This paper develops a new ontological framework for understanding modern monetary economies. It proposes that fiat money is most coherently and meaningfully understood as a claim for value against society: a transferable entitlement to goods, labour, and services, rather than a commodity-like asset. From this relational interpretation follows a fundamental structural result: net financial wealth cannot exist in the aggregate. This is a necessary consequence of the social nature of monetary claims. Every financial asset corresponds to an obligation borne elsewhere in society, and thus no sector—including the state—may generate net financial equity. The paper clarifies the value anchor of fiat money as a dispersed and continuous redemption obligation borne collectively through ordinary economic activity. Taxation is identified as the essential mechanism through which monetary claims are enforced, settled, and retired. On this foundation, the paper further introduces a decomposition of financial positions equity (net claims) and credit, where credit denotes the permission to obligate society and therefore subsumes equity. This decomposition applies equally to state-issued fiat and bank-created credit, offering a unified ontology for modern monetary systems and resolving persistent ambiguities in monetary theory. This is a preprint. A revised version may be submitted elsewhere.
Patrick McGuinness (Sat,) studied this question.