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Prepare for Deflation

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Numbered for clarity of response.

 

1. Money is standardised tradeable debt - nothing more; nothing less. You may barter with gold, but it is not money.

 

Could you clarify what you mean by this? Debt implies that someone owes someone else something, and since modern currencies are not redeemable, I do not understand "debt" in this context.

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Same numbered approach.

 

1. :blink: Man, you sound so bought by the debt mongers. For me money is a means for exchange of goods and a store of value in the meantime, meaning to say when I prefer to save rather than spend.

2. I didn't say precious metals were the only money. Certainly not. That's why I mentioned squirrel skins, which were, I believe, in ancient times in Finland used as money. And if you consider the practicalities quite sensibly so.

3. "Gold still represents the ultimate form of payment in the world. . . . Fiat money, in extremis, is accepted by nobody. Gold is always accepted" (Speech to Senate Banking Committee in May 1999). http://news.goldseek.com/GoldSeek/1216209600.php

4. As you imply, power is worth far more than mere money.

5. Buy your squirrel skin? I mentioned accepting squirrel skins as payment. You seem, nevertheless, overly concerned with debt, albeit tradable debt as you thankfully emphasize. What if one day this debt ceases to be tradable, i.e. nobody will buy it?

6. So do you prefer to believe in accounts on magnetic discs or pieces of paper with pictures of "worthies" or something better than squirrel skins?

7. I don't believe in the value of people. I know the value of people. And I like to keep it separate from "filthy lucre" as the old phrase goes.

 

1. No, I don't think so. I dislike debt. If there is going to be debt, I want it to be a debt owed to me, or - at least - a debt I know I can pay easily.

2. Squirrel skins are not money - they're a commodity... a bit like gold... they don't have universal uniform value.

3. Could have guessed that came from a goldbug site. The key words are "in extremis" - I don't think I need to do more than translate the Latin.

4. Power, or to be more accurate, 'control' is an identical concept to money.

5. There is always a party responsible for debt. If the party responsible can't be held responsible, the value is lost. Banks are reasonably secure - but NS&I or Gilts are more-so... the latter has my country as the counter-party... so it can't disappear if a company collapses or an individual creditor goes AWOL. If my own state defaults on me, it no longer has authority over me... and, in any case, I'll have far bigger and more immediate things to worry about than money... because I won't be the first to have that thought.

6. I'm not a luddite... a debt is a debt. As far as I'm concerned - my word is my bond... but I prefer my bank to perform the administrative tasks for me. Reconciliations are so tedious!

7. I'm no Bible basher, but I think you could learn a thing or two from Christianity (N.B. I don't mean convert.) None of the assets you own have any value except that defined by your interactions with other people... ignore them to your peril. :)

 

 

Could you clarify what you mean by this? Debt implies that someone owes someone else something, and since modern currencies are not redeemable, I do not understand "debt" in this context.

 

I think you understand almost perfectly - if you extend someone to be any economic entity (individual, company, corporation, bank or state) then you've got it nailed spot-on.

 

Beyond being 'debt' money has some other important properties.

 

1. Other than with respect to time, all money is homogeneous - i.e. £10 is £10 - irrespective of its representation - as a single £10 note, or two £5 notes or 10 £1 coins -etc. Similarly £10 in RBS is identical to £10 in HBOS.

2. Time is very important - in two respects:

a ) All money has a maturity - a time before which it can not be spent (it would be useless if I gave you an IOU and you immediately passed it back saying "pay me now")

b ) All money can either be spent at maturity or not - this gives a velocity of money and defines economic activity.

The standard measures of money supply try to divide money by maturity. M0 is cash and is always mature... M1 (excluding M0 is current accounts - and is as accessible as switch payment systems are available)... M2 (excluding M1) is immediately accessible savings - which can be transferred to M0 or M1 subject to constraints such as opening hours and bank holidays. M3 (excluding M2) is term deposits and money market debts with maturities up to 2 years. - etc.

3. Money obeys an unbounded algebra with two primitive functions and negation. SUM(M0,M1) is the additive function used in totalling bills; MINUS(M0) is negation which turns a debt into a credit and vice-versa; TIMES(M0,R0) is the geometric or multiplicative function with a non-negative "real" number... which is used both to calculate scale - for the subset of R0 that coincides with the natural numbers - and to calculate margins or interest. It is an understanding of the distinction between the additive and multiplicative functions - and the authority to decide when each is used - that distinguishes between the Plebeian and Patrician in society which leads to class distinction.

