Lots of people have an intuition that "fiat money" -- money based on government paper with no commodity like gold to "back" it -- is something of a scam, weak and doomed to failure. That intuition is wrong. Fiat money runs the world, obviously, and that isn't an accident. Here's how (I think) it works.
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
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History of money and types with features. SamiuR RahmaN
This document discusses the history and functions of money. It begins by outlining the evolution of money from early bartering systems to modern digital currencies. Some of the milestones mentioned include the use of shells as early as 1200 BC, the development of coinage around 600 BC, the introduction of paper money in China in the 9th century, and more recent innovations like credit cards and digital payment systems.
The document then examines different types of money such as commodity money, metallic money, paper money, bank credit, and electronic money. It also outlines the key functions of money as a medium of exchange, unit of value, standard for deferred payments, store of value, and basis for the credit system. Finally, the document
This document provides an overview of money and banking concepts. It begins with a discussion of barter economies and how money emerged to overcome shortcomings of barter. It then covers qualities and types of money, as well as the functions of money. The document also discusses demand and supply of money, the structure and functions of commercial banks, types of financial instruments, and provides an overview of Sri Lanka's financial system.
The document discusses different aspects of financial markets including the functions of financial markets, flow of funds through direct and indirect transfers, classification of financial assets into equity, debt, and hybrid instruments. It also defines different classifications of financial markets based on maturity, claim, and structure. Finally, it outlines various types of financial intermediaries such as depositary institutions, contractual savings institutions, and investment intermediaries.
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
For Order Online:
Whatsapp: +923452502478
Portfolio Link: https://blueprismacademia.wordpress.com/
Email: arguni.hasnain@gmail.com
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Bartering was the original form of exchange before money was developed. Livestock, shells, and beads were some of the early forms of commodity money. Money needs to serve as a medium of exchange, store of value, and unit of account. King Croesus created the first coins of gold and silver in 561 BC. Paper currency was first issued in China in 806 AD but led to inflation. Various commodities served as forms of money throughout history. Goldsmith notes marked the early use of banknotes in England in the 1600s. The US established its own currency systems after gaining independence.
Money serves three main uses: as a medium of exchange to determine value during transactions, as a unit of account to compare the values of goods and services, and as a store of value that generally maintains its purchasing power even if saved over time. For something to function as money, it must meet six key characteristics: durability, portability, divisibility, uniformity, limited supply, and general acceptability. The value of money comes from it representing value in itself (commodity money), being exchangeable for something else of value (representative money), or having value by government decree (fiat money).
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
For Order Online:
Whatsapp: +923452502478
Portfolio Link: https://blueprismacademia.wordpress.com/
Email: arguni.hasnain@gmail.com
Follow Me:
Linkedin: arguni_hasnain
Instagram : arguni.hasnain
Facebook: arguni.hasnain
History of money and types with features. SamiuR RahmaN
This document discusses the history and functions of money. It begins by outlining the evolution of money from early bartering systems to modern digital currencies. Some of the milestones mentioned include the use of shells as early as 1200 BC, the development of coinage around 600 BC, the introduction of paper money in China in the 9th century, and more recent innovations like credit cards and digital payment systems.
The document then examines different types of money such as commodity money, metallic money, paper money, bank credit, and electronic money. It also outlines the key functions of money as a medium of exchange, unit of value, standard for deferred payments, store of value, and basis for the credit system. Finally, the document
This document provides an overview of money and banking concepts. It begins with a discussion of barter economies and how money emerged to overcome shortcomings of barter. It then covers qualities and types of money, as well as the functions of money. The document also discusses demand and supply of money, the structure and functions of commercial banks, types of financial instruments, and provides an overview of Sri Lanka's financial system.
The document discusses different aspects of financial markets including the functions of financial markets, flow of funds through direct and indirect transfers, classification of financial assets into equity, debt, and hybrid instruments. It also defines different classifications of financial markets based on maturity, claim, and structure. Finally, it outlines various types of financial intermediaries such as depositary institutions, contractual savings institutions, and investment intermediaries.
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
For Order Online:
Whatsapp: +923452502478
Portfolio Link: https://blueprismacademia.wordpress.com/
Email: arguni.hasnain@gmail.com
Follow Me:
Linkedin: arguni_hasnain
Instagram : arguni.hasnain
Facebook: arguni.hasnain
Bartering was the original form of exchange before money was developed. Livestock, shells, and beads were some of the early forms of commodity money. Money needs to serve as a medium of exchange, store of value, and unit of account. King Croesus created the first coins of gold and silver in 561 BC. Paper currency was first issued in China in 806 AD but led to inflation. Various commodities served as forms of money throughout history. Goldsmith notes marked the early use of banknotes in England in the 1600s. The US established its own currency systems after gaining independence.
Money serves three main uses: as a medium of exchange to determine value during transactions, as a unit of account to compare the values of goods and services, and as a store of value that generally maintains its purchasing power even if saved over time. For something to function as money, it must meet six key characteristics: durability, portability, divisibility, uniformity, limited supply, and general acceptability. The value of money comes from it representing value in itself (commodity money), being exchangeable for something else of value (representative money), or having value by government decree (fiat money).
The document discusses the characteristics of money. It explains that early societies used bartering with goods like animals and food, but that carrying all these items was inconvenient. Money was then invented as it is durable, portable, divisible, uniform, available in limited supply, and universally accepted. The six key characteristics of money are described in detail. The document notes that the US Federal Reserve plays a role in determining how much money is in circulation.
The document discusses the barter system, one of the earliest forms of exchange where goods and services were directly traded for other goods and services. The barter system dates back to around 6000 BC and originated out of necessity for early civilizations. As wants and desires became more complex, specialization of labor developed and bartering allowed for the exchange of surpluses. Though simple and flexible, bartering also had disadvantages like the lack of a common measure of value and difficulty storing value. The document then briefly introduces the concept of credit cards which originated in the 1920s as a system to overcome some limitations of bartering.
Money serves several essential economic functions according to the document. It acts as a medium of exchange, replacing bartering, allowing goods and services to be traded. Money also serves as a unit of account, allowing prices of goods and services to be denominated in a standard unit. Additionally, money acts as a store of value, allowing purchasing power to be saved and transferred over time. The document discusses different definitions and classifications of money, including definitions based on what constitutes money, whether it is currency in circulation or includes other assets, and classifications based on the nature and legality of various forms of money.
