An Honest Introduction to Money

[BobK71]

(The cause for optimism is that even this lasted only 15 years before the elites shot themselves in the foot with the 2008 crisis.  The system really is doomed.)

Couldn't the plutocracy merely have the U.S. Federal Reserve system accept and issue the Federal Reserve Note II (i.e., a new one) instead of the Federal Reserve Note?

If they devalue or abandon their FRN I, which amounts to: 1. acknowledging their previous note issue was a flawed system; 2. in effect reneging on their debt or at least most of it; 3. stiffing the very people who trusted them;  4. causing a crisis and mass spectacle that generates lots of commentary that exposes the system's fundamental weakness; 5. trying to get a new system going to maintain their power, that people will now trust, I think they will want to make absolutely sure the new system has enough strength to withstand all skepticism, at least initially.  We have to remember these people are pretty smart.

That is why if they peg dollars to gold, crypto, etc., it will be at a very low price for the dollar.  They'll need all the stability they can get, and then some, to allow them to push fiscal and monetary stimulus to get the economy going and pacify the population.  (Also, pegging existing dollars looks much better than starting a new dollar.)

[BobK71]

The banks are just a higher version of the mob lol.

They say we need the money or else! we blow up the economy anyways with poor practices of giving suckers like us to invest supposedly a worth AAA bond or some crap.

The only thing we can do is try to be better off, in reducing as much risk as possible if we ever get a chance to reach a high principal balance.

In the modern world, at least in the developed world, people don't tolerate police and soldiers using their power to bully the public.  (Except racially charged instances, maybe.)

Unfortunately, bullying on the financial plane *is* tolerated.

And the state uses and nurtures the banks essentially in the same way as it did warriors, and for the same reasons.

[username18333]

I think they will want to make absolutely sure the new system has enough strength to withstand all skepticism, at least initially.  We have to remember these people are pretty smart.

Free market economics is renowned for its competition and the necessity of business to become evermore agile and adept in doing business because of that. However, the Federal Reserve has established a sort of horizontally and vertically integrated monopoly on money; it can "sell" (i.e., loan) any quality of money without any (domestic) threat of competition so long as (1) legal tender laws are enforced consistently and (2) it supplies the notes (be they FRN 1, FRN 2, FRN 3, etc.) itself.

[BobK71]

That maybe you dont know,i dont know who said that,propably Lenin
Money in hand of our enemy can be dangerous weapon
money in hands of our own people is the most dangerous enemy


My thoughts
Looks like that we all,living in diffrent countries,we are all living in totalitary system,and we are the the most dangerous enemys

Money takes on a whole new meaning in a socialist economy.  Since the government creates it at will and doesn't really allow it to drive supply and demand of goods and services (but instead quotas, regulations, and other uses of power are used to allocate scarce resources,) the economy is basically de-monetized.  If you *don't* have money, you definitely can't get what you want.  If you have money (and have the same amount everyone else seems to have,) then you're subject to the regular rationing.

[BobK71]

Free market economics is renowned for its competition and the necessity of business to become evermore agile and adept in doing business because of that. However, the Federal Reserve has established a sort of horizontally and vertically integrated monopoly on money; it can "sell" (i.e., loan) any quality of money without any (domestic) threat of competition so long as (1) legal tender laws are enforced consistently and (2) it supplies the notes (be they FRN 1, FRN 2, FRN 3, etc.) itself.

The short answer is that the authorities probably won't try this strategy because of the low chances that the populace will end up putting much wealth in the FRNs.

The long answer is that financial repression alone, especially financial repression by law (e.g. legal monopoly) has rarely, if ever, been enough to support the modern monetary system in the West.  Even under the last paper-money regime in China, when all power was concentrated in the emporer, there was virtually no contact with foreign countries, and using anything other than the state paper money was punishable by death, eventually the state saw fit to go to silver.

