There are a lot of people who do not understand money. This is unfortunate since it is the cause of much grief.
The most important thing to know about money is that it has no intrinsic value. You can’t eat it, wear it, or build a house out of it. You can use it to make a fire, but people don’t usually do that unless very, very stupid people get in charge of the government. More on that later.
Many things have been used for money, but those things all had certain features in common. To be useful, money must be durable, portable, divisible, recognizable, and most importantly, scarce.
The reason things like gold and silver have been used as money around the world and throughout history is because they have all the above features. Recently, shoplifters have been stealing brand name laundry detergent to use as money – for the same reasons given above.
Many people very stupidly think that since money can be exchanged for goods and services, creating money will somehow conjure more goods and services into existence. What actually happens is that price of everything goes up. This is called “inflation” and has been a problem for nearly every currency in history. The British pound, for example, is the world’s oldest continuously used currency, and it has lost about 99% of its value since 1751. You’d need 200 pounds today to buy the same amount that 1 pound did in 1751. The US dollar is even worse. It has lost about 97% of its value since 1913, the year the Federal Reserve banking system was created. The dollar lost about 2/3 of its value since 1971, the year the US officially went off the gold standard.
The second most important thing to realize about money is that is a symbol. It is both a symbol of desire and a way of measuring it. For the only way to measure how much someone wants something is to ask what they are willing to trade for it. Money is what makes this trade possible.
Prices are the way we measure desire. They are critical information about how much a good or service is worth and how much demand there is for it. Many very stupid people think that the government can somehow raise or lower prices by decree. The only result of such decrees is economic chaos. In countries like Venezuela and Zimbabwe, socialist governments attempting to help the poor set low prices for food and fuel. However, since they set them too low, those goods are in short supply and what goods do exist are only available on the black market for much higher prices. In Venezuela, many people earn a living by standing in line to buy goods for the official price just so they can sell it on the black market for a higher price.
This is not the first time this has happened, 1700 years ago, a Roman emperor named Diocletian didn’t have enough money to pay for everything. He ordered the mint to decrease the amount of silver in each coin so he could buy more. It worked initially, but then prices rose because it did not take long for people to figure out the coins were worth less than before. So Diocletian then decreed that it was illegal for merchants to raise prices. One historian at the time wrote that Diocletian might as well have commanded the winds not to blow.
Just like today, the inflation was blamed on everything except the government. Diocletian blamed speculators, money lenders, and foreigners for the inflation. Sound familiar?
Inflation can only come from a government creating more money, and there are numerous examples of this.
So why then does a trained economist like Paul Krugman think that minting trillion dollar coins would be a good idea? My only answer is that someone who knows economics but not history will invariably be dumber than a person who has studied neither. This is probably why Krugman also thinks the US economy could be jump-started by a fake alien invasion.
Be interesting to see if O’Reilly gets the boot.
http://www.bbc.com/news/world-us-canada-39492854
OReilly Gets The Boot wasn’t my favorite Elvis Costello album, but I liked the concept.
Regardless of my thoughts on O’Reilly the individual, I’m torn here. The entire episode stinks of another round of character assassination. The left is going after O’Reilly’s scalp. And it’s only going to escalate.
On the other hand, there’s at least some legitimacy to the claims here. This isn’t the fabricated, nonsensical, and hypocritical BS they typically use.
But when in doubt, I just go in the opposite direction of the progressives.
I don’t know much about the others, but Julie Roginsky is a rabid Democrat partisan hack, which may have had a little something to do with her not being offered a permanent position.
Yeah. Nope as fuck.
Lisa Bloom is Gloria Allred’s daughter.
Allred’s spawn? So she’s raised someone to take her mantle when she finally kicks the bucket? That’s damn depressing.
“We should give everyone in America $1,000,000 and everyone will be rich!”
I’ve had conversations with people who actually believe that.
Thomas Paine?
Its gonna come up when I finish my series on the single land tax.
Paine wanted one for the purpose of giving everyone (man?) on his 18th birthday a payment. That was your lifetime societal aid. Don’t waste it and take care of yourself.
Free college nowadays I guess. Along with the old age pension at 50. Which made sense in the early 1800’s and why the Social Security benefits age needs to be increased now. I like Paine actually, but he was a socialist basing his socialism on proto – Georgeism.
He wasn’t a socialist in that he didn’t want the state owning the means of production.