The document discusses the evolution of money from barter systems to modern forms. It begins by describing barter systems and their limitations, then moves to commodity money like precious metals. It describes how goldsmith receipts evolved into paper money and different types of paper currency. Later forms of money discussed include bank money, plastic money, and different central banking approaches to currency issuance like commodity backing and reserve requirements. The document provides an overview of the development of money from early barter to modern monetary systems.
This presentation introduces money and the financial system. It defines key components of the financial system including financial instruments, financial markets, financial institutions, and central banks. It then outlines the five core principles of money and banking: 1) Time has value, 2) Risk requires compensation, 3) Information is the basis for decisions, 4) Markets determine prices and allocate resources, and 5) Stability improves welfare. Each principle is briefly described.
Vouching involves examining documentary evidence to verify transactions recorded in accounting books. It establishes the accuracy and authenticity of entries.
Some key aspects of vouching include checking that vouchers are numbered and cancelled, examining high risk transactions like those with owners, and verifying dates, amounts, and names match the cash book. The auditor must also consider the nature of payments.
Vouching is important as it forms the basis for further audit work and fulfills the purpose of checking entries. It helps ensure transactions are valid, correctly recorded, and supported by evidence. This detects errors and potential fraud.
Money refers to anything that is generally accepted as payment. It functions as a medium of exchange, unit of account, and store of value. Money includes currency, deposits, and other liquid assets. The money supply has evolved from commodity money to various forms like paper currency, checks, and electronic payments. Measuring the money supply includes aggregates like M1, M2, and M3 that capture currencies and increasingly liquid assets.
This document provides an overview of money, including its definition, evolution, characteristics, types, functions, demand and supply. It defines money as anything widely used and accepted in transactions. Money has evolved from commodity money backed by precious metals to modern fiat currency not backed by any commodity. Key characteristics include durability, divisibility, transportability and limited supply. The main types discussed are commodity, fiat and bank money. Functions of money include serving as a unit of value, medium of exchange, store of value and standard for deferred payments. Demand is influenced by transactions, precautionary and speculative motives, while supply includes currency and bank deposits measured by indicators like M1, M2 and M3.
Money can take various forms and serves several functions including as a medium of exchange, measure of value, and store of value. The money supply is categorized into different levels including M1 (currency and demand deposits), M2 (near money), and M3 (broad money). Money demand is influenced by transaction, precautionary, and speculative motives. The quantity theory of money posits that changes in the money supply will impact the price level in an economy. Banks play an important role in the financial system, with central banks responsible for currency issuance and monetary stability and commercial banks accepting deposits and providing loans.
This document defines money and discusses its origins and functions. It begins by defining money according to economists as anything that serves as a medium of exchange, unit of account, and store of value. Money originated as commodity money, then metallic money like gold and silver coins, followed by paper currency and checks as credit/bank money, and now electronic banking. The primary functions of money are as a medium of exchange, unit of account, standard for deferred payments, and store of value. It also has secondary functions like aiding specialization and trade and being used for loans, and contingent functions related to incomes, credit systems, and liquidity. The document outlines the evolution and roles of money.
Money can take many forms and serve several functions. It is generally accepted as a medium of exchange, measure of value, store of value, and standard for deferred payments. The money supply is determined by various factors including the central bank, commercial bank lending, and monetary aggregates like M0, M1, M2, and M3. The quantity theory of money posits a direct relationship between the money supply and price level in an economy.
This document discusses different forms of money including metallic money, paper money, and bank money. It describes various types of each form. Metallic money includes coins made of metals like gold and silver. Paper money consists of notes issued by central banks in a country. Bank money includes means of payment without physical currency like checks, bills of exchange, and drafts. The document also covers advantages and disadvantages of paper money and different methods that central banks use to issue paper currency notes.
Money and Banking introduction slides pptOsama Yousaf
This document discusses money and banking concepts. It defines money as anything generally accepted in exchange for goods and services, and identifies four key functions of money: medium of exchange, unit of account, store of value, and standard of deferred payment. It also discusses the money supply, functions of banks and other financial institutions, international banking, and how the banking system creates money through fractional reserve banking.
The document discusses the quantity theory of money, which states that the general price level is directly proportional to the money supply. It defines money and its key functions as a medium of exchange, unit of account, and store of value. The quantity theory was challenged by Keynesian economics but updated by monetarism. While most economists agree it holds true long-run, some critics argue the direct relationship between money supply and prices does not always apply. The document also explains Fisher's equation of exchange that relates the money supply, velocity of money, price level, and volume of transactions.
Barter is the oldest system of trading where goods and services are exchanged directly without money. Under a barter system, there must be a "double coincidence of wants" where both traders have something the other wants in order to complete a trade. Other problems with barter include a lack of a common store of value as some goods are perishable, a lack of divisibility as commodities cannot always be divided into small units, and a lack of a common measure of value to assess the worth of different commodities. The difficulties of barter led to the invention of money as a common medium of exchange.
The document summarizes concepts related to interest rates, including:
1) Interest rates are determined by the equilibrium between the demand for and supply of loanable funds. The demand comes from those wanting to borrow, while the supply comes from savings.
2) Nominal interest rates do not account for inflation, while real interest rates are adjusted for expected inflation.
3) In bond markets, the demand for bonds is negatively related to interest rates, while the supply is positively related. Equilibrium occurs where the quantity demanded equals the quantity supplied.
4) According to Keynes, interest rates are determined by liquidity preference and the demand for and supply of money, not loanable funds. Higher income or
The document defines money and describes its key functions. Money serves as a medium of exchange, a measure of value, and a standard for deferred payment. It can also act as a store of value, though inflation can weaken this function. Money is further classified as commodity money, which derives value from the materials itself, and token money, which represents value but has no intrinsic worth. Examples of each type are provided.
This document defines money and discusses its key functions. It notes that money acts as a medium of exchange, unit of account, standard of deferred payment, store of value, and means of transferring value. The document outlines different forms of money including cash money created by central banks and credit money created by commercial banks through loans. It also discusses quantity theories of money, how money supply is measured, and references for further reading on macroeconomic topics related to money.