 

Personally, I think money is possibly too complex for society at large - most people have a problem comprehending the more exotic algebraic structures that money permits... and, as a result, this leads to exploitation. I think that it is with a view to eliminating the need to deal with such a complex algebra that leads some to wish that it be simplified to have only one primitive function and negation. This was the facility provided by specie in time long since past. It worked reasonably well until some bright sparks introduced the multiplicative primitive function by debasing coinage. I believe that it is a desire for less challenging times that leads people today to see value in gold... conversely, I note that in history the multiplicative primitive was never kept at bay for very long... so, probably, it is best to admit its existence and act accordingly. Of course, this complicates matters - it forces us to rely upon regulators to establish transparency.. it would probably be fair to say that ours, at the very least, are falling short of expectations... but I don't see a preferable alternative.

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1. No, I don't think so. I dislike debt. If there is going to be debt, I want it to be a debt owed to me, or - at least - a debt I know I can pay easily.

Who wouldn't? You're sounding like a bankster.

2. Squirrel skins are not money - they're a commodity... a bit like gold... they don't have universal uniform value.

So what is money? And how do you relate "universal uniform value" to your preference for paper-debt money over real long-term tangibles?

3. Could have guessed that came from a goldbug site. The key words are "in extremis" - I don't think I need to do more than translate the Latin.

May 20 1999 to the U.S. Congress Banking Comittee. Demonstrate that it is a false statement. Your mere comment about the use of a commonplace Latin phrase, suggests that you are at a loss for any useful comment on the matter, and need to resort to clearly very base rhetoric.

4. Power, or to be more accurate, 'control' is an identical concept to money.

Most truly powerful people throughout history would be in contradiction. Money is lesser than real power.

5. There is always a party responsible for debt. If the party responsible can't be held responsible, the value is lost. Banks are reasonably secure - but NS&I or Gilts are more-so... the latter has my country as the counter-party... so it can't disappear if a company collapses or an individual creditor goes AWOL. If my own state defaults on me, it no longer has authority over me... and, in any case, I'll have far bigger and more immediate things to worry about than money... because I won't be the first to have that thought.

Debt, debt, debt, as always with you.

 

Can you conceive of a money which is not debt? but indeed a real credit?

 

Doesn't sound like it. It must be a nightmare for you to consider that in practical terms only a matter of decades ago money was not debt for most people.

 

Oh woe, woe, the money is not debt! Let us rectify this misfortune and place debt upon the populace that they be cleansed!

 

It seems that you and I live in different worlds.

 

You live in a mind-state where you are a child-serf-slave of your state (unless you are a bankster). In so many words you have said yourself.

 

That is what they want (or what you want if you are a bankster).

6. I'm not a luddite... a debt is a debt. As far as I'm concerned - my word is my bond... but I prefer my bank to perform the administrative tasks for me. Reconciliations are so tedious!

Debt, debt, debt, as always with you.

 

Woe, woe, would be the world without debt. Oh woe no banks! Oh woe no bonds, woe no bondage!

 

Oh woe no words!

7. I'm no Bible basher, but I think you could learn a thing or two from Christianity (N.B. I don't mean convert.) None of the assets you own have any value except that defined by your interactions with other people... ignore them to your peril. :)

I have indeed learnt a thing or two from xianity.

;)

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Thinned-out to eliminate ad hominem; numbered for clarity...

 

1. Who wouldn't? You're sounding like a bankster.

2. So what is money? And how do you relate "universal uniform value" to your preference for paper-debt money over real long-term tangibles?

3. ...Demonstrate that it is a false statement. Your mere comment about the use of a commonplace Latin phrase, suggests that you are at a loss for any useful comment on the matter, and need to resort to clearly very base rhetoric.

4. Most truly powerful people throughout history would be in contradiction. Money is lesser than real power.

5. Can you conceive of a money which is not debt? but indeed a real credit?

6. You live in a mind-state where you are a child-serf-slave of your state (unless your a bankster). In so many words you have said yourself.

