What is money? Where does our money come from?

[darktone]

ps: fed bill, US bill

Yep thats true, but the answer im hanging out for is that one was created by government and the other by a bank.

The Lincoln greenback (the one with the red seal) was created interest free! no one collects rent from this note.

The Fed note was created as an interest bearing debt. In other words it was loaned into existence. Its creators collect rent on this note.

Debt based money is one we have today, so not only do we have to deal with the devaluation as you described earlier, but we have to pay an interest charge for the privilege.

 

[darktone]

Re debt based Fiat as to non-debt based Fiat, this is worth a read (albeit a bit theatrical).

Web of Debt - REVIVE LINCOLN’S MONETARY POLICY: AN OPEN LETTER TO PRESIDENT OBAMA

 

[new_trader]

The theory of having a gold (or any commodity) standard is the quantity of money is fixed to the quantity of commodity, the problem i see with this is there is nothing to stop the hoarding / monopoly of that commodity. (the great depression)

This is incorrect. The great depression had nothing to do with the hoarding of gold...what history books are you reading?

The idea that a gold standard limits the amount of money or inhibits economic growth is utterly absurd and outright wrong. Productivity ie/ real goods and services raises the standard of living for the average person, not the amount of paper money. Use the deserted island analogy. If you were stuck on an island and the Government came along and gave you $1 million would that help you? What about $2 million? No, none of that would help, what you need is products, like a boat and an engine and fuel. None of that comes from Government, they come from entrepreneurs.

Physically, gold is one of the most malleable and ductile metals on the planet, I remember reading somewhere that a standard gold bar can be stretched right around the earths equator. However, electronically, gold would be infinitely divisible so there is no limit to how much gold backed electronic money exists. Prices would simply adjust to the amount of gold that there is and everyone would benefit because their money becomes more valuable as their purchasing power increased. This is no different to the way stock prices increase. But if a company kept issuing millions of new shares every week the current stockholders would get poorer not richer as the value of their holdings are diluted. Money needs to be scarce.

 

[darktone]

This is incorrect. The great depression had nothing to do with the hoarding of gold...what history books are you reading?

Miton Friedman, explains it as the Fed failing to act. It had the gold, but chose not to make it available. The video is earlier in the thread if you would like to have a look.

The idea that a gold standard limits the amount of money or inhibits economic growth is utterly absurd and outright wrong

Im sorry but the primary purpose of a 'standard' is to limit the amount of money in supply. (even though in practise it seldom works)
When have i ever mentioned growth!?

Productivity ie/ real goods and services raises the standard of living for the average person, not the amount of paper money.

id agree, so why are you telling me this!?

If you were stuck on an island and the Government came along and gave you $1 million would that help you? What about $2 million?

Well providing it was paper money at least you could burn to keep warm i suppose. What could you use gold for in this scenario?


You just pissed because you couldnt answer the dollar question i asked eh!

 

[new_trader]

Miton Friedman, explains it as the Fed failing to act. It had the gold, but chose not to make it available. The video is earlier in the thread if you would like to have a look.

Explain that in your own words...failing to act in what way? Maybe you should look up Executive Order 6102...otherwise known as the US government confiscating gold because it wanted to devalue the dollar and raise prices. You don't think the 'New deal' had anything to do with prolonging the Great Depression?

Im sorry but the primary purpose of a 'standard' is to limit the amount of money in supply. (even though in practise it seldom works)
When have i ever mentioned growth!?

At least you understand something. Yes, it breaks down because of Governments and not the 'system' itself. The standard argument against the gold standard is that there isn't enough gold. I was making a general comment.

Well providing it was paper money at least you could burn to keep warm i suppose. What could you use gold for in this scenario?
:

So why not ask for paper instead of money deposited in your bank account thousands of miles away?

In the above case you couldn't use gold for anything probably, unless you had enough to fashion it into a boat, and that is my point which you failed to recognise from the start. Money doesn't exist or have any value on its own. Gold on it's own is just another commodity. Products and services give money value and that value is set over time through a process of barter and exchange. Over time, gold, because of all it's qualities and uses out-competed all other commodities to become the worlds medium of exchange.

You just pissed because you couldnt answer the dollar question i asked eh!

I didn't know the answer nor did I see any relevance. Proves my point anyway about being able to 'trust' money. How could I trust something I don't recognize?