This document defines money and discusses its functions and evolution. It notes that money acts as a medium of exchange, store of value, and unit of account. Originally barter and commodities were used, but money developed to solve difficulties with barter. Coins and paper money later replaced commodities as money. Modern money includes coins, paper notes, and checkable deposits. Central banks control money supply and commercial banks create credit and accept deposits.
Fiat currencies issued by strong stable states are generally very effective despite potential ethical concerns over management. While claims about fiat money being weak, prone to debasement, or unstable can sometimes be true, they are rarely true of currencies issued by states that can tax citizens and have diversified economies. For now, major fiat currencies provide more effective price stability than existing cryptocurrencies.
The role of money in the Macro Economyssuser8537e8
Money plays a key role in modern economies by facilitating transactions and influencing economic activity. It allows specialization and exchange to occur more efficiently than a barter system. Central banks aim to control the money supply to promote growth, employment and price stability. While money solves issues with barter, uncontrolled increases in the money supply can cause inflation and reduce its value. Financial institutions and markets help stimulate economic development by transferring funds from savers to borrowers.
The document discusses the characteristics of money. It explains that early societies used bartering with goods like animals and food, but that carrying all these items was inconvenient. Money was then invented as it is durable, portable, divisible, uniform, available in limited supply, and universally accepted. The six key characteristics of money are described in detail. The document notes that the US Federal Reserve plays a role in determining how much money is in circulation.
The document discusses the barter system, one of the earliest forms of exchange where goods and services were directly traded for other goods and services. The barter system dates back to around 6000 BC and originated out of necessity for early civilizations. As wants and desires became more complex, specialization of labor developed and bartering allowed for the exchange of surpluses. Though simple and flexible, bartering also had disadvantages like the lack of a common measure of value and difficulty storing value. The document then briefly introduces the concept of credit cards which originated in the 1920s as a system to overcome some limitations of bartering.
Money serves several essential economic functions according to the document. It acts as a medium of exchange, replacing bartering, allowing goods and services to be traded. Money also serves as a unit of account, allowing prices of goods and services to be denominated in a standard unit. Additionally, money acts as a store of value, allowing purchasing power to be saved and transferred over time. The document discusses different definitions and classifications of money, including definitions based on what constitutes money, whether it is currency in circulation or includes other assets, and classifications based on the nature and legality of various forms of money.
The document discusses the evolution of money from barter systems to modern forms. It begins by describing barter systems and their limitations, then moves to commodity money like precious metals. It describes how goldsmith receipts evolved into paper money and different types of paper currency. Later forms of money discussed include bank money, plastic money, and different central banking approaches to currency issuance like commodity backing and reserve requirements. The document provides an overview of the development of money from early barter to modern monetary systems.
This presentation introduces money and the financial system. It defines key components of the financial system including financial instruments, financial markets, financial institutions, and central banks. It then outlines the five core principles of money and banking: 1) Time has value, 2) Risk requires compensation, 3) Information is the basis for decisions, 4) Markets determine prices and allocate resources, and 5) Stability improves welfare. Each principle is briefly described.
Vouching involves examining documentary evidence to verify transactions recorded in accounting books. It establishes the accuracy and authenticity of entries.
Some key aspects of vouching include checking that vouchers are numbered and cancelled, examining high risk transactions like those with owners, and verifying dates, amounts, and names match the cash book. The auditor must also consider the nature of payments.
Vouching is important as it forms the basis for further audit work and fulfills the purpose of checking entries. It helps ensure transactions are valid, correctly recorded, and supported by evidence. This detects errors and potential fraud.
Money refers to anything that is generally accepted as payment. It functions as a medium of exchange, unit of account, and store of value. Money includes currency, deposits, and other liquid assets. The money supply has evolved from commodity money to various forms like paper currency, checks, and electronic payments. Measuring the money supply includes aggregates like M1, M2, and M3 that capture currencies and increasingly liquid assets.
This document provides an overview of money, including its definition, evolution, characteristics, types, functions, demand and supply. It defines money as anything widely used and accepted in transactions. Money has evolved from commodity money backed by precious metals to modern fiat currency not backed by any commodity. Key characteristics include durability, divisibility, transportability and limited supply. The main types discussed are commodity, fiat and bank money. Functions of money include serving as a unit of value, medium of exchange, store of value and standard for deferred payments. Demand is influenced by transactions, precautionary and speculative motives, while supply includes currency and bank deposits measured by indicators like M1, M2 and M3.
Money can take various forms and serves several functions including as a medium of exchange, measure of value, and store of value. The money supply is categorized into different levels including M1 (currency and demand deposits), M2 (near money), and M3 (broad money). Money demand is influenced by transaction, precautionary, and speculative motives. The quantity theory of money posits that changes in the money supply will impact the price level in an economy. Banks play an important role in the financial system, with central banks responsible for currency issuance and monetary stability and commercial banks accepting deposits and providing loans.
This document defines money and discusses its origins and functions. It begins by defining money according to economists as anything that serves as a medium of exchange, unit of account, and store of value. Money originated as commodity money, then metallic money like gold and silver coins, followed by paper currency and checks as credit/bank money, and now electronic banking. The primary functions of money are as a medium of exchange, unit of account, standard for deferred payments, and store of value. It also has secondary functions like aiding specialization and trade and being used for loans, and contingent functions related to incomes, credit systems, and liquidity. The document outlines the evolution and roles of money.
Money can take many forms and serve several functions. It is generally accepted as a medium of exchange, measure of value, store of value, and standard for deferred payments. The money supply is determined by various factors including the central bank, commercial bank lending, and monetary aggregates like M0, M1, M2, and M3. The quantity theory of money posits a direct relationship between the money supply and price level in an economy.
This document discusses different forms of money including metallic money, paper money, and bank money. It describes various types of each form. Metallic money includes coins made of metals like gold and silver. Paper money consists of notes issued by central banks in a country. Bank money includes means of payment without physical currency like checks, bills of exchange, and drafts. The document also covers advantages and disadvantages of paper money and different methods that central banks use to issue paper currency notes.
Money and Banking introduction slides pptOsama Yousaf
This document discusses money and banking concepts. It defines money as anything generally accepted in exchange for goods and services, and identifies four key functions of money: medium of exchange, unit of account, store of value, and standard of deferred payment. It also discusses the money supply, functions of banks and other financial institutions, international banking, and how the banking system creates money through fractional reserve banking.