7. I have indeed learnt a thing or two from xianity.

 

1. Who wouldn't prefer to be owed to owe? Someone who needs help and considers the debt fair exchange where they have nothing else to offer. It is best to settle debts as soon as possible.

2. Erm, see the post immediately above. Tangibles are not money - they have subjective value.

3. No thanks. I believe it to be a true statement taken out of context. With the linked explanation for the Latin, the phrase does hold up to scrutiny.

4. I disagree... I presume you're referring to those who challenge secular power and emerge as leaders? I'd argue they don't have power or control - they have respect - which puts power, control and money to shame.

5. A credit that is not a debt is a tangible asset. These are all well and good, but they do not represent money because they do not lead to hierarchical structures within society.

6. Codswollop. I no more accept that I'm a slave of my state than vice versa.

7. That's a positive sign. I grasped even more by comparing and contrasting the Semitic faiths.

 

I think you should be careful not to read too much into what I've told you. With the exception of suggesting that I value people - and I think you'd be well advised to do similarly... you might have noted that I'd not passed judgement on the morality of the concepts behind the terms I described. It is one thing to recognise and define - quite another to support or condone. So far I've focused exclusively on the former - the latter being dependent upon consensus on the former.

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Thinned-out to eliminate ad hominem; numbered for clarity...

Have you got something against pseudo-religious hortations?

1. Who wouldn't prefer to be owed to owe? Someone who needs help and considers the debt fair exchange where they have nothing else to offer. It is best to settle debts as soon as possible.

Like I said who wouldn't?

 

Few. But I truly, I am one of those few.

 

"Neither a lender nor a debtor be".

2. Erm, see the post immediately above. Tangibles are not money - they have subjective value.

This is a question you cannot answer because you do not understand it.

 

As a reminder the question is: "What is money?".

3. No thanks. I believe it to be a true statement taken out of context. With the linked explanation for the Latin, the phrase does hold up to scrutiny.

I'm very well aware of the minor 2-word Latin phrase. What has that got to do with the veracity or otherwise of the statement?

 

So provide the true context.

4. I disagree... I presume you're referring to those who challenge secular power and emerge as leaders? I'd argue they don't have power or control - they have respect - which puts power, control and money to shame.

So you suggest that power, control and money are all shameful. Your deceptive implication being that, ergo, power is identical to control and to money.

 

That is a false conclusion mandaciously presented.

5. A credit that is not a debt is a tangible asset. These are all well and good, but they do not represent money because they do not lead to hierarchical structures within society.

So you see money as creating a hierarchy, which necessarily means empowering some over others.

6. Codswollop. I no more accept that I'm a slave of my state than vice versa.

You cannot be at one place in the hierarchy and another at the time.

7. That's a positive sign. I grasped even more by comparing and contrasting the Semitic faiths.

Xianity like many other Eastern Mystery sects is rooted in Zoroastrianism, and therefore not primarily Semitic. "Monotheism" and much else found in those Mystery Religions existed in Ancient Egypt long before, as you probably know, and was not Semitic.

 

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Have you got something against pseudo-religious hortations?

 

1. Like I said who wouldn't? Few. But I truly, I am one of those few. "Neither a lender nor a debtor be".

2. This is a question you cannot answer because you do not understand it. As a reminder the question is: "What is money?".

3. I'm very well aware of the minor 2-word Latin phrase. What has that got to do with the veracity or otherwise of the statement? So provide the true context.

4. So you suggest that power, control and money are all shameful. Your deceptive implication being that, ergo, power is identical to control and to money. That is a false conclusion mandaciously presented.

5. So you see money as creating a hierarchy, which necessarily means empowering some over others.

6. You cannot be at one place in the hierarchy and another at the time.

7. Xianity like many other Eastern Mystery sects is rooted in Zoroastrianism, and therefore not primarily Semitic. "Monotheism" and much else found in those Mystery Religions existed in Ancient Egypt long before, as you probably know, and was not Semitic.

 

1. That's the closest agreement I've ever come across framed as an objection.

2. On the contrary, it is a question I've answered in some detail - but where you don't like my answer. See my above post and read from "Beyond being 'debt' money has some other important properties. "

3. The Latin phrase is critical as it defines the veracity of the statement. I've already said that I've found where you referenced it - but I can't find the original. It isn't important to me because, read carefully, the statement trivially holds.

