Topic: An Honest Introduction to Money - page 5. (Read 6557 times)

However, the U.S. government owes more on each "bill[]" (dinofellis) than its face value (regardless of whether or not it has been spent), for its bonds (at least, at present) pay positive interest.

Very true, I just wanted to point out that the state is not the source of morality.

So those obtaining those bills are essentially the US government, which can, as long as the US dollar is world reserve currency, buy up the world against it.

Which they did:


http://en.wikipedia.org/wiki/Balance_of_trade#/media/File:Cumulative_Current_Account_Balance.png

That was added in 1954, if I remember correctly, to (help) rally the American public behind its government's aggressive posturing towards the officially atheist U.S.S.R.



The U.S. government only makes the U.S. dollar legal tender by ensuring that it can be used to pay debts. It is the modern American consumer  economy that creates those debts and the private banks of the U.S. Federal Reserve system that "print those bills" (dinofelis) through debt (e.g., buying U.S. government bonds therewith).

I think there's a subtlety there.

I define money as follows:
"money is money because most people think that most people think that it is money".

And that's also what is going on with what you're saying.  In fact, nobody thinks that the USA, or the UK, are going to pay their debt.  After all, since Nixon, a dollar changed from a virtual IOU into a real IOUN (I owe you nothing).  This was already de facto the case: nobody was really claiming their gold, and there wasn't enough of it for the IOU to even be slightly credible.  It was when Charles de Gaulle from France wanted his physical gold, that Nixon was forced to give him a middlefinger.  In reality, actually, de Gaulle had been getting gold from the USA against french dollars since 1965.  It was when this really became difficult to maintain, that Nixon stopped it - it would become clear that the IOU was not covered.

A dollar on which is printed "this note is legal tender for all debts, public and private" has on its other side "in God we trust".  Meaning probably "hey, I owe you nothing, but go and see God, maybe he'll jump in".

What can you get, from the USA, with a dollar bill ?  Another dollar bill.  That's about what the IOUN means.  So what trust in what ability to pay what debt ?

The dollar is a world currency, because everybody thinks that everybody thinks that it is money.  But in the original issuer, the USA, no trust has to be placed for that, as they owe you nothing against it.  That makes that the USA, with its ability to print those bills, can buy the world, against nothing.

In the case of Great Empire and the G.E. coin, your statement is inaccurate.

I would worry more on whos about to be the next world currency reserve, cause theres a slight chance the u.s will fall off and possible china can take it.

Just the fact that their whole growth is 10x larger, and they been playing chess with how they should approach the situation. Cant predict which one will win, but stay on top of whos winning or has the chance to take over the world foreign reserve.

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.

I wouldn't call Europe a heaven of peace in the last 500 years   About every 50 years or so, there has been a devastating war in Europe over this time scale.

I think that the two elements which make regular warfare and conquest unprofitable today are the fact that two elements are usually required by the international community which has weight (essentially the USA, say):
- absence of slavery
- representative democracy.

As such, the usual goals of military conquest, namely enlarging territory, winning slaves and wealth from the conquered territory, and increase of power, now fall apart.  Slavery is frowned upon.  And if there is to be representative democracy in the conquered territory, that would rather lead to decrease of political power (if the conquered area is not favourable to your invasion, which is often the case).

So all the classical incentives of classical military invasion for a state have been ruined by the international pressure for absence of slavery and for representative democracy.

This is why most wars today are fought by proxies.  There is no political gain any more in direct conquest of territory.  It is only interesting if the area is remarkably rich, and much smaller than the invasion powers. 

Representative democracies will use their armies to gain geopolitical power without annexation but by destruction of regimes that thwart their own geopolitical strategies of obtaining stuff from others.


It does.  After all, it is still the main tool to get goods, services and power to a small elite which shares financial and political power.

The goal of the state is to pump wealth from the productive to the elite.  This has always been so, and it the principal reason of existence of a state.  From the first kings to the most sophisticated form of modern government.  However, as the modalities change, and the ways to get power change.

