See?  This is one of those moronic thoughts* that I've been saying can be avoided by developing a more complete understanding of money.  I guess I shouldn't have been surprised.  Just prior, you said:


Derp.  You even quoted me explaining the opposite.

* Two moronic thoughts, actually.  If you didn't see the second one, ask yourself (or a dictionary) what a token is.

You keep responding with words that suggest that you've read what I wrote about abstracting away the specific who and what, but your brain appears to be winning what must be a mighty struggle to prevent itself from understanding the concept.

You also keep inexplicably imagining that I'm calling your theory wrong, when I'm not.  If someone says that car are transportation, do you also create endless, pointless paragraphs explaining how cars can't be transportation because you can prove that cars are assets?  Do you have equations showing how the price of cars vary with the demand to store transportation?

If you trade something for an IOU for one loaf of bread, you'll (maybe) get one loaf of bread back later.  If you get an IOU for "One dollar's worth of value", you'll (maybe) get "One dollar's worth of value" back later, whatever that is.

You may notice that an IOU for a purely abstract value functions, in practice, exactly like an asset.  You trade it for however much wealth you can get for it, from whoever you can find that wants it.

Inflation is caused by people abusing privileged positions that allows them to game the system by creating new IOUs without doing anything to earn them.  Deflation is caused by human progress (I think I explained this in detail earlier in the thread).  Neither really needs a theory of "what money is" to explain.  What makes you think otherwise?

I've been sitting out because reading dinofelis attempt to repeat himself to victory is extremely boring.  But ZephramC is asking a question based on flawed assumptions, and I feel it is worth addressing.  His scenario only makes sense under the extremely literal view espoused by (among others) dinofelis.  ZephramC, if you are less committed to this view than dinofelis is, I hope that this adds to your understanding:

In my view, once the peanuts start being used as money, they behave in a very debt-like manner.*  Before money, barter is the exchange of wealth for wealth.  Once money shows up, the same barter transaction is virtualized in time and space.  One party gives wealth in exchange for a token that they expect to be able to redeem for wealth later.  When they actually get around to redeeming it, the barter is completed.

One key to this system is the value of the money.  In this hypothetical, peanuts-used-as-money are much more valuable than peanuts-used-as-food.  This is a general result throughout history, by the way.  If you don't see the peanut as a token representing a claim on wealth** you have to resort to silly handwaving to explain this premium in value.  (Note that I said "explain", not "name".)

I'm not saying that all money is literal representations of debt, though some such representations can be (and are) used as money.  And I'm not saying that money isn't an asset.  I'm saying that the moneyness of money is the expectation that it can be traded for wealth, and that the essence of debt is that expectation on the holder's part, rather than the specificity on the borrower's part.

At the platonic ideal of money, people are just swapping abstract IOUs around.

Not that it matters, but what you describe in 1) could not possibly work without debt.  I don't believe it is possible for more than one couple/family to live together without some notion of debt.  Way back in history, debt existed long before money was invented, and money was actually invented not to facilitate trade, but to normalize debt.

* Yes, dinofelis, I'm aware that you disagree.  I don't care, and I certainly don't need you to repeat your narrow definition.

** Not a specific claim to a specific thing from a specific person, but a claim still.

There are reasons why voting is done in private, and why it is impossible to carry proof of a specific vote away.  Whatever one hopes to gain with "verifiable voting" isn't worth giving that up.

Paper ballots are a better solution all around.

You are looking at the trees, but you can't see the forest.

With a few pathological exceptions, if you ask people about money, they will tell you that they value it in terms of what they can get for it.  That is, for what useful goods and services they would have directly traded their goods and services for if money did not exist.

I get it that, to you, the medium is the only important part of this.  But there are times when viewing the exchange as the important part is more useful.  Additionally, I remain uninterested in accepting your strict definition of debt and your incomplete definition of money  Your arguments that grow from these roots show only your inability to see the bigger picture.

By the way, your notion of digital collectibles falls apart if you know how a bank works, particularly the checking system.  (Or, for that matter, Ripple.)  In the banking system, dollars are just entries in a database.  They are not finite, they are not immutable.  Paper dollars are just bearer checks used to facilitate adjusting those database records up and down.

Further, your understanding of bitcoin is weak.  Bitcoin has no such concept as "ownership", nor a concept of "exclusive".  Ownership is a social concept, but Bitcoins are traded by providing solutions to scripts.  Any valid solution will be accepted by the network, regardless of the wishes of "the owner".  These forums are full of stories from people who imagined themselves to be "owners" of bitcoins, but were wrong.  The bitcoin ledger is very abstract.

Heh.  I just quoted myself saying it like 3 times.  How was that not clear?

And in my opinion, I'm not claiming that red is blue.  I'm claiming that the distinction between bright grey and white isn't so sharp.  And at risk of breaking the color analogy, that people who are able to see bright grey and white as being similar rather than different have a distinct advantage in thinking clearly about certain subjects.


Amusingly enough, that is exactly how bitcoin works.  Yap stones too, basically.