 

[darktone]

Explain that in your own words

The Fed allowed the great depression to be GREAT by allowing quantity of money of to fall by aprox 35%, it could have prevented it!

You don't think the 'New deal' had anything to do with prolonging the Great Depression?

No idea, maybe you could tell me.

At least you understand something.

Why thankyou omnipotent one!

I didn't know the answer nor did I see any relevance. Proves my point anyway about being able to 'trust' money. How could I trust something I don't recognize?

Well, the difference between the two are huge! One is a free tool for the people, and one is a parasitical burden. Perhaps you should do some research before condeming all paper money equally!..But im guessing you wont, will you.

 

[new_trader]

Well, the difference between the two are huge! One is a free tool for the people, and one is a parasitical burden. Perhaps you should do some research before condeming all paper money equally!..But im guessing you wont, will you.

I have done plenty of research thank you but you are the one who has been changing the goal posts throughout the argument. This whole thing began because YOU said that money was an idea that hinged on trust. I disagree entirely with that assertion and simply stated that when you have money with intrinsic value like gold and silver, then NO TRUST IS REQUIRED.

The end...I'm tired of banging my head against this brick wall.

 

[darktone]

I have done plenty of research thank you but you are the one who has been changing the goal posts throughout the argument. This whole thing began because YOU said that money was an idea that hinged on trust. I disagree entirely with that assertion and simply stated that when you have money with intrinsic value like gold and silver, then NO TRUST IS REQUIRED.

The end...I'm tired of banging my head against this brick wall.

If you say so mr know all. Glad were done!

 

[barjon]

...................... simply stated that when you have money with intrinsic value like gold and silver, then NO TRUST IS REQUIRED.............

Oh come on, NT, it's all about confidence and trust to a greater or lesser degree. Even if you're talking gold you are taking it on trust that no alchemist is going to arrive to make a scarce commodity as common as the dust under your feet.

 

[new_trader]

Oh come on, NT, it's all about confidence and trust to a greater or lesser degree. Even if you're talking gold you are taking it on trust that no alchemist is going to arrive to make a scarce commodity as common as the dust under your feet.

Alchemist have been trying for 1000's of years but the Government ALREADY has the technology to make your money as common as the dust under your feet.

Ok, now that this is ventured into the realm of improbable hypotheticals, let me ask you this:

You're selling your car for £5000- and only 2 buyers show up.

1) Buyer A has 5 ounces of gold that they are willing to exchange with you on the spot and wants to take the car away immediately.

2) Buyer B doesn't have any money but writes you an I.O.U to pay you £6000 cash in 3 weeks time but wants to take the car away immediately.

Which of the above 2 transactions requires trust?

 

[barjon]

Alchemist have been trying for 1000's of years but the Government ALREADY has the technology to make your money as common as the dust under your feet.

Ok, now that this is ventured into the realm of improbable hypotheticals, let me ask you this:

You're selling your car for £5000- and only 2 buyers show up.

1) Buyer A has 5 ounces of gold that they are willing to exchange with you on the spot and wants to take the car away immediately.

2) Buyer B doesn't have any money but writes you an I.O.U to pay you £6000 cash in 3 weeks time but wants to take the car away immediately.

Which of the above 2 transactions requires trust?

both

You're pointing me towards gold, of course , but I must trust that it really is gold; or that other people are going to accept in in exchange for things I want: or that it's not part of a stolen heist that's going to be reclaimed from me; or that it's going to hold its "value"; or that government is not going to make holding it illegal and confiscate it; etc, etc

Many may be fanciful and only need a very slight degree of trust - but it's trust nonetheless.

 

[darktone]

Alchemist have been trying for 1000's of years but the Government ALREADY has the technology to make your money as common as the dust under your feet.

Ok, now that this is ventured into the realm of improbable hypotheticals, let me ask you this:

You're selling your car for £5000- and only 2 buyers show up.

1) Buyer A has 5 ounces of gold that they are willing to exchange with you on the spot and wants to take the car away immediately.

2) Buyer B doesn't have any money but writes you an I.O.U to pay you £6000 cash in 3 weeks time but wants to take the car away immediately.

Which of the above 2 transactions requires trust?

Ditto with what barjon said, and, imo, the two options cant really be compared as one is an on the spot exchange and one is a promise to pay!