And looked it up, it was age 21. The age 50 pension is new to me, I am going to have to include that too.
Fair enough. Redistributionist. The old age pension was from Agrarian Justice
http://xroads.virginia.edu/~hyper/Paine/agrarian.html
At the bottom of the link.
And the first person who spends it all…they’ll demand others to bail the idiot out.
Human nature gonna nature, brah.
True that. One of several reasons the basic income won’t work. At least in a democracy, where they can vote largess from the treasury.
Krugman is nothing more than a DNC hack who loves getting liberal adoration for backing up their assinine economics with his nobel prize. He is the king hack of all hacks.
Eh, its a living.
Probably nobody has gotten as much mileage off a
NobelSwedish Bankers’ Prize.Exactly. Krugman and the NYT are in the business of confirming the world view of the people who read the NYT, nothing else.
Which do you mean, Paul Krugman the economist or Paul Krugman the NY Times columnist? Comparing the textbooks authored by the former, you get a very different economic story than the columns written by the latter.
What Krugman has done is the equivalent of someone winning a Nobel Prize for work in biology and then writing a weekly column extolling creationism.
I think its Kevin Williamson who has the theory that there are effectively two “Paul Krugmans”. The ‘real’ one who writes textbooks and appears in the public, and the ‘other’ who writes NYT columns, which is actually Krugman’s wife.
The value of money is governed by the same laws that determine the value of everything else.
supply and demand.
The more money that is available, the less valueable it becomes. The demand will fluctuate with the value of the money determined by the supply. Supply enough of it and the value drops to nothing and the demand goes away. When the demand goes away, other tangible goods become the new currency of choice.
I see you made it out unharmed. Find anything interesting?
Wait… it might be a cop pretending to be him to throw us off the scent!
Tell me ‘Lachowsky’… how do you feel about deep dish?
deep dish is a great casserole
They told me my previous FOIA was void because it was emailed and not signed in person. So, pulled out a copy of the email, signed it, and gave it to them. They are supposed to respond within three days according to the law.
My guess, they have stalled long enough to delete the audio and video, but there is a chance I may end up with it.
I think the most effective argument against inflation in the current political environment is to relentlessly harp on how it is a backdoor tax on the poor and middle class. Most people are ignorant of economics. They barely know what inflation is, let alone who it harms. Need to draw the line for them.
Pasta was $1.49 last week! How can it be $1.99 this week!
Inflation, brah.
It sounds trite but that is the reality of it.
I know that food is historically speaking relatively cheap right now but what it costs to feed my family has gone up at least 30% in the last decade, My wages have not even gone up 10%.
When my kids were Toddlers I could get milk for $1.79 a gallon, chicken was $0.49 – $0.69/lb, Steak was $4 to $7/lb, Corn on the Cob was $0.10 per ear today Milk is $3.49/gal, chicken is $0.99 to $1.49/lb, Steak is $7 to $10.lb, and an ear of corn is $0.50. Sure the price for pre-processed crap hash’t changed anywhere near as much but we don’t buy very much stuff that comes in boxes
Where in the heck are you buying milk? I can routinely get a gallon from $1.79 to $1.89. Corn ’round these parts will go $.20 to $.25 an ear.
Not sure if he’s in Pennsylvania, but that’s about the price of milk here the last I checked. Granted, that’s not due to inflation but rather because PA sets a price floor for milk.
Maryland just over the Bay Bridge on the Eastern Shore.
Last year I was in Mass and Milk was cheaper but all the other prices were similar.
Most states have strict price controls on milk. What you pay in one state is no indication of what you will pay in any other.
Are you sure it is a state level regulation?
Milk is one of the most heavily regulated food products we have here in the States…
https://en.wikipedia.org/wiki/Marketing_orders_and_agreements
Corn is satan’s food, milk is for infants. The only relevant number there is steak.
Is it? Maybe in the short run it punishes those working for fixed wages, but it seems much more significant as a tax on savings. I guess it depends? Inflation definitely punishes the holder of a mortgage backed security and benefits a homeowner, for example.
It helps any debtor.
hyper-inflation makes that college debt nothing in short order.
Which can lead to some incentives that can be financially ruinous, especially if you predict when the inflation is going to hit wrong.
