Topic: What is currency? (Read 3587 times)

Going to be part of this, sounds interesting.

currently there are 2 types of currencies, namely digital currency, which is pioneered by crypto, and fiat currency, which has the same properties, namely as a transaction tool, even though it has a different operating system

Currency is a tool to pay for or buy items that you like. but the name of each country's currency is different. but the type of currency used in the world of bitcoin is.

In my opinion, in a particular country they have a system of money used in general so it so called a currency. Like the strongest currency was the dollar. In these new era, with the advancement of technology digital currency evolved.

It is true that currency is a representative of the. Value of the countries purchasing power given to the people in a form of trust. That means that the piece of cotton bill of a minted coin they have in their wallets and bank accounts has real value and the people should trust the financial arm of the government that it is true.

Currency refers to any kind of money that is in circulation in an economy, used to purchase goods and services.

The value is constantly changing, there is no case the same price for 10 years. Because electronic money is a sacred variable over time.

I was finally able to watch most of it.  I agree that his solution, while it may be the best balance of many bad choices, is flawed in the sense that it's not going to be implimented by him; or even by economists in general.  It's going to be implimented by polititians.  If it can go wrong, and I'm sure that even he can admit that it could go very wrong, then it is a wise bet to assume it will go wrong.  Obamacare might have worked (as a social program) under the correct implimentation as well, but it doesn't because we are talking about government actions.

I'm of the opinion that his "choose death now" path is the better one in the long run, because it will effectively purge the economy of institutions that function as parasites upon our economy and our society at large.  (Think about this; every bank teller, every tax consultant, every lawyer, every polititian earns a living performing necessary work that the private sector would call a "cost center".  They don't produce anything.  If Bitcoin comes out the winner, it will be because the public recognizes that using it will cut out the cost centers, and our society will not need a tenth of these people anymore)  The drawn out "Japanese model" won't do this, although it may avoid a civil war.  Even if one path could be said, with any certainty, to lead to civil unrest and the other to decades of economic maliase; I'm not sure that a full blown civil war would actually be more costly in human lives and suffering as compared to decades of rationing of resources (because health care may be first, but it won't be last) leading to reduced access to many important resources for the childhoods of the next generation.  I have five children; but only one life of my own.  If the needs of the many outweigh the needs of the few, then I choose the quick death now.

For the life of me, I couldn't watch that video. But I'm not unfamiliar with Rich Duncan's work.  The problem is that his perspectives are no more certain than anyone else's.  Japan has largely been in this same boat for two decades or more, and yet they seem to zombie on.  The primary reason for this is that, as a culture, the Japanese seem to have an endless trust that their government knows best; and American's generally do not.  Still, I'm not stupid, and have taken more drastic steps for my own family than just a few weeks canned goods and a few gallons of water.  I'm not going to bet against an economic breakdown, in part, because I'm of the Austrian school of thought at well.  However, I'm not going to 'talk my book' either; because such social breakdown is a social breakdown.  A debt deflation may or may not be a trigger for a social breakdown.

Nothing, just that we are forced to use it because everyone is using it.

He makes a lot of sense, but his solutions from an Austrian perspective are pure malinvestment.
He is talking about a catastrophic multi decade Depression - a little hard to stack up on food and water for that.

Dude exactly that is the function of price! God damn I get really tired of this argument. It doesnt matter if you measure it in work or kilowatts or gold or ass or oil or anything else. The price someone is willing to pay is the representation of subjective value the standard is what you measure against.

For instance you could push my car to give me a jump you only spent 100 joules doing it so I pay you 110 because I am a nice guy, But if I was on the way to get some pussy ... I might be willing to pay 500 joules to get a push start.

IT IS PRICE THAT IS THE REPRESENTATION OF SUBJECTIVE CHANGES IN VALUE AT A GIVEN PLACE AND TIME!!!

http://www.youtube.com/watch?v=iquemUNNYY8 Please watch it and get a little stash of food and water for the just in case.  