To my thinking, modern money has always survived by distributing its weight among all of the following major devices of support, and not any one alone.  I think this distribution will be even more necessary in the future as trust in the elites continues to diminish and power will continue to shift from the US-Europe axis to the developing world.

Remember that the fundamental problem for mondern money is that the problematic incentives for the elites always end up creating more paper claims to wealth than real goods and services, and so the following support systems become necessary to keep the system alive:

1. Political repression
- Acquiring colonies and making them hold paper sterling as reserves, by Britain.
- Working with China and oil-rich dictatorships to support the dollar in exchange, effectively, for safeguarding the regimes' power.
- Encouraging poor countries to issue too much money and debt so the dollar becomes trusted and hoarded by individuals.
- Problems for the elites: international inequality, social instability in poor countries, terrorism and war.

2. Financial repression by law or market manipulation
- Banning of private gold ownership (US.)
- Legal caps on bank interest (US.)
- Capital controls (US and Europe under the Bretton Woods system.)
- Driving savings into bank assets by, effectively, taxpayer support for banks and loose bank regulation.
- Loose monetary policy.
- Suppression of gold and silver prices via derivative trading.
- Exporting economic instability and pain to developing countries via the "exorbitant privilgeg" process.
- Problems for the elites: market-developed evasion (e.g. money market funds and euro-dollars;) financial fragility (due to distortions of asset prices by policy) and instability; developing countries fighting back (Asian currency manipulation was a big part of the causes of the 2008 crisis.)

3. Acknowledgement of reality
- Price inflation over the long term.
- Devaluation of the dollar against gold during the Great Depression.
- Allowing gold price to go to $300 and then $1200 per ounce under the fiat system.
- Dollar devaluation against Deutsch Mark, euro, yen and yuan in recent decades.
- Monetary/fiscal tightening (e.g. early 1980s US, present day European periphery.)
- Problems for the elites: exposure of the system's weakness to the public.

(Note that, often, a device is a combination of the above categories.  E.g. Western equities and real estate are indirectly propped up by central bank policy (low interest) and enjoy long-term appreciation which reflects the weakness of paper money against "real" assets.  These are excellent devices from the elites' point of view as they naturally divide the weight of the system among multiple pillars.)

In short, the survival of the system depends as much, if not more, on "soft power" as on "hard power."  For example, the very reason that the world still trusts the dollar is that the US is perceived by many to have an open and free financial system.  The reason Americans and foreigners get into dollars and Treasuries is that they know they can get out.

This is not to say that creditors hold much power over debtors, or rich over poor.  The various repressions make clear the authorities' ability to punish savers of all types.  But any redistribution of wealth to the poor, especially under a complex and disguised system such as this, tends to reflect power grabs by the elites.  Genuine help to the under-privileged of the world, and especially allowing them room to help themselves, can really only come about when the economy acquires real wealth in a stable, sustainable and equal manner, and that can only happen when the world system is no longer destabilized by state-issued money.

[BIT-Sharon]

Currency, money can be said, is used as a tool of medium of exchange, the stored value and accounting unit, is specialized in supplies special goods and services in the exchange act as equivalents.

[BobK71]

Currency, money can be said, is used as a tool of medium of exchange, the stored value and accounting unit, is specialized in supplies special goods and services in the exchange act as equivalents.

Yes, that's pretty much the economic profession's standard narrative.  IMO it reduces "store of value" to 1 among 3 major functions, while in reality people won't use it much as medium of exchange or unit of account if it loses store of value status.

[dinofelis]

Yes, that's pretty much the economic profession's standard narrative.  IMO it reduces "store of value" to 1 among 3 major functions, while in reality people won't use it much as medium of exchange or unit of account if it loses store of value status.

In fact, "unit of account" is independent of the money function.  It is funny that what people mostly define as "money", namely "unit of account" doesn't need to be money at all.  In fact, any commodity, any service, can be a "unit of account" without it being money at all.

