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Book Review: Money: The Unauthorized Biography

samzenpus posted about 8 months ago | from the read-all-about-it dept.

The Almighty Buck 91

jsuda (822856) writes "Most of us know that making money is difficult and saving it is even harder, but understanding money is easy–it's just coins and folding certificates, a mere medium of exchange. That's wrong! according to Felix Martin, author of Money: The Unauthorized Biography. Not only is that understanding wrong but it's responsible (in large part) for the 2007 Great Recession and the pitiful 'recovery' from it as well as a number of previous financial and credit disasters." Keep reading for the rest of Jsuda's review.Mr. Martin draws a comparison of the orthodox understanding of money as a mere medium of exchange as typified by material objects–coins, gold bars, measuring sticks, and the like and a different way of thinking about it--as a social accounting construction based on mutual trust. That way of thinking acts as a primary social organizing tool. As such, a monetary system is much more sophisticated than just a logical extension of primitive bartering systems. It is imbued with major political aspects which account, in part, for the differences between the haves and have-nots, the policies selected to address financial/economic busts, and the relationship of the state to the monetary/financial systems.

The differing understandings of money underlie even now the varied explanations by economists of the causes of the Great Recession and the varied reactions of political leaders to it. It is also relevant to the deliberate removal of the government from the monetary system in favor of an impersonal computer network, as in the digital coin system now developing.

The author is a professional economist, bond trader, and analyst with the George Soros Institute for Economic Thinking. The book is a very worthwhile look at the concept of money as a (implicit, at least) political and social determinant and is quite topical as alternative monetary systems (mostly digitalized) like Bit Coin and competitors are garnering much attention. While the book does not address those new developments, it's clear that the digitalized coin systems imply acceptance of the orthodox understanding of money as a commodity. Some of Martin's criticism of the limitations of the orthodox view seem to apply to these alternatives, as well.

Mr. Martin writes in a relatively accessible manner relating stories, mostly, about money in historical and global contexts. His approach reminds of Malcolm Gladwell's books which use elaborate historical stories to illustrate relatively complex topics. Gladwell writes better but, arguably, covers simpler issues. However, this book, too, is relatively simple. It is no treatise on money or systems; it doesn't cover every issue which relates to money and exchange; and it seems a bit thin on theory even on those topics it does focus on. The major topic is the nature of money–a medium of exchange or social/political organizing tool and that issue has been theorized differently for centuries.

Mr. Martin starts his critique of the orthodox view of money by explaining how the early Pacific island Yap culture relied upon the symbolism of large stones (known as "fei.") These stones were kept by individuals as value storage devices, even though they had few of the characteristics which typically would be present in money systems–tokens of some sort small enough to carry and to hide, a consistent look, ease of exchange, a readily determinable unit value, etc. None of that was relevant for the Yaps as they understood money as mere transferable obligations, commercial or otherwise, based on mutual trust. The bigger your stone, the more value you had to trade, even though no stones physically moved anywhere. The Yaps had a small community and violations of community trust were easily discouraged. The stones (including a large one on the bottom of the ocean) were only tangential to the much more relevant element of social trust.

Mr. Martin reviews a large handful of other historical situations involving credit collapses, bank runs, recessions, and big bank/governmental associations to make his main point that when money is rigidly understood merely as a commodity of exchange, bad things can happen to financial, credit, economic, and political systems, especially in difficult times. Take, for instance, the Irish potato famine of the mid-19th century where potential government/social aid to the jobless and hungry was stymied by creditor interests who valued the absolute sanctity of (bond and debt) contracts even at the consequences of millions of deaths. As they saw it, those victims were either responsible for their own problems or just losers in a competitive economy. Some economic thinkers at that time believed that those awful consequences were just part of the natural order and represented (unfortunately for the victims) unavoidable consequences of "good" finance.

While Mr. Martin doesn't address it much, most of the little people in America and elsewhere were also victims of the absolute sanctity of debt contracts. They lost jobs, homes, pensions, and savings in the Great Recession while big bondholders who legally had assumed investment risks lost nothing. Their debt contracts were inviolate. (The personal and social contracts of the little people naturally were worth nothing.)

Some of the major policy implications of money deal with: 1) inflation and deflation where a political decision is implied involving the contrary interests of creditors and debtors: 2) social responses to credit collapses and the role (if any) of government in moderating them; 3) who or what entities are or should be guarantors of trustworthiness (i. e., big banks? government? a computer network? 4) the role of formal contract law versus the principle of the good social good, and more. These are not mere abstract matters of formal theory but highly consequential matters of life and death (as the Irish potato farmers and lots of little people have found out.)

The author spends a lot of time explaining how trust works--in small organizations and communities, nations, and in globalized financial systems. At the top of the trust ladder (even for the most libertarian types) is the sovereign, i. e., government. There are important reasons why governments are generally lenders of last resort, stabilize financial and economic systems, and ultimately, the only potential savior for citizens from total economic collapse (as in the Great Recession.) There are various alternatives for the governmental role, none of which please everyone.

Hence, the political dimension of the money-social relationship. Mr. Martin comes down hard in favor of the flexible, social understanding of money. He praises John Maynard Keynes, Walter Bagehot, and even Salon, of centuries ago for their insights. He blames the great liberal philosopher, John Locke, of all people, for having a decidedly ill-liberal and ill-formed understanding of money. Lock was an orthodox monetarist and helped justify the philosophy which is still prominent. Each of the two philosophical approaches discussed here offer both liberal and conservative themes though rarely opposed as such.

That raises one major objection to Martin's thesis that orthodox monetary theory is wrong. He wants to substitute the social tool concept for it, but it seems pretty obvious that both frames of reference have their utility and truth. It's not easy to discredit respect for contract rights. On the other hand, it's hard to accept the starvation of millions of people to maintain them fully intact.

Nearly all such fundamental frames have their truths, even if inconsistent with the other. The better philosophical view is that we are guided (or not) by multiple, logically inconsistent frames. That is a philosophical point which he doesn't address well enough. He does concede that the orthodox theory mostly works well when times are good (but breaks down horribly when circumstances are bad.) This seems to imply a need for high-level judgment somewhere in the system, e. g., democratic political processes, a conclusion which tends to support his position.

He offers a couple of not very well-explained alternative monetary systems designed to remedy the faults of the orthodox approach while maintaining its virtues. He ends the book by suggesting that even if his thesis is correct, that getting the rest of the world to accept it is difficult–most people have rigid orthodox views, fiercely held. He lamely suggests without any elaboration that the power is within each of us to change those views. That would seem to require another book.

There is a lot of good meat, so to speak, to chew on in this book.

You can purchase Money: The Unauthorized Biography from amazon.com. Slashdot welcomes readers' book reviews (sci-fi included) -- to see your own review here, read the book review guidelines, then visit the submission page.

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Gangsta Yo! (-1, Flamebait)

Anonymous Coward | about 8 months ago | (#46623845)