The document discusses the quantity theory of money, which states that the general price level is directly proportional to the money supply. It defines money and its key functions as a medium of exchange, unit of account, and store of value. The quantity theory was challenged by Keynesian economics but updated by monetarism. While most economists agree it holds true long-run, some critics argue the direct relationship between money supply and prices does not always apply. The document also explains Fisher's equation of exchange that relates the money supply, velocity of money, price level, and volume of transactions.
Barter is the oldest system of trading where goods and services are exchanged directly without money. Under a barter system, there must be a "double coincidence of wants" where both traders have something the other wants in order to complete a trade. Other problems with barter include a lack of a common store of value as some goods are perishable, a lack of divisibility as commodities cannot always be divided into small units, and a lack of a common measure of value to assess the worth of different commodities. The difficulties of barter led to the invention of money as a common medium of exchange.
The document summarizes concepts related to interest rates, including:
1) Interest rates are determined by the equilibrium between the demand for and supply of loanable funds. The demand comes from those wanting to borrow, while the supply comes from savings.
2) Nominal interest rates do not account for inflation, while real interest rates are adjusted for expected inflation.
3) In bond markets, the demand for bonds is negatively related to interest rates, while the supply is positively related. Equilibrium occurs where the quantity demanded equals the quantity supplied.
4) According to Keynes, interest rates are determined by liquidity preference and the demand for and supply of money, not loanable funds. Higher income or
The document defines money and describes its key functions. Money serves as a medium of exchange, a measure of value, and a standard for deferred payment. It can also act as a store of value, though inflation can weaken this function. Money is further classified as commodity money, which derives value from the materials itself, and token money, which represents value but has no intrinsic worth. Examples of each type are provided.
This document defines money and discusses its key functions. It notes that money acts as a medium of exchange, unit of account, standard of deferred payment, store of value, and means of transferring value. The document outlines different forms of money including cash money created by central banks and credit money created by commercial banks through loans. It also discusses quantity theories of money, how money supply is measured, and references for further reading on macroeconomic topics related to money.
This document defines money and discusses its functions and evolution. It notes that money acts as a medium of exchange, store of value, and unit of account. Originally barter and commodities were used, but money developed to solve difficulties with barter. Coins and paper money later replaced commodities as money. Modern money includes coins, paper notes, and checkable deposits. Central banks control money supply and commercial banks create credit and accept deposits.
Fiat currencies issued by strong stable states are generally very effective despite potential ethical concerns over management. While claims about fiat money being weak, prone to debasement, or unstable can sometimes be true, they are rarely true of currencies issued by states that can tax citizens and have diversified economies. For now, major fiat currencies provide more effective price stability than existing cryptocurrencies.
The role of money in the Macro Economyssuser8537e8
Money plays a key role in modern economies by facilitating transactions and influencing economic activity. It allows specialization and exchange to occur more efficiently than a barter system. Central banks aim to control the money supply to promote growth, employment and price stability. While money solves issues with barter, uncontrolled increases in the money supply can cause inflation and reduce its value. Financial institutions and markets help stimulate economic development by transferring funds from savers to borrowers.
The document discusses the nature of money and different types of currencies. It notes that traditional national currencies are controlled by central banks and governments, and when spent, the money leaves the user's "tank" and does not return. Alternatively, it proposes the idea of community currencies that are designed to circulate within a local area and return to users over time, providing opportunities even during economic downturns. It provides the example of a "community way" program as a test case for implementing a local circulating currency.
Money is a medium of exchange, that allows one person to get goods or services in return of certain modes of payment.
Money is not just a piece of paper with a face in the middle, nor is money a circular piece of metal with a number. That is actually currency.
Barter system was itself a form of money, a favour in return of another is a form of money.
Money is not just notes and coins, there is much more to money than that.
Money can be categorized in three major categories – Commodity money, Fiat money and Fiduciary money.
Commodity money is a type of money whose value comes from the commodity it is made of. For example – Gold Coin
Fiat money is a type of currency issued by the government. For example – Indian Rupee
Fiduciary money is a type of money that is based upon the trust between the payer and payee. For example – Cheques
This document discusses different theories of money and currency. It contrasts value subjectivism with value objectivism. Value subjectivism is the view that money only has value because people believe it does, while value objectivism is the view that money has value because of the resources and labor required to produce it. The document also discusses natural currency and how it develops through exchange, as well as trade value principles like voluntary exchange. Other topics covered include neutral money, the distinction between money and currency, coins, notes, and the value of coins and notes.
The document provides an overview of Bitcoin and blockchain technology. It discusses how Bitcoin was introduced through a 2008 paper by the pseudonymous Satoshi Nakamoto. It explains the key aspects of Bitcoin, including how transactions are recorded on a distributed public ledger called the blockchain, how virtual wallets are used to store and transfer bitcoins, and how "mining" involves solving complex math problems to validate transactions and earn new bitcoins. The document also covers the history and mechanics of money more generally to provide context for the emergence of cryptocurrencies like Bitcoin.
1. The document provides an introduction to investing in gold and silver, noting that while a disclaimer is included, the purpose is to educate readers on key strategies and information.
2. It discusses the current state of the US economy, including unprecedented levels of debt that have raised concerns about inflation and the stability of the dollar. This context suggests gold and silver are wise hedge investments.
3. There are many investment options in gold and silver, but the document focuses on physical bullion coins and bars as the best investments, noting concerns about ETFs and numismatic coins in difficult economic times.
State or Market: Mystery of Money-RevealedAsad Zaman
{writeup/Video: http://bit.ly/azGian01A} There is an age-old controversy regarding money. Free market proponents believe that money emerges naturally to facilitate exchange among private parties. State Theorist hold that money is a creation of the state, which acquires value by force of law. Giannini resolves this controversy by showing that both state and market are necessary aspects of money.
This document outlines key concepts related to money, including its definition, evolution, functions, and motives for demand. It discusses how money evolved from bartering systems and commodity money to today's forms, serving important functions as a medium of exchange, store of value, and unit of account. Money offers benefits like making transactions more efficient and allowing specialization. It also outlines the transaction, precautionary, and speculative motives for holding cash.
