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Author Topic: Are Currency and Money the Same thing  (Read 4048 times)
Possum
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October 22, 2011, 12:13:44 PM
 #1

Hi

Are Currency and Money the Same thing.

I'm asking this question here as you guys see things more realistically than others

Thank you
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October 26, 2011, 03:08:49 PM
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I would say no.  This is after just a moment's thought, so it might change.

In my view, money is the abstraction, and currency is the realization.  When you pay someone with a paper bill, or a metal coin, you are operating on both levels, giving them both the abstraction, and the physical embodiment.  When you pay with a check or a credit card, you are operating only on the abstract level, so money changes hands, but currency does not.

Then again, on a deeper philosophical level, one could argue that the paper money or metal coin is very nearly as abstract as a check or credit card transaction.  But, if you must draw a line somewhere based on principles, I think what I've described is a good place to draw it.

Oh, and note that while a check isn't generally a currency, there have been (and can be again) situations where personal checks have been passed around at face value, making them a currency within those specific situations.

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October 26, 2011, 03:33:18 PM
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In my view, money is the abstraction, and currency is the realization.

I agree. And to put it another way:

Currency is a form of money, but money isn't a form of currency.
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October 26, 2011, 03:58:15 PM
 #4

currency is to money as frequency is to a Fourier transformation

no wait,

currency is to money as shoes are to footwear

or

currency is to money as warships are to naval power
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November 05, 2011, 06:40:26 AM
 #5

IMHO

Money is everything that could be exchanged for something else but have value inherently  (SEX , Food ,  salt , Intelligence ,Currency* etc.) = Wealth .
Currency something purposely designed to be exchanged. (GOLD , tally sticks, copper coins , paper bills , etc. ) and it's useless and worthless without someone else wanting it. = Belief .


*Currency is money as long as there is belief in it (there is demand for it) when belief stops value of the currency disappears and it stops qualifying as money.

This is my view .. it could be wrong though.
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November 05, 2011, 02:19:40 PM
 #6

http://www.youtube.com/watch?v=E5VNAEmmBQM

@ 4:50 Mike Maloney explains his view on currency vs money.
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November 05, 2011, 06:13:10 PM
 #7

Money is any object or record that can be accepted as payments for any goods or services, while a currency is a specific generally accepted medium of exchange.

In other words, currency is something physical that has intrinsic value, while money is anything that has value.

Lets say you have $100:  $80 in the bank, and a $20 bill.  You want to buy a cup of coffee from Starbucks, which costs $5, so you hand the barista your $20 bill, and she gives you a $5 bill and a $10 bill back.  There is no identifying marks on any of the bills to tell where the money is coming from, or where it is going.  If a mugger walked into the Starbucks and demanded your $20 bill as you were handing it over to the barista, he could then use the bill to buy a pizza without any problems.

Now lets say you want to buy a suit from the local tailor for $50, which you don't have in currency.  You write a check to the tailor for $50, and he gives you your suit.  But this is a money transfer, which tells the bank to debit the record of your account $50 and credit your tailor's account $50.  If your evil mugger stole this check, your mugger couldn't cash it (convert the check to a currency) without forging your tailors identity.
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November 06, 2011, 04:47:00 PM
 #8

Interesting topic.
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November 06, 2011, 04:57:30 PM
 #9

Where it gets weird, is whether Bitcoin is a currency or just money.  It has certain characteristics of currency, but it may just be a (mostly) anonymous form of money, though users think of it as a currency.
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November 06, 2011, 05:00:31 PM
 #10

From wiki,

Money
Quote
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context.[1][2][3] The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past, a standard of deferred payment.[4][5] Any kind of object or secure verifiable record that fulfills these functions can serve as money.

Currency

Quote
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply. The other part of a nation's money supply consists of bank deposits (sometimes called deposit money), ownership of which can be transferred by means of cheques, debit cards, or other forms of money transfer. Deposit money and currency are money in the sense that both are acceptable as a means of payment.

So from this I'd gather that currency is the actual thing used for exchange, whereas money is the abstract. I could give you 1 BTC for a stick of gum, and that'd be a use of it as a currency.  However if I just give you a wallet.dat that contained 1 BTC, that would be using the wallet.dat as money.  I think.