HOW TO BE A WORTHLESS, VILE, AMERICAN YARD-APE!!!!
  • Slink around, shuffling your feet and bobbing your neck like the lazy retard you are.
  • Walk down the middle of the street because you don't know what a sidewalk is for.
  • Hang out at carwashes and mini-marts because everybody knows these are the best places to be a dope, I mean dope.
  • If you're a nigger bitch, shit three nigger babies into the world before 17 years of age. This assures that welfare mo ney will support you, so your nigger men have more time to commit crimes.
  • And give REAL honest black people a bad name.
  • Oh yes, make sure each nigger baby has a different father.
  • Bastardize the English language in the name of nigger culture.
  • Make sure that several terms have multiple meanings and others have ambiguous meanings and that only 50% of nigger wor ds are even complete words. Real niggers will know what you're trying to say.
  • As a culture, make sure there are always more blacks in prison than in college at any given time.
  • Hang out in packs of 10 to 15 and make sure everyone acts as annoying as possible. This helps to promote nigger indivi duality.
  • Always talk loud enough so everyone in the 'hood can fucking hear you, and if they are niggers, they will know what yo ur saying, bro.
  • Wear clothes that are 10 sizes too big, making sure the pants hang off your ass.
  • Park at least 5 junk cars in your yard while being careful not to use the driveway. It's OK to abandon them in the str eet as long as it's in front of someone else's crib.
  • Exaggerate every motion, every tonal inflection and grab your dick a lot.
  • Do drugs, sell drugs, make drugs. Okay, don't REALLY do this, but it IS what niggers do.
  • Turn your backyard into a junk yard. If you don't have a backyard, turn your mother's into a junk yard.
  • Travel around leaching off relatives, friends, salvation armies.
  • Drink cheap wine and malt liquor every day, forgetting that "malt liquor" is just fortified cheap beer.
  • If you're a nigger buck: fuck anything that moves, no matter how ugly she is. After two 40oz, even the ugliest, fattes t nigger bitch will look good.
  • Be charitable and covet fat, ugly white chicks. After all, they're niggers too. They can't help being so undesirable to white men that they have to fraternize with black dudes on a 20/20 trip. And white ho's are a special trophy too, especially the not so ugly ones.
  • Spray paint everything in sight with scribbles that mean nothing to white people but mean things to fellow niggers (except niggers from another hood who will probably go after you for tresspassing on their turf).
  • Use the term "motherfucker" in every sentence. It's one of the most versatile words in the nigger language, being a noun, verb, adjective and complete mini-sentence in event you run out of thoughts.
  • Stop in the middle of the street, blocking all traffic to converse with fellow niggers and have complete disregard for everyone else.
  • Overcharge customers at Taco Bell and pocket the difference.
  • Drive your car while slouched so low that you can barely see over the wheel (gangsta drivin').
  • Get a job under affirmative action. Then sit around all day pretending that you earned the position and that the other co-workers respect you. Whenever you fuck up, scream "racism!" & hope you get enough Generation X liberals in the jury.
  • Never, I mean NEVER, take any responsibility for your actions. Always blame others including Asians, Latinos, Mexicans, and especially Whites for your sorry ass stupid lives.
  • Be sure to get a dog, tie it up in the cold and mud and neglect it until it dies. Then start all over again. Cash must be used because you long ago fucked up your credit and checking account.
  • Cram 5 generations into a two room government apartment and still be able to neglect your kids.

Then you too can be a true nigger, and anyone who finds any fault with anything you do is automatically a racist. They don't dislike what you do and wish you would do something better with your life, nor do they wish you would realize that other people exist and should be treated with respect. No, they're just racists who hate you because of the color of your skin, and everything bad in your life is their fault. You nigger.

Re:Gangsta Yo! (0)

Anonymous Coward | about 8 months ago | (#46624001)

tl;dr

Stupid Republicans (-1)

Anonymous Coward | about 8 months ago | (#46623979)

monetary systems (mostly digitalized) like Bit Coin

Why do those people refuse to spell Bitcoin correctly? I know they hate it since it is new, and they everything new by definition, but why act like fucking morons by pretending to not know how to spell it? I know this Jsuda moron isn't very smart, but he is working hard to make himself look illiterate by doing this Republican-style thing.

Re:Stupid Republicans (1)

ArcadeMan (2766669) | about 8 months ago | (#46624007)

You spelled Judas wrong.

Re:Stupid Republicans (0)

Anonymous Coward | about 8 months ago | (#46624491)

You spelled Judas wrong.

I did not. Why do you Republicans refuse to tell the truth? That Republican misspelled his own name. Please just stop posting. You people are ruining this site.

Re:Stupid Republicans (1)

ArcadeMan (2766669) | about 8 months ago | (#46625437)

Why are you calling me a republican? I'm Canadian you insensitive clod!

Re:Stupid Republicans (2)

tomhath (637240) | about 8 months ago | (#46624017)

A George Soros employee is a Republican? Not likely. You must have meant Stupid Democrats.

Re:Stupid Republicans (-1)

Anonymous Coward | about 8 months ago | (#46624039)

Trolololololololololololololololololololololololololololololol.

Yeah. Parent is a troll.

Re:Stupid Republicans (4, Funny)

CrimsonAvenger (580665) | about 8 months ago | (#46624129)

Why do those people refuse to spell Bitcoin correctly?

Probably for the same reason they omit words from sentences...

I know they hate it since it is new, and they everything new by definition

Somewhere between "they" and "everything" was an idea. Alas, it must be inferred, since it wasn't stated outright.

Re:Stupid Republicans (0)

Anonymous Coward | about 8 months ago | (#46624541)

He accidentally the whole everything.

Re:Stupid Republicans (0)

Anonymous Coward | about 8 months ago | (#46628629)

hated, most likely

Haven't you heard? (0)

Anonymous Coward | about 8 months ago | (#46630447)

The new style is to randomly omit words from English sentences (especially "to", "had", "have", and "be"), and then randomly rearrange the order ("I rowed slowly the boat"), as Yoda does. Nevermind that none of this is valid English -- if a cool kid does it, it's legit.

Re:Stupid Republicans (-1)

Jane Q. Public (1010737) | about 8 months ago | (#46624179)

" I know this Jsuda moron isn't very smart, but he is working hard to make himself look illiterate by doing this Republican-style thing."

Considering that it was Democrat-style thinking (yes, even on the part of George Bush) that got us into this financial mess (i.e., monetary policy plus government intervention in housing and other markets), I would be careful about referring to Party-style thinking if I were you.

Let's see... what has this DEMOCRAT-controlled administration done for us in the last 6 years?

Least transparent government in living memory; economic "recovery" that really wasn't; inflation that is only now starting to hit home; Obamacare that nobody in their right mind wanted; wildly expanded NSA surveillance which has pissed off our enemies, our allies AND our own citizens; Benghazi; drone murders; the greatest collection of blatant public lies to the people (again in living memory); failed foreign policy; ah, hell, I'm tired of listing things.

Oh, wait... one more: imaginary "climate change". (If you don't think that has ties to political ideology, look at the latest survey of members of the American Meteorology Society).

While I would not be surprised to get lots of flak over that last comment, that's just another symptom of exactly what I am talking about.

Re:Stupid Republicans (1)

Jane Q. Public (1010737) | about 8 months ago | (#46624255)

s/Meteorology/Meteorological

Re:Stupid Republicans (-1, Offtopic)

Jane Q. Public (1010737) | about 8 months ago | (#46625063)

AAAaaaaaannnnndddd...

the modders have proved me right again. Thanks for that, I guess.

Re:Stupid Republicans (1)

blue trane (110704) | about 8 months ago | (#46625375)

I blame Reagan for everything (War on Drugs, ripping solar panels off the White House, Meese the Pig, etc.). The only good thing Reagan did was prove that deficits don't matter.

Re:Stupid Republicans (1)

minstrelmike (1602771) | about 8 months ago | (#46626109)

The only good thing Reagan did was prove that deficits don't matter.

sarcasm: And apparently that has now been "disproven" by Tea Partiers, fundamentalist Libertarians and Texans (except for when they want their Federal handout).

Re:Stupid Republicans (1)

Jane Q. Public (1010737) | about 8 months ago | (#46626505)

"The only good thing Reagan did was prove that deficits don't matter."

He "proved" that, did he? And how, pray tell, is he supposed to have proved that?

Dude. When you pick fights, it helps to use IQ. (1)

Slartibartfast (3395) | about 8 months ago | (#46627197)

There are many things to pick on in this administration; make no doubt about it. But several of the things you bring up are either silly or stupid.

1) Obamacare that nobody wanted; I'm sorry -- you don't like health insurance? Clearly, large segments of the population don't want it, but "nobody" is such a sweeping, wrong-headed generalization that it shows your huge bias.
2) Errr... the economy isn't recovering? Unemployment is down, the market is way up. Which metrics do you use? Yes, it could be *better*, even a fair bit better, but pretending it *isn't* is just stupid.
3) "Inflation rate that is only now beginning to hit home." WAT. After GWB left office, we haven't had inflation break 3%. Honestly, if you'd made point #2 well, you could have used the low inflation rate as a sign of a weakly growing economy. Instead, you're just speaking out your a**.
4) "Wildly expanded NSA surveillance." Citation, please. I'm not saying it's *not* true... but I won't believe it is until you prove it. What *is* true is that Edward Snowden let the cat out of the bag. Much of what he let out of the bag, however, predated Obama, and I see no particular reason to believe government snooping has changed much since... well, Hell, since before J. Edgar Hoover.
5) "Imaginary climate change." Okay, again -- screw what the politics of *anyone* is. Show me objective, not-cherry-picked proof. I'd say it's objectively demonstrable that the climate is changing; the only thing that is left to debate is whether its cause is humans or not. If you actually think the climate isn't changing, however, you may be immune to facts. Indeed, I think we've probably already demonstrated that.