The document discusses money, its functions and meaning. It defines money as anything generally accepted as a medium of exchange. The functions of money are outlined as a medium of exchange, a store of value, and a unit of account. Broad and narrow definitions of money are presented. The ideal attributes of money are described as durability, divisibility, transportability and non-counterfeitability. The evolution of money from commodity to fiat currency is summarized.
This paper discusses alternatives to capitalism and explores gift economies. It summarizes different ways to change currency systems, such as changing who issues money or making it redeemable for different things. The paper advocates returning to gift relationships as seen in cultures where money was less important and people helped each other without price tags. It explores existing gift paradigms and their issues. Finally, it discusses the role of Islamic social business and charities in alleviating poverty, and plans to experiment with a system called COPIOSIS that uses a different type of currency called net benefit rewards.
How Rich People Think Condensed Edition (Ignite Reads)Lucky Gods
Cracking the Code of Money: How Rich People Think (Condensed Edition)
** Ever wonder what separates the financially-free from the paycheck-to-paycheck crowd?**
** Ditch the "get rich quick" schemes and dive into the minds of the wealthiest!** This bite-sized guide explodes the secrets behind rich thinking:
** Money mindset hacks:** Reprogram your brain for abundance!
** Risky moves that pay off:** Learn calculated leaps that build empires. ️
** Investment strategies for everyday heroes:** Master the art of growing wealth.
** Building empires from scratch:** Turn your ideas into gold bars.
** Keeping your fortune secure:** Wealth maintenance for long-term success. ️
⌛ Skip the fluff, unlock the wisdom. This condensed edition is your passport to the inner circle of wealth. ✈️
Ready to rewrite your financial story? Let's go!
Accounting for the Good and the BeneficialRick Lines
This document provides an introduction to principles of results-driven monetary design. It discusses how the current monetary system creates boom and bust cycles that leave people in debt and desperation. It argues that money is a specialized language that can be purposefully designed to foster the type of economy and society that is wanted. The goal is to present money in a simple way and show how communities can design their own money systems to enable prosperity even during economic crises.
Simon Duffy talked about why money - for all its limitations - is an important element of the Keys to Citizenship - not as a replacement for Love - but as a critical supplement.
Model of a flexible exchange rate regime for Complementary currenciesSehrGlobal
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- It emphasizes that financial success is determined more by behaviors than intelligence. Emotions can lead even smart people to make poor financial decisions.
- Some lessons include focusing on long-term wealth creation over short-term gains, being cautious with risk, and finding happiness through having enough rather than buying expensive possessions for status.
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[4:55 p.m.] Bryan Oates
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Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
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Learn in-depth about Dogecoin's trajectory and stay informed with 36crypto's essential and up-to-date information about the crypto space.
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University of North Carolina at Charlotte degree offer diploma Transcripttscdzuip
办理美国UNCC毕业证书制作北卡大学夏洛特分校假文凭定制Q微168899991做UNCC留信网教留服认证海牙认证改UNCC成绩单GPA做UNCC假学位证假文凭高仿毕业证GRE代考如何申请北卡罗莱纳大学夏洛特分校University of North Carolina at Charlotte degree offer diploma Transcript
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Michael, LMIC Economist, presented findings that reveal a weakened relationship between labour market tightness and job quality indicators following the pandemic. Labour market tightness coincided with growth in real wages for only a portion of workers: those in low-wage jobs requiring little education. Several factors—including labour market composition, worker and employer behaviour, and labour market practices—have contributed to the absence of worker benefits. These will be investigated further in future work.
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Fabular Frames and the Four Ratio ProblemMajid Iqbal
Digital, interactive art showing the struggle of a society in providing for its present population while also saving planetary resources for future generations. Spread across several frames, the art is actually the rendering of real and speculative data. The stereographic projections change shape in response to prompts and provocations. Visitors interact with the model through speculative statements about how to increase savings across communities, regions, ecosystems and environments. Their fabulations combined with random noise, i.e. factors beyond control, have a dramatic effect on the societal transition. Things get better. Things get worse. The aim is to give visitors a new grasp and feel of the ongoing struggles in democracies around the world.
Stunning art in the small multiples format brings out the spatiotemporal nature of societal transitions, against backdrop issues such as energy, housing, waste, farmland and forest. In each frame we see hopeful and frightful interplays between spending and saving. Problems emerge when one of the two parts of the existential anaglyph rapidly shrinks like Arctic ice, as factors cross thresholds. Ecological wealth and intergenerational equity areFour at stake. Not enough spending could mean economic stress, social unrest and political conflict. Not enough saving and there will be climate breakdown and ‘bankruptcy’. So where does speculative design start and the gambling and betting end? Behind each fabular frame is a four ratio problem. Each ratio reflects the level of sacrifice and self-restraint a society is willing to accept, against promises of prosperity and freedom. Some values seem to stabilise a frame while others cause collapse. Get the ratios right and we can have it all. Get them wrong and things get more desperate.
1. an introduction to fiat money
silicon valley ethereum meetup
march 10, 2016
by Steve Randy Waldman
http://www.interfluidity.com/
@interfluidity
photocredit:http://www.piramindwelt.com/nachrichten/london-croupier-beim-diebstahl-von-chips-ertappt/
thisversionlightlyedited2016-09-21
2. …disclaimer
• Everything in this talk is speculative
• Nothing in this talk is authoritative
• Money remains the most mysterious topic in economics,
usually asserted with its basis ignored when it is present at
all in conventional economic models. To talk about what
money is and means, and how money works, is to invite
controversy.
• Even from my own, small, idiosyncratic perspective, the
topic is too large. I will omit important details. In particular, I
will treat governments and central banks as a single
consolidated entity and omit discussion of reserve
dynamics. These are important institutional facts, crucial for
understanding financial markets in particular. But they could
occupy a whole talk, and are not essential to this tale.
3. …tl; dr
• Fiat money is a social and institutional technology
• Fiat money is not “mere paper”. It is not “unbacked”. On the
contrary, it is backed by the most valuable of all possible
things: human beings’ capacity to labor, to create, or to
surrender value
• In its modern form, it has evolved, via a mix of centralized
and decentralized innovations, from inferior antecedents,
such as commodity monies and various forms of endorsed
IOU. Fiat money was not created by fiat. It emerged.