4. I suggested only a relative potency - not an objective moral judgement. It rather depends the objectives of the respected leader and the secular state (in control of the money supply) which acts properly. This is a matter for individual judgement on a case by case basis. It is not the means as much as the motive that matters as far as I'm concerned.

5. Almost and yes. I see money creating multiple hierarchies.

6. I most certainly can, if there are multiple hierarchies. This arises naturally when ownership of assets is considered.

7. Quite... I'm not concerned with the revealed nature of religions - or particularly by their historic roots. I think, however, that the extent to which their creeds have been adopted gives an important window onto the human psyche... and, with it, one of the more helpful ways to establish popular belief - and, in so doing, establish the nature of money - among other things. This is my reason for focusing on "the big three" with their widely understood common basis.

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Where the risk is deceptive activity within financial services, I fail to see how buying protection from financial services will help. The only real protection is to demand transparency and insist that criminal activity is prosecuted. Everything else is either pointless or counter-productive.

 

pointless, counter productive ? apart from your long winded posting style making my eyes bleed (thanks for that) i find your "faith" in the system touching and rather "dads army" in warm and fuzzy way, you are of course totally incorrect with regard to your faith in the debt money fiat status quo mate, i am sorry, huge chunks of the worlds population and 4000+ years of human history pushing against the fiat debt orgy running on for much longer however i hope you derive much comfort from your belief system going forward, good luck etc.

 

 

 

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pointless, counter productive ? apart from your long winded posting style making my eyes bleed (thanks for that) i find your "faith" in the system touching and rather "dads army" in warm and fuzzy way, you are of course totally incorrect with regard to your faith in the debt money fiat status quo mate, i am sorry, huge chunks of the worlds population and 4000+ years of human history pushing against the fiat debt orgy running on for much longer however i hope you derive much comfort from your belief system going forward, good luck etc.

 

Sorry for making your eyes bleed.

 

You might be right about any particular fiat, but not all fiats are identical - and if we're talking about 4000+ years of history, stored value in money is the least of my concerns. In that time-scale we've seen widespread destruction of assets through riot and war; confiscation and genocide. My right (and ability to possess) property (any kind of asset) is no more certain than fiat - both are founded only on trust of others.

 

I don't trust fiat as a store of value - because debt itself is uncertain - except when I know the debtor is solid - which, frankly, I only know of myself in absolute terms. This means that I will be buying the assets I want when they become available to me at an acceptable price - which will reduce my dependence on money as a store of value (and make me feel far more relaxed)... so I am certainly looking for an end to the "debt orgy" as you put it - I think that has happened already... and its effects are taking time to sink in... I feel that British society is at the stage where we've stopped drinking pints of 50/50 Red-bull and Smirnoff and have started walking home... though we're not yet feeling any more sober. Much danger remains - calamities (such as buying useless assets) are around every corner, and I've no doubt that some will fall foul of the PM Kebab van. There'll be a huge hangover for most - but rationality will re-emerge for all who survive... what that looks like is yet to be revealed.

 

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Sorry for making your eyes bleed.

 

You might be right about any particular fiat, but not all fiats are identical - and if we're talking about 4000+ years of history, stored value in money is the least of my concerns. In that time-scale we've seen widespread destruction of assets through riot and war; confiscation and genocide. My right (and ability to possess) property (any kind of asset) is no more certain than fiat - both are founded only on trust of others.

 

I don't trust fiat as a store of value - because debt itself is uncertain - except when I know the debtor is solid - which, frankly, I only know of myself in absolute terms. This means that I will be buying the assets I want when they become available to me at an acceptable price - which will reduce my dependence on money as a store of value (and make me feel far more relaxed)... so I am certainly looking for an end to the "debt orgy" as you put it - I think that has happened already... and its effects are taking time to sink in... I feel that British society is at the stage where we've stopped drinking pints of 50/50 Red-bull and Smirnoff and have started walking home... though we're not yet feeling any more sober. Much danger remains - calamities (such as buying useless assets) are around every corner, and I've no doubt that some will fall foul of the PM Kebab van. There'll be a huge hangover for most - but rationality will re-emerge for all who survive... what that looks like is yet to be revealed.

