What is money? Where does our money come from?

[darktone]

darktone has serious comprehension issues. He is the type of person who when asked to draw a circle, will ask you what shape you would like it to be.

When asked to reply in his own thread, he still replies in the same thread

And, he hasn't got the foggiest idea what 'fiat' means

UNSUBSCRIBED!!

The last time i checked im free to do as I please NT. Now dont take this the wrong way but could a truer picture be that you may have ego issues? Maybe this has an impact on your ability to think critically?

As little as i may know about "fiat", id say by your posts you likely know less.

UNSUBSCRIBED!!

I shrug my shoulders and smile politely.

 

[new_trader]

The last time i checked im free to do as I please NT. Now dont take this the wrong way but could a truer picture be that you may have ego issues? Maybe this has an impact on your ability to think critically?

As little as i may know about "fiat", id say by your posts you likely know less.


I shrug my shoulders and smile politely.

Just when I thought I was out...they pull me back in. - YouTube


It has zero to do with ego. I am not going to argue about the definition of a word with you, whether there is such a thing as 'non debt based' fiat or this based fiat or that based fiat because it is ridiculous. Fiat is a latin word which roughly translates to "let it be done" or "it shall be". Now, I don't care whether you agree or disagree, that is its meaning. Argue with whoever invented Latin. Now, when money is described as fiat, it means it has no intrinsic value and comes about by an arbitrary order or decree. It means it was not freely chosen by the market through a voluntary exchange process over time. Do you get it now?

So one more time for the dummies:

1) Fiat money is money that derives its value from government regulation or law
2) Fiat money is currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves.
3) Fiat money, inconvertible money that is made legal tender by the decree.
4) Fiat money is without intrinsic use value as a physical commodity, and derives its value by being declared by a government to be legal tender

That is it, I am now, definitely UNSUBSCRIBED because I know that this will only result in another incomprehensible, illogical reply from darktone who will still insist there are a myriad number of fiat currencies, just like there are countless types of circles...round ones, square ones, triangular ones...and anyone who insists that a circle is round has an ego problem.

 

[darktone]

Just when I thought I was out...they pull me back in. - YouTube


It has zero to do with ego. I am not going to argue about the definition of a word with you, whether there is such a thing as 'non debt based' fiat or this based fiat or that based fiat because it is ridiculous. Fiat is a latin word which roughly translates to "let it be done" or "it shall be". Now, I don't care whether you agree or disagree, that is its meaning. Argue with whoever invented Latin. Now, when money is described as fiat, it means it has no intrinsic value and comes about by an arbitrary order or decree. It means it was not freely chosen by the market through a voluntary exchange process over time. Do you get it now?

So one more time for the dummies:

1) Fiat money is money that derives its value from government regulation or law
2) Fiat money is currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves.
3) Fiat money, inconvertible money that is made legal tender by the decree.
4) Fiat money is without intrinsic use value as a physical commodity, and derives its value by being declared by a government to be legal tender

That is it, I am now, definitely UNSUBSCRIBED because I know that this will only result in another incomprehensible, illogical reply from darktone who will still insist there are a myriad number of fiat currencies, just like there are countless types of circles...round ones, square ones, triangular ones...and anyone who insists that a circle is round has an ego problem.

Imo youre insulting and diverting from the point NT, why? Belief protection mode kicking perhaps?.. Im not questioning the meaning of the word "fiat" as well i think you know. Im saying there are 2 main types of fiat currency, debt based and non debt based. They have very different implications for the transactors. Hence the shark /dolphin pic, very similar beasts in many ways, but i know which one id rather be chucked in a pool with!

Ive been accused of many things in my time, illogical has never been one of them tbh, but if thats your opinion then youre welcome to it.

As long this thread gets some folks to do some research and discuss the subject of todays money, then its worth my time. Please feel free not to be dragged here.

All the best.

 

[new_trader]

Im saying there are 2 main types of fiat currency, debt based and non debt based. They have very different implications for the transactors. Hence the shark /dolphin pic, very similar beasts in many ways, but i know which one id rather be chucked in a pool with!

The only difference is that you think one group of Central planners will do a better job than another group of Central planners, but it is fiat money regardless of what prefix you add. You want to swim with crocodiles instead of sharks. Although, you would probably say you'd rather swim with good crocodiles than bad sharks, as if adding a prefix makes a world of difference.

 

[darktone]

The only difference is that you think one group of Central planners will do a better job than another group of Central planners, but it is fiat money regardless of what prefix you add. You want to swim with crocodiles instead of sharks. Although, you would probably say you'd rather swim with good crocodiles than bad sharks, as if adding a prefix makes a world of difference.