Please. Informed debate is one of the things that makes this country great. Ill-informed spouting of kneejerk $PARTY talking points only shows your bias, and inability to objectively consider multiple points of view. Perhaps you don't *care* to consider multiple points of view, and that's your prerogative... but don't bother trying to ever convince anyone of anything.

Re:Dude. When you pick fights, it helps to use IQ. (2)

JayBean (841258) | about 8 months ago | (#46628229)

Good points, but you are using faulty numbers to dispute #2. Unemployment is down only if you exclude those that dropped out of the labor force. But that may (probably) can't be blamed solely on the administration. I'm looking at the Fed for pumping money into banks, and banks not lending the money out to small businesses (which has pushed the market up somewhat).

Being a puppet for Wall Street? Sure, that seems like a valid criticism. Of this and every other administration in recent times, I suppose.

Re:Stupid Republicans (0)

Anonymous Coward | about 8 months ago | (#46625651)

> monetary systems (mostly digitalized) like Bit Coin

Why do those people refuse to spell 'digitized' correctly?

What a bunch of hooye, total garbage (2, Interesting)

roman_mir (125474) | about 8 months ago | (#46623999)

Sure, money is a social construct, however real money, as in money that is not fiat, money that is not declared by the government to be legal tender, namely gold stood in the way of governments destroying value of money by creating inflation (printing money, expanding monetary supply) and stood in the way of government from stealing more and more, since with real money, the innovation always led to higher productivity and lower prices (in the 19th century prices were falling, while money was gaining value, which is in stark contrast with the today's world of huge inflation and very low productivity and extremely high unemployment, all leading to rising prices). Of-course governments hate real money, as it prevents governments from expanding beyond their role of a LUXURY GOOD. Government is a luxury good that needs to be cut first when times are difficult, thus allowing the people to start rebuilding their savings and restructuring the economy, all of this on the backdrop of falling productivity, lost jobs and thus falling prices is what is necessary to fix the problems created by preceding round of inflation and expansion. In a market not controlled by government intervention, these are local phenomena, short-lived, and they allow scarce resources to be reallocated from inefficient uses to more efficient ones.

Governments controlling currency, printing money, taxing income are the reason for deep lived recessions and depressions that eventually worsen, as more and more resource misallocation is accumulated in the system. 2008 recession was caused by the Federal reserve and Treasury, which worked together to monetize USA debt (that Clinton and Rubin managed to push into short term category out of long term bonds). The reason governments are able to rack up the debt that can never be repaid is because they can print money literally, once they default on the honest money, whatever was known as currency (legal tender) becomes money in itself, its only role to be true money place holder is lost and the paper becomes money itself, no longer currency, no longer bank notes, but actual money backed by the con game that the governments run.

In any case, governments have no legitimate role in money manipulation, but this never stops them, because of-course it is so lucrative, to seize power from the people, to destroy the money by declaring paper to be it and then to buy political influence with this new concept - paper money, that can never be backed up by any amount of production. All of this of-course leads to bigger and bigger government, fewer and fewer individual freedoms, more and more oppression, which forces businesses to leave, eventually the money becomes the only product of that system, inflation becomes the only export.

Keynes was not an economist, he was a charlatan. To economics Keynes is what an astrologist is to an astrophysicist.

Yes, you do need to understand what money is, no you will not build any understanding of it from this nonsensical piece of crap of a book, whose author should be ashamed of himself, either for this complete lack of understanding or for the politics he is playing by selling this piece of shit.

Re:What a bunch of hooye, total garbage (5, Interesting)

blue trane (110704) | about 8 months ago | (#46624123)

In the 19nth century, when prices were falling, the small farmers were being hurt because there wasn't enough inflation, so they kept owing more and more to the banks. So they formed the Greenback Party, ahead of its time, urging the US to get off the gold standard permanently (Lincoln had already printed over $400 million greenbacks during the Civil War, and species payment had been suspended, so the gold standard wasn't rigidly adhered to), and print more greenbacks. The small farmers understood that deflation benefited the big money holders more than the poor.

The problem with the gold standard is that it didn't permit elasticity. Elasticity in the money supply was needed during times of panic, or with seasonal variations in the demand for money. So farmers would withdraw money to get product to market in the fall, and the banks would pull it out of the stock market to pay them in gold, and the stock market would crash and there would be a panic. So the banks on their own evolved a clearinghouse system that functioned essentially like a central bank, creating credit, using paper money. Eventually the private sector agreed it was better for the government to run a centralized clearinghouse, rather than let J. P. Morgan run it, because Morgan had no obligation to serve the public interest, and could help his friends and hurt his enemies. So after Morgan ended the Panic of 1907, it was generally agreed upon by the private sector that the creation of the Fed was a better idea.

Inflation is used as a scare tactic by gold-mongers. One common story is: a suit cost $20 in 1920 (or whenever). But how much was a computer in 1920? $Infinity, because they didn't exist. So along with some inflation, came a huge increase in standard of living and technology. An increasing money supply fuels innovation. The Song Dynasty in China was the first to experiment with paper money, and saw great innovations as a consequence.

Re:What a bunch of hooye, total garbage (2)

khallow (566160) | about 8 months ago | (#46624285)

I'm sure I'll be crucified on a cross of gold for saying this, but the silver mine owners of Nevada were the Koch brothers of that time and the the Greenbacks were their astroturf organization.

There's little reason to care about modest inflation or deflation. I would say that people tend to be more considerate of the future in a mild deflation situation since time value of money is higher. All those farmers were going out of business not because there wasn't enough inflation, but because they weren't productive enough. That's why over the past century, US farmers went from over a third of the workforce to around 2%.

So the banks on their own evolved a clearinghouse system that functioned essentially like a central bank, creating credit, using paper money. Eventually the private sector agreed it was better for the government to run a centralized clearinghouse, rather than let J. P. Morgan run it, because Morgan had no obligation to serve the public interest, and could help his friends and hurt his enemies.

The banks would have evolved additional clearinghouses and not just for this reason.

Re:What a bunch of hooye, total garbage (4, Insightful)

Animats (122034) | about 8 months ago | (#46624603)

I'm sure I'll be crucified on a cross of gold for saying this, but the silver mine owners of Nevada were the Koch brothers of that time...

Somebody knows a little financial history. Early thinking about inflation involved "the free and unlimited coinage of silver". Look up the "free silver" movement.

Understanding the implications and biases of the financial system is very important. For example, introducing money into the system via the Fed is a a bias toward the banking system. Introducing it through infrastructure spending (which Japan does) is a bias toward the construction industry. Introducing it by financing export oriented industries (as China does) is a bias toward manufacturing industries.This is a political policy choice, and more than one option is possible.

Re:What a bunch of hooye, total garbage (0)

Jane Q. Public (1010737) | about 8 months ago | (#46624403)

"In the 19nth century, when prices were falling, the small farmers were being hurt because there wasn't enough inflation, so they kept owing more and more to the banks."

The prices were falling because production was expanding. This is called "supply and demand", and that's the way free markets are supposed to work.

"The problem with the gold standard is that it didn't permit elasticity."

The "elasticity" you refer to is the ability of government to print money it doesn't have and didn't earn or tax. This was the direct cause of both the cancellation of the internal gold standard in 1934 and Nixon's axing of the Bretton-Woods system in 1971.

We can see what effect those two decisions had [postimg.org] . It's all due to government wanting (and spending) more than it can afford. And it's hurt everybody. (Except, of course, those who actually benefit from inflation: government, banks, and Wall Street. Everybody else suffers.)

The "elasticity" problem wasn't due to wartime and other "emergencies"... it was due to the government spending too much money, and its perceived need to get its hands on more. As you can see from the linked chart, until that happened inflation was not necessary (except for small blips around wartime, as in the labeled boxes... and it ALWAYS went back to normal afterward, until government changed all that).

Just as Alan Greenspan, a man with whom I often disagree, wrote in 1966:

"Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process."

Re:What a bunch of hooye, total garbage (1)

blue trane (110704) | about 8 months ago | (#46625425)

Elasticity in the money supply is essential, and was recognized as such by the private sector. Panics resulted from money being taken out of the stock market to supply farmers with their deposits on a seasonal basis.

"that's the way free markets are supposed to work."

The free market doesn't care about the General Welfare or the public interest. Government does.