That's true also, but I'm not sure that it matters.  The vast majority of people either don't know that currencies are debt based, or they are of the mistaken belief that the US $ is still backed by physical gold held in reserve.  The failure of such a currency is entirely dependent upon the public's faith that it will still have spending value tomorrow.  The fact that we know better doesn't imply that we can predict the outcome.  As the saying goes, the market can be irrational for longer than you can stay solvent.  The fiat currency market has been irrational since at least 1971, and probably 1913; and that hasn't really matter yet.

Those units you described are all objective measure, they exists regardless of human. But value only exists with human, a fundamental difference

And energy is not a good measurement either, you can push the same car back and forth on the street for the whole day and spent lots of energy, but no one gonna pay you one dime

Thinking about those guys spent a fortune to get married just to be divorced a couple of years later, their valuation about marriage changed dramatically  

100 percent agreed on that bitcoin will not be the successor


It has never happened in the history of man that a debt based world reserve currency failed.

I agree with your premise that a shift in the worldwide value 'standard' is underway, but there is no special condition to imply 1) that such a shift will necessarily be catastophic, since it's happened before without significant problems.  Most of the world didn't really even notice when Bretton-Woods failed, just kinda shrugged their shoulders and carried on.  Or 2) there is no certainty that the world would chose Bitcoin as the successor under the current state of geo-political affairs.

It is all part of the problem that I am pointing out.

Let me try explaining it differently

The unit of measurement of value has been many things, sea shell's, massive rocks, salt, food, metals/gold, and now we have a pseudo unit of measurement called a dollar.

So basically the world has had a government standard for the last 40 years.

The crisis that the world is experiencing is because the government standard changes. It is a dictated standard that floats to American advantage and at the expense of the rest of the world. Countries are moving away from the dollar and we will lose our status as the reserve currency.

The question is what will the new standard be? If we want a world that is not dictated to us at the point of a gun, if we want a smaller police state and less wars we need to choose a unit that is not controlled and distributed by the government.

Bitcoin could be that standard, but it is gonna have to be defined in terms of something other than the government standard. You cant define bitcoin with the USD or EURO or any other state issued currency, and it can not have a hard limit.

http://theautomaticearth.com/Finance/the-imf-proposes-a-10-supertax-on-all-eurozone-household-savings.html

http://www.thejakartaglobe.com/business/de-americanized-world-needed-after-us-shutdown-china-media/

http://www.huffingtonpost.com/robin-koerner/monetary-policy_b_1270711.html

http://www.mises.org/daily/6556/How-Much-Longer-Will-the-Dollar-be-the-Reserve-Currency

http://www.washingtonpost.com/opinions/americas-default-on-its-debt-is-inevitable/2013/10/10/1451d416-302c-11e3-bbed-a8a60c601153_story.html

http://economictimes.indiatimes.com/news/international-business/us-headed-toward-very-dangerous-moment-world-bank/articleshow/24070979.cms

"The post-1971 dollar derives its value from the stamp of the government that issues it. Across the seas, this imprimatur is starting to look a little tenuous. Lend us your dollars for 10 years, the Treasury proposes. We will pay you the lordly interest rate of 2.7 percent per annum. And at the end of those 10 years, we will hand you back your principal, which will almost certainly buy less than the money you lent.

This is the unsustainable conceit of the world’s superpower-cum-super debtor. By deed, if not audible word, we Americans say: “The greenback is the world’s great monetary brand. You have no choice but to use it. Like it or lump it.” But the historical record of paper currencies is clear: Governments always over-issue it. The people finally do lump it."


“The cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising debt ceiling has again left many nations’ tremendous dollar assets in jeopardy and the international community highly agonized,” said the commentary.

“Instead of honoring its duties as a responsible leading power, a self-serving Washington has abused its superpower status and introduced even more chaos into the world by shifting financial risks overseas,” but equally stoked “regional tensions amid territorial disputes, and fighting unwarranted wars under the cover of outright lies” the commentary said, referring to Iraq.

