proxy.
Ergo, convertibility is what allows the Federal Reserve to contrast the diminishing marginal utility of debt thereby extending the life of the Have central banks ever pursued their prerogative to enforce their ownership of the currency? Of course they have.
The most recent example was the Euro. But Argentina and Zimbabwe have repeatedly withdrawn their money in circulation and substituted it with a currency of different value. The difference between what Zimbabwe does and what the Fed does is merely a question of size. The Zimbabwe Dollar only circulates in a small economy so the diminishing marginal utility of debt quickly reaches its limits. Think of the first time the US$ monetary system hit the buffers in 1929. The great depression only began to resolve with the Land Lease Act and then WWII.monetary system AND absorbing assets along the way.
Essentially I agree.
Value is an intangible quality, measured by marginal utility, which is unique to each individual. The theory of marginal utility mandates that an increasing quantity of X will reduce the desire to increase the quantity further in relation to marginal utilities of other goods/services.
This was commonly referred to as the paradox of value which sort to understand why water, critical to life, was priced in exchange [money] terms lower than diamonds.
Gold has exchange value based on two very separate properties. The first is it’s commodity based useage for dental fillings, jewellery, electronics, etc. The second, is it’s use as money, that has endured now for thousands of years.
The consistency of gold as money, is key to understanding the marginal utility, or value of gold, and hence the money price, or exchange value that it commands for other goods/services.
Fiat money can be created at the States pleasure or need. Their need seems to expand infinitely, thus, the exchange value is diluted continuously and is drifting inexorably to zero.
Exchange markets, based on money, are critical to maintain the standard of life that we enjoy. Money as a good and service, is critical to their functioning, barter exchange would put us back to the Dark Ages.
While it is always possible that some other commodity could serve as money, after thousands of years fulfilling that function, it is highly unlikely that gold & silver would relinquish that service. Therefore, while placing a precise value, or marginal utility on gold is not possible, zero is a highly unlikely outcome.
Interest and devaluation are two different dynamics. Although the result is the same, one is overt the other covert.
Both dynamics however are carried out arbitrarily.
Both dynamics are made possible by the fact that we have no ownership of money.
“Interest however does not ceteris paribus affect the exchange value of money.”
Only in an unencumbered monetary system would interest rise and fall according to time preference.
When interest is manipulated unilaterally and arbitrarily however, it most certainly affects the exchange value of money creating an asymmetrical purchasing power advantage in favour of the earlier recipients of money.
The fundamental problem is that economic theory today has seemingly forgotten what capital actually is. The abstraction of money is so prevalent, not that economists seem to understand money either, that capital and its function has been lost.
Take the mind experiment of Crusoe on the island alone. He has a bright idea to build a boat and a net to catch more fish. He has the idea, now, how to build the boat and net. Both will require time to build/make and both will require materials, which again require time to be gathered.
The time required to gather and manufacture his products, require him to forego time spent gathering food. He decides to gather extra food each day for 3 months and save it. Then when he is manufacturing his product, he can allocate time from gathering food to manufacturing his products, living off of his saved capital, viz. stored/saved food.
The saved food is present value consumption. It is valuable. More valuable than future value consumption. The future haul of food will however be far more using a boat and net than current production of food. The difference or discounted value is the return to capital. Whether this capital be the saved capital goods of stored food, or the capital goods manufactured, capital is critical to actioning an idea.
If however there was a second castaway, and instead of Crusoe ‘saving’ food [capital] he could borrow the food [loan]. The difference or interest rate, will be the future haul of food, which will however be far more using a boat and net than current production of food. The difference or discounted value is the return to capital and is the interest rate charged for the loan [food].
Another way of looking at it is if I want to manufacture a boat and I can borrow money [food] to do so: will the return exceed the cost of interest? If it does, I build the boat. If not, I don’t.
I manufacture wigits. I can borrow at an interest rate of 5%. My selling profit is 18%. My net profit is 13%. It is worth borrowing the capital.
When the interest rate is low, more projects of production will be profitable, the marginal project. When it’s high, less.
So the only way to manipulate the interest rate is through inflation, creating money to maintain and overcome time preference. So it is more accurate to talk about inflation rather than the interest rate, as the natural rate of interest is not able to be manipulated by Central Bank. The natural rate of interest, eventually, dictates the the trend of the economy.
Constant devaluation leads inevitably to increase cost of living AND hardening of the fiscal framework.