Re:What a bunch of hooye, total garbage (1)

minstrelmike (1602771) | about 8 months ago | (#46626087)

The supply of money is completely independent of the economics of trading.
If a cow is worth 4 goats, changing the monetary price of a cow to 3 dollars or 300,000 dollars or 25 bazillion lira changes nothing about the trading situation. A goat is still worth one-fourth of a cow. If cows die off and become scarcer and more valuable, then they might end up being worth 10 goats but notice that is COMPLETELY INDEPENDENT of the "value" of our money.

Money is merely a tracking device. You can track items using pencils or pens or spreadsheets, but the stuff being tracked doesn't change regardless of how you wish to track it.

Re:What a bunch of hooye, total garbage (1)

jenningsthecat (1525947) | about 8 months ago | (#46627927)

The supply of money is completely independent of the economics of trading.

If a cow is worth 4 goats, changing the monetary price of a cow to 3 dollars or 300,000 dollars or 25 bazillion lira changes nothing about the trading situation. A goat is still worth one-fourth of a cow. If cows die off and become scarcer and more valuable, then they might end up being worth 10 goats but notice that is COMPLETELY INDEPENDENT of the "value" of our money.

Money is merely a tracking device.

Money is also a storage device. If I trade my cow for 4 goats today when I could have gotten 5 goats for it next week, I've lost out. But if I trade my cow for money today and hold the money, then I can buy 4 goats next week, have money left over to buy something else, and have the savings that come from not having had to feed and care for the cow for a week. Of course it could also go the other way - I could lose on the transaction. And this is how stock markets are supposed to work, for better or worse.

But that storage medium makes room for all kinds of middle men, and ultimately gives rise to all sorts of ways to game the system. And because so much money is paid to people who have added little or no value to the system, or who in fact have taken value out of the sytem, a large percentage of 'legal' tender might as well be counterfeit.

Money makes assets and liabilities more fluid, more portable, and easier to hide. It introduces both efficiencies and inefficiencies, and it causes different market sectors to be much more interdependent on each other than they otherwise would. So, no, money is not "merely a tracking device".

Re:What a bunch of hooye, total garbage (2)

Marc D Hall (3600315) | about 8 months ago | (#46630231)

The supply of money is completely independent of the economics of trading.

So in the real world, where real things happen, this isn't near true. Money is created when banks issue loans. Banks issue loans based on market forces and do so without government permission and do so whether they have reserves or not. In fact, in reality anyone can create money, and people do every time they issue an IOU, the difference is whether a third party would accept them in exchange for things. Saying money is independent of trading is like saying debt is independent of trading: nonsense.

Re:What a bunch of hooye, total garbage (1)

TranquilVoid (2444228) | about 8 months ago | (#46636097)

Money is merely a tracking device

The question is, what is it tracking? Money has intrinsic value because it is useful, so this has the possibility to distort the 4 goats = 1 cow equation. There's also the problem that bartering can occur. Maybe this circumvents the tracking, but I think of money as an IOU, so you could say it tracks debt (which doesn't change when bartering happens).

Re:What a bunch of hooye, total garbage (1)

Jane Q. Public (1010737) | about 8 months ago | (#46626399)

"Elasticity in the money supply is essential, and was recognized as such by the private sector. "

Bullshit. Look at that chart again. "Elasticity" was never essential until the government MADE IT essential by spending more money than it had gold to back it. You're claiming that the government's "solution" is necessary because of a problem the government created in the first place. That's like saying amputating your arm is good for you and "essential" to the health of your arm because the cut I made in it with a machete last week has become infected.

"The free market doesn't care about the General Welfare or the public interest. Government does."

Hahahaha! That's a nice idea. Too bad it's so easy to prove that it isn't so. Or rather... you may be right, it might actually "care", but its intervention has demonstrably done far more harm than good.

Thanks, but no matter how much it "cares", when the solution is worse than the problem, I'd rather do without. Government intervention in the economy has caused so many problems (the 2008 debacle for just the most recent big example), that I really don't give a damn how much it cares. Income inequality, by the way, has gone up in direct proportion to government intervention.

When are people going to realize that it isn't the good intention that matters, it's the actual result?

Re:What a bunch of hooye, total garbage (1)

u38cg (607297) | about 8 months ago | (#46625483)

Oh lordy. So far off the map you're not even wrong.

Re:What a bunch of hooye, total garbage (1)

AthanasiusKircher (1333179) | about 8 months ago | (#46625579)

We can see what effect those two decisions had.

The graph you've linked to is nice and all, but it would be better if it adopted a logarithmic scale when the inflationary period started. After all, the Fed's policy since the Great Depression has been to target a particular range of inflation per year, which will result in an exponential curve. Trying to do a linear fit to a process that was targeted to be exponential just ends up making the graph misleading and less useful to measure the effects of the Fed's policy.

It's all due to government wanting (and spending) more than it can afford. And it's hurt everybody. (Except, of course, those who actually benefit from inflation: government, banks, and Wall Street. Everybody else suffers.)

It hasn't hurt me, and I'm not in the 1%, nor do I own a bank or a Wall Street firm or run the government. Of course, I don't bury my money under my mattress or in my backyard, either. I invest it. I also buy things with it, including taking out, for example, an affordable mortgage at one time -- and inflation greatly benefitted me there by making my loan principal decrease over time.

The people whom inflation hurts are those on fixed income and people who prefer to hide their money somewhere rather than using it or investing it. However, it helps us all when rich people don't want to keep their money locked in a giant money bin for them to swim around in it, but instead put it out into the world in investments. A slow, small rate of inflation encourages them to do this.

You can argue with the Fed's targeted inflation policy, if you want, but it coexisted with the gold standard for several decades. Gold doesn't and didn't prevent what you think it does. And it also introduces other problems, which is the reason just about all modern economies dropped it.

The "elasticity" you refer to is the ability of government to print money it doesn't have and didn't earn or tax.

Meh. This is a typical lack of understanding about the origin of money and currency. It seems the book that is reviewed here actually might explain something to you, given that it discusses the importance of systems of credit and tokens in many early currency systems. Sovereign nations have operated using debt for important political and economic functions since the dawn of civilization. It was not invented in 1913 or 1934 or 1971.

Re:What a bunch of hooye, total garbage (1)

Jane Q. Public (1010737) | about 8 months ago | (#46626565)

"The graph you've linked to is nice and all, but it would be better if it adopted a logarithmic scale when the inflationary period started. After all, the Fed's policy since the Great Depression has been to target a particular range of inflation per year, which will result in an exponential curve. Trying to do a linear fit to a process that was targeted to be exponential just ends up making the graph misleading and less useful to measure the effects of the Fed's policy."

Just no. The intended effect might be exponential, but the actual effect as shown is in linear dollars, because the actual effect on costs is not logarithmic, it's linear. Where did you study information presentation? You're suggesting I use a misleading measure of actual results, simply because of the intent of the policy? That's crazy.

As someone else in this thread has already pointed out: prices are relative to other prices in trade. That's how they're measured. This graph is an accurate representation of what cost of goods are today compared to past times, in term of trade values.

"The people whom inflation hurts are those on fixed income and people who prefer to hide their money somewhere rather than using it or investing it."

Nonsense. Inflation hurts everybody who saves. (When interest is lower than inflation, as it is now, money in the bank loses real value.) And it is the same with any other interest-bearing investment. When inflation is high, it directly affects what the real return is on your investment. 10% annual return with 5% annual inflation gives you an actual return of only 5%. It's that simple. And 2% interest from your savings account loses money when inflation is over 2% (as it consistently has been for years).

The fact that inflation harms savings is simple elementary-school-level math. And since the real health of an economy is measured largely by production capacity + savings, any harm to savings is relative harm to the economy.

"Meh. This is a typical lack of understanding about the origin of money and currency. "

Bullshit. It's called "history". Apparently I've studied the history of our economy, and you haven't.

The Hoover and FDR governments had spent more money (and in the case of FDR, planned to spend even more) than they had gold to back. The elimination of the internal gold standard was a direct result. The same with Johnson and Nixon. Other countries were calling for the U.S. to make good on its debt, and because of the Bretton-Woods system, that debt was still tied to gold. But the U.S. didn't have that gold because the government had already spent the money. Nixon axed Bretton-Woods as a direct result of that government debt. And, just for giggles, it should be noted that contrary to Obama's claims about default, in effect Nixon defaulted on U.S. debt in the process.