Thats a world away from what i want.
I want the subject transparently discussed in msm and taught in schools / I want a simple as can be transparent system, non debt based / I want a publicly elected MPC to oversee allocation and creation-contraction / I want the power to create money taken out of the hands of banks and given to the people, where imo, it belongs.

No need for crocodiles!

 

[new_trader]

Thats a world away from what i want.
I want the subject transparently discussed in msm and taught in schools / I want a simple as can be transparent system, non debt based / I want a publicly elected MPC to oversee allocation and creation-contraction / I want the power to create money taken out of the hands of banks and given to the people, where imo, it belongs.

No need for crocodiles!

So, a classic gold specie standard is what you want, good, I agree.

But how do you explain this:

No it doesnt, thats the basic monetary reform frame.
To have debt free money created by government (via some accountable / elected commitee, spent into the economy when expansion is needed. To have an appropriate amount destroyed via taxation when contraction is needed.

 

[darktone]

So, a classic gold specie standard is what you want, good, I agree.

But how do you explain this:

What is government (or perhaps what should government be)? Representation for the will of the people. imo.

No i dont want a gold standard. Although i like many of the plus sides.

 

[new_trader]

What is government (or perhaps what should government be)? Representation for the will of the people. imo.

No i dont want a gold standard. Although i like many of the plus sides.

You crack me up, you really do...The government is the people because they should express the will of the people? So to have your system of money, all we need is a trustworthy Government, right? Perhaps you can explain why the founding fathers of the USA wrote a Constitution.

Answer these questions because I think it will give me an understanding of exactly where you stand and whether I should give up.

Just write True or False for each (If you don't mind):

1) Money should serve as an honest measure and a reliable store of value.

2) Money should convey price signals with clarity so that markets can operate efficiently.

3) Money should ensure true economic outcomes.

4) Money should serve as an instrument of government policy and planning when required.

 

[darktone]

You crack me up, you really do...The government is the people because they should express the will of the people? So to have your system of money, all we need is a trustworthy Government, right? Perhaps you can explain why the founding fathers of the USA wrote a Constitution.

Answer these questions because I think it will give me an understanding of exactly where you stand and whether I should give up.

Just write True or False for each (If you don't mind):

1) Money should serve as an honest measure and a reliable store of value.

2) Money should convey price signals with clarity so that markets can operate efficiently.

3) Money should ensure true economic outcomes.

4) Money should serve as an instrument of government policy and planning when required.

Unlike you to twist words. Imo the government should be there to best serve the needs of the people. It should be transparent and accountable. How can i put it more simply?

Imo money should be.
1) Fair medium of exchange.
2) A store of value.
3) Unit of account.

Markets can sort themselves out.

 

[new_trader]

Unlike you to twist words. Imo the government should be there to best serve the needs of the people. It should be transparent and accountable. How can i put it more simply?

Yes, but that is like arguing that we have no need for locks and burglar alarms because people in society should be honest.

Imo money should be.
1) Fair medium of exchange.
2) A store of value.
3) Unit of account.

Markets can sort themselves out.

The more you write the more baffling and confusing you become. I can't see why you don't want a gold standard.

You said:

1) I want the power to create money taken out of the hands of banks and given to the people

OK.How is money created and how is the amount determined?

2) To have debt free money created by government (via some accountable / elected committee, spent into the economy when expansion is needed. To have an appropriate amount destroyed via taxation when contraction is needed.

If markets can sort themselves out as you said, what is the job of the elected committee? Why would they need to spend in the economy and then contract? How is that any different to what we have now?

 

[darktone]

All is as i currently understand it. No doubt it could be explained better with more detail.

Yes, but that is like arguing that we have no need for locks and burglar alarms because people in society should be honest.

Thats one way to look at it. Id think more along the lines that the public not wanting to be f****d over keeping things in check.

The more you write the more baffling and confusing you become. I can't see why you don't want a gold standard.

LOL, no doubt. The main concern id have for a gold backed currency would be that it could be withheld from the public, by lenders / large holders.

OK.How is money created and how is the amount determined?

The money could be created debt free by BOE. The amount determined could be calculated by the MPC, transparently for all to see.

If markets can sort themselves out as you said, what is the job of the elected committee? Why would they need to spend in the economy and then contract? How is that any different to what we have now?

The MPC's job would be to evaluate the amount of money available to the public. As i understand, they would need a certain amount of control in the supply, due to saving / spending. Banks lending or not. It could guard against inflation / deflation of the available money supply.
Its different to what we have now in that banks couldnt control the money supply. That the public wouldnt have to pay interest to the banks for the creation of that money. That the public can have a say in how and where its spent into the economy.

I think thats the general gist.