• Money is not (only) microeconomic. It organizes your
purchase of an apple, sure, but it also organizes whole
economies, wealth, prosperity, and power.
4. …tl; dr
• Fiat money systems, which include the states and central
banks that issue base money, the banking systems that
multiply it, and other creditors and lenders, constitute an
absolutely unrivaled technology for motivating an organizing
economic behavior in ways that appear decentralized
locally but can be centrally directed in pursuit of large
scale goals ranging from economic development and
prosperity to the prosecution of total war.
• It is common—but almost ridiculous—to argue that fiat
monies are “weak” or “fragile” or “inevitably debauched”.
• A more serious critique is that fiat monies may be unethical,
precisely because they are so powerful, such effective and
resilient drivers of human affairs, that are hierarchically
and potentially corruptly managed.
5. …tl; dr
• If you want to replace fiat money systems with something
better, don’t look to inferior, obsolete monies like gold for
your inspiration. Fiat money systems are the cutting edge of
the technology of money (and prosperity and power).
Understand how they work and iterate, ideally by
improving or replacing the ethically questionable part:
unchecked discretion in management by corruptible
governments and financial institutions.
• Fiat money systems do not exist in isolation or as
abstractions. Fiat money is not a commodity but an activity.
Fiat money systems must be managed in constant
feedback with the state of the real economies they serve,
in consideration of the goals and values of the political
communities they help to define. Replacing corrupt
institutions with blind, simple rules is ethically appealing but
functionally inadequate. Be more clever than that.
6. …what is money?
The conventional schtick:
• Medium of exchange
• Store of value
• Unit of account
7. …what is money?
The conventional schtick:
• Medium of exchange Means of final settlement
• Store of value
• Unit of account
8. …what is money?
The conventional schtick:
• Medium of exchange Means of final settlement
• Store of value
• Unit of account
Economists have no real definition of money. In programming
language lingo, money is “duck typed”. Whatever quacks like a
duck, whatever serves all these roles, counts as money.
The unit of account role is essential, but very tricky. It’s
common, but misleading and dangerous, to argue that money
can serve as a unit of value. Value is not an objective thing that
can be measured in the world, and money-unit measures
engender intuitions about value that are indefensible on
serious reflection.
9. …what does money buy?
Money buys just one thing.
• It doesn’t buy apples.
• It doesn’t buy cars.
Money purchases human behavior!
…which, of course, can include the surrender of apples or cars
…which can also include human labor, physical or mental
Nothing else is responsive to money. Only humans.
(Vending machines and smart contracts may change this, but that is just humans building things in their image.)
Money is an instrument of persuasion!
10. …persuasion is the nice word
• Persuasion and coercion lie together on a continuum
defined by the quality of options created.
• If I tell you I won’t give you a candy bar unless you cut my
hair, that’s persuasion.
• If I tell you I’ll shoot you unless you cut my hair, that’s
coercion.
• All that differs is the quality of the options. There is a whole
continuum of persuasive? coercive? potential options
between withholding candy and murder.
11. …persuasion is the nice word
• When a negative incentive is very strong we switch words,
persuasion becomes coercion.
• Interestingly, we have no word for when a positive incentive
becomes so strong the situation becomes qualitatively
distinct from ordinary choice.
• We have no word for that, but we do understand that it exists
• Consider Winston Churchill’s mean offer, “now we’re just
haggling over the price.” We have sympathy for the victim of
Churchill’s barbed wit, even though we can’t say she was
“coerced” because the initial positive incentive was very
strong.
• (The possibility of very strong, so very persuasive positive
incentives, would be an interesting source of value for a
money.)
13. …persuasion is the nice word
• The source of money’s value is its capacity to persuade.
• Characteristics like scarcity or use value or exchange value
or anticipated acceptability for further trade may contribute
to the capacity of a thing to be persuasive. But the
fundamental requirement is to be persuasive.
• Most accounts of money’s value emphasize persuasion via
providing a positive incentive, “voluntary exchange makes
both parties better off”
• But there is a symmetry here. Both positive and negative
incentives can shape human choices. If both can persuade,
then maybe both can serve as the basis of money.
• (If there is an asymmetry, it may well be that negative
incentives are more powerful persuaders than positive.)
14. …what would good money look like?
• A capacity to persuade is a necessary, but not sufficient.
— (there are lots of ways to be persuasive that aren’t remotely moneylike)
• To serve as money, a thing has to be persuasive in a very
particular way. In behavioral terms, it must be a thing that is
— “reinforcing” (pleasurable, desirable) to acquire; and
— “aversive” (unpleasant) to give up or do without.
• A good money should be quantifiable
• Money, or enforceable claims on money, should be
arbitrarily divisible (or else discrete atoms should have
very small values)
• Money, or enforceable claims on money, should be fungible
and easy to transfer
15. …what would good money look like?
• Money, or enforceable claims on money, should be
“current” (a prerequisite to fungibility)
• Money, or enforceable claims on money, should have a
durable and reasonably stable capacity to persuade
What is this “enforceable claims” stuff?