It added that emerging economies should have a greater say in major international financial institutions the World Bank and International Monetary Fund and proposed a “new international reserve currency that is to be created to replace the dominant US dollar.”

"China has only slightly more weight than Italy at the IMF, which has been headed by a European since its creation in 1944.
A governance reform has been in the works for three years but its implementation has been blocked by the effective veto of the United States."



"The top richest 1 percent of people own 46 percent of global assets"



 
   

Perhaps.  Time will tell.

The political crisis is just a big sham to distract us all from the underlying problem: We're broke. This nation is flat broke. And we have a currency crisis, right now.

Political crisis, sure. That may or may not lead to a currency crisis.

That's what currency used to be, back before 2009. From the moment of the genesis block, there has been only one true currency.

Paper with some ink on it.

I think that you're underestimating the decay this nation is experiencing. We are already entering the time of crisis.

I'm not sure that I agree with this, and I'm a long running bitcoin bull.  It might happen, but I would think that before any particular society were to abandon their local fiat currency and commit the work necessary to both learn about bitcoin and price goods locally in bitcoin, that local fiat has to have some kind of crisis of confidence.  I can see this happening in many developing nations rather without much additional motivation than what the recent history has provided; but as to places with a long history of a well respected central banking system (I.e. The US, UK, Germany before the Euro, not sure about the Euro now) I doubt that even a minor crisis of confidence would motivate even a small minority of the general pubic to trade bitcoin in meatspace for a loaf of bread.  Certainly, so long as Bitcoin stands the test of time, such a crisis must come for all fiat; but I would consider it unlikely to occur in my own lifetime.  That is, so long as the US doesn't erupt in another civil war; which at this point is still a low, but rising, risk factor IMHO.

That carrot you ate today was probably grown from shit.  A good chance it was cow manure or pig, chicken, etc.

Shit is very valuable to the farms that grow your food - and food is more valuable than money - so don't disparage shit with your mouth full! :-)

Of course we need a common standard for currency. Bitcoin is that standard. Before long, everbody, globally, will measure value in bitcoin. Sure, in places and at times people may use other things as currency, but the one global standard will of course always be bitcoin. Everybody will know what a soda costs in bitcoin and what a loaf of bread costs in bitcoin and what a house costs in bitcoin, and it will of course be very stable once it has driven all other currencies into the ground. Right now it's very difficult to keep track of things because there is no currency in existence that isn't being manipulated by some group or another to such a degree that it's no longer useful as a standard.

That's also not true.  And whatever industries that you work in are, by definition, of limited scope.  You can't rationally assume that your personal experiences are indidicative of the market as a whole, although I won't contest the point.


I suppose that would depend upon what industries we are talking about.  I'm sure that manufacturing for international markets would have an advantage in metric, simply because that market is larger.  Still, if that were universally true, then why does every car that I've ever owned have both metric and American standard parts, regardless of where it was made?  There are metric automotive tool sets that have oddball sizes (9.5 mm wrench, anyone) that are actually metric conversions of commonly used AS part sizes.  For the most part, Americans just have full sets of both AS and Metric, which is wasteful in some ways.  But we're Americans, so waste of resources is what we do.

EDIT:  For those who don't know, a 9.5 mm wrench is the same as a three-eights inch wrench.  Intended for a rather commonly used nut size for cars made in Japan, and to some degree cars made in Germany; for the simple fact that the size of nut is economicly and structurally ideal for it's use.  In part, because it's commonly used in the United States, and therefore mass produced to great economies of scale.

A peice of shit could be currency if it was deemed to have value by society. Currency is really just a notion not a solid definitive object

Canada is special, its metric but everything traded with the US is Imperial. It is literally the residential housing industry keeping imperial alive, most industries I work in are switching to metric, just to stay globally relevant.
   
The bottom line is, sure use whatever system you like, the best one will win in the end. Having been educated in metric only and working exclusively with metric for 10 years and switching to imperia and metric 15 years ago, I can say there are big productivity gains to be made in the use of metric alone.