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November 06, 2011, 05:06:56 PM
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So from this I'd gather that currency is the actual thing used for exchange, whereas money is the abstract. I could give you 1 BTC for a stick of gum, and that'd be a use of it as a currency.  However if I just give you a wallet.dat that contained 1 BTC, that would be using the wallet.dat as money.  I think.

Maybe not.  You can use a non-currency money to pay for something, see my example above about paying a tailor with a check.

Most likely, Bitcoins are forms of money transfer, not a currency, though the process is easy and anonymous enough to treat them as such.
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November 07, 2011, 02:03:30 PM
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So from this I'd gather that currency is the actual thing used for exchange, whereas money is the abstract. I could give you 1 BTC for a stick of gum, and that'd be a use of it as a currency.  

Money is abstract - agreed. I like to say that money is imaginary. Currency is used to represent the imaginary. Currency is physical tokens.

When gold was money, it was simultaneously money and currency at the same time.

With Bitcoin, the blockchain, and the agreement about what it represents is Money. (When/If Bitcoin becomes generally accepted).

Bitbills and Casacius coins are currency. Your wallet on a USB stick is currency (although very difficult to verify, so it probably could never become generally accepted). (Again, When/If Bitcoin becomes generally accepted.)

I know it the term 'cyptocurrency' is in general use, but it is a misnomer. Bitcoin allows individuals to directly exchange money. It largely obsoletes currency.

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November 07, 2011, 05:21:56 PM
 #13

Excellent insights in this thread. There's a very long read by FOFOA that goes into the history, distinctions and reasons for them. Set aside a day (it's that long and in-depth) to read it.
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November 07, 2011, 10:56:07 PM
 #14

currency
Another name for money. A country's own currency is that used for internal transactions. Foreign currency is the money of other countries.

Oxford Dictionary of Economics


I think what that means is that money is money in general while currency usually refers to a specific type of money.

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November 08, 2011, 11:51:15 AM
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So from this I'd gather that currency is the actual thing used for exchange, whereas money is the abstract. I could give you 1 BTC for a stick of gum, and that'd be a use of it as a currency.  

Money is abstract - agreed. I like to say that money is imaginary. Currency is used to represent the imaginary. Currency is physical tokens.

When gold was money, it was simultaneously money and currency at the same time.

With Bitcoin, the blockchain, and the agreement about what it represents is Money. (When/If Bitcoin becomes generally accepted).

Bitbills and Casacius coins are currency. Your wallet on a USB stick is currency (although very difficult to verify, so it probably could never become generally accepted). (Again, When/If Bitcoin becomes generally accepted.)

I know it the term 'cyptocurrency' is in general use, but it is a misnomer. Bitcoin allows individuals to directly exchange money. It largely obsoletes currency.

So having a patch of land you don't have money ?

No you don't have currency , cash , but still you could rent it , or you could exchange it ... or you could grow something on it , or you could build something on it. Money ain't imaginary. It's a term for value. If something has value to you it is money.
 Currency is imaginary because it has no value other then the fact that it can be exchanged , If someone desires it or is forced to desire it (legal tender) , and the paper bills represent that fictional item , just the same as the numbers showing the debit of you Bank account.

Gold is currency , because it is valuable because people believe it to be so. There are very few useful things you can do with gold other then exchanging it , you can make jewelery but you can make that from shit if you wanted , not very useful , or you could use it in electronics but there are better materials like silver.


A piece of bread on the other hand is money, will always have an intrinsic value (of how much calories it will provide to you) and depending on how much you desire it and how much the owner of the bread desires it , we can quantify that piece of bread in currency and it's value in currency is the one that varies . It's real and intrinsic value will always be the same .

If you have the knowledge to produce a knife for example , again you have money , that knowledge is still valuable to you as it is , but you can also exchange that knowledge for something else by quantifying it .  

The belief in god ... is money in my view , if your belief is strong enough God can have huge value for you , you can also use that belief to control people , if you can make them believe to and accept that you have a better understanding of god for example. You don't need to exchange nothing real but still you would gain huge benefits.

All currency is money but just for the time there is desire for it , if the desire or belief disappears the value of currency is ~0 . BUT the paper bill that represented that currency at one point might still be valuable for some (collectors for example.) the numbers representing your currency in a bank account on the other hand , i don't think someone would value them.
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November 08, 2011, 12:30:49 PM
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So having a patch of land you don't have money ?