If we can take a slightly smaller view, say over the last five hundred years, we should recognize the success of the "Westphalian" system.  (The Peace of Westphalia set forth the principles of territorial integrity and non-intervention between European states, after the carnage of more than a century of warfare.  Notwithstanding Napolean, Hitler, Putin, etc. the system is largely successful, especially since the non-European world has largely adopted the spirit over the last hundred years.)

In the post-Westphalian world, even the biggest international contest and driver of monetary inflation, ie the rivalry between Britain and France in the 18th century, saw most conflict happen outside Europe.  Today's conflicts, say, between China and other countries, are over small bits of territory.

Absent the real need to protect people against foreign aggression, monetary control and inflation has no real justification in today's world.

The state is oppressive, but I wouldn't go quite as far.  In the post-Enlightenment world, the state has been constrained to some degree, and all I'm saying is that getting out of money should be the next constraint (similar to, say, staying out of for-profit business as the US government is officially required to.)

Note that (as I alluded to in the original post,) the most successful modern states in both military and monetary terms, ie the UK and US, have also been the most supportive of "liberal" values.  (I'm using "liberal" in a classical sense.)  Only these states can really "rob the world" because the world trusts in their promises to pay their debts.  So there is a kind of strangely poetic logic going on that the most purist libertarians may not realize.

The progress we're after requires a mass awakening.  And it can be argued that such an awakening will be the only true and permanent success.  Any quick victory probably won't be real.

I fully agree with you.  However, you should maybe read "Debt, the first 5000 years", by Graeber.  It illustrates somewhat the fact that most money found actually its origin, not in markets, but by states, wanting to finance war and needing the seigniorage to pay their armies. 


In fact, this is even so by definition.  If a monetary asset had an intrinsic (usage) value, equal to its face value, then it wouldn't be money !
After all, what is money ?  Money is what is used mostly as an intermediate asset.  As such, the demand for it is MAINLY to be used as an intermediate asset (temporary store of value).  Hence the demand for it is *much higher* than the demand for its usage as a consumption or production capital good (which determines its intrinsic value).
So by definition, the demand for money must be much higher to be used as intermediate asset than as consumption/capital good, and hence the price of it, determined by that demand (in the face of the same offer) must be much higher than its intrinsic value.

Otherwise it wouldn't be money.

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.

If “people” (johnyj) should each, individually, prove a “money creator” (johnyj), need these concern themselves with the “right to rob” (johnyj)?

Interest is not a big issue. Now when the interest rate can be negative, all the debt slave talk will be questioned. In a negative interest environment, you only need to return less money than you borrowed, and there will be more and more money left in the circulation, and debt will shrink

So, as long as banks control the money creation, they could adjust the game rules as wish: Positive interest, negative interest, more money, less money... anything can be done when you command the money creation

The real issue lies in money creation, e.g. if those money are created at a cost to its face value. If it much cheaper, then there are some kind of slavery. And another problem is people using fiat money as unit of value, it is people's trust of fiat money give the money creator right to rob them

The purpose of monetary society is to allow individuals the flexibility to earn and consume at different times, and to adjudicate the relative value of each good, service and consumption.  It also makes division of labor possible.  Money is one of the great inventions of humankind.

The vast majority of savers are not hoarders who refused to help others over their lives.  They are ordinary people trying to be able to consume when they become old or sick.  In any case, sharing what you have is a noble impulse that is fundamentally difficult to codify into a system, so it should probably stay as such.

And savers taking advantage of borrowers are not the predominant outcome of debt.  Inflation and default probably happen more often than loans repaid fully with higher-than-justified interest rates.

To be totally honest, you can't be 100% sure, but usually someone making a sweeping philosophical statement about money such as this has the ulterior motive of supporting the financial repression by the elites that makes the modern monetary system possible, that benefits them so much.  And their next device for repression will be negative interest rates, if they get their way.

For this reason, I have become wary of such statements, as I've read so many of them.  When all's said and done, money really shouldn't be considered that different from the simple and mundane object we all understand it to be.  If it really is more complicated, then something is wrong, since the elites will take advantage of the lack of understanding of the rest.  This last part is unfortunately all too true today.  There's nothing that will benefit the average person more, fundamentally, than fixing this anomaly.

What system is in place to prevent individuals from issuing/spending more money than they earn (in the past or future?)

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.