Topic: Representational Monetary Identity (Read 6249 times)

The money I have in my (physical) wallet consists in paper notes, or bank notes. These notes have a monetary value, which belongs to me. However, the notes themselves do not belong to me (so I have no right to destroy them). They are public: they belong to society. While their monetary value is private: it belongs to me or else to whoever controls its representing notes.

It is precisely this monetary value - of the notes I have in my (physical) wallet - that constitutes money as distinct from its representation. It is just an abstraction - despite a social one - unlike the notes that represent it. Still, without this abstraction, its representing notes would have no monetary value.

You are absolutely correct: as no monetary representation can exist without money, conversely money cannot exist without its representation - distinction is not independence.

Consequently, different forms of money are merely different monetary representations.

So what is money if not it’s representation in paper or metal? I find the idea that there’s some pure form of money distinct from any material representation a bit superficial.

Sheer gold is only money when it represents that money, so even if we could create the metal (instead of mining it), it would not necessarily be money. For example, gold was not money for the Aztecs decimated by Cortes. Thus, despite money always being a social creation, the object representing it is not: unlike dollars and bitcoins, monetary gold is a form of money of which the representing object itself is not a social creation. Finally, we can borrow money without turning it into debt: for example, I could borrow bitcoins. Money can only become debt when mistaken by its representation.


The confusion between debt and money already happens "behind the scene." However, what confuses people is a form of monetary representation: it makes them confuse itself with money. This is part of what makes the confusion between debt and money possible.


The problem is not credit, but rather its confusion with the money on which it depends, which in turn results from the confusion between that money and its representation (representational monetary identity).

Money is not debt if you never borrow, gold for example is never created out of debt

Blending credit into the picture will confuse most of the people's logic thus disguise what really happened behind the scene, so far this practice has been successful in fooling majority of people

Credit is actually a very complex concept including several changes in ownership (ownership itself is even a more complicated concept), after several times back and forth changing of ownership, most of the people get lost

I am glad you came to that view.

However, your conceptions of wealth and labor are not where I see the fundamental problem. The dominant form of money today confuses it with its representation, which indeed corrupts the concepts of wealth and labor, but only after corrupting the general concept of money by turning it into debt and greed. Bitcoin solves that problem because it finally distinguishes money from its representation. I investigated that issue here: http://omniequivalence.com/representational-monetary-identity/.

I concede you may have a point. Looks like I have to re-examine my definitions on wealth & labor

You do not simply sell yourself to your boss; you rent yourself to him. During the day of work, when he owns you, you cannot enjoy your wealth without his permission, so it does not belong to you without also belonging to him. After that, or when in vacation, you can freely enjoy your wealth, so it belongs to just you. In other words, your wealth only belongs to just you during the time you do not belong to your boss.


Before 1971, dollars were legally a proxy representation of gold. You can say they were a "claim" on gold as long as you remember that both were money: gold was directly money while dollars were just indirectly so. However, although now money is purely debt, it still is a claim on wealth, just as it was before (when people talk about the collapse of the dollar, they are precisely talking about the day the dollar will no longer be a claim on wealth).


Wealth is a useful product of labor. So the means of production (machines, commodity resources, etc), which are indirectly useful products of labor (they are useful in producing useful things), are also wealth. However, the process of production itself is not wealth: it remains the process by which the means of production become wealth.


A consumer good may be useless to you, but if somebody else regards it as useful (even if you disagree), then it is a useful product of labor, which is the very definition of wealth.


Nobody has to be a Kennedy to be wealthy. Even if I am far less wealthy than the Kennedys were, I am still wealthy.


Now you talk about a "claim on labor" to mean a different thing: a claim on the money you earned with your labor. The fundamental problem with this system - of which the scenario you described is a late consequence - is that the public aspect of money has been long privatized: money has long become debt. For decades now, this has concentrated money (which is ultimately power) in the very few hands of the so-called 1%, and will continue to do so as long as money remains a form of debt.

Wealth is food, clothes, a house, a car. Money is not wealth, but rather a claim on it.

Yes, money is not wealth on that we agree. However I doubt that owning clothes, car & house truly represents wealth. Say a slave owns his machete & shack - is he wealthier that the one which does not (but has them just the same)? If your boss wants you there 8:00 AM sharp and for that you maintain a house near his factory & have to own a car - are these signs of your wealth? Again, (modern) money aint claim a thing. It used to be claim on gold but not anymore. Most people may volunteer to exchange their goods or services for your money but they don't have to.