 

[new_trader]

both

You're pointing me towards gold, of course , but I must trust that it really is gold; or that other people are going to accept in in exchange for things I want: or that it's not part of a stolen heist that's going to be reclaimed from me; or that it's going to hold its "value"; or that government is not going to make holding it illegal and confiscate it; etc, etc

Many may be fanciful and only need a very slight degree of trust - but it's trust nonetheless.

The test for real gold is simple. The problem is that you are focusing on the gold (probably my fault) and not the message I have been trying to convey from the beginning, which is what money should be. But trying to explain this to some people here is like trying to explain current life on earth but being forbidden to refer to evolution or using the term survival of the fittest. The history of money is there for you to read and research, I didn't write it but it is clear that you and darktone are determined to rewrite it.

 

[darktone]

The test for real gold is simple. The problem is that you are focusing on the gold (probably my fault) and not the message I have been trying to convey from the beginning, which is what money should be. But trying to explain this to some people here is like trying to explain current life on earth but being forbidden to refer to evolution or using the term survival of the fittest. The history of money is there for you to read and research, I didn't write it but it is clear that you and darktone are determined to rewrite it.

I think a more accurate description of the situation is that your view of monetary history is confined to gold, which imo is a very narrow view of things. Your opinion is that gold is money dare anyone think otherwise! Makes it tough to have a debate.

Heres the link to the Great depression video set that Friedman did, its well worth a watch imo.
http://www.trade2win.com/boards/gen...-where-does-our-money-come-5.html#post1715000

 

[new_trader]

I think a more accurate description of the situation is that your view of monetary history is confined to gold, which imo is a very narrow view of things. Your opinion is that gold is money dare anyone think otherwise! Makes it tough to have a debate.

See what I mean Jon?

...priceless...

 

[darktone]

See what I mean Jon?

...priceless...

Youve just confirmed my point with that remark!

 

[barjon]

The test for real gold is simple. The problem is that you are focusing on the gold (probably my fault) and not the message I have been trying to convey from the beginning, which is what money should be. But trying to explain this to some people here is like trying to explain current life on earth but being forbidden to refer to evolution or using the term survival of the fittest. The history of money is there for you to read and research, I didn't write it but it is clear that you and darktone are determined to rewrite it.

No, I'm not determined to re-write it NT. I understand what you are saying but I think you take it too far.

Whatever you use from tangible things like gold, or old master paintings through to the complete intangible of figures on a excel spreadsheet you have to have confidence and trust that everyone else will use the same to "value" goods and services and to use it as a proxy for such things in the market place.

 

[new_trader]

No, I'm not determined to re-write it NT. I understand what you are saying but I think you take it too far.

Whatever you use from tangible things like gold, or old master paintings through to the complete intangible of figures on a excel spreadsheet you have to have confidence and trust that everyone else will use the same to "value" goods and services and to use it as a proxy for such things in the market place.

Jon, what you just wrote proves not only that you don't know what I am saying but that you don't understand money, otherwise you wouldn't be saying that I've taken things too far...I really am now banging my head against a brick wall...you of all people too:-0

Old masters paintings...really???

What is money? - A widely accepted medium of exchange that is easily recognisable, durable, portable, valuable, scarce, easily divisible, homogoneous, desirable and useful.

You think old masters paintings have all these qualities?

Figures on an excel spreadsheet? You can trace those back to Alexander's time? Are they scarce?

Where does our money come from? -According to you, it can come from Picasso, Monet or Microsoft. Doesn't matter, as long as you can tear off a piece of the weeping woman and buy milk with it, right?


I'm adding 'money' to the list of topics to avoid on T2W...how such a simple and elegant subject can be debauched is beyond imagination...what a joke

 

[barjon]

Thought you'd pick up on that, NT. Just included old masters in case you were one of the super rich clique who use such things between themselves - just a poor jest really. Bit like the Lever Brothers issuing Lever tokens (or whatever they were called) to their workers to use in company shops, but which became a more general currency in Port Sunlight.

Anyway back to your definition:


What is money? - A widely accepted medium of exchange.

Exactly so, but you seem to have said that "widely accepted" doesn't imply confidence and trust to make it so accepted. I think it does, that's all.

cheers

jon

 

[the hare]

Just included old masters in case you were one of the super rich clique who use such things between themselves - just a poor jest really.

Art is commonly used in certain types of "illegal transactions". Easy to transport across borders etc, and reasonably liquid.