Correct. You have wealth, not money.

I think you don't understand the difference between money and wealth. We should all try to remind ourselves of that difference from time to time.

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November 08, 2011, 03:14:43 PM
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So having a patch of land you don't have money ?


Correct. You have wealth, not money.

I think you don't understand the difference between money and wealth. We should all try to remind ourselves of that difference from time to time.

Please explain to me the difference. So that i can remind to my self of that from time to time.

All currencies together are currency . They are money only in certain conditions which i explained above. Money is wealth and wealth is money . even if we didn't invent currency money would still exist because we can exchange our wealth through barter.
Money = wealth in exchange.
Currency = fictional item invented for the sole purpose of being exchanged.

Let me ask you this: If for example a town would revert to barter would it have any money? Could it use it's wealth to trade with other towns? Or would they absolutely need currency? Sure they can trade ... they give oil for food for example and that wealth is money at that very moment and it ain't currency because if no one want's their oil for example they could just use it themselves to power some tractors.

This is my view on things.

What is money in your view ? All currencies ever invented? If that is the case then you are right. If we refer to money as a distinct term for all currencies and only currencies , that don't represent wealth and can only be exchanged for wealth then you are right.

 
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November 08, 2011, 04:10:44 PM
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So having a patch of land you don't have money ?


Correct. You have wealth, not money.

I think you don't understand the difference between money and wealth. We should all try to remind ourselves of that difference from time to time.

Please explain to me the difference. So that i can remind to my self of that from time to time.

All currencies together are currency . They are money only in certain conditions which i explained above. Money is wealth and wealth is money . even if we didn't invent currency money would still exist because we can exchange our wealth through barter.
Money = wealth in exchange.
Currency = fictional item invented for the sole purpose of being exchanged.

Let me ask you this: If for example a town would revert to barter would it have any money? Could it use it's wealth to trade with other towns? Or would they absolutely need currency? Sure they can trade ... they give oil for food for example and that wealth is money at that very moment and it ain't currency because if no one want's their oil for example they could just use it themselves to power some tractors.

This is my view on things.

What is money in your view ? All currencies ever invented? If that is the case then you are right. If we refer to money as a distinct term for all currencies and only currencies , that don't represent wealth and can only be exchanged for wealth then you are right.

The problem with your view is that it defines anything and everything as money.  Why not just call them nouns and be done with it?

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November 08, 2011, 04:47:06 PM
Last edit: November 08, 2011, 05:09:13 PM by deuxmill
 #19

Wheal they are also nouns . Currency is also a noun . Fuck me even human is a noun. and even language is a noun and even RETARD is a noun.

What's that suppose to mean?

A form of wealth that ain't money is for example a photo of your dog that no one would want it in exchange for something he owns. IT would be wealth to you because it has value to you , but it ain't money because you can't exchange it. and it ain't currency either.

I have to make a correction to one of my statements above thought :

Quote
No you don't have currency , cash , but still you could rent it , or you could exchange it ... or you could grow something on it , or you could build something on it. Money ain't imaginary. It's a term for value which can be exchanged . If something has value to you it is money wealth.

There .

So not all wealth is money ... only that which can be exchanged .
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November 08, 2011, 05:25:20 PM
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Wheal they are also nouns . Currency is also a noun . Fuck me even human is a noun. and even language is a noun and even RETARD is a noun.

What's that suppose to mean?

A form of wealth that ain't money is for example a photo of your dog that no one would want it in exchange for something he owns. IT would be wealth to you because it has value to you , but it ain't money because you can't exchange it. and it ain't currency either.

I have to make a correction to one of my statements above thought :

Quote
No you don't have currency , cash , but still you could rent it , or you could exchange it ... or you could grow something on it , or you could build something on it. Money ain't imaginary. It's a term for value which can be exchanged . If something has value to you it is money wealth.

There .

So not all wealth is money ... only that which can be exchanged .

Your view has some pretty big problems still, even after you've clarified it so as not to include all nouns.

The first problem is that you are ignoring several roles of money in favor of just one role.  Go back up to the top and read the first few posts.