 

[new_trader]

The gold specie standard makes sense to me. I am not trying to change your mind, all I am trying to explain to you is that is has 1000’s of years of history to back it up. The fact that money solved the problems associated with barter and that gold ended up becoming the world’s money through voluntary exchange is proof that it is true free market money; it is the quintessential people’s money. There is no other way to describe it. The use of gold as money did not come about by a government created committee nor was it the idea of any one genius or majority vote. I find it ironic that you think forbidding people from going back to a system of money they chose freely and instead forcing them to accept your debt free fiat standard is your idea of ‘peoples money’...utterly bizarre logic.

What I still cannot fathom is:

1) Your objection to gold when it has successfully served as money in civilizations all around the world and there has been much greater economic growth under a gold standard than under any type of fiat standard

2) How your debt free fiat system is different to the current fiat system

You say the BOE creates debt free money in amounts determined by the MPC. I still don’t know what you mean by debt free money. Does your ‘debt free’ money have any intrinsic value or are people forced to accept it as a payment of debt through legal tender laws? Is it backed by anything of real value or is just a piece of paper with a face value created out of thin air?

Currently, interest rates are set by a Central Bank based on some arbitrary guesswork. Interest rates should be set by the free market based on the time preference for money, and that should happen regardless of whether you have a gold specie standard or not. It’s just easier for a Central bank to manipulate interest rates with fiat money and that's why they like it.

“the public can have a say in how and where its spent into the economy.”

Why do they have to say anything? What is wrong with the people spending their own money in the economy as they wish? That is how markets work. That is how entrepreneurs satisfy consumers. You want to take away individual choice and force them to go with the majority all while calling it 'peoples money'...again, utterly bizarre logic.

From what I can gather, your debt free money requires an honest and transparent government working with an honest and transparent central bank that has the majority of people forcing the minorty to spend their money according to what they think is best for the economy...bizarre!

Do you have any idea why governments hate the gold standard? Have a think about it and see what reasons you can come up with.

 

[darktone]

The gold specie standard makes sense to me. I am not trying to change your mind, all I am trying to explain to you is that is has 1000’s of years of history to back it up. The fact that money solved the problems associated with barter and that gold ended up becoming the world’s money through voluntary exchange is proof that it is true free market money; it is the quintessential people’s money. There is no other way to describe it. The use of gold as money did not come about by a government created committee nor was it the idea of any one genius or majority vote. I find it ironic that you think forbidding people from going back to a system of money they chose freely and instead forcing them to accept your debt free fiat standard is your idea of ‘peoples money’...utterly bizarre logic.

Ive a got a general overview of the history of gold / money (in all its odd forms). Im also aware that the gold/standard isnt without its problems. Im not forbidding anything, Id like to reasoned debate about the subject in the MSM / Parlament etc.

What I still cannot fathom is:

1) Your objection to gold when it has successfully served as money in civilizations all around the world and there has been much greater economic growth under a gold standard than under any type of fiat standard

My objection to gold as you put it, is to point out thats it not without its problems. As i currently understand things most forms of money have had good and not so good periods in history. Gold included.

2) How your debt free fiat system is different to the current fiat system .

You say the BOE creates debt free money in amounts determined by the MPC. I still don’t know what you mean by debt free money. Does your ‘debt free’ money have any intrinsic value or are people forced to accept it as a payment of debt through legal tender laws? Is it backed by anything of real value or is just a piece of paper with a face value created out of thin air?

Currently, interest rates are set by a Central Bank based on some arbitrary guesswork. Interest rates should be set by the free market based on the time preference for money, and that should happen regardless of whether you have a gold specie standard or not. It’s just easier for a Central bank to manipulate interest rates with fiat money and that's why they like it.

Well, this thread has one or two pointers on that . So i invite you to do some of your own research on the differences but in short. One is created by a bank and loaned into existence at interest. The other is created interest free spent into circulation as required. Its as simple as that.
Bill Stills "the money masters" is an excellent doc on the subject imo. Along with a walk through history of money.
The Money Masters - Full (ENG/ITA Subs) - YouTube

Why do they have to say anything? What is wrong with the people spending their own money in the economy as they wish? That is how markets work. That is how entrepreneurs satisfy consumers. You want to take away individual choice and force them to go with the majority all while calling it 'peoples money'...again, utterly bizarre logic.

Tbh, I find it bit bizarre that you interpret what ive said as this. When i talk about spending in this context i mean the first spend of the new money. For example, healthcare / education / infrastructure / business etc etc. Currently we have no choice. The banks decide where the new money spends first, they like property / speculation. 90% + goes here. No prizes for guessing why.

From what I can gather, your debt free money requires an honest and transparent government working with an honest and transparent central bank that has the majority of people forcing the minorty to spend their money according to what they think is best for the economy...bizarre!