It also can have the perverse incentive of people with lots of debt favoring policies that lead to high inflation (if not actual hyperinflation).
https://www.jstor.org/stable/2673879?seq=1#page_scan_tab_contents
The people most likely to be simply saving are the ones who are on a fixed income. There’s nothing short term about the impact it has on the poor. There’s also the simple reality that the poor have less to spare. The response to my comment here was a bit surprising. I guess I should save my tears for the bankers.
That’s where I’m confused. Where do the poor take any long term hit on this? They work for market wages that will increase to meet the new level of inflation. They don’t have any savings that becomes worthless (they probably actually benefit from some debt forgiveness.)
But inflation also helps debtors. Now who is the biggest debtors? I’ll give you a hint; it rhymes with Smederal Smovernment.
The Bedroll Bumpermint?
Aderall movement?
There are a lot of people who do not understand money.
So true. When I taught a banking law seminar, I’d give one lecture – the history of banking, which is really the history of money. Money is an extraordinarily slippery concept, and has gotten even more so now that most money doesn’t exist in even a nominally tangible form.
The best description I have ever come across for money is that it is a consensual hallucination. There’s nothing there, but it works because we all pretend it works because it works because we all pretend . . . .
Did you show them this?
https://www.youtube.com/watch?v=XS5iSZ6A4es
…brah.
It was before YouTube even existed, if you can imagine such a thing.
Concentrated life.
-Doug Casey
The comment about laundry detergent disproves your earlier comment about no intrinsic value.
Same for gold and silver.
Gold has the intrinsic value of getting you laid.
What’s more, there are people out there turning music into gold.
Where’s Stevie?
Gold has the intrinsic value of getting you laid.
Nope. Still exchanged for value.
I don’t think anything has “intrinsic” or inherent value. Some things have use value, which I think is what people generally mean when they say intrinsic value. Some things have exchange value. I’d have to think about whether there’s other kinds of value.
In one of these discussions, we were talking about the price of gold, and how its going up. But it all depends on where you set your feet – if you take the dollar as the measure of value, then gold is getting more valuable. If you take gold as the measure of value, then the dollar is getting less valuable. I think the latter is a better way of looking at it, as it captures the idea that “inflation” is really just the devaluation of the currency.
Yes, I agree, I think gold is the “stable” value. Its true fluctuation is only in comparison to other commodities.
Its why I like the gold:oil ratio. It may not last forever, but it bounces between 5:1 and 20:1, centered around 10:1. When it gets too far off of 10, there are investment opportunities.
Speaking of which, ratio is about 24 right now.
Go long oil and short gold, at least one of them is gonna change.
note: I am not a professional investor and am not gonna do this myself, but the last time I made this suggestion (when gold was about 750 and oil was 150) it would have made a lot of money buying gold and shorting oil.
What do you think of the opinion made that the silver/gold ratio is out of whack?
Probably, but that depends on the amount of each that is mined.
It doesn’t seem to fall in a pretty pattern like gold:oil.
I’m no expert, but silver actually has some off-take for industrial uses.
But here’s the thing about the gold and silver markets: they are the most manipulated markets on the planet. The central banks, and especially the Fed have a massive vested interest in “controlling” the prices of those commodities, and so they do. Currently, they are suppressing the price of these commodities. They have the muscle to make their manipulation stick, too. But all manipulation comes to an end, and generally with a huge overreaction.
So….are you saying buy physical silver?
Governments have the ability to manipulate commodities for longer than you can stay solvent. If they do so for long enough, and enough people have made an attempt to benefit by that manipulation, the government always has the opportunity to confiscate your holdings before the controls are released.
So, I am not an investment advisor, but you should seek professional advice before going out and buying physical silver.
How about colloidal silver?
*unstoppers flask*
Too late … hit that topic further down the thread.
Canadian money has humo(u)r value, which is a plus.
Loony or tire Canadian money?
“gold is the “stable” value”
That’s what it boils down to. The money supply isn’t important. It’s changes in the money supply that create the problem (mostly for senoirs with a fixed income). Pegging the supply of dollars to something like gold prevents a large fluctuation.
I have thought about a SPYder backed currency.
Not necessarily as stable as gold, but backing it off the S&P500 is pretty interesting.
More than likely, a SpideyBuck would gain value over time instead of losing it.
If we set a constant rate of 200 SpideyBucks to 1 share of SPY, then an SB would be worth $1.18 right now. But that would go up over time (even ignoring what happens to the dollar).
I have tried to figure out how to set up a bitcoin style currency, but with actual backing somewhere, I liked the SPY idea, as its easier to hold stock certificates than piles of gold.