Bitcoin is a very good approximation of the platonic ideal of "money".  It is such a good approximation that bitcoins don't really exist, not even intangibly.  It is only a ledger.  Click a few threads right here in the Economic sub-board, and you'll see people twisting their minds into all manner of crazy contortions trying to fit the abstract nature of bitcoin into whatever rudimentary philosophy of money they happen to have.

Bitcoin doesn't "embed the electricity of mining".  It doesn't provide the "useful service" of hashing quasirandom numbers.  It isn't an asset, except by the very loosest definition of asset.  It isn't a commodity, except again in the very loosest sense.  No one is forced to accept or acquire it.  It annihilates the regression theorem.  And so on...


I doubt that any model could explain all of the properties of money.  Money is just too damn big of a topic to reduce to a single analogy.  I haven't even seen a definition that is both correct and non-circular.  Actually, the only "correct" definition of money that I've ever seen is that "Money is what people use as money".  Kinda like how a dictionary can tell you what the word "river" means, assuming that you already know what a river is, and aren't too concerned about the edge cases.

Given that you've studiously avoided understanding my position, I find it hard to believe that you ever held it yourself.  Much more likely, you are assuming that I hold the same belief that you once held, and you are arguing against that.

For evidence of this, I point out that you have repeatedly countered arguments that I did not make, while ignoring what I actually have said.  In fact, that is about all that you have done here.

Are you surprised that I don't agree with everything I read?  Shouldn't you be concerned that both you and Rothbard are incapable of using orthogonal categories?

Money is certainly a commodity, but that doesn't exclude it from other categories.  No one claims that an apple isn't fruit because it is a commodity, nor that it isn't food because it is round.

Further, an apple is still useful when detached from society, but money is not.  At least not in the abstract; a tangible manifestation of money might still be useful.  If you ignore or diminish the social aspect of money, you lose something.  The notion isn't necessarily wrong, per se, but it isn't as useful as it would be if it were complete.

What makes you think I haven't?

Bah. I've said what I needed to say, and I'm done.  The root of our disagreement is not that you haven't repeated your claim often enough, and I don't suspect that anything I write will cause you to think beyond repeating it yet again.

Ugh.

Start with a bank loan.  It says who will repay it (the payer), who they will repay to (the payee), and how much they will repay (the payment).  Very clearly a debt, no arguments from anyone (I think).

Now consider a bearer bond.  The payee has been abstracted away, but still a debt.

Next, say I take a piece of paper and write "IOU" on it and sign my name, then trade it to a friend for help moving furniture.  Now both the payee and the payment have been abstracted away.  Is that a debt?  I would say that it is, even though it doesn't say what I owe, or to whom, and no court would compel me to trade anything in particular to get it back.

Now say that a group of us get together and decide together to define a unit of measurement, and print a bunch of these IOU notes in various values, and with no specific final redeemer.  Again, I would argue that these represent debt that has been fully abstracted.  No named payer, no named payee, no fixed payment.  Since they have no final redemer, they represent that you have done something good for society in general.  And they have no fixed value beyond the abstract UOM printed on them, leaving the bearer and the present redeemer to negotiate the terms of trade.

Now consider another group developing the exact same scheme, but using gold instead of notes, and weight instead of printed denominations.  Is the essence changed?  Of course not.

Now the man that finds gold in his yard hasn't created a "debt against the earth" or anything silly like that.  He has done something good for society: he has found more money.

Now, if anyone prefers to consider debt only to exist when a specific person is bound by threat of violence to a specific performance, I can't stop them.  Nor can I if they prefer any other combination of un-abstracted properties.  I won't even say that they are wrong.  But I will say that they will have a much harder time understanding money in that system.

I'm not claiming that he is wrong.

I'm saying that you can develop a better understanding of the world by drawing the line in a slightly different place.


You are aware that you are making my point here, right?

Do you really not see that you are just going around in a circle?

It is not interesting to me if you choose to draw a line that divides some debt-like things from some other debt-like things.

Before going into whether or not your system is "right", I note that it is not useful.  Basically, your argument reduces to defining itself.

In the sense of a platonic ideal, money is an abstract IOU.  It is useful only in the sense that it can be redeemed for something else.  In the real world, some (but not all) of the things we use as money have uses other than exchange.  For example, dollar bills can be burned for heat, light, or amusement, and gold has industrial uses.  Bitcoin is a closer approach to the ideal, since it doesn't really exist.

You could claim that since money isn't a claim on a specific thing, or from a specific person, that it doesn't qualify as debt.  But this is just a matter of definition, and not a universal one because plenty of people would draw that line in a slightly different place.  You can certainly choose to define debt in a narrow sense that excludes various categories of similar concepts, but what good does it do you?

By recognizing money as an abstract form debt, you are able to quickly purge from your mind all sorts of silliness.  It is a more useful way of thinking about things.

Now in the broadest sense, an "asset" is merely something useful, which can be "useful for use" or "useful for exchange".  This obviously includes goods, money, in any form, and debt, again, in any form.  Saying that money is an asset isn't an argument for or against including it in the category of debt.