‣ Currently and historically, monies frequently are not used as media of exchange directly,
especially for large transactions
- One obvious reason for this is security
- Convenience is a factor for commodity monies
- One interesting aspect of cryptocurrencies is that final money is more amenable to direct
use in exchange than with traditional currencies
‣ Claims on final money are often used in exchange
- e.g. bank deposits
‣ Sometimes claims on claims on final money are used
- e.g. credit cards
‣ Monetary systems fall naturally into hierarchies, with a “base money”, and claims on that
money varying degrees removed built upon them
‣ Often claims further removed trade at a discount to base money
‣ An quite recent innovation of modern banking system regulation is to enforce widespread
parity between base money and bank deposits, which are claims one level removed
19. …bootstrap money
• We value our own capacity to persuade and dislike being
unable to persuade others to do what we would like them to
do (like give us food)
• Therefore a thing, whatever it is, with the capacity to
persuade others in the way of money becomes persuasive
to most selves in the way of money
20. …bootstrap money
• We value our own capacity to persuade and dislike being
unable to persuade others to do what we would like them to
do (like give us food)
• Therefore a thing, whatever it is, with the capacity to
persuade others in the way of money becomes persuasive
to most selves in the way of money
21. …bootstrap money
• We value our own capacity to persuade and dislike being
unable to persuade others to do what we would like them to
do (like give us food)
• Therefore a thing, whatever it is, with the capacity to
persuade others in the way of money becomes persuasive
to most selves in the way of money
• Call it a self-fulfilling prophecy, an Ouroborous, or, in
economics-speak a coordination equilibrium
• The identity of the thing is wholly arbitrary (although to ever
become used as money, it probably has many of the
characteristics we identified for “good money”)
• The prototypical example of bootstrap money is the use of
cigarettes as currency in prisons
22. …bootstrap money
• Bootstrap is the most common “folk theory” for how money
comes to be
• All monies benefit from the bootstrap effect — once a thing
is treated as money, it is valuable because it is treated as
money
• However, “pure” bootstrap monies are in fact rare. Usually
something tilts the playing field re the choice of what gets
called money. Once a money is established, people who
hold or have preferential access to it actively work to
maintain that “tilt” so that no Bernanke disillusionment /
demonetization moment ever results
— Prominent historical gold standards were not pure,
spontaneous bootstrap monies. (Sorry!)
23. …bootstrap money
• Bitcoin is a prominent contemporary, pretty pure bootstrap
money
• Ether is arguably becoming monetized right now
• The old currency of defunct regimes in now failed states
represents an interesting form of bootstrap money
— See Somali Shillings
http://jpkoning.blogspot.ca/2013/03/orphaned-currency-odd-case-of-somali.html
— See also Iraq’s “Swiss Dinar”
(which circulated in parallel to the currency of a then-still-functioning regime)
http://jpkoning.blogspot.com/2013/05/disowned-currency-odd-case-of-iraqi.html
24. …bootstrap money
• When a thing starts to be used as money, its value rises well
above the value that would be supportable based on the
use value of the thing
• Monetization is a form of bubble, but it is arguably an
unusually stable sort of bubble, since once many potential
transactors have settled on an arbitrary token, switching to a
different arbitrary token becomes a difficult coordination
problem
— The (now infamous) Mencius Moldbug used to describe gold as “the
bubble that never bursts”.
• Unfortunately, there are other possible monies besides
purely arbitrary tokens or arbitrarily chosen commodities.
The demonetization coordination problem can be solved.
• It’d be nice to have a form of money whose
persuasiveness is not a “sunspot”
25. …obligation as a source of persuasion
• Humans, individually and socially, have deeply engrained
notions of reciprocal and hierarchical obligation
• Reciprocal obligation — if you do a favor for me, I bind
myself, formally or informally, to return the favor in some
fashion
• Hierarchical obligation — Whether "voluntarily" in respect of
the "legitimacy" of a hierarchy, or enforced via persuasive/
coercive powers that reinforce the hierarchy, individuals or
institutions towards the top of social hierarchies can compel
behavior of those beneath.
• Almost everywhere, both sorts of obligation are socially and
institutionally enforced, under sanctions that range from
informal shunning, to coercive loss of liberty or property, to
death
26. …obligation as a source of persuasion
• Accepting an obligation to reciprocate is perhaps the most
common and effective form of persuasion we have.
— owing a friend for doing a favor
— “paying” for a meal with a credit card
• Enabling a person to fulfill or escape an obligation is also a
common and effective means of persuasion, particularly if
the obligation carries risks of serious sanction for failure to
perform
• In rough but only qualitative terms, obligation, whether
reciprocal or hierarchical, constitutes something like
negative money.
— we can be persuaded in exchange for escaping an
obligation or if others grant an obligation to us
28. …the money shot
Arguably the most important innovation ever in
economic history is the insight that “negative
obligation” — maybe “absolution” or “freedom”
— can be weaponized tokenized, made fungible
and quantifiable.
Obligation is the core source of value of all
monies that are successful in the modern sense
of supporting prosperity at a large scale.
Fiat money, fundamentally, is valuable because it
confers the capacity to fulfill and therefore free
oneself of obligations, ranging from formal taxes
and debts to less formal but still compelling
obligations to feed oneself and ones family.
29. …sources of obligation, sources of value
• Public, hierarchical sources of value:
— Kings or states can create obligations and endow value
to a scrip by declaring a tax payable in that scrip
— Subjects then find the scrip that permits them to fulfill
those obligations very persuasive, particularly if the
penalty for nonpayment is severe
— Almost by definition, states have a special capacity to
be, um, persuasive
• Private, reciprocal sources of value:
— Private parties can perform favors repayment for which
will be surrender of a quantity of some scrip, with rough
consequences of some sort if the debt is not repaid
— Debtors are then amenable to persuasion in exchange
for tokens that will undo their obligation
30. …sources of obligation, sources of value
• Convergence
— If private creditors owe taxes to kings and states, then
they have reason to ask that repayment of obligations be
made in the king's coin
— Self-reinforcing bootstrap dynamics hold as strongly for
a king's token as it would for any other thing, but much
more stably so, since the king can reinforce and assure
the stability of his token so long as he retains the
political capacity to coerce or persuade payment of tax
31. …sources of obligation, sources of value
• In summary, tokens are given value by
— the capacity of the societies in which they trade to
impose (tax) and cajole (loans) members to accept
scrip-denominated obligations
— the willingness of the society to impose serious
consequences for nonperformance of these obligations,
whether those be formal consequences (eviction from
ones home, debtors’ prison) or informal and social
(shame, shunning, loss of status, mockery by peers)
— bootstrap dynamics that render the scrip desirable
because everybody desires it.
— but not randomly. predictably, because a significant
subset of the population is obliged to acquire it.
— and stably, because the state can prevent
demonetization / devaluation via taxation
32. …sources of obligation, sources of value
An ethical aside:
‣ It is tempting, given libertarian sensibilities and the connotations of the words “hierarchical”
and “reciprocal”, to think of “hierarchical obligations” as “coercive” and normatively bad,
but “reciprocal obligations” as “voluntary” and normatively good.
‣ I think that is a misplaced intuition one should resist.
‣ Hierarchical obligations can sometimes be legitimate and not unreasonably burdensome.
Reciprocal obligations can sometimes be accrued under conditions that are in substance
coercive.
