Money has many characteristics. Durability, divisibility, inability to be counterfeited, uniformity, ability to be easily carries, and acceptable as a means of exchange.
Currency really only hold 4 or 5 of those characteristics.
Money is a medium of exchange. Money can be valuable or invaluable. Valuable money is a store of wealth. Invaluable money is simply currency.
"If you know how the world's financial system works, you know that the game your playing. And if you don't know the game and the rules we're playing by ... you're going to get slaughtered ... you are going to get slaughtered." - Mike Maloney
Mises definition of money is the most accurate:
the most desired commodity in a market
Today, in the US, it is a particular piece of colored paper or its digital representation in a computer.
But it is still money.
Travlyr is very confused over himself.
He demands that you must provide him something of value - as if 'value' is something that is inherent and universally the same to all people all the time.
But no such thing or condition exists. Everyone holds a value on things differently and is completely subjective.
This is a core economic understanding, because if this was not true - and everyone held the same value on things trade would not occur.
Trade occurs because what you value in the thing you have is LESS than what you value in the thing you want. And your trading partner holds exactly the opposite valuation to you - what you have he values more than what he has right now.
You both trade, getting rid of what you do not value so much and get what you value more.
This cannot occur if everyone holds the same value for things. So because trade does happen can only mean value is subjective and individual.
Thus, Travlyr spewing that he doesn't value tally sticks, and therefore are not money is not true. Tally sticks were money in England up until 1970's, and if he was living in England a few hundred years ago, he'd darn well value those sticks - because if he didn't pay his taxes with them, he'd be hung!
So, today, 'we' desire (note the lack of using the word "value") FRN higher than any other specific good or commodity - making them money, and not gold or anything else.
We price all our goods and services in reference to FRN, and not to oz. of gold - further demonstrating that FRN are money and gold is not.
What gets many people confused about money is that they seem to think money is some sort of "special" economic good - that it has unique economic laws that only apply to it, and that economic laws that apply to other economic goods and services do not apply to money.
So guys like Travlyr believe money is immune to supply and demand, for example - that is, regardless of demand, gold must always have the same "value".
But hold fast this thought:
The laws of economics applies to all goods and services. There are no special laws of economics that apply to only "special" economic goods.
The economic laws that apply to apples are the same -no more and no less- that same economic laws that applies to money.
So to expect money to resist or be immune to economic law is bluntly an error.
Last edited by Black Flag; 03-04-2012 at 01:13 AM.
"Money" is one of the most complex things in economics so I think pinning it down to one particular good or another is a little irrational in my opinion; salt, animal skin, seashells, tobacco & many other things have been "money" at different times & in different places, of course, we may argue that gold/silver be better forms of money than most others because of their characteristics but I wouldn't go so far as to say that they're "money" by themselves
"Money" is anything that is used not necessarily for direct consumption but only to exchange it for other goods or services in the future
For example, if one accepts FRNs in exchange for oranges so that one can exchange those FRNs for other goods or services in the future then FRNs are "money" for that transaction; on the other hand, if one accepts FRNs in exchange for their oranges so that one could use them as toilet-paper then FRNs in that transaction would NOT be "money"
If one accepts gold in return for oranges so that one can gift gold-jewellery to his wife then that gold would NOT be "money" for that transaction while if that gold was accepted so that it could be exchanged for other goods or services in the future then that'd constitute "money" for that transaction
Obviously, sometimes the purposes may overlap where something is accepted with a dual-view of using it as a good as well as to exchange it for other goods in the future which is why it's so difficult to pin down "money" as a concept
Besides, some forms of "money" will be more common than others & they may be more likely to be perceived by people in general as the "only" money even though there may be isolated transactions where other things are being used as money
There is enormous inertia — a tyranny of the status quo — in private and especially governmental arrangements. Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable
- Milton Friedman
Mises said, "The function of money is to facilitate the business of the market by acting as a common medium of exchange."
Which, in a 100% barter economy, would be any goods used for trade. Everything would qualify as money. As barter economies became more sophisticated, then gold & silver climbed to the top of the money chain because they hold value as characterized by their desirability, durability, divisibility, portability, and scarcity. Gold and silver emerged as currency of choice from free market barter exchanges. When counterfeiters get involved, then the rules change.
100% redeemable gold and silver paper certificates are honest value placement holders because they represent 100% of the value of the gold and silver in the market. In other words, either spend 1 oz of pure Ag for a tank of gasoline or spend a 100% 1 oz redeemable paper Ag for a tank of gasoline. It makes no difference.
If the paper money is less than 100% redeemable for gold and silver, then the paper represents less value than the gold and silver maintain in the marketplace (inflation). If the paper is not redeemable in any specific commodity, or electronic accounting entries are considered as money, then the value of money is based on faith in whoever has the authority to "print" or increase the "account" will maintain the value of money. That faith is the faith that the authorities will not print so many of them as to flood the market with money supply (inflation) and cause prices to rise, or that they will not shrink the money supply (deflation) and cause prices to fall.
When faith in the counterfeiter begins to fail because the authorities print whatever they want for themselves without regard to the broader economy, then it becomes clear that scarcity did not limit their transfer of wealth from production to the privileged counterfeiter (QE). Controlled amounts of QE are simply wealth transfers from producers to insiders (theft). Too much QE becomes hyperinflation (destruction of the paper money). Default back to barter and gold & silver.
When faith in the counterfeiter begins to fail because the authorities burn all the paper or "erase accounts" (bank holiday), then it becomes clear that durability did not limit their ability to transfer wealth by sleight of hand (theft). That is why the Argentineans were banging pans in the streets and on the walls of the banks in protest while bitching about the lying counterfeiting thieves.
Last edited by Travlyr; 03-11-2012 at 02:45 PM.
Freedom is a state of mind. Nobody can take that from you unless you let them.