The second problem is that you are using meaningless criteria for excluding some nouns from the category of money.  Say that someone really likes the picture of your dog.  Does the picture of the dog then become money?  Was it money before that person knew the picture existed?  Does it remain money once that person has the picture, assuming that there isn't a second person that would also be willing to exchange for it?  I could go on, but it doesn't appear that there is any way to make a consistent decision about the money-ness of some object based on your definition, nor on reasonable extensions of that definition.

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November 08, 2011, 06:05:40 PM
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Wheal they are also nouns . Currency is also a noun . Fuck me even human is a noun. and even language is a noun and even RETARD is a noun.

What's that suppose to mean?

A form of wealth that ain't money is for example a photo of your dog that no one would want it in exchange for something he owns. IT would be wealth to you because it has value to you , but it ain't money because you can't exchange it. and it ain't currency either.

I have to make a correction to one of my statements above thought :

Quote
No you don't have currency , cash , but still you could rent it , or you could exchange it ... or you could grow something on it , or you could build something on it. Money ain't imaginary. It's a term for value which can be exchanged . If something has value to you it is money wealth.

There .

So not all wealth is money ... only that which can be exchanged .

Your view has some pretty big problems still, even after you've clarified it so as not to include all nouns.

The first problem is that you are ignoring several roles of money in favor of just one role.  Go back up to the top and read the first few posts.

The second problem is that you are using meaningless criteria for excluding some nouns from the category of money.  Say that someone really likes the picture of your dog.  Does the picture of the dog then become money?  Was it money before that person knew the picture existed?  Does it remain money once that person has the picture, assuming that there isn't a second person that would also be willing to exchange for it?  I could go on, but it doesn't appear that there is any way to make a consistent decision about the money-ness of some object based on your definition, nor on reasonable extensions of that definition.

No it was not money before. It is money when you can exchange it , you can only then exchange it if that someone really likes the picture of your dog. IT IS MONEY IF YOU CAN EXCHANGE IT . By assuming that there isn't a THIRD person that would also be willing to exchange for it then I have to assume it ain't money afterwards.

So by you only post in which you reveal you point of view : I assume your view of the noun DOLLAR which defines a currency is that it is the realization of money. WHICH IS COW DUNG. A DOLLAR IS JUST AS FICTIONAL AS A SIN OR A BLESSING FROM GOD. the dollar bills and the number in the bank accounts represent that fictional item like wine represents in certain conditions the blood of CHRIST.
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November 08, 2011, 06:32:31 PM
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No it was not money before. It is money when you can exchange it , you can only then exchange it if that someone really likes the picture of your dog. IT IS MONEY IF YOU CAN EXCHANGE IT . By assuming that there isn't a THIRD person that would also be willing to exchange for it then I have to assume it ain't money afterwards.

So, money is anything that could be exchanged, but only in those moments when it could be exchanged.  If it actually is exchanged, it could very well cease to be money at that instant.  And, of course, we never really know what could be exchanged unless we actually attempt the exchange.  Or, is something money because someone says they are willing to exchange for it, even if they really aren't willing?

In this strange world of quantum moneydynamics, what plays the other roles that we assign to money?  To give two examples of non-medium roles, how is (abstract) value stored, and what is the unit of account?

So by you only post in which you reveal you point of view : I assume your view of the noun DOLLAR which defines a currency is that it is the realization of money. WHICH IS COW DUNG. A DOLLAR IS JUST AS FICTIONAL AS A SIN OR A BLESSING FROM GOD. the dollar bills and the number in the bank accounts represent that fictional item like wine represents in certain conditions the blood of CHRIST.

You should figure out who pressed your crazy button and ask them to turn it off.

Just in case you aren't merely trying to embarrass yourself, I'll point out that I've already addressed your objection in the very post that you claim to have just read, post #2 of this thread.

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November 08, 2011, 07:07:41 PM
 #23

currency = medium of exchange
money = medium of exchange, unit of account, store of value

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November 08, 2011, 10:06:32 PM
 #24


So having a patch of land you don't have money ?


Correct. You have wealth, not money.

I think you don't understand the difference between money and wealth. We should all try to remind ourselves of that difference from time to time.

Please explain to me the difference. So that i can remind to my self of that from time to time.