The problem with fiat (a currency) isn't IS or AS, it is, the unit of measure must be fixed, and to the OP's point, Energy is a key commodity in wealth generation, it is a poor currency, not the fact that we have an International Standard for measuring other things.

BTW, in some markets the AS continues to dominate, even in Canada.  Such markets are usually local in nature.  One great example is the trade in bulk firewood.  The standard way to measure bulk firewood in the US and in Canada is by the cord. http://en.wikipedia.org/wiki/Cord_(unit) Historicly (and often legally) defined as a stacked volume of wood measuring 4 feet by 4 feet by 8 feet, or 128 cubic feet.  To this day, your government continues to recognize the cord as the standard bulk measurement of wood, while also continuing to discourage it's use, while encouraging the cubic meter.  (A measurement of volume that is, notably very close to a "face cord" which is usually one-quarter (half and half again, base 2) of a full cord)

The cord is the commonly used standard for bulk firewood in a great many European nations as well, that also officially use the metric system.

http://www.ic.gc.ca/eic/site/mc-mc.nsf/eng/lm03963.html

I didn't claim that it was a conspiracy.


Again, I'm as familiar as anyone else is in the system.  I'm employed in a job that requires it's use.  I know what it's good for.


This is false.  It's the dominate choice because Europe was so screwed up with slightly different versions of the Imperial System beforehand, and it's the dominate choice today because developing nations have a vested interests in conforming to their primary markets.  The domiance of computers help keep it in use, but it's far from a market based victory.  Most of the nations that employ it today were forced to by government edicts.


And a pint is a pound of freshwater.  The major advancement of the Metric system was using base 10, which is good for mathmatics.  Like I said, AS is primarily a base 2 system, which is easier for the human mind to conceptualize withut calculators or pen and paper.  Notablely, however, caluclators didn't exist when the Metric system was in accendency; which is why it had to be forced upon most populations.  Although it did encourage the study of arithmatic among the masses.


Which, pratically speaking, isn't a particularly widely used mental calculation, in the real world.  Think about it; while it's trivial for you to convert distances that you measure in centimeters (the width of a table, for example) to distances that you would travel in a car (in kilometers) how likely are the average perosn to ever do such a shift of scale outside of the context of a math class?  Yes, it would be very difficlut for me to change thes same scale in AS; moving from inches (or feet) to miles,  shifting between scales of measurements is not a regualr use of either system by common people.


America does compete with the "Imperial system", and every American child learns metric in school; but there are very good reasons that the American Standard dominates within the US itself.  One of which is that base 2 is easier to do practial calculations in your head in, beyond simple changes of scale.

Slow down there, the metric system isn't a conspiracy, it based on units of 10, and it evolves from counting on 10 fingers, it is the dominant market choice and has outperformed every competing system since its inception in the late 1700,s . It uses logic as a way to connect similar values eg. 1cc (cubic centimeter) is equal to 1 gram of water.  1 square km = 10,000,000,000 square cm. And 0.0 degrees Celsius is the temperature at which water freezes, and 100 degrees Celsius at sea level is the temperature at which water boils, knowing that you can common sense the temperature space and volume.

It allows efficiencies in mental calculations that surpass any other system. You can convert between units by changing the name or scale as easily as moving a decimal place.

America would fall of the earth if it had to compete in a free market with the old imperial system, just be grateful your government holds ignorance as a virtue.     

Is that what your government tells you?  Mine has been telling me the same thing, even to the point of requiring that it be taught in my school and forcing me to use it in the military.

The natural rise of the American Standard was haphazard and still has strange artifacts of history (such as the mile), but most of the measurements (particularly volume and weight) are base 2 (halves and/or doubles) and are much easier for actual humans beings to conceptualize without the aid of a computing device.  It will take nothing less than being conquored by a foreign power to stop Americans from teaching the AS system to their children and using in daily business.  There is a good reason that a measuring tape manufactured in China will have both Metric & American Standard printed upon them.  Americans will use both, but generally only use metric when forced to by circumstances, or when talking to Canadians.  American construction workers hate metric, and every young architect quickly learns to produce prints in AS, regardless as to how great the metric system is to his trade.