 

In a sense we are debating tradable stores of wealth. I agree, looking at a timescale of 4,000+ years preservation of wealth is of little importance. What I have come to realise though is that one's natural (80 years now) it is likely we will have at least one major war and perhaps a couple of other important events (stock market crashes, run away inflations) that will destroy a lot of people's wealth.

 

Gold is a store of wealth just as tradable, fungible debt is. Wealth of any sort requires confidence. The distinction of 'moneyness' may be pointless. It is merely a separate term for a rising confidence in its worth above that supported by commodity jewellery usage or oil reference. It has not breached these limits yet and it is a matter of conjecture that it will -although clearly it could and this is the bet on gold prices for many.

 

The only long term store of value that meets my requirements is land. It does not inflate at 2% or more a year and it has a yield - something gold does not possess. You can find ways to pass it down the generations without paying taxes. It has worked for the Normans. The only thing is, you have to defend it with your life if you have to - you can't just put it in a chest and bury it. Or even better, get someone else to defend it with their life. Clearly as with any store of wealth you need to choose your moment when to invest, or simply take a very long perspective and realise any short term volatility will become infinitessimal.

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1. Wealth of any sort requires confidence.

2. The distinction of 'moneyness' may be pointless.

3. The only long term store of value that meets my requirements is land. The only thing is, you have to defend it with your life if you have to - you can't just put it in a chest and bury it. Or even better, get someone else to defend it with their life.

 

While I agree with much of what you posted, I'd like to address the three numbered points you made.

 

1. 100% agree. This, I consider to be absolute - an axiom, if you like.

 

2. Absolutely disagree. The behaviour of money has great influence on the behaviour of society. If you've read Taleb, he talks about Mediocristan and Extremistan... what he is really talking about is the multiplicative and additive functions of algebra acting over our money supply. If our money supply worked differently, so would society.

 

3. Do you really believe this? Would you like to re-read? Is it better to get someone else to defend your land with their life? Do you not realise that this leads to debt? Do you not realise that 'paying' for others to defend your land was what required gold in times gone by - and is the reason some, even today, some attach value to the useless inert metal? Do you think that your descendants for time immemorial want the burden of fighting to defend your the land you chose? Do you not think that this might be an error of judgement?

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2. Absolutely disagree. The behaviour of money has great influence on the behaviour of society. If you've read Taleb, he talks about Mediocristan and Extremistan... what he is really talking about is the multiplicative and additive functions of algebra acting over our money supply. If our money supply worked differently, so would society.

 

3. Do you really believe this? Would you like to re-read? Is it better to get someone else to defend your land with their life? Do you not realise that this leads to debt? Do you not realise that 'paying' for others to defend your land was what required gold in times gone by - and is the reason some, even today, some attach value to the useless inert metal? Do you think that your descendants for time immemorial want the burden of fighting to defend your the land you chose? Do you not think that this might be an error of judgement?

 

2. I was referring to the 'moneyness' of gold and its effect on gold's value in the markets. At the moment its value is largely set in terms of its commodity value - i.e. its usage in jewellery and perceived relative value of the dollar - like oil.

 

3. It was a little joke. The Normans did not defend their land alone over the ages. A dream was given to all members of the nation that the land they were defending, the country (and all that goes on on it) was theirs. So in a funny way they persuaded Anglo Saxons to defend their land and the status quo. (but it was just a small joke not thought through as a philosphical argument)

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Without having the most recent ten or twenty posts, I quote the following from Bob Hoye's newsletter as I thought it was relevant:

 

There has been a popular notion that in a credit-based economy that the Fed can

depreciate the dollar at will. This is not the case as the central bank needs ardent

borrowers to perform its portion of a credit expansion. The problem that is slowly being

faced is that policymakers created an investment world free of risk. A couple of years

ago in housing there was no risk. If it was merely a matter of issuing credit the housing

bubble would have been perpetual, but it wasn't. Prices started down and rather than

proving the concept that Fed liquidity could push prices up the market has shown the

opposite.

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I'm not a fan of precious metals or commodity investment - and I explain this as being a 'religious preference' - in the sense that I don't expect to be able to convert others, rather than because I've derived it from scripture or follow some cult.