All currencies together are currency . They are money only in certain conditions which i explained above. Money is wealth and wealth is money . even if we didn't invent currency money would still exist because we can exchange our wealth through barter.
Money = wealth in exchange.
Currency = fictional item invented for the sole purpose of being exchanged.

Let me ask you this: If for example a town would revert to barter would it have any money? Could it use it's wealth to trade with other towns? Or would they absolutely need currency? Sure they can trade ... they give oil for food for example and that wealth is money at that very moment and it ain't currency because if no one want's their oil for example they could just use it themselves to power some tractors.

This is my view on things.

What is money in your view ? All currencies ever invented? If that is the case then you are right. If we refer to money as a distinct term for all currencies and only currencies , that don't represent wealth and can only be exchanged for wealth then you are right.

 

In this case, land is a resource (http://en.wikipedia.org/wiki/Resource), meaning it acts as a source from which some benefit is derived, in this case you live there, you can grow crops on it, etc.  As such, you are right, the land does have a value associated with the derived benefits.

In the barter system (http://en.wikipedia.org/wiki/Barter_system), you would exchange use of the land directly with other resources.  You could rent out a corner of it for a baker to set up shop on, and in turn he gives you a hundred loaves of break a week.

But a hundred loaves of bread is a lot of bread, much more than you can eat.  You could try to find someone else who needs them before they spoil, such as the blacksmith, where you can give him 5 loaves of bread for a new shovel.  But if he, lets say, already made a set of knives for a baker for 20 loaves, he doesn't have any need for bread and the loaves spoil, so you would need to find someone else to trade with.

But this is a lot of work, so you set up a Medium of Exchange (http://en.wikipedia.org/wiki/Medium_of_exchange).  In this case, every week the baker gives you a hundred coupons each worth a loaf of bread.  Whenever you want a loaf of bread, you would give him a coupon.  You could then buy your shovel from the blacksmith for five coupons, and then the blacksmith can exchange it whenever he needs bread, or he can go to the local tailor and trade in a bread coupon to fix his shirt that he burnt while working on the forge.

After a while, the king notices your new private bread currency (http://en.wikipedia.org/wiki/Private_currency), and thinks it's a nifty idea and the whole kingdom should use them.  So he commands his royal scribes to write bread coupons and his royal bakers to accept them for bread, and then commands all the people in the land to accept them as an official state-mandated currency (http://en.wikipedia.org/wiki/Currency). 

And that's the story of how a resource became a currency.  Wink
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November 08, 2011, 11:41:19 PM
 #25


So having a patch of land you don't have money ?


Correct. You have wealth, not money.

I think you don't understand the difference between money and wealth. We should all try to remind ourselves of that difference from time to time.

Please explain to me the difference. So that i can remind to my self of that from time to time.

All currencies together are currency . They are money only in certain conditions which i explained above. Money is wealth and wealth is money . even if we didn't invent currency money would still exist because we can exchange our wealth through barter.
Money = wealth in exchange.
Currency = fictional item invented for the sole purpose of being exchanged.

Let me ask you this: If for example a town would revert to barter would it have any money? Could it use it's wealth to trade with other towns? Or would they absolutely need currency? Sure they can trade ... they give oil for food for example and that wealth is money at that very moment and it ain't currency because if no one want's their oil for example they could just use it themselves to power some tractors.

This is my view on things.

What is money in your view ? All currencies ever invented? If that is the case then you are right. If we refer to money as a distinct term for all currencies and only currencies , that don't represent wealth and can only be exchanged for wealth then you are right.

 

In this case, land is a resource (http://en.wikipedia.org/wiki/Resource), meaning it acts as a source from which some benefit is derived, in this case you live there, you can grow crops on it, etc.  As such, you are right, the land does have a value associated with the derived benefits.

In the barter system (http://en.wikipedia.org/wiki/Barter_system), you would exchange use of the land directly with other resources.  You could rent out a corner of it for a baker to set up shop on, and in turn he gives you a hundred loaves of break a week.

But a hundred loaves of bread is a lot of bread, much more than you can eat.  You could try to find someone else who needs them before they spoil, such as the blacksmith, where you can give him 5 loaves of bread for a new shovel.  But if he, lets say, already made a set of knives for a baker for 20 loaves, he doesn't have any need for bread and the loaves spoil, so you would need to find someone else to trade with.