You can talk about your theory all you want, man, but it doesn't trump history. Reality prevails over ideology.

Re:What a bunch of hooye, total garbage (1)

Marc D Hall (3600315) | about 8 months ago | (#46639409)

The fact that inflation harms savings is simple elementary-school-level math. And since the real health of an economy is measured largely by production capacity + savings, any harm to savings is relative harm to the economy.

Savings are government deficit. For the non-government sector to save there has to be a surplus. For the non government sector to have a surplus the public sector must run a deficit. Every dollar in existence was issued through a deficit. Money is created out of nothing because that's the only way it can be created, but the government is almost always the last step in the process. And the obsession with inflation is pretty weird. Eco-metrics don't suffer. Numbers don't feel pain or starve to death. A real threat to sentient beings is from things like unemployment, social immobility, lack of education or healthcare. These are real social problems with real effects that are for more of a threat than the inflation boogy-man. The government issues currency mostly IN RESPONSE TO the non-government sector issuing debt. That debt HAS TO BE issued in order to fund savings and investment, which HAS TO happen in order for new jobs to be funded. Refusing simply stops new employment from being funded. These real social problems cause the economy to become deficient, reducing the usefulness of the economies sovereign currency, causing the government, when it HAS TO issue new currency to issue more and more as a simple reflection of the failing value of the currency caused by real social problems. The US can never be forced to default on a debt denominated in dollars. It just isn't possible. It can't even be forced to pay interest to foreign holders of debt. Governments pay interest to purely control interest rates. And dollars can only be spent in the US, so all add to aggregate demand for US products. If the debt is denominated in gold, it can default if it can't get enough gold.

Re:What a bunch of hooye, total garbage (1)

Ralph Wiggam (22354) | about 8 months ago | (#46625585)

[quote] It's all due to government wanting (and spending) more than it can afford. And it's hurt everybody.[/quote]

The voting population of the United States overwhelmingly wants their government to spend more than it collects and the government they elect reflects that. Everyone likes the idea of cutting spending and then cutting taxes. But when asked what spending to cut- young people want to cut the programs used by old people, old people want to cut programs used by young people, rural voters want to cut programs that help city dwellers, urbanites want to cut farm subsidies...and on and on. Raising taxes in any significant way has become completely taboo. Rather than alienating a huge block of voters, politicians have to maintain the status quo of massive deficit spending in order to get elected.

And no, it doesn't hurt everyone. It helps that massive percentage of Americans that receive benefits from the government. There are a lot of government benefits besides a check on the first of the month.

Re:What a bunch of hooye, total garbage (1)

Jane Q. Public (1010737) | about 8 months ago | (#46626599)

" It helps that massive percentage of Americans that receive benefits from the government..."

... at the expense of a healthy productive economy.

There, fixed that for you.

Government handouts are not production. Government does not produce wealth, production does. Government handouts (according to some rather famous studies) cost about $2 in production for every $1 in handouts.

If you want to ruin the economy, that's the way to go. Just ask Greece and Spain [investing.com] for example.

Re:What a bunch of hooye, total garbage (1)

Smauler (915644) | about 8 months ago | (#46627641)

Government handouts are massively productive if they help someone who has just been made redundant get back into work. That's kind of the point of government, in my opinion, to help and protect those at shitty parts of their life.

Stuff like child benefit is a different matter, and annoys me (in the UK, you've got to be rich to not qualify for child benefits, I think they should go to the poor only). Also, taxing and giving benefits to one person at the same time is counterproductive... getting rid of taxes for the poor will go a long way to ending benefit culture.

Re:What a bunch of hooye, total garbage (1)

Jane Q. Public (1010737) | about 8 months ago | (#46627799)

"Government handouts are massively productive if they help someone who has just been made redundant get back into work."

You mean "could be", not "are", because it isn't happening. At least in the U.S.

More handouts than ever before, yet economic recovery from the government-caused 2008 disaster has been weak and relatively "jobless".

I wasn't joking: income inequality has gone UP in direct proportion to government "intervention" supposedly intended to help poor people.

You can't pay attention to just the intentions, man. It's the results that matter. And even if we assume all that intervention was well-intended, the results speak for themselves.

Part of the difference here could be that you're (apparently) not from the U.S. But let me tell you: in this country it hasn't worked, doesn't work, and isn't going to work.

Re:What a bunch of hooye, total garbage (1)

Smauler (915644) | about 8 months ago | (#46642127)

You mean "could be", not "are", because it isn't happening. At least in the U.S.

No, I meant "are". There's an "if" in the middle of the sentence.

Re:What a bunch of hooye, total garbage (1)

Shadowmist (57488) | about 8 months ago | (#46629337)

Government handouts are not production. Government does not produce wealth, production does. Government handouts (according to some rather famous studies) cost about $2 in production for every $1 in handouts. If you want to ruin the economy, that's the way to go. Just ask Greece and Spain [investing.com] for example.

We're not Greece, our situation isn't Greece, and Greece's problems don't point to a solution for any other country on the planet. Treating this country as if it were Greece would be a sure sign to ruin. .

American workers have grown in productivity with advances in technology, but their share of the wealth that they produce through their labor has been declining steadily since the early 70's. The problem has never been with the lack of wealth but it's distribution..

Re:What a bunch of hooye, total garbage (1)

Ralph Wiggam (22354) | about 8 months ago | (#46631237)

... at the expense of a healthy productive economy.
 

An economy with a $15.6T GDP a 2.6% growth rate, and low inflation isn't healthy or productive?

When you view all economic data through an ideological lens, it doesn't give you insight. It blinds you.

Re:What a bunch of hooye, total garbage (1)

Anonymous Coward | about 8 months ago | (#46624361)

There's just not enough gold for a gold standard. We have mined 150000 tons of gold in total. There are more than 6 billions people. The mean amount of gold per person would be 25 gram of pure gold per person without counting governments and corporations. Now the standard reply is just "gold would just become more valuable until there's enough gold". But that'll only happen to a point. And the deficit in gold is too massive. Unless the government uses guns to enforce a minimal value for gold. Would you accept 25g (average total lifetime saving) of gold for your house? I wouldn't and only a fool would: that's five gold rings. I'd want 5 to 10kg.

Also, yes the current system sucks, but going back to the gold standard is impossible. Besides inflation can happen with gold too. All the gold Spain brought back from the new world also caused a lot of economic problems.

Re:What a bunch of hooye, total garbage (1, Interesting)

meustrus (1588597) | about 8 months ago | (#46625113)

*sigh* no mod points today. I may disagree with the basis of roman_mir's assertions, but I don't think the post should be voted down. It's not nasty; the closest thing to vitriol is calling the book a "piece of shit" (which reads more like a thesis statement than an ad hominem). I know that a lot of fucking crazy Republicans (or more likely trolls masquerading as such) have been posting some pretty steamy piles of shit around here lately, but this post definitely is not one of them.

Re:What a bunch of hooye, total garbage (1, Interesting)

meustrus (1588597) | about 8 months ago | (#46625341)

You say that governments print money and control the money because government wants more of it. In America, my friend, the government is the people. In the words of the great Republican Abraham Lincoln, "government of the people, by the people, for the people". Our government is not an entity of its own, clawing away for every advantage. Our government is a body of leaders representing all people living within our nation: a Republic.

Therefore when one thinks of the ways that our government takes away our wealth, takes away our freedoms, takes away our dignity, we must not think of it as a great leviathan, secure in itself by virtue of its ability to lay waste to the lesser people. It is not some abstract deity that takes from us. It is ourselves. It is the political circus we have all become part of. And whether or not all the elephants recognize them, every circus has ringleaders.

Who benefits from all this taking? Who benefits from the government printing money while still taxing it from the people who earned it? Who really holds the power that is being sucked into Congress? You're right about one thing: it's not us. But I guarantee you that if the government itself reaped the benefits, we would not have a deficit in the trillions.

Re:What a bunch of hooye, total garbage (2, Interesting)

rev0lt (1950662) | about 8 months ago | (#46625365)

however real money

There is no real money. Its a trust system. You have only perception of value.

as in money that is not fiat

There is no real money. Its a trust system. You have only perception of value.

namely gold stood in the way of governments

Gold has no intrinsic value by itself. Its a rare metal. Its not money. Its perceived value is not even stable across time. Again, its a rare metal in a trust system. Gold has value for you because you can exchange it for stuff you actually need. Other people accept it exactly because of the same motive. Oddly enough, if gold was rated at production cost, would probably be way cheaper today than it was 150 years ago (you know, before combustion engines and dynamite and TNT). Why people like gold so much? Its a noble metal, shiny and it doesn't oxidate. What's not to like?

