Lay definitions are fine for their purpose. In science as well as the philosophy of science, "verification" refers to establishment of certainty, which can only be accomplished via sound deductive logic. In contrast, inductive logic can, with certainty, only reject falsifiable statements.

Even the development of that most powerful system for induction, the human brain, is subject to precisely this constraint. Thus neural development occurs through a process of "pruning" of so-called "exuberantly" formed synapses. That carefully formed inductive models can come to approximate reality to some extent is itself a highly corroborated hypothesis.

Credit (formalized debt) actually predates commodity currencies and government money, though without a common unit of account, credit is just deferred barter.

Interestingly, non-metal currencies were used in the ancient world and early Middle Ages (e.g. squares of intricate cloth in Prague). My sense is that people had already learned the value of a common unit of account - and the necessity of seniorage - so they realized they could use these "pure fiat" currencies after gold disappeared in the wake of the fall of the Western Empire. It must have seemed a natural fusion of their traditional formal/informal debt systems with the common unit of account formerly provided by the Roman solidus.

You can invalidate (or falsify) a hypothesis, but you can't validate (verify) one. Hypothesis which consistently survive falsification are said to be "corroborated," due to our increasing confidence.

Such is the nature of inductive science.

The Fed was created by Congress. It also turns over its "profits", including interest payments on US debt, directly to the Treasury General Account (quotes because the Fed has unlimited power to issue currency).

I don't think there is really any comparison between the Fed and a truly private enterprise. Sure, the private banking system has a hand in running things, but is clear from the Federal Reserve Act that the executive branch has final say over the Fed's action.

It's fair to describe the Fed as a public-private partnership, but the Fed is not really a profitable enterprise, since all its profits are monies it creates electronically and credits to its own accounts. Furthermore, it lacks the defining element of a private operation, which is the inability to create money, in turn leading to an operational constraint in which money must be obtained prior to being spent. In contrast, the government / Fed must issue money before it can be collected back from the public.

It's a great book, unfortunately quite expensive ($55 on Amazon). It's "possible" there is a PDF floating around online...

I haven't read much about private mints in other time periods, but in the Middle Ages the "private" mints (i.e. the free mints) were nevertheless operated by churchmen, feudal lords or vassals of feudal lords. Each of these had military power as well as license and ability to collect taxes. Also at that time, the ability to assay gold was much less common than in the classical period or Renaissance.

Another interesting aspect to the reemergence of coin in Europe is the collapse of currencies after their issuing mints were taken over by immunists, lords or wealthy individuals who obtained immunity to royal taxation and often royal justice as well. It seems that the people were unwilling to trust the metal content of such coins, which is borne out by the adulterated coins they seem to have issued.

Way to skip over half the formula. The availability of goods for purchase in gold cannot be a sufficient condition for the use of gold as a currency - it's a circular argument. Demand for the currency must be created somewhere, via a levy of taxes.

Gold was valuable in the Old West because it was valuable in the East, where it was valuable because the government was collecting taxes while operating its gold-convertible currency.

Uh, yes it is. The Fed is authorized to exist by Congress. The Federal Reserve act gives the Treasury Secretary power over the Fed chairman should they disagree, and indeed the chair is appointed by the President of the United States.

To be sure, the private banking sector has a significant role in running the Fed, which I believe should be reduced or eliminated entirely. But if you think Bernanke is working only for their interests, you haven't been reading the screeds against him coming precisely from the leaders of that sector.

Good one. By any reasonable measure there has been massive deflation since the beginning of the industrial revolution.

Sure, there has been some apparent inflation driven by food, energy and fraudulent bubble markets. But how much cheaper today than in the past is a computer? Antibiotics? Rapid transportation? Instantaneous communication? Access to knowledge? These had infinite prices not too long ago.

You should read Medieval Money and its Uses, by Peter Spufford. Indeed, when the Roman Empire collapsed in the West, gold fell out of use in favor of informal debt systems. Silver coinage was gradually re-introduced as West European governments regained the ability to collect taxes and use minted coins to fund state expenditures, thus introducing the coins into their economies.

Boom.

Seriously, I am tired of the circular logic underlying much of these arguments. Whatever initial condition led to acceptance of gold, etc. in lieu of in-kind payments, it was not "because I can buy stuff with it."

Of course, but other people have already stated and demonstrated a willingness to accept gold as payment. It's quite circular to say that this is the origin of its value.

What is more interesting are the conditions which led to the first gold-accepting person accepting gold (before which gold did not have "intrinsic" value.

Of course a stock certificate has no intrinsic value - it's value is proportional to the ability of the issuer to redeem the certificate for actual livestock. Gold and other precious metals do have value in and of themselves; we value them for their appearance and physical properties, which are suitable to manufacture of jewelry and (today) certain electronic components, nanoparticles, etc.

As a currency, however, gold and silver have always required a state actor (i.e. "fiat") to guarantee metal content and enforce demand through taxation. This fact was made especially clear in the early Middle Ages. After the Roman Empire had collapsed in the West, gold coins (the solidus and triente) virtually disappeared from Europe, with silver denarii arising only as regional governments gained sufficient strength to enforce taxes. At first, these taxes would be paid "in kind" (essentially, food - the "in kind" produce of the land). Subsequently, taxes would be collected in coin, but only after the government had begun minting them and distributing them into the hands of citizenry.

Even during the "free minting" period, the value of currency vis-a-vis raw metal was determined via the mint fee and seniorage; free mints were free as in speech (if you had silver), rather than beer.

One important qualification is the low labor productivity at that time. The vulnerability to famine which obtains when the average worker produces just 1.8 person-years of food per year creates a high bar to any potential currency.

I highly recommend Peter Spufford's Money and its Use in Medieval Europe, which goes into insane-but-captivating detail on the above issues. It's an essential read if you want to understand the nature of pure fiat, metal-backed (convertible, less than 100% coverage) and metal-based (coins = weight of metal) currencies, and what features are shared by all three currency regimes.