But this is a lot of work, so you set up a Medium of Exchange (http://en.wikipedia.org/wiki/Medium_of_exchange).  In this case, every week the baker gives you a hundred coupons each worth a loaf of bread.  Whenever you want a loaf of bread, you would give him a coupon.  You could then buy your shovel from the blacksmith for five coupons, and then the blacksmith can exchange it whenever he needs bread, or he can go to the local tailor and trade in a bread coupon to fix his shirt that he burnt while working on the forge.

After a while, the king notices your new private bread currency (http://en.wikipedia.org/wiki/Private_currency), and thinks it's a nifty idea and the whole kingdom should use them.  So he commands his royal scribes to write bread coupons and his royal bakers to accept them for bread, and then commands all the people in the land to accept them as an official state-mandated currency (http://en.wikipedia.org/wiki/Currency). 

And that's the story of how a resource became a currency.  Wink

You are absolutely right . The only difference that i could spot , and you can call me whatever you like , I don't really care , is : I consider that when they exchanged that set of knifes for 20 loaves they used those resources as money , because they EXCHANGED resources. The notes are money for as long as the baker has bread. If he doesn't you and all the others can take the notes and shove them up your ass/ down your mouth but you won't get much out of them. Therefore the notes are currency.

It's just a matter of perspective after all.

from thefreedictionary.com :

mon·ey  (mn)
n. pl. mon·eys or mon·ies
1. A medium that can be exchanged for goods and services and is used as a measure of their values on the market, including among its forms a commodity such as gold, an officially issued coin or note, or a deposit in a checking account or other readily liquefiable account.
2. The official currency, coins, and negotiable paper notes issued by a government.
3. Assets and property considered in terms of monetary value; wealth.

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November 08, 2011, 11:51:39 PM
 #26

Lawyers, guns, and money are the rock-scissors-paper game of the real world. The value of what you have depends on the circumstances. To paraphrase Warren Zevon, when the shit hits the fan, it helps to have all three.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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November 09, 2011, 05:50:00 AM
 #27


So having a patch of land you don't have money ?


Correct. You have wealth, not money.

I think you don't understand the difference between money and wealth. We should all try to remind ourselves of that difference from time to time.

Please explain to me the difference. So that i can remind to my self of that from time to time.

All currencies together are currency . They are money only in certain conditions which i explained above. Money is wealth and wealth is money . even if we didn't invent currency money would still exist because we can exchange our wealth through barter.
Money = wealth in exchange.
Currency = fictional item invented for the sole purpose of being exchanged.

Let me ask you this: If for example a town would revert to barter would it have any money? Could it use it's wealth to trade with other towns? Or would they absolutely need currency? Sure they can trade ... they give oil for food for example and that wealth is money at that very moment and it ain't currency because if no one want's their oil for example they could just use it themselves to power some tractors.

This is my view on things.

What is money in your view ? All currencies ever invented? If that is the case then you are right. If we refer to money as a distinct term for all currencies and only currencies , that don't represent wealth and can only be exchanged for wealth then you are right.

 

In this case, land is a resource (http://en.wikipedia.org/wiki/Resource), meaning it acts as a source from which some benefit is derived, in this case you live there, you can grow crops on it, etc.  As such, you are right, the land does have a value associated with the derived benefits.

In the barter system (http://en.wikipedia.org/wiki/Barter_system), you would exchange use of the land directly with other resources.  You could rent out a corner of it for a baker to set up shop on, and in turn he gives you a hundred loaves of break a week.

But a hundred loaves of bread is a lot of bread, much more than you can eat.  You could try to find someone else who needs them before they spoil, such as the blacksmith, where you can give him 5 loaves of bread for a new shovel.  But if he, lets say, already made a set of knives for a baker for 20 loaves, he doesn't have any need for bread and the loaves spoil, so you would need to find someone else to trade with.

But this is a lot of work, so you set up a Medium of Exchange (http://en.wikipedia.org/wiki/Medium_of_exchange).  In this case, every week the baker gives you a hundred coupons each worth a loaf of bread.  Whenever you want a loaf of bread, you would give him a coupon.  You could then buy your shovel from the blacksmith for five coupons, and then the blacksmith can exchange it whenever he needs bread, or he can go to the local tailor and trade in a bread coupon to fix his shirt that he burnt while working on the forge.