It still has the problem that btc doesnt have in that a government can seize the assets backing the security. But other than that, I like the concept.
Absolutely. The government sells Tips which are inflation protected treasuries.
Wouldn’t that essentially be a mutual fund, assuming you stay pegged to the S&P 500 if there’s any changes in membership?
There are a lot of things you can buy with btc that you can’t buy with a mutual fund.
Giving someone .01% of a share of a mutual fund is hard.
Yeah, nothing has ‘intirinsic’ value. You can’t go to them and measure the value of it without putting it up for exchange.
Gold and silver (and platinum) are great conductors – significantly better than copper and aluminum for some applications. That gives them intrinsic value in industrial applications.
And silver more so than others I read.
Silver is the best (elemental) conductor, but has the potential for corrosion issues. Gold is marginally less conductive but doesn’t corrode so a lot of high end connectors will use gold plating over silver. Silver also had industrial uses in high end optics as it is the most reflective element, and medical uses as well.
Not to mention the health benefits of colloidal silver !!Eleventy!!!!
Well, you are blue so…
As an aside, I met the man and he is a damn fine fellow. I guess he just didnt notice that his skin changed cause it was gradual and he was kind of a hermit.
That gives them intrinsic value in industrial applications.
No, that gives them use value in industrial applications.
Gold and platinum are inferior conductors. The only advantage is their corrosion resistance, which is why they’re sometimes used as plating.
Platinum is still a vital component of catalytic converters, but aside from that and industrial catalysis it has few practical applications that can’t be fulfilled with other, modern materials.
It is, however, far more durable and abrasion resistant as gold and considerably more resistant to corrosion.
But yeah, gold is inferior to copper and silver in electrical conductivity at ‘normal’ temperatures. Platinum is actually a poorer electrical conductor than iron and nickel.
Everybody must get stone. Freidman’s Episodes in Monetary Mischief begins with this story which is quite interesting.
http://www.npr.org/sections/money/2011/02/15/131934618/the-island-of-stone-money
Something not mentioned in the above article is that the value of the stone wasn’t simply just a matter of size or weight. The history of the stone played a larger role in its value as currency.
There was a gag in one of the old Asterix comics (Cleopatra maybe?) – about talents. “Why do they call it a talent?” “That’s what it takes to get one…”
I know I butchered it.
Biggest employers by state.
It’s long past time to cut off federal education funding.
I wonder how much that map would change if the state university systems (or the state education systems in general) were included as state government employees. I’d bet state government would be the largest employer in at least 40 states.
“I will gladly pay you Tuesday, for a hamburger today.”
In Venezuela, many people earn a living by standing in line to buy goods for the official price just so they can sell it on the black market for a higher price.
Wreckers! Parasites!
Sounds like they need to get themselves an app and make it a business. Queuers?
Needs fewer vowels. Qrs? QRz?
Money is only as strong or healthy as the entity or person backing it.
Money is nothing more than a convenient fiction; a ledger entry making it unnecessary to barter. As R C said, a mass hallucination. But try telling some people that.
Queuers?
We don’t need your superfluous heteronormativity around here.
Superfluous Heteronormativity was my nickname in Uni.
nice read with one small exception.
Socialist governments do not mandate low prices to help the poor.
They do so to in attemps to stay in power.
Anytime a politician does something that benifits you it is simply a by product of what is in their own best self interest.
I was just watching the Morning Joke clip with Rand. Mika was in fine form, veering wildly back and forth between derisive chortles and incipient weeping at the very thought of Susan Rice illicitly snooping on the Trump transition team on behalf of the pure and saintly O.
The personality cult has in no way diminished its grip on those people since the Ascended One’s “return to private life”.
Later, the nodders expressed their surprise at the possibility of another attempt at an Insurance Clusterfuck repeal.
*I’ve decided that’s what I will call it, henceforth.
“In Venezuela, many people earn a living by standing in line to buy goods for the official price just so they can sell it on the black market for a higher price.”
See? Socialism works – it’s creating jobs right before our eyes!
I was shaden-reading Marxist.com about Venezuela and came across this nugget of gold :
So you’re saying that something that was previously worthless was transformed into something of value through the actions of a middle man when he encountered a willing buyer? Do go on…
It’s a lot of text to say the same thing they always say after a failed socialist revolution. That being that they just didn’t socialize hard enough.
