[LMB] OT: Governor’s Orders

Zan Lynx zlynx at acm.org
Thu Nov 19 23:52:02 GMT 2020


On 11/19/20 12:04 PM, Harvey Fishman wrote:
> 
> But just what is "money"? Not specie, but money?

It's a promise, in my opinion.

With fiat currency issued by a government, the promise is that they will 
accept it as payment for taxes and other government debts.

With gold and other "hard" currencies it is at least pretty, and no one 
is making more of it. Or not much anyway. One BBC article says there is 
an estimated 171.3 Mg of gold. if you have one kg of gold, you have 
0.0006% of all the gold in the world.

With merchants it is a promise that this merchant at the least, and 
probably others will accept it in exchange for goods or services. If a 
rancher sells a steer to a butcher in exchange for money, the deal is 
clear that rancher should be able to use that money to buy an equivalent 
amount of prepared meat back, minus only what represents the work of the 
butcher.

Mostly other people take money because it represents actual value you 
created which someone else paid you for.

Somewhere in the chain of events where the farmer sold his wheat, paid 
for a new Lincoln, that car salesman bought a hamburger, the fast food 
place paid the employees and the employee paid you for your used Xbox, 
somewhere in there is something of value that you want. Like the wheat, 
which was baked into bread and sold, you can go buy that without having 
to go to the farmer for it.

If people start to break the promise of money the system stops working. 
But it is very difficult to do that because it is what people accept as 
payment themselves and everyone gets into the habit of it.

When the government starts hyperinflation they've broken the promise 
because they're printing money and using it to buy value without having 
created any value.

A little bit of extra money printed over time can be a good thing if the 
economy is expanding. There are more people creating value so there 
should be more dollar bills going around to pay for it. With hard 
currencies when you go from producing 100 chickens to 1,000 chickens the 
price of chicken drops by 10. Eventually you can't make gold or copper 
coins small enough to be useful.

-- 
                 Knowledge is Power -- Power Corrupts
                         Study Hard -- Be Evil


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