If you want to express price in "oxen" or in "one hour's labor" or in "apples" doesn't really matter.  Any sufficiently well-known commodity or service can be socially decided upon to be the "unit of account" without even coming close to be an intermediate asset.

However, no medium of exchange can exist without at the same time not being a "store of value".  These two things go together of course.  The only difference between both is liquidity and a few practical issues.  Real estate is a store of value, but is not a very practical medium of exchange.

In fact, a medium of exchange is not really needed.  It is but ONE solution to the problem of indirect exchange.  There are other ways to solve that issue, and historically, not "medium of exchange", but "credit" was often first introduced as a means to solve the issue of indirect exchange.

Money is just a tool.

http://www.princeton.edu/~kiyotaki/papers/Evilistherootofallmoney.pdf

[LiteCoinGuy]

The Biggest Scam In The History Of Mankind

https://www.youtube.com/watch?v=iFDe5kUUyT0



Money vs Currency - Hidden Secrets Of Money Ep 1 - Mike Maloney

https://www.youtube.com/watch?v=DyV0OfU3-FU

[Benjig]

Currency, money can be said, is used as a tool of medium of exchange, the stored value and accounting unit, is specialized in supplies special goods and services in the exchange act as equivalents.

When money is used to intermediate the exchange of goods and services, it is performing a function as a medium of exchange. It thereby avoids the inefficiencies of a barter system, such as the "coincidence of wants" problem. Money's most important usage is as a method for comparing the values of dissimilar objects.

[dinofelis]

When money is used to intermediate the exchange of goods and services, it is performing a function as a medium of exchange. It thereby avoids the inefficiencies of a barter system, such as the "coincidence of wants" problem.

The point is that historically, the system that develops usually to avoid that coincidence of the wants, is a credit system, not a monetary system.  It most probably even lies at the invention of writing.  You can simply avoid the "coincidence of wants" by giving an IOU in exchange of what you need now.  You'll pay your debt later, whenever that other person needs something from you.  Or he can transmit that IOU from you to a third person if he wants something from that third person.  Very often, central trusted entities, such as temples or the like, wrote down those IOU.

[username18333]

This is not to say that creditors hold much power over debtors, or rich over poor.  The various repressions make clear the authorities' ability to punish savers of all types.  But any redistribution of wealth to the poor, especially under a complex and disguised system such as this, tends to reflect power grabs by the elites.  Genuine help to the under-privileged of the world, and especially allowing them room to help themselves, can really only come about when the economy acquires real wealth in a stable, sustainable and equal manner, and that can only happen when the world system is no longer destabilized by state-issued money.

Code:

sendfreetransactions=1

Code:

sendtoaddress [address] [balance + amount]

Your “poor” could appropriate a greater portion of the (monetary) value of the GEC economy to themselves.

[mrhelpful]

A philosophical discussion is probably beyond the scope I originally planned, but I would just say that we do need some state to uphold some kind of universal values, in practice.  Without that, it would be the law of the jungle, or the law of organized gangs.

The law of organized gangs is just another name for states, right.
The state is the violence monopolist.  If a gang has enough power in a territory to be unchallenged, then it is the state.

This sounds more of a bank if anything else.

I mean wheres our bail out money, when we they started selling bad AAA graded investments. Even the credit agency giving those grades should be fined.

[johnyj]

When you create 1 dollar worth of money using 1 dollar worth of resource/labor, then there is no robbery involved, just fair trade. However, if you write some numbers on a paper and use it as 1 dollar, then that is not fair trade. But still, many people accept this paper and regard it as something with 1 dollar's value. So it involves some trust and time related tricks

(You missed the gist of my post.) What does that matter when any- and everyone may do so?