Yeah I was amazed that after all that, they really are saying :
“Sure, nationalizing and collectivizing the biggest and most productive industries was a disaster, but once we do it to all industries, everything will be great.”
I shouldn’t be surprised that there’s a legit Marxist.com apologist site, but I had never bothered to look. It’s a proverbial derp-mine.
There’s gems in every hyperlink:
“The barrage of propaganda against Lenin and the Bolsheviks has begun. This year, the 100th anniversary of the Russian Revolution, we will see learned critics working to turn public opinion against the Bolsheviks and what they stood for, in an attempt to bury the truth about what the revolution was really about. ”
Psst…I think you guys already lost this one.
The best part is how this person unironically used the word “bury” and “Bolsheviks” in the same sentence.
Were these resellers and buyers then declared enemies of the state and then put under the gun?
If not, someone needs to bone up on their proper communist etiquette.
“workers who are not yet lumpenized”
Seems like these workers fit the definition of lumpenized which I admittedly had to google as I am not fluid in fuckderp.
http://revolutionaryliberationgospel.ning.com/m/blogpost?id=3385150%3ABlogPost%3A2353
The language of classist seems to be the same as that of racists.
I agree, actually, if that blog citation is correct, the original writer appears to have inverted the meaning? How does them collecting the food and profiting off of it mean they have class consciousness? They can’t even get their own nonsense beliefs right?
This is very, very wrong.
The Theory of Money and Credit – Ludwig von Mises
Still not intrinsic value. “Marketability” is not intrinsic, it is a function of the market in which you are trading.
Good arrows might be an example of a pre-money quasi-barter “currency” in certain societies. Lots of demand, relatively fungible and “commodified”, but only “marketable” in a pretechnological society. In a technological society, ammunition could serve the same purpose, in the absence of currency.
Look at prisons – societies where currency is very scarce or not usable for much. They have substitute commodity/quasi-currencies – classically, cigarettes, but also things like time on a transistor radio, etc. Stuff that really isn’t nearly as marketable outside the prison, but it is inside, and so it can serve. But, its not that cigarettes, arrows, bullets, or time on a radio are intrinsically valuable – they are situationally valuable.
Mises definition of intrinsic value is that something has value to a human being other than as money.
People value gold for decoration and certain intrinsic uses. People value bitcoin for its decentralized ledger of transactions. People value cigarettes for the pleasure from consuming them. People value fishhooks for their usefulness in catching fish. People value cell phone minutes for allowing them to communicate with others. People value arrows for their ability to catch food (or kill enemies). People value time on a radio for the pleasure it gives them.
All of these things have value to human beings intrinsic to their nature. And it is human perception of value that gives things value. A rock on mars, with no human to interact with it, has no value.
If you were to insist that something has to be valued universally across all peoples and all time to have intrinsic value, then only oxygen and water would have intrinsic value (and I’m not sure about water). And then the statement that money has no intrinsic value would be meaningless, since neither would tractors, gasoline, naked pictures of 22 year old Jessica Alba or MRI machines.
Mises definition of intrinsic value is that something has value to a human being other than as money.
I can see that, maybe. Sounds more like use value as I use the words, something more like value that is inherent in the object such that it does have value always and everywhere. Otherwise, it doesn’t sound very “intrinsic” to me. As a term of art in economics, Mises may be more in the mainstream.
I agree with this:
And it is human perception of value that gives things value.
Which to me means that value happens in our heads, and not inherent or intrinsic to anything (again, leaving aside the use of “intrinsic value” as a technical term of art).
I assume this whole thing ends up like the “Metro” game series, wherein bullets are used for currency.
One of the benefits of using ammunition as currency in a post-apoc scenario is that it’s hard to inflate the currency. Indeed, as time goes by, the value of a round will increase. For a while, it will be possible to ‘mint’ new currency, but eventually, the ability to make or recycle metal cases and primers will diminish.
It’d be novel to live in a genuinely deflationary economy, assuming of course that you’re still alive.
My time tested best explanation. People who dont understand money seem to grok this immediately:
You know what an inch is, right? Can you build a house out of inches? No. Inches dont actually exist. They are represented by marks on a ruler. They are just used to measure stuff, like lumber. A dollar is a measure just like an inch is.
Can you build a house out of lumber? Of course you can. Lumber is wealth. It is useful stuff. Inches and dollars are just measuring marks on a ruler or your bank account.