And debt most certainly is speculative.  If it wasn't, why would something like FICO exist?

All of this applies to gold too.  That gold is a physical thing does not change anything.  You get it by doing something useful for someone else, and you expect to be able to trade it later for something useful to you.

So what is your principle then?  What I'm reading above really looks like it comes down to "many places already have auto liability insurance laws".  Unless those laws were handed down by god, you really can't use their existence as justification for their existence.

Imagine the world 50 years from now.  Most BTC has already been generated.  Most worldwide commerce is using bitcoin.  The value of 1 BTC is about one decent, but small, office building, say close to 1 million dollars today.

Now think carefully and give me a scenario where 1 BTC can double in value in a reasonably short time.

Basically, what you describe couldn't work.  But it also couldn't happen, so there isn't much point in losing sleep over it.

I have a spade in my garage.  Calling it a spade doesn't mean that I hate it.  Based on your response, it looks like I got your name right too...

A name is an implicit reference to an internal ideal (in the Platonic sense).  That reference may be a "false form" in a philosophy class, but in the real world, most people would consider naming to be a useful tool.


There is a reason that you don't get the point.


Why does the family home not have insurance?  Surely the owner understands that they face non-zero risks from many sources, not just your cliched redneck...

If the argument is that the driver must carry insurance because they might cause damage through accident or neglect, why does that not extend to making the driver also carry insurance to cover damage they might do through crime?  By what principle do you draw the line?

Logic always catches the unwary.  If the potential to cause "catastrophic loss" is a reason to force a person to carry insurance, surely that should apply to all potential catastrophic loss, right?  The loser feels the loss all the same, without regard to how or why the losee did it.  Why must the losee make advance preparations to help the loser recover from one loss, but not the other?

May I suggest that your guiding principle may perhaps be that one is already common, so you support it, while the other shows the absurd conclusion to your arguments, so you deny it?  I've seen this movie before.  We all know how it ends.


I have insurance that protects me against criminal actions done against my self and my property.  Surely you do too, if you aren't homeless.  If you find that concept confusing, perhaps you can use a nearby shiny surface to locate the source of the stupid.

Wow.  Speaking of poorly reasoned and flat out wrong, have you read your own post?  Hard to pack so much wrong into one sentence.  The "health insurance" sentence, if you are wondering which line of statist bullshit you are repeating without thinking.

Just for fun, I'll skip that one and look at the first sentence instead.  It is just as bad, really, but not currently a hot topic, so the talking points are rusty.  By your implied logic, everyone should be forced to carry crime insurance that pays out if they commit a criminal act.  From the victim's point of view, it doesn't matter a whole lot if I drive off the road and through his house during an accident, or if I intentionally burn it down during a criminal act of arson.  Why do you favor mandatory car insurance*, but not "I'm a criminal" insurance?  Or do you?  In both cases there is "inflict incredibly costly damage" and "unable to make equitable relief".

Why can't the owner of the valuable thing purchase insurance to protect their assets instead?

* You don't come out and say it exactly, but I suspect that car insurance is what you are thinking of, being, by far, the most common form of insurance that people have to buy that protects other people instead of the purchaser.

There are levels of debt.

Money is debt.  This includes dollars, bitcoins, and even gold.  This is highly abstracted debt, not a call on any specific thing, or from any specific person.  Under barter, you trade value for value directly.  With money, you trade value for a claim on value, or money.  When you spend the money, you complete the barter that you had half-completed earlier.  Money is a token of debt from society in general, it represents that you have done something good for society, and that society has not yet done something good for you in return.

When people talk about how the dollar is debt based, they either mean this, and only this, or they are morons repeating catchphrases that they don't understand.  This is heavy shit, and it is possible to go decades with the fuzzy "money is debt" meme in your head, but without understanding what it really means.  I know, I was there.  Please read, and re-read the paragraphs above and below until it makes sense.

Deflation is the natural state of an economy when money is honest.  A dollar held is an investment in society.  You are leaving resources available for others to use, even though you could take them for yourself.  When you redeem your dollars in the future, it is normal to find that society has invested the value that you left unclaimed in improving production of useful things, and even to have invented new things.  Better production means that products are easier to produce, thus cheaper.

So, with honest money, like bitcoin, it is natural that one bitcoin should be able to purchase more value tomorrow than it does today.  We call this deflation, and it should be obvious that deflation is not a problem under that system, nor is the debt.

The problem with the dollar is that some people are able to produce new claims on wealth, without creating new wealth.  They are then able to acquire wealth, and at the same time diminish everyone else's stored claims to wealth.  This is called inflation.

The root problem is that the dollar is a political currency, meaning that imperfect people are in charge.  If we could round up some angels to run things, the dollar could be sound, even deflationary.  But angels are in short supply, so Satoshi decided to set a fixed generation curve.  As long as we keep it difficult for bitcoin to come under political control, we'll be OK.

Ha!