 

Religion is personal and pls ignore if offends

 

I am not sure but are you thinking of Jesus who condemned a man who accumulated and buried gold when he could have used that gold to create jobs wealth etc.

 

I do think that when money was honest gold as it was in Jesus's time and was throughout nearly all history, acumulating lots of the stuff would be deflationary, infact cornering gold would be totally wrong.

 

Inflation - that banker/government thieving from the honest hardworking man who saves is and was not possible in a full on gold standard, infact that diabolical crime had never yet happened in Jesus's time.

 

As I see it fiat money now is a perversion of money thats much worse than gold as money.

 

If money is the root of all evil then fiat money is a worse devil because fiat currencies always collapse to near zero value and concentrate wealth to the controllers of the currency the politically connected.

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I have extreme discomfort at this idea. Precious metals are not money - and haven't been for some time. While I fully understand the notion of "specie" that, historically, was something that could be used to hold the issuers of "paper money" to account - this was at a time when precious metals were money... precious metals today do not have that status... we will never again be taxed in gold - gold will never become legal tender. In this context, while gold seems to react to monetary expansion as it did in times gone by - I strongly suspect this is only because it is a common misconception that gold is a hedge against inflation - which, paradoxically, makes gold a hedge against the fear of inflation.

 

A long time ago (when I was far too young to understand) I heard gold being discussed - and there was a comment that "In times of crisis, people rush to what they believe in - for some that's gold, for some that's property - for others it is religion." This makes a lot of sense to me. While I'm thinking about exotic financial instruments, it is as if it is to a soundtrack of a cockney geezer (I'm not devout) asking is it "kosher?" I have to wonder if the instrument really does have value... it is remarkably difficult to establish a credible answer most of the time. I'm inclined to argue that "religion" is the only answer that might work... not in the join-a-cult or kneel-n-kiss-yer-ass-goodbye kind of ways, but by acting in an honest and transparent way - and asking for the same of others. I do not believe in the "big outrageous conspiracy" explanations - I believe that there are billions of individually minor deceptions... and I'm encouraged by chaos theory which suggests that the consequences of relatively small actions can cause dramatic consequences. For me the only insurance I'd trust is education, reason and communication... all of which are (virtually) free.

 

I like this post a lot - I agree that the flight to gold is partly a matter of belief in time of crisis. And I also agree that what we are seeing is a conglomeration of many small acts, not one big conspiracy.

 

And while I'm not remotely religious, I think that what we are seeing now is a period when some truth is breaking through the murk of a thousand small deceptions. Very interesting.

 

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1. Money is standardised tradeable debt - nothing more; nothing less.

 

I'd give two alternative definitions:

 

Money is a promise of future exchange value. (Thus it's a category error to confuse either gold or paper with "money" which is a representation).

 

Or:

 

Money is the mechanism we use to ration and share out goods and sevices in a society. No matter how this is done, there will be some who feel unfairly treated. They often blame money rather than the way in which society chooses to allocate money and resources.

 

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:blink: Man, you sound so bought by the debt mongers. For me money is a means for exchange of goods and a store of value in the meantime, meaning to say when I prefer to save rather than spend.

 

This is actually a crucial point - at what point does saving become hoarding, or the accumulation of power and privilege. It isn't crucial to the definition of money tha it should be something that can be stored or accumulated over generations, only that it should faciitate exchange by representing a promise of future value. It's an interesting question whether it is of any great benefit to society that people should accumulate large amounts of stored future exchange value, and whether or not it matters if, in that case, they should have any guarantee of what the future value of that money should be.

 

Worth thinking about.

 

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I'd give two alternative definitions:

 

Money is a promise of future exchange value. (Thus it's a category error to confuse either gold or paper with "money" which is a representation).

 

Or:

 

Money is the mechanism we use to ration and share out goods and sevices in a society. No matter how this is done, there will be some who feel unfairly treated. They often blame money rather than the way in which society chooses to allocate money and resources.

 

I think few blame money cos few understand it.

 

Gold is the free market money.

 

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I think I read somewhere that UK M4-growth has plunged down to +11.2% in July.

