It is tempting when exploring the True nature of money, as theologians study the bread in the Eucharist, to study the tokens and the exchanges. One popular approach is to posit a substance called 'value' which resides in the tokens, either intrinsically because the tokens are made of some valuable stuff (use value), or by government decree (exchange value). This is reminiscent of the theory of transubstantiation in which the bread somehow 'changes' into into the body of Christ.
But this whole approach assumes that money is some kind of stuff which moves from hand to hand. Even fiat money is a commodity insofar as it is valued for itself more than for what it can buy.
When we look at the different ways of issuing money, we see clearly that 97% of modern money is NOT a commodity. It comes from nothing and exists only on bank balance sheets. This is accounting money, the kind used in mutual credit systems. And it has some other interesting properties: - For every unit of money created as a liability, there is a corresponding asset created with equal and opposite value - The money flows into circulation and at the appointed time some money - not necessarily the same money is pulled out of circulation and cancelled out against the asset, leaving nothing.
When we look at cash we might imagine each piece moves around the economy independently of other money, like a ball bouncing randomly around a pinball machine. But with accounting money you can't mark the bills and track one piece of money just like you can't pinpoint an electron. A better analogy is a field.
It turns out that money is very like energy. By studying the substance we miss the wood for the trees. The paradox of money-as-a-commodity and money-as-a-promise is resolved once money is regarded as a circuit or as a wave acting in a field.
It is created when no-value splits into assets and liabilities, just like when a neutral photon breaks into a positron and an electron which go spinning off in different directions and times. Money can be seen like electrons leaping from atom to atom, but look at the whole picture and money flows like a wave in a field, pushing waves before it and pulling waves behind it. What matters is not the atoms or the leaping, but the integrity and balance of the circuit.
At least, that's when it works.
When we treat money as a commodity, the flows get out of sync. When we hoard money and relend the same money twice we prevent it from returning to source. When we just read the peaks and not the troughs, we miss the coming tsunami.
When, for cultural reasons, borrowers take all the responsibility and risk, while lenders charge rent on their absent 'property' the two parties will never dance well together, leading to gluts and dearths and arhythmia.
Credit money, or accounting money is very much like electricity, and the conceptual leap if we want master it is the same leap as from Newtonian mechanics to Quantum mechanics.