In any case, governments have no legitimate role in money manipulation

You mean, the same governments that actually LEGISLATE about what and how the currency system works, and how, how much and how far transactions will be taxed?

Keynes was not an economist, he was a charlatan

It may be the case, but because even a 4th grader can dismantle your arguments, I'd take your opinion with a grain of salt.

you do need to understand what money is

Apparently you feel lonely. I'd suggest you'd start with the basics.

US Law (1)

rsilvergun (571051) | about 8 months ago | (#46627181)

it's printed right on the money: "This note is legal tender for all debts, public and private". You're legally required to accept US Currency. It's up to you how much, but if you have a debt you don't get to say no. You can require that the currency be in certain denominations (e.g. you can decline a jar full of 10,000 pennies) but that's about it.

If you say no and it's enough money to go to court over than sooner or later a judge is going to make you take the money. If you tell a judge no he throws you in prison for contempt of court.

I suppose you could overthrow the US Gov't, but other than that our money is pretty sound.

Oh, gold's intrinsic value is that rich people like to wear it. It's one of the few metals that won't leave marks on your skin. Since rich people are, by definition, the most important players in any economy they sorta set the value. It's been a long time since we were the sort of hunter-gathers that couldn't see the intrinsic value of gold...

Re:US Law (1)

BitZtream (692029) | about 8 months ago | (#46627475)

Uhm, no, thats not what that means.

You can not legally require me to take cash for a doubt. If your debt to me is 14 pigs, then you owe me 14 pigs. Period.

The statement you're reading means the GOVERNMENT will back its value, for all debts, public or private, it does not mean you have to accept cash.

There are plenty of businesses who do not accept cash for their services or goods. All the examples of places who use their own currency for micro transactions such as xbox live (formerly, they recently stopped).

There is also the matter of businesses who refuse cash and accept only credit or check.

Re:US Law (1)

rev0lt (1950662) | about 8 months ago | (#46629027)

it's printed right on the money: "This note is legal tender for all debts, public and private". You're legally required to accept US Currency. It's up to you how much, but if you have a debt you don't get to say no. You can require that the currency be in certain denominations (e.g. you can decline a jar full of 10,000 pennies) but that's about it.

Someone already replied to this. And, as you may have guessed by now, the US didn't invent the concept of money (or markets, for what it's worth).

If you say no and it's enough money to go to court over than sooner or later a judge is going to make you take the money. If you tell a judge no he throws you in prison for contempt of court.

This is just silly. A judge CANNOT FORCE anyone to do anything. The judge has no power. The institution the judge represents is a different matter altogether. But, as an example, I can easily create a pizza restaurant that works exclusively via subscription and is payed via electronic transaction. AFAIK there is no law against this.

Oh, gold's intrinsic value is that rich people like to wear it.

You don't mean rich, you mean wealthy. And if they're wealthy, you probably already have gold, or some spare stuff you can trade from/to gold - thats WHY they're wealthy. And part of it is, people like yourself see a demand for gold (because rich people want it...), so will gladly accept it as currency, thus giving it its intrinsic value. You would work for gold :)

Legal Tender (0)

Anonymous Coward | about 8 months ago | (#46630323)

Oddly enough though, when I went to the DMV to renew my drivers license. and again when I went to the court house to renew my conceal carry permit, they would not accept legal tender, and required a check, credit card, or money order....

Re:What a bunch of hooye, total garbage (1)

plopez (54068) | about 8 months ago | (#46625683)

Why is gold valuable? WHy should we use it for currency? Clean water is much more valuable, you can't live without it. You can't eat gold.
Gold as a currency is just another currency, it is valuable because people think it is valuable. Gold bugs are a bizarre cult who do not understand economics at all.

Re:What a bunch of hooye, total garbage (0)

BitZtream (692029) | about 8 months ago | (#46627491)

Water is not scares.

Gold has unique properties that in and of themselves are valuable, and to top it off, its rare.

Are you really that stupid?

Re:What a bunch of hooye, total garbage (0)

Anonymous Coward | about 8 months ago | (#46627599)

Plutonium is even scarcer so we should use plutonium as money.

Re:What a bunch of hooye, total garbage (1)

guacamole (24270) | about 8 months ago | (#46626131)

Keynes was an economist, and one of the best ever. Unlike you. And most of your assertions are garbage.

Re:What a bunch of hooye, total garbage (1)

St.Creed (853824) | about 8 months ago | (#46626299)

Governments do have a role in money systems. The Dutch Central Bank is celebrating its 200th anniversary this year, and it's interesting to note that the first 30 years were spent trying to establish faith in paper money. Once this had happened it opened the way for some much needed liquidity in the economy and a lot more economic activity happened as a result of that.

In the 11th century the Vikings raided the monasteries. This provided a much-needed economic boost once the gold came into circulation again. With paper money you NEVER have an end to circulation: you can always print more as needed. So it is very useful if you want to have some influence over the economy to have a currency that you can control. And this has very little to do with "governments being evuhl" and a lot with governments being the "management board of capitalism".

Crises, finally, are not caused by misallocation of funds, but by a lack of return on investment in every sector. *This* causes misallocation of funds as capitalists (sorry: investors) then become desperate for ROI and start to invest in tulips, bad loans and Zynga shares. Eventually that collapses, leaving everyone with worthless stuff, companies go bankrupt and the system is rationalized once again. ROI is restored by companies that are able to buy out their competitors for an apple and an egg, and things start anew.

I do have disagreements with the author - money and contracts are not the same, for instance, and while the choice of distribution of money is political most countries have a central bank that does this, usually outside direct political control - invalidating at least part of the thesis as I see it. But I doubt its complete nonsense.

Re:What a bunch of hooye, total garbage (0)

Anonymous Coward | about 8 months ago | (#46631787)

there you go, again with your fiat currency mantra. can you point to one successful non-fiat currency in use today? more than once people have asked you that question, and not once have you offered one. if nobody can make a non-fiat currency work in the long term then why will your religious movement do a better job than every government that has ever existed?

Re:What a bunch of hooye, total garbage (1)

Pope (17780) | about 8 months ago | (#46685467)

real money, namely gold

Hahahahahaha! Good ol' typical goldbug bullshit.

Author's and submitter's agenda (0)

Anonymous Coward | about 8 months ago | (#46624003)

The author is a professional economist, bond trader, and analyst with the George Soros Institute for Economic Thinking...The book is a very worthwhile look at the concept of money as a (implicit, at least) political and social determinant and is quite topical as alternative monetary systems (mostly digitalized) like Bit Coin and competitors are garnering much attention. While the book does not address those new developments, it's clear that the digitalized coin systems imply acceptance of the orthodox understanding of money as a commodity.

So is this:

A) yet another Soros funded attack on Republicans (probably, but it's unusual in that the author doesn't attempt to conceal that connection as is usually done in Soros' political activity).

B) yet another bit coin thread

C) Both A and B

(obviously the answer is C)

Re:Author's and submitter's agenda (1)

minstrelmike (1602771) | about 8 months ago | (#46625993)

Money is not a commodity. That was actually the basis for the first revolt against the new American government of George Washington's.
They implemented a tax on corn liquor but jars of corn liquor were actually trade items--dollar bills if you will--because they didn't go bad
America essentially taxed you on the bills you used to pay. That's complete different than taxing your income or your net worth.

For anyone who thinks monetary policy matters globally or that the gold standard or bitcoin have any sort of control over economics, they haven't actually thought thru econ from basic principles.It is not part of any economics class whatsoever so don't be shocked.

1. First assume the total worth of everything in the world is 5 trillion dollars or be as accurate as you wish.
2. Next, assume the total worth of everything in the world is just 5 dollars.
3. Now explain how the trading situation between different resources is modified simply because we change our idea of what money itself is worth. Eggs aren't worth any different in relation to bacon and gasoline than they were before or after the monetary change.

Re:Author's and submitter's agenda (1)

Marc D Hall (3600315) | about 8 months ago | (#46631721)

1. First assume the total worth of everything in the world is 5 trillion dollars or be as accurate as you wish. 2. Next, assume the total worth of everything in the world is just 5 dollars.