After a while, the king notices your new private bread currency (http://en.wikipedia.org/wiki/Private_currency), and thinks it's a nifty idea and the whole kingdom should use them.  So he commands his royal scribes to write bread coupons and his royal bakers to accept them for bread, and then commands all the people in the land to accept them as an official state-mandated currency (http://en.wikipedia.org/wiki/Currency). 

And that's the story of how a resource became a currency.  Wink

You are absolutely right . The only difference that i could spot , and you can call me whatever you like , I don't really care , is : I consider that when they exchanged that set of knifes for 20 loaves they used those resources as money , because they EXCHANGED resources. The notes are money for as long as the baker has bread. If he doesn't you and all the others can take the notes and shove them up your ass/ down your mouth but you won't get much out of them. Therefore the notes are currency.

It's just a matter of perspective after all.

from thefreedictionary.com :

mon·ey  (mn)
n. pl. mon·eys or mon·ies
1. A medium that can be exchanged for goods and services and is used as a measure of their values on the market, including among its forms a commodity such as gold, an officially issued coin or note, or a deposit in a checking account or other readily liquefiable account.
2. The official currency, coins, and negotiable paper notes issued by a government.
3. Assets and property considered in terms of monetary value; wealth.



You're right.  Technically it would be considered as a Commodity Money (http://en.wikipedia.org/wiki/Commodity_money), where the value of exchange is intrinsic to the item itself.  Where commodity money fails is that the value is very subjective dependent upon my immediate needs:  if I don't need any more bread, and don't know anyone else who I can trade it with, it carries a low value for me, but to my neighbor, who's starving, it can carry a much higher value.
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November 09, 2011, 12:02:30 PM
 #28

I'm thinking about a simplified case:

On an island with only 2 people (A and B) and a bank, at the beginning of the day, bank loan out 1 million dollar (the island dollar) to A and 1 million to B, with 0 interest

A then capture a fish and sell to B at price of 1 million, B pick up a basket of fruits and sell to A at price of 1 million. After this, they both spent 1 million and earned 1 million, at the end of the day, they return the money to Bank, thus completing the credit loop

So, money is the driven power of economy activities, same as BTC is the driven power of miner's activities, under this driven power, there will be economy activities.

What if second day bank only will loan 100 dollar to A and 100 dollar to B? A and B will refuse to do anything because they think the dollar is not worth their effort. Actually their economy activities in this case are totally independent of how much bank loan they have, they could still complete the activities with 100 dollar loan, but now they have some HISTORY to compare and FEEL unfair

So, the most important use of currency is the benchmark of value





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November 09, 2011, 12:11:24 PM
 #29

I'm thinking about a simplified case:

On an island with only 2 people (A and B) and a bank, at the beginning of the day, bank loan out 1 million dollar (the island dollar) to A and 1 million to B, with 0 interest

A then capture a fish and sell to B at price of 1 million, B pick up a basket of fruits and sell to A at price of 1 million. After this, they both spent 1 million and earned 1 million, at the end of the day, they return the money to Bank, thus completing the credit loop

So, money is the driven power of economy activities, same as BTC is the driven power of miner's activities, under this driven power, there will be economy activities.

What if second day bank only will loan 100 dollar to A and 100 dollar to B? A and B will refuse to do anything because they think the dollar is not worth their effort. Actually their economy activities in this case are totally independent of how much bank loan they have, they could still complete the activities with 100 dollar loan, but now they have some HISTORY to compare and FEEL unfair

So, the most important use of currency is the benchmark of value






If there is nobody in the bank, why don't they just go take that 2 million out? I'm just pointing out that if this is a closed system, then there is no need for money.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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November 10, 2011, 02:03:52 PM
 #30


If there is nobody in the bank, why don't they just go take that 2 million out? I'm just pointing out that if this is a closed system, then there is no need for money.

The bank is operated by heavily armed robots  Grin

And, if they are so easy to get that 2 million, it will worth nothing to them, and there will be no economy activities. You can regard the planet earth as a closed system with billions pair of A,B and banks, same principle still holds

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