However, being able to "extract labor" makes you a capital owner ...  having capital is to have the means of producing new wealth and control over the workers needed to produce it

You are absolutely right that capital is about control over workers. However the wealth is not the material outcome but rather the very process by which part of the output is directed towards certain people's needs. For example the daily output of an armaments factory does not represent wealth. But the process by which your can be consistently made to build bombs for the benefit of a tiny ME country & its supporters is wealth.

Money being a claim on wealth simply means that it can buy useful products of labor (wealth).

Ditto, consumer goods are not wealth. In fact many are waste.

People can be wealthy without having capital

Damn right. the Kennedy's, the Bush's, the Clinton's - they are all wealthy without owning much capital. So are countless top-level state bureaucrats who could direct the effort of millions to their own benefit. Hence they are wealthy.

..., by working for money and buying the useful products of their own work and those of the work of other people.

It's true that everyone works. And this is the genius of the system: I work for 8 hours and make $200. Some political pundit earns the same in 10 min explaining on CNN the brilliancy of certain BofA, whose chairman makes $25K/ day and which acts in the interest of an lobby of the top 2% of the us population. I don't agree but I have to pay my mortgage to that institution just the same (claim on labor). So does the pundit. The BofA chairman also works - he makes bets with our money on all kinds of things. When he's right - he gets a bonus. When he's wrong - he gets a bailout with my taxes. Now I have to work extra hard because the school got de-funded and I need to put my kids in a private one which is expensive. And I learn that the private school principal & the BofA chairman share the same culinary taste - what a coincidence!

Wealth is food, clothes, a house, a car. Money is not wealth, but rather a claim on it.


Having assets is to own useful things, not for the sake of their utility, but rather for the sake of their monetary value. Then, it is the same as having money. So you are correct: this does not make you "wealthy" (you have no "wealth"), but only "rich" (you have money or something of monetary value, with which you can buy wealth).

However, being able to "extract labor" makes you a capital owner, not necessarily a wealthy person. Usually capital owners are also wealthy (they usually have good clothes, good cars, good houses, etc), but having capital is to have the means of producing new wealth and control over the workers needed to produce it. It is like having money since both can give you access to wealth that does not yet exist.


Money being a claim on wealth simply means that it can buy useful products of labor (wealth).


Again, that is being a capital owner. People can be wealthy without having capital, by working for money and buying the useful products of their own work and those of the work of other people.


You are confusing between wealth and capital. Wealth is any useful product of labor while capital is a social form of producing wealth (other such forms are servitude, slavery, etc). The "political connections, family ties, ethno-cultural belonging etc" belong to the social form of production - not to the wealth it produces.


Both slavery and capital are claims on the workers themselves, and not on labor (this is one of Marx's mistakes). The difference is that slavery is an absolute, unlimited claim on workers while capital is a relative, limited one (limited in both time and form). Money can be a claim on capital by being a claim on workers along with the means they need for producing new wealth, or it can be just a claim on wealth directly.

Wealth is claim on labor. Having assets or cash does not automatically make you wealthy (you are merely considered “rich”) – the ability to use these to consistently extract labor - does. Money is not a claim on wealth – far from it. Example: having a profitable business backed by a powerful lobby is wealth. Your money has no claim on such wealth unless it’s for sale. Even then only the “the assets” are sold (factory, office, bank account,etc). What is not sold are the political connections, family ties, ethno-cultural identity etc. These make a big difference in a bailout-driven business model.

There used to be times when wealth was simple to recognize. The claim on labor was direct (slavery, serfdom, etc). This is now replaced with a more indirect system, involving several layers of indirection between the claim and the owner. The results are nevertheless the same - you work for other people more than they do it for you. What you put in is less that what you get. That difference is the wealth.

As for money - you are right in general that both liabilities and assets can be used as money. However not every asset has to be tied to liability (example - a gold coin in your hand is an asset with no liability). The evilness of the banks is that with a stroke of a pen they can create both an asset and a liability and make money on both while maintaining their books perfectly balanced - as long as the paper they create is considered "money"

Would it not be "personally-attacking-anyone-whose-actual-points-you-are-unable-to-invalidate"? There indeed should be a single word for that since it is one of the oldest behaviors, both on- and offline.

Just remembering my point at /index.php?topic=144650.msg2860192#msg2860192, the mistaking of money for wealth (for assets) and of debt for money are the same, and both result from representational monetary identity.