 

Quick! Prepare for deflation! :lol:

 

EDIT: Sorry, just can't help it!

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Can you conceive of a money which is not debt? but indeed a real credit?

 

An all but meaningless distinction. Money is a promise of future exchange value.

 

You can argue about the idea of whether money should be created as debt of course, but all money is based on promises and representations, whether it is made of gold (which has a tangible value) or paper (which doesn't).

 

Try to get away from the idea that money is a 'real thing' in and of itself.

 

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I think few blame money cos few understand it.

 

Gold is the free market money.

 

And in turn some will suffer under free markets and will blame gold. There are always winners and losers - society as a whole makes decisions (either together or through conflict) about who they will be.

 

Look at the late 19th century and the hatred that mid-west farmers felt for gold, and the movement for paper currency to be issued - it was simply a different group that was suffering.

 

Free markets help with some problems, and cause others. Just as states that tax and spend do. There are no perfect solutions and it is utopianism to imagine that a gold currency is inherently more moral or perfect than any other.

 

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Try to get away from the idea that money is a 'real thing' in and of itself.

 

Like most things the more you know the less you are sure.

 

Money is certainly complicated, but current fiat money is IMO a scam that will fail because fiat money alway always has in the past.

 

They never in the end resist the temptation to make far too much of it.

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Try to get away from the idea that money is a 'real thing' in and of itself.

We had this discussion before and I think it is wrong. Real money is a commodity that usually has other uses than just its money function. The most important thing is that it has to develop in a free market and in a truly free way. For instance, a gold coin with a face value that is traded at face value is no real gold currency. A real gold currency would be one where just the gold content matters.

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I think I read somewhere that UK M4-growth has plunged down to +11.2% in July.

...

That means the money supply doubles every 6.5 years. :o

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We had this discussion before and I think it is wrong. Real money is a commodity that usually has other uses than just its money function. The most important thing is that it has to develop in a free market and in a truly free way. For instance, a gold coin with a face value that is traded at face value is no real gold currency. A real gold currency would be one where just the gold content matters.

 

You're still conflating the fact that something is a 'real thing' of'real value', with the idea that therefore if it is used as money, it is 'real money'. The latter phrase is meaningless. Money is a promise of future exchange, that is the whole point of it. In many cases it makes sense to use something of real value or scarcity (such as gold) to represent that promise.

 

You're imagining that it would be a utopia if a gold currency only worked as a barter, in other words people only ever exchanged it if they were happy to keep the gold indefinitely, because they valued it for itself. But the whole point of money is that it can be exchanged - as soon as people are using something to represent future exchange it adds value to that thing. People value gold more if they can exchange it than if they can't - in the former case it is a useful, flexible piece of money. In the latter, you would only buy it if you wanted a lump of gold.

 

I don't want or need a gold coin. But I want to guarantee I can buy stuff next week, next month, next year. So if I knew for sure a gold coin was a good way to guarantee that, I'd take the coin instead of some dollars. So my demand for gold is raised in a situation where it is widely acceptable as currency. Higher demand = higher price. There is no such thing as money being traded purely for its own value, its just a misunderstanding of the whole way that money works.

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We had this discussion before and I think it is wrong. Real money is a commodity that usually has other uses than just its money function. The most important thing is that it has to develop in a free market and in a truly free way. For instance, a gold coin with a face value that is traded at face value is no real gold currency. A real gold currency would be one where just the gold content matters.

 

And actually let me restate something in even simpler terms to explain why this is wrong:

 

Gold has a use value. There is a certain demand for gold based on its uses (as jewelery etc).

 

If gold is also being widely used as currency, this creates a big chunk of extra demand, as people who do not want gold for its use value also now demand it for its use as a medium of exchange.

 

So its use as a medium of exchange increases demand for it. Thus by the laws of supply and demand its price increases.

 

So the whole argument you put forward that a real gold currency would be one where 'just the gold content matters' is fatuous. If something is used a currency it has a higher demand than if it isn't.

 

(And I recognise that part of gold's current demand situation is based on people who want it as currency, though I'd also say that if it became more widely used as currency there would be a lot more demand created).

 

So you simply cannot define the 'natural' demand and price level for a commodity such as gold and suggest that that would be its value in a case where it was used as currency.

 

QED.

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