This is an interesting thought experiment but it has no connection with reality. Money isn't created or issued by someone deciding that everything is worth whatever. It's like saying "imagine all metres were an inch long". That won't make everyone think it.

"George Soros Institute for Economic Thinking" (-1, Troll)

Anonymous Coward | about 8 months ago | (#46624009)

And there's where I stopped reading.

Re:"George Soros Institute for Economic Thinking" (4, Insightful)

yelvington (8169) | about 8 months ago | (#46624177)

And there's where I stopped reading.

And also where you stopped thinking.

Re:"George Soros Institute for Economic Thinking" (1)

GerryGilmore (663905) | about 8 months ago | (#46625085)

Since you're already modded to +5 I won't bother, but - Kudos for not being one of the mindless cumwads who automatically reject anything that anyone else says just because they are associated with ${political party or person's name who we've been conditioned to hate by propagandists}. Without critical thinking, there is no thinking possible at all.

Money is just bits. (0)

Anonymous Coward | about 8 months ago | (#46624021)

Bits and bytes.

Re:Money is just bits. (1)

GTRacer (234395) | about 8 months ago | (#46624447)

Two bits, four bits, six bits, a dollar! Hey, they're right! Think I'll get a bite to eat...

Wait a second... (0)

Anonymous Coward | about 8 months ago | (#46624029)

Mr. Martin starts his critique of the orthodox view of money by explaining how the early Pacific island Yap culture relied upon the symbolism of large stones (known as "fei.") These stones were kept by individuals as value storage devices, even though they had few of the characteristics which typically would be present in money systems–tokens of some sort small enough to carry and to hide, a consistent look, ease of exchange, a readily determinable unit value, etc.

So what's the readily determinable unit value of gold? If I have a gram, can I trade it for a cow the world over? Or will it net me one cow here, three cows there, no cows somewhere else? What about over time - does that value of gold vary?

Re:Wait a second... (1)

tomhath (637240) | about 8 months ago | (#46624441)

Just look it up [goldprice.org]

Re:Wait a second... (0)

Anonymous Coward | about 8 months ago | (#46624977)

Doesn't have the cost of cows the world over.

But it does seem that the unit value of gold does fluctuate.

Money as a ticketing system (5, Interesting)

blue trane (110704) | about 8 months ago | (#46624183)

I like C. H. Douglas's Social credit [wikipedia.org] definition of money:

According to economists, money is a medium of exchange. Douglas argued that this may have once been the case when the majority of wealth was produced by individuals who subsequently exchanged it with each other. But in modern economies, division of labour splits production into multiple processes, and wealth is produced by people working in association with each other. For instance, an automobile worker does not produce any wealth (i.e., the automobile) by himself, but only in conjunction with other auto workers, the producers of roads, gasoline, insurance, etc. In this view, wealth is a pool upon which people can draw, and money becomes a ticketing system. The efficiency gained by individuals cooperating in the productive process was coined by Douglas as the “unearned increment of association” – historic accumulations of which constitute what Douglas called the cultural heritage. The means of drawing upon this pool is money distributed by the banking system.

Douglas believed that money should not be regarded as a commodity but rather as a ticket, a means of distribution of production.

Re:Money as a ticketing system (1)

plopez (54068) | about 8 months ago | (#46625715)

I see money as an exchange, energy flows in one direction and money in the opposite. I expend energy at work so I get money in return. People expend money for me and I give them money in exchange, etc.

Re:Money as a ticketing system (1)

Kjella (173770) | about 8 months ago | (#46626601)

So what did the third oarsman on the left of the trading vessel accomplish by himself? Nothing new about taking a share in a great project led by a lord or rich merchant. And there's nothing new about making products that go into value chains like from wool you spin thread, from threat you weave cloth, from cloth you tailor clothes. With eBay and big data we could probably do better without money now than ever before, simply by finding closed loops where person A wants what B has, B wants what C has and C wants what A has. Particularly if we set up timed contracts, like I give you ten sacks of flour now and I get a fresh bread a week for a year. It would still be extremely inconvenient though.

So many people here seem absurdly obsessed with what money is, when to the average wage earner it's just a convenient way to convert work into shelter, food, clothes, transport, entertainment and so on. That's what 90% use it for and 9 of the last 10% just want a stable value so they don't have to become investors or speculators in real world goods while they save up for their next big purchase. Yes, like gold. Money exists as a convenience because it is universally accepted, easily divided, instantly transferable, easy to transport and so on. It exists because it's a better deal than instantly trading my pay check for gold and trading it back one milligram at a time when I want a soda.

My investments are of course valued using currency but if the dollar crashes while the investment object stays the same it just means it'll be worth more expressed in dollars, which is exactly the opposite of what happens if you're holding dollars. And if the prices all move together then it's rather irrelevant, if gold prices and house prices both double it matters little when I want to sell my gold to buy a house. I guess the rest matters if you got billions to move and millions to earn, but for most people thousands to move and soda money to earn isn't worth the bother.

Dumb Title (0)

Anonymous Coward | about 8 months ago | (#46624329)

Wouldn't all biographies of money be unauthorized? In what way would one acquire the "authorized" biography of money.

Re:Dumb Title (0)

Anonymous Coward | about 8 months ago | (#46629239)

You have to buy it of course

Money: Two Kinds (3, Interesting)

smugfunt (8972) | about 8 months ago | (#46624793)

There are (at least) two kinds of money, and they work differently.

Commodity money is based on some thing which is in limited supply. We don't use this anymore.

Fiat money is created by the Government out of nothing. It gets it into circulation by Government spending. It gets it out of circulation by taxing. People use it because they have to pay taxes in it. If the total amount of wealth is increasing the Government must run a deficit or there will be deflation. If it runs a surplus there will be inflation and recession.

See MMT [wikipedia.org] for more info.

Part of our economic problems come from people (including policy makers) being stuck in commodity money mind-sets when we are using a different kind of money entirely. Currently there is a deficit and a recession because the deficit isn't big enough and there is too much tax! There are structural reasons too, like the Government spending on the wrong things.

Re:Money: Two Kinds (1)

meburke (736645) | about 8 months ago | (#46625977)

Actually, there are many kinds of money if you consider money as a "thing." However, money is a "measurement" used to help determine if trading is equitable for all parties.

Although this book is interesting, I would recommend Ludwig Von Mises, "The theory of Money and Credit" https://mises.org/books/Theory... [mises.org]
for a more well-rounded look at what money actually "is".

Question Suppose you needed a board 3' long for a bookshelf, and the government made the "inch" smaller between the time you measured and the time you decided to purchase the lumber; Would you settle for a shorter board or would you expend more resources for a board that would fit? (This is the problem with fiat money.)

Re:Money: Two Kinds (2)

smugfunt (8972) | about 8 months ago | (#46626413)

Commodity money can also change in value when the supply of (or demand for) the commodity changes. This can be naturally arbitrary, or due to market manipulation by large holders. If the commodity cannot be produced fast enough to match wealth creation there will be deflation. The gold standard era was not devoid of economic crises. The tally-stick era was much more stable, probably due to the broader range of commodities it employed and the lack of fractional reserve shenanigans.

Fiat money should be adjusted to keep prices stable, without worrying about an underlying thing. This does mean it is open to adjustment for other reasons. Good governance is the answer to that. How to get it is left as an exercise for the reader :-)

Not read von Mises directly, but I know he is of the Austrian School. Anyone who is hostile to the very idea of government will dislike fiat money. Personally, I prefer to be ruled by an accountable government than by a private bank, or worse.

Re:Money: Two Kinds (1)

Anonymous Coward | about 8 months ago | (#46629967)

"The theory of Money and Credit" is, like a lot of economics texts, a work of pure fantasy without any reference to real life designed to retrofit a bunch of presupposed conclusions. Every example of human culture we have ever studied, including the ones we live in, completely discredit everything those texts imagine is or was true.

There are lots of examples of "money things", but they are all tokens representing a unit measure of debt. Or there are commodities.

"Commodity money" is (according to standard economic theory) just like the worlds tallest person: they are a person like all other people, they just happen to be the tallest. Money in this model is just a commodity that is the 'moneyest'. This doesn't describe money in the real world. Gold coins circulated while central authorities demanded them for tax. And while they did the coins where worth more than their weight in gold (something that is literally impossible if most economists are right about money.) Then when the central authorities died the gold went out of circulation and went back to commodity value. Even when they were in circulation there's no evidence that anywhere near all economic activity used metal coins. Credit systems go back as far as history, long pre-dating coinage.