Its not my debt free money, the subject is as old as gold. It only seems to get an airing when theres economic pressure and fades to the background in better times. Education imo is the way forward.
Majority - forcing - minority?? Maybe another context misunderstanding.

Do you have any idea why governments hate the gold standard? Have a think about it and see what reasons you can come up with.

Going to war under a gold standard could be a bugger for a start.
No means of stealth taxation through inflation could also be a major bummer.
Limited vote buying power.
The list goes on no doubt.
-----------------------------------

A quick question for you. Could you tell me why banks would fight tooth and nail against a debt free fiat?

You know, imo, the main aims of the monetary reform and Gold crowds arnt so different. Both seek to limit quantity of money.

 

[new_trader]

A quick question for you. Could you tell me why banks would fight tooth and nail against a debt free fiat?

I can see why they like fractional reserve banking but I still can't figure out how money created ex nihilo is any different to what we have now. I don't like the idea of any fiduciary money becuase it has no intrisic value and therefore can easily be corrupted and abused. Like I say, fiat is fiat.

You know, imo, the main aims of the monetary reform and Gold crowds arnt so different. Both seek to limit quantity of money.

There is a major difference in that commodity money comes from the free market and has intrinsic value. We're never going to agree. Let's just end it here.

 

[darktone]

I can see why they like fractional reserve banking but I still can't figure out how money created ex nihilo is any different to what we have now. I don't like the idea of any fiduciary money becuase it has no intrisic value and therefore can easily be corrupted and abused. Like I say, fiat is fiat.

Yep, certainly the FR side of it they like very much. The more subtle part is the interest application, this is where the real wealth transfer occurs over time for essentially, lending something they never had in the first place and charging a premium for the priveledge. Ill try and find some material that best explains this one point. The most important power imo they would like to keep is the overall power that comes with money creation. Panics / booms, they can do it all at the press (or not) of a button.
I do understand the intrinsic view and concern, but i would say that imo all monetary systems can be abused if not properly overseen.

There is a major difference in that commodity money comes from the free market and has intrinsic value. We're never going to agree. Let's just end it here.

We dont have to agree eh, but is good to debate. Maybe a ND fiat and gold backed system could run side by side, whos to say not.. Wish there was more discussion in the public arena.
Cheers

 

[FrankDeliquo]

Here is a concise explanation of modern money and where it comes from: What Is Money? - Insofisma

 

[darktone]

Here is a concise explanation of modern money and where it comes from: What Is Money? - Insofisma

Very nice and as i understand it mostly . Think it will take me a couple more read thoughs to absorb the fuzzy bits.
Cheers.

 

[rsh01]

Here is a concise explanation of modern money and where it comes from: What Is Money? - Insofisma

From your posted link:
"Bank Notes and Coins
These are simply IOUs from your central bank (e.g. the Fed). If you are holding a dollar note and I am the Fed, you are holding proof that I owe you a dollar’s worth of assets* at current market prices.

*By assets here we generally mean government bonds.* This means simply that the government owes the Fed and the Fed owes you.* What is it that the government owes you, via the Fed?* Future goods, services and assets obtained from citizens via taxation.* Or conversely, a credit against your future tax payments."

~So if am holding a dollar, then the fed owes me a dollars worth of assets which are, as defined above, govt bonds.
~But then it says the govt also owes me future goods, services and assets obtained from citizens via taxation.

Which is it, a dollar of govt bonds or future goods/services/assets acquired through taxation? Or both?

 

[FrankDeliquo]

From your posted link:
"Bank Notes and Coins
These are simply IOUs from your central bank (e.g. the Fed). If you are holding a dollar note and I am the Fed, you are holding proof that I owe you a dollar’s worth of assets* at current market prices.

*By assets here we generally mean government bonds.* This means simply that the government owes the Fed and the Fed owes you.* What is it that the government owes you, via the Fed?* Future goods, services and assets obtained from citizens via taxation.* Or conversely, a credit against your future tax payments."

~So if am holding a dollar, then the fed owes me a dollars worth of assets which are, as defined above, govt bonds.
~But then it says the govt also owes me future goods, services and assets obtained from citizens via taxation.

Which is it, a dollar of govt bonds or future goods/services/assets acquired through taxation? Or both?

The govt owes the Fed future goods/services/assets acquired through taxation. The Fed holds a government bond which is proof of that. The Fed owes you part of that government bond. In effect the government owes you future goods/services/assets acquired through taxation, via the Fed, but it's not exactly the same as the government owing you those directly. Close enough in all but extreme circumstances though.

 

[darktone]

Renegade Economist with Positive Money - YouTube