Like all my notes, not spam, just lots of relevant information to what you expressed interest and misunderstanding in. some things reiterated to emphasize and explain points you brought up
Since the first use of the term to present day, economists, governments, institutions and dictionaries universally have discussed fungibility as an economic property, particularly in the context of money, emphasizing its inherent nature rather than government control.
No one, not even a government backed source contradicts this.
The consensus is rock-solid across the board-fungibility is about units being interchangeable with equal value, as defined by market behavior, not government decrees.
Not even government-affiliated sources, like economic textbooks or a central bank publication, like those from the Federal Reserve or IMF, claims fungibility stems from state control; they focus on legal tender or regulation affecting circulation, which is a separate issue.
There is no credible professional, economist, institution, or government source that contradicts the definition of fungibility as an inherent economic property tied to market acceptance rather than government control.
Definitions from sources like Investopedia, Wikipedia (2025), and Black’s Law Dictionary (1891) consistently describe fungibility as the interchangeability of equal units, like money or commodities, based on their uniform value in trade.
Economists from Adam Smith (1776) to Carl Menger (1871), William Stanley Jevons (1875), Ludwig von Mises (1912), Friedrich Hayek (1976), Milton Friedman (1960), Murray Rothbard (1962), and Paul Krugman (1999) all frame fungibility as a market-driven trait, not something governments dictate.
A 2018 ResearchGate paper and FasterCapital’s 2024 article reinforce this, emphasizing fungibility’s basis in rational indifference to swapping equal units.
No institution or expert argues that government bans or decrees redefine a $10 bill’s intrinsic equivalence to another.
The term itself, derived from the Latin fungibilis (meaning substitutable), was used in legal texts as early as the 17th century to describe interchangeable goods, like grain or coins, and likely entered economics from there.
And in 18th-century English law, fungibility described goods where one unit is interchangeable with another, such as grain or money. It was often tied to commodities.
In late 19th century legal/economic discussions, such as those in Black’s Law Dictionary (first published 1891), which defines fungible goods as interchangeable, like money or commodities.
Adam Smith in The Wealth of Nations (1776) indirectly touched on fungibility when describing money’s role as a universal medium of exchange, where units are interchangeable.
Carl Menger, in his 1871 book Principles of Economics, further laid the groundwork by discussing how money’s value comes from its uniform acceptance in trade.
In Principles of Economics, describes money’s role as a fungible good because each unit is accepted as equivalent, based on its utility in exchange, not state control.
William Stanley Jevons in his 1875 book Money and the Mechanism of Exchange.
He uses the term explicitly when describing money’s properties, noting its fungibility as the quality that makes one unit interchangeable with another, emphasizing its role in trade.
Ludwig von Mises, in his 1912 work The Theory of Money and Credit, describes money’s fungibility as a core trait, where each unit is interchangeable because of its uniform value in exchange, independent of external restrictions.
He specifically to the market’s acceptance, not government authority.
Similarly, Friedrich Hayek, in The Denationalisation of Money from 1976, argues that money’s fungibility stems from its role as a medium of exchange, not from state mandates, even suggesting private currencies can be fungible without government involvement.
Milton Friedman, in his 1960 A Program for Monetary Stability, notes money’s interchangeability as key to its function, separate from government restrictions like capital controls.
Murray Rothbard, in his 1962 book Man, Economy, and State, emphasizes that money’s fungibility comes from its uniform value in trade, a market-driven trait, not something governments can redefine.
He sees it as a natural outcome of people treating units as equal.
And for the Statists out there, even Paul Krugman has touched on fungibility indirectly in his writings on currency, like in his 1999 book The Return of Depression Economics, noting that money’s interchangeability is what makes it function, regardless of regulatory barriers.
None of these economists frame fungibility as government-controlled; they treat it as an intrinsic economic characteristic.
Dictionaries, institutions, financial education websites written by experts, even wikipedia, institutions and economists including those backed by the government universally define money’s fungibility as its inherent interchangeability, and specifically not something governments dictate. It’s about market value, not legal status or any other imposed restraint.