Hmmm, it:

-argues with just about everything anyone says
-contradicts it's own previous arguments in order to promote further arguments
-agrees with nothing but it's own self-validating statements
-is relentless in pursuit of arguments

My brain can't be working properly today, as I'm sure there's one-word expression for this type of online behaviour. What could it be?

So let us talk straight:

1) If money cannot be a liability, then it cannot be an asset: my bank money can only be an asset to me by becoming a liability to the bank, and it can only be an asset to the bank by becoming a liability to borrowers. This is no "accounting trick": money can only be an asset if mistaken by a liability, as which alone banks can duplicate it in the borrower's account - the original form of this mistake is what I call representational monetary identity (http://omniequivalence.com/representational-monetary-identity/).

2) Wealth is not a claim on labor, despite having a monetary value and being a product of labor. Instead, money (not wealth) is a claim on wealth (not on labor). Wealth is in itself neither money nor labor: it is rather all things we produce because of their utility, without which they could have no monetary value (a piece of wealth taken in its monetary value is, precisely, an asset). The true meaning of "assets" is the one you put between quotes:


While its false meaning is the one you leave unquoted:


Instead of denouncing banks, you are just buying into the very confusion that allows them to make money: the mistaking of money for wealth (for assets).

This is of course not possible.  You are looking at a legalized accounting trick allowing the same thing to be counted as asset and liability at the same time. You bring $100 to the bank – it’s an asset to you and liability to the bank. Bank loans it out – now it’s an asset to the bank and a liability to the borrower. The grand total in circulation had not changed (still $100) but there are now $200 of assets and $200 of liabilities. The bank then proceeds to collect interest from the borrower while maintain the appearance of having your $100 at hand.  Some non-Christian type earns a bonus.

When economy goes wrong (every 5-7 years) the Bank cries foul, gets money from Government (your taxes) AND forecloses on borrower. The Bank is again whole, you lost your taxes, the borrower lost their property, more money was printed and the same non-Muslim type gets rich.

Rinse & repeat. In this process the “money” is nothing but a unit of account, used to quantify how much property can be squeezed from the hapless borrower and what percentage of your productive output (GDP) the bank can claim during bailout. The notion that money is “yours” is but a fiction. In fact the money has been assigned to you to quantify your temporary usefulness during property seizures / bailout negotiations. ("Look, we are too big to fail, there's XXX billion $ deposited in our bank ..."). If the bank believes it can squeeze more from you at a later date – you get more money (credit) and "get richer". When that perception changes – bang – you’re broke. How much you get or is taken from you depends on the "depth of the business cycle"

Last but not least, you can’t comprehend things because the language has been deliberately drained from meaning. It helps a great deal to confuse things. When you cant talk straight - you cant think straight. It's not obvious how wars get started by Department of Defense, schools are closed by Department of Education and oil & gas exploration is banned by Department of Energy. And yes the business cycle has nothing to do with your business. Things would be much clearer if it was named: "the banking cycle".

You do understand that wealth is a claim on labor? The so called "assets" - your car, house, ranch or factory are worthless unless there are people willing to toil on them. Therefore it's impossible for the majority to be wealthy - wealth is a minority thing - not for the average Hindu.

The reason why fractional-reserve banking works is not because commercial banks "pretend" still to have the money they already loaned. It works because the representation of that money by different bank accounts remains mistaken for the same deposit money, which hence replicates itself among its different representations by those different bank accounts (or notes, checks, etc), in what I call a representational monetary identity.

Bitcoin prevents that by inherently distinguishing money (a private key) from its representation (a public key).


Fractional-reserve banking predates central banking: it is not necessarily "backed by central banks," although with central banks it will take longer to collapse.


A central bank that does not create money as a public debt is not a central bank.

You are a bit confused: I gave you Bitcoin as an example precisely of money that is not debt since you asked me for such an example. Yet even if I didn't, you have just conceded that money can be something other than debt, which is good enough.

No one ever mentioned bitcoin being debt based, thats just a daft argument. And those old notes and gold coins are no longer fiat money. Fact is 100% of our fiat money is now an IOU.

To find money not created by banks you just have to:

1) Remember that banks have not always existed and that money was once gold and silver (not to mention salt, cattle, etc).

2) Notice the forum you are in, which is about Bitcoin, a form of money created by a peer-to-peer network, rather than by banks.

No that difficult, is it?

What other fiat money is there, besides money created by commercial or central banks?