The reason that economic theory requires money to be a commodity is that those economists can't integrate debt into their systems without doing away to assumptions they don't want to lose. They need economies to be barter economies for their religious texts to hold. So no banks, debt, no model of money (money is like air, necessary but irrelevant to the model). Debt has to be irrelevant because transferring spending power between people makes no difference (when you assume, as economists do, that all people are identical). The axiom that all agents are the same agent is central to all mainstream economics from so called Keynesian to Austrian. You'll rarely hear them say that though because it's patently absurd.

Economics is mostly a religion. You start with want you want to conclude and write stories that make the world fit them. If other economists like the sound of your stories they get adopted and they give you one of their fake nobel prizes.

Gold is still here, and always will be (0)

Anonymous Coward | about 8 months ago | (#46630725)

Commodity money is based on some thing which is in limited supply. We don't use this anymore.

Yes we do, it's just that you're not supposed to pay any attention if you're part of the working class. The evidence?

* Governments, especially superpower governments, own physical gold, and lots of it. Lots and lots and lots of it. This isn't because they trust the fiat system; on the contrary, it is precisely becaue they don't trust the fiat system, even though they themselves are the primary administrators and beneficiaries of the fiat system. After all, if the gold has no purpose anymore, why in the world wouldn't they sell it?

* Governments deliberately mint and distribute their own official forms of gold (american eagles, canadian maple leafs, chinese pandas, etc), and most of these programs came after the abolishment of the gold standard! Why in the world would they do this, if fiat currency is here to stay and gold is merely a useless metal? Because the elite at the top of the pyramid understand gold. They know that in the event of a financial catastrophe, gold is the only ticket out. But what use is gold if you don't have a liquid market for it? That's where the official bullion coins come in. They leveraged the authority of government to create that market, so that individual elites will have a standard unit of gold and somebody to sell it to if the need arises. (In other words, individual elites will trade in the same gold market that other individuals trade in, rather than deal with the scrutiny of "big league gold" (400oz "good delivery" bars).

Note that I haven't given my opinion on fiat currency here. I'm just pointing out the reality of the system.

disagree with bells on (1)

johnwerneken (74428) | about 8 months ago | (#46624995)

The trust creates the money and the money must ENFORCE the trust, whether that starves all the poor or not. BALONEY!

Contracts (2)

sjames (1099) | about 8 months ago | (#46625115)

Contracts are torn up all the time when circumstances change. There is practically no case where a a party of a contract will be required to drive themselves to ruin to fulfill a contract.

The same is true of money IF YOU HAVE A LOT OF IT. If you don't have a lot of money, you're screwed.

Re:Money (2)

Roger Erickson (3599535) | about 8 months ago | (#46626895)

No discussion of modern money can proceed without referencing the following people? Marriner Eccles http://mikenormaneconomics.blo... [blogspot.com] Beardsley Ruml http://www.constitution.org/ta... [constitution.org] Abba Lerner http://en.wikipedia.org/wiki/F... [wikipedia.org] William Vickrey http://www.columbia.edu/dlc/wp... [columbia.edu] Wynne Godley http://www.levyinstitute.org/s... [levyinstitute.org] Warren Mosler http://moslereconomics.com/man... [moslereconomics.com] Randy Wray http://www.levyinstitute.org/p... [levyinstitute.org] Bill Mitchell http://bilbo.economicoutlook.n... [economicoutlook.net] and CH Douglas, already referenced in another comment

These types of ideas have been examined before... (1)

Anonymous Coward | about 8 months ago | (#46625597)

And I suspect they will continue to be.

In my opinion, the REAL issue with money stems from two things.
1. Detachment from actual worth. A lot of people harp on gold back and many other schemes but that's not what I'm talking about. In times like ours, where money truly is nothing more than a perception of value, it can be manipulated much like religious talismans have been manipulated throughout history.
2. Positive interest systems. Positive interest promotes hoarding and a overall m.o. of only contributing money when you are statistically likely to get more in return. In order for people to be remotely successful is such a structure, they must find ways to generate or guarantee economic growth. When that happens you being searching for anything and everything that can make you more money. Many of these things may not have tangible worth. See first point.

See Charles Eisenstein's "Sacred Economics" for more on this. Not to say I agree with everything he has to say, but he hits on some very major points.

Economics is a biological thing (1)

minstrelmike (1602771) | about 8 months ago | (#46625925)

Economics is based on biology. Lots of different organisms trade resources back and forth. In fact, if you don't trade and you can't find resources, you die.
Basic economics and it applies equally to protozoans, elm trees and human global civilization.

As far as money per se, that is an illusion or artifact of civilization. People who think credit or cash or the gold standard drives economics don't actually spend any time thinking about the concepts or limits. Consider--what is the total dollar value of everything in the world? Let's assume it is 500 trillion dollars.
Now assume it is only 5 dollars.
What actually changes about how people trade things or what things are traded for what other things? Nothing changes.
Money itself actually is just interpretation. It's a scorecard; not a driver.

Economics, according to Sowell is the how we value _scarce_ resources. That truly identifies most of the issues we have as a society. When clean air or water is plentiful, then there is no cost/value associated with it. When we pollute the water or air, now it becomes more valuable and as a society, we either say goodbye to clean air or figure out how to value it as an externality and pay for the use of it.

Still go nothing to do with money and everything to do with resource trading which is something all biological communities engage in.

Das Kapital (1)

mveloso (325617) | about 8 months ago | (#46626029)

Have you heard the good news about Das Kapital? I actually should re-read this, as it's one of the better treatises on money, capital, etc ever. Ignore that communist part if you want, since that part from what I remember was pitched as a logical conclusion but is more of a future prediction.

Wealth is electrons, Money is holes (1)

jd.schmidt (919212) | about 8 months ago | (#46626141)

Once upon a time, gold money may have been wealth in itself, but today that quaint method of business is long gone. Money, holes, facilitates the movement of wealth, but is not wealth itself. Frankly the last thing any rich person wants is a big pile of money sitting around doing nothing. To a large degree our fascination with money has caused us to lose sight of the wealth it really represents. Money today is just a measuring stick of wealth, and an elastic one at that. Had more people looked not at the loans, but at the real property and wealth it represented, the real-estate bubble could have been avoided. Indeed most bubbles could deflate if people better understood what they really had bought.

Courtesy of the Android Sisters (1)

Rollgunner (630808) | about 8 months ago | (#46626411)

Sisters : I will use two pieces of paper as an example. Can you see this?
Human : I see one piece of paper, the other's money.
Sisters : Two pieces of paper.
Human : What ?
Sisters : Here are two pieces of paper. Both the same size. Both just paper... Humans are obsessed with money.
Human : Not all humans; Just some of us... Most of us.
Sisters : One piece of paper is worth 500 solar credits, the other is worthless; Not even worth a solar centavo. Do you know why?
Human : Sure! One's a piece of money, the other's a piece of paper!
Sisters : They are both paper !
Human : Yeah... Right.
Sisters : One has been *blessed* by the treasury wizards, the other has not.
Human : That's it?
Sisters : That's it.

In the words of Jerry Dandridge " You have to *believe* for that to work"...

Re:Courtesy of the Android Sisters (1)

Marc D Hall (3600315) | about 8 months ago | (#46637153)

No.. you have to believe that 1) someone has a mandatory payment to make and 2) that they can make that payment in that currency. That's the difference between dollars or pounds or yen and pieces of paper (cloth actually I think).

Heinlein did it first (1)

VernonNemitz (581327) | about 8 months ago | (#46626429)

In his book "Stranger in a Strange Land", a human raised by Martians finds himself trying to understand the ways of Earthly humans. One day he groks the concept of "money". Good stuff!

Marx wrote about the nature.. (1)

blahplusplus (757119) | about 8 months ago | (#46627305)

... of money a long time ago. How money interacts with the law (concepts of property) is what's at issue. Money acts as a substitute for the earths energy and resources. The problem comes when you add rules to the game and add in exploitation, greed and the whole nine yards.

books (1)

TC Emre Şenoğlu (3601823) | about 8 months ago | (#46640881)

I am totally agree with you. Great post. Thanks and best regards... www.hediyealternatifi.com
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