A while ago we managed to sow some confusion by using the word “nothing”, instead of “money”, when describing what a seller receives for the goods sold. In order to avoid unnecessary frustration, we find it is best to elaborate.
If money is a recordkeeping device — as Joseph Ostroy and Narayana Kocherlakota among others have suggested, and as we believe it is — then what is it supposed to record? We suggest that it is used to record goods transactions. But the transaction which is being recorded with the help of money cannot itself involve money. Money can not be used to record a transaction where goods are exchanged for money. That would be circular. That is why we say that money is used to record a transaction where a seller gives goods to the buyer, while the buyer (typically) gives nothing to the seller. If the buyer gives cash to the seller, then that cash is not part of the transaction we refer to. It plays a part in recording the transaction.
Furthermore, recordkeeping with the help of tokens, ie. (physical) currency, is a special case. When bank ledgers are involved, there is no object that is passed from the buyer(‘s account) to the seller(‘s account). The reason we might see an object passing from account to account is probably because we are used to thinking of money in physical terms[1]. If there was an actual object being transferred from an account to another, then an overdraft would not be possible. So, all we can say in general is that the seller has his account credited. The balance of the account can just as easily be negative (debit) or zero after this credit entry. Likewise, the buyer’s account might have had a zero or negative balance before the debit entry was made on it, so no money can be seen to reside there either.