American cars have Km's printed upon speedometers as a matter of law, but they are small print because Americans don't want them.

Yes redundancy is great thing

SI-units are the correct way...

You mean the Système International system?

No

Currency is a system of circulating tokens of standardized denominations which, by consensus, is agreed to quantitate value in a relatively context-free manner (unlike coupons and subway tokens, which represent value only in very limited contexts.)

That is about as general and abstract as it gets--covering everything from tally sticks to kina shells to gold coins, paper money, and cryptocurrency.

Every system of measurement on the planet depends on a unit of measurement.:
Wealth = Money

Value = irrelevant (eg. my 4 year old believed $20 for 1 smarty was good value, and you know from his perspective at the time and place is arguably correct.)
i.e.Value is nothing but an opinion dependant of space, time and knowledge.  

You have to rethink your idea.  

While each human is capable of more or less creating the same magnitude of energy measured in joules it is not a relevant unit of measure, as that energy input is an inadequate unit of measure of value.  
See   Labor theory of value
1 joule of work = 1 unit of labor

Wealth is what is to be measured, and money is the unit, currency is a symbolic representation of money.
Work is relative, a joule is in fact money; the application of 1 joule of work can be amplified through technology and or knowledge, or destroyed.

 Putting the same energy into plowing land by hand -v- putting energy into plowing by oxen -v- putting energy into plowing via combine harvester will reveal exponentially greater outputs.

And the application of knowledge also amplifies the energy input. Eg: plowing in 90 deg angles to a slope and planting at the correct time is just knowledge but applied with the same work generates greater wealth.


Joules are not easily exchanged, they diminish over distance, and cant saved over time. So is not a good currency, it is a commodity.

I suggest 1 unit of currency = 1 unit of value = 1 joule of work.     

All units of measurement are very subjective, people said the same thing before they defined an inch. Length is very subjective or weight is very subjective or g force is very subjective... is all very much a matter of opinion, but when we all share the same opinion something cool happens it becomes a matter of fact length is no longer subjective when we all accept the unit of an inch and when we all accept a unit of the measure of value it will no longer be subjective. 

Value is very subjective, same thing never has the same value 10 years ago or in another country, it is changing constantly

Weight = kilogram
length = meter
temperature = Kelvin

Use the SI-system...


Work or energy is sensible. Everything can be presented in it. Though it's very complex. And immaterial stuff is rather hard...

My argument is that currency is a measurement system to try and quantify value.

If currency is the measurement of value what is it's unit of measurement?

Every system of measurement on the planet depends on a unit of measurement.

weight      =  pounds
length      =  inch
work        =  joule  
brightness = candles
time         = second
value        =  ?

What is a unit? "a quantity chosen as a standard in terms of which other quantities may be expressed."

Who chooses that standard? We do! people just start to all agree on a unit

The first thing people say is that value is subjective, but all of the units of measurement are a matter of opinion that we all share. What is subjective to the individual is not true of man kind in general. It may be true that a individual may not value food but it is not likely to ever be true that mankind would not value food.

So if currency is just a yardstick to measure value of real things it is just a tool, like a protractor, compass, tape measure but it has no lines on it. To give currency lines we have to all define and accept a unit of value.

I suggest 1 joule of work = 1 unit of currency

When we define a unit of currency it will no longer be subjective when we all believe something it becomes objective.

The only way to ever measure anything is against a point of reference.
 

This is what is says on wiki about money--

"Measure of value
Money acts as a standard measure and common denomination of trade. It is thus a basis for quoting and bargaining of prices. It is necessary for developing efficient accounting systems. But its most important usage is as a method for comparing the values of dissimilar objects."

There is no system of measurement that does not have a constant, not one of them no matter how subjective they may seem every system of measurement has a unit! The measure of value is no different the above statement is not true and will not be true until a unit of value is accepted.