In that case, the most trusted IOU would still be the IOU issued by US government. Of course you can use airline miles and supermarket coupons to purchase certain goods, but those have limited reach and a higher risk of ruin (Companies can go insolvent anytime)

In fact, for many people the biggest doubt of bitcoin is:  Who is going to back its purchasing power?  Although it is indirectly backed by merchants who accept bitcoin, but merchants are not responsible for its exchange rate, its value could still easily drop 30% overnight if no one is backing it with fixed amount of tangible assets. Currently the value is backed by the cost, very similar to gold, some kind of psychological support

In contrary to modern monetary theory (and what those academic people believe), USD's value is not decided by supply and demand, but by the value of assets that backed USD when they were issued. FED could easily create 5X more money without affect USD's value, simply because each USD issued are backed by assets of corresponding value (Although this action is questionable "Real Bills Doctrine", it works well to sooth the confidence of merchants)

[BobK71]

Currency, money can be said, is used as a tool of medium of exchange, the stored value and accounting unit, is specialized in supplies special goods and services in the exchange act as equivalents.

When money is used to intermediate the exchange of goods and services, it is performing a function as a medium of exchange. It thereby avoids the inefficiencies of a barter system, such as the "coincidence of wants" problem. Money's most important usage is as a method for comparing the values of dissimilar objects.

Before money can do that though, it must be trusted to maintain its value.  When the incentives for the issuer are always to issue more, and the issuer has the physical power to do so, the system is broken and a new one is called for.

[Erdogan]

When you create 1 dollar worth of money using 1 dollar worth of resource/labor, then there is no robbery involved, just fair trade. However, if you write some numbers on a paper and use it as 1 dollar, then that is not fair trade. But still, many people accept this paper and regard it as something with 1 dollar's value. So it involves some trust and time related tricks

(You missed the gist of my post.) What does that matter when any- and everyone may do so?

In that case, the most trusted IOU would still be the IOU issued by US government. Of course you can use airline miles and supermarket coupons to purchase certain goods, but those have limited reach and a higher risk of ruin (Companies can go insolvent anytime)

In fact, for many people the biggest doubt of bitcoin is:  Who is going to back its purchasing power?  Although it is indirectly backed by merchants who accept bitcoin, but merchants are not responsible for its exchange rate, its value could still easily drop 30% overnight if no one is backing it with fixed amount of tangible assets. Currently the value is backed by the cost, very similar to gold, some kind of psychological support

In contrary to modern monetary theory (and what those academic people believe), USD's value is not decided by supply and demand, but by the value of assets that backed USD when they were issued. FED could easily create 5X more money without affect USD's value, simply because each USD issued are backed by assets of corresponding value (Although this action is questionable "Real Bills Doctrine", it works well to sooth the confidence of merchants)

That backing is psychological. That is important, because all the value is speculative, it means that someone speculate that he can get something of real value (useful) in exchange for the money, in the near or distant future. In reality, the dollar is unbacked. This is no problem for money, it is not needed, in fact it is good, else the money manager will eventually amass all the backing stuff. Still, there is no backing. The variations of value due to the erroneous belief in the backing, can go on for a long time.

[BobK71]

Your “poor” could appropriate a greater portion of the (monetary) value of the GEC economy to themselves.

I could spend an evening just ranting about that whole "crucifixion on a cross of gold" thing...

So what is this GEC idea?  I haven't had time to check it out (as work is pretty hectic.)

[pereira4]

I've found this video very relevant to this thread. It's an introduction on money and why Bitcoin is the better alternative for the future:

https://www.youtube.com/watch?v=Xkw9t9ShwGc

Very easy and short video, good for newbies to show and spark interest in the Bitcoin world. Usually all videos are about how Bitcoin works, but now why Bitcoin is the next big thing.

[username18333]

So what is this GEC idea?  I haven't had time to check it out (as work is pretty hectic.)

You mint the money, and the (imperial) government certifies it as such.

[username18333]

In that case, the most trusted IOU would still be the IOU issued by US government.

If a preponderance of a business’ customers should insist that the business accept the G.E. certified money each mints, the business, if it should also wish to maintain their patronage, must comply therewith.