- Suppose the only way you can feed your kid today is to accept a title loan against your
car at 140% APR?
‣ When we want to draw ethical judgments about the ecology of obligations in our society
(and we should), I think we should look to the degree of burden and the legitimacy of its
accrual in a case-by-case way.
‣ Note that state coercion is implicated in all formal obligations to repay scrip, whether the
obligations are public or private.
- Regardless of whether an obligation is publicly accrued as a tax or privately accrued as
a loan, it is the state’s coercive powers that create the consequences of nonperformance
that ultimately motivate the pursuit of scrip by the obliged.
33. …from head taxes to income taxes,
the role of the banking system
34. “
The problem was that if the subsistence base was capable of
supporting the population entirely, colonial subjects would not be
compelled to offer their labor-power for sale. Colonial governments
thus required alternative means for compelling the population to work
for wages. The historical record is clear that one very important
method for accomplishing this was to impose a tax and require that
the tax obligation be settled in colonial currency. This method had the
benefit of not only forcing people to work for wages, but also of
creating a value for the colonial currency and monetizing the colony. In
addition, this method could be used to force the population to produce
cash crops for sale. What the population had to do to obtain the
currency was entirely at the discretion of the colonial government,
since it was the sole source of the colonial currency.
“
—Matthew Forstater
on monetizing colonial Africa
from Taxation and Political Accumulation
available at:
http://cas.umkc.edu/econ/economics/faculty/Forstater/papers/Forstater2005/RiPE%20Forstater.pdf
35. …from head taxes to income taxes,
the role of the banking system
• The theory that token-money is given value by states
imposing taxes and thus compelling subjects to work for
their scrip is known as chartalism
• However in its simplest forms, such as monetizing a
subsistence-based premodern economy, something like a
head tax ought to be required
— Income, payroll, and consumption taxes, the staples of modern
government, only become due if one earns or spends monetary income
— They don’t directly compel the acquisition of monetary income, so they
don’t directly render fiat tokens persuasive
— Modern taxes undoubtedly provide some support to the currency, via
what economists call “income effects” and income-independent taxes
like property taxes or auto registration fees
— But in “civilized societies” (as opposed to brutally run colonies), states
manage to support the value of their currencies mostly via less
burdensome taxes, that somewhat hedge citizen’s risk of lacking scrip
36. …from head taxes to income taxes,
the role of the banking system
• In modern, liberal economies, much of the work of both
producing fiat money and ensuring a sufficiency of
obligations to back them is delegated to banking systems,
reducing the need for onerous direct taxation
• Modern banking systems exist to lend and encourage
borrowing, creating debtors whose obligations, and
therefore whose assets and capabilities, back the currency
• The "funds" lent by modern banks are claims on state
money, often guaranteed by the state so they trade at parity
with state money and function directly as money
• When banks make loans, they issue new claims and
effectively produce new money. They also create new
debtors, who contribute to the value to money by virtue of
their requirement to service or repay the loans.
37. …from head taxes to income taxes,
the role of the banking system
• The state regulates banking systems to manage the scale
and scope of this private money creation, and (ideally) to
assure a general hygiene in loan quality
— Periods of mass default potentially threaten the value of
money, if mass default leads to mass forgiveness
— As we have recently seen, in actual debt crises, elites
may be absolved, but pounds of flesh are demanded of
ordinary debtors who fail to repay, which helps protect
the value of the money
• The delegation by states to profit-motivated banks of both
sides of fiat money creation — the issuance of tokens, and
the creation of aversive obligations to back them — has
arguably been the "secret sauce" that hypercharged modern
capitalism.
38. …from head taxes to income taxes,
the role of the banking system
• Banks' incentives are to subsume all spheres of human
activity into income-generating enterprises to which funds
can be profitably advanced.
• It’s an overstatement and a bit conspiratorial to say that
banks are “responsible” for the increasing colonization
of all aspects of life by market management and control.
But their incentives are certainly consistent with these
developments
• (Consider how higher education has changed in the
course of a generation from a good that was supposed
to be insulated from market forces to a certain degree to
a debt-financed enterprise rationally undertaken only if it
will yield a financial return. The need of educated
graduates to service or repay student loans helps
support the currency!)
39. …from head taxes to income taxes,
the role of the banking system
• As long as bank debt is mostly "good" (serviceable) and the
purposes for which the loans are made genuinely productive
of value (whatever that means), this combination of fiat
money and powerfully incentivized private banks can be a
remarkable engine for "economic development”
— (tricky conditions, though!)
• Private-debt-laden economies (including nonbank as well as
bank debt) enable states to switch from head taxes to
“kinder, gentler” income taxes, since private obligations
undergird the value of the currency
40. …fiat money is an activity, not a thing
• Fiat money is valuable only when the issuer of the token, somehow,
manages to orchestrate
1) High productive capacity of the community within which the
token will be exchanged
2) Widespread binding obligation to ensure that acquisition of
tokens to pay taxes or repay debt remains a persuasive
motivator for a significant subset of the community
• States try to orchestrate those conditions by tweaking their
management of fiat money
— Taxes and tax collections, bankruptcy laws, and bank regulation
obviously affect both points above
Note:
‣ The entire portfolio of government debt (from cash money to overnight debt to term bonds)
should be thought of as fiat money, in the same way that both a checking account and a
savings account in a bank represent money, even though one form is slightly more
convenient to spend
41. …fiat money is an activity, not a thing
• States have tools that affect the value of their currencies very
directly
— When "money is tightened", the state and banking system award
high interest to those who net-hold it, while the burden of being
a debtor (and so the incentive to earn money to service or
escape debt) becomes very high, putting upward pressure on
the value of the token
— When "money is loosened", the state and banking system make
it less attractive to hold money, and less burdensome to be in
debt, putting downward pressure on the value of the token
— States offer to pay holders of money higher interest for a
guarantee they do not spend tokens for some period of time,
helping to support token values (states issue term bonds)
— (This will probably matter less and less as it becomes easier
to borrow against government bonds in overnight repo
markets.)
42. …fiat money is an activity, not a thing
• Weakness can be strength
— There are tradeoffs between supporting the strength and value
of obligations [Point (2) above] and maximizing the productive
capacity of the economy [Point (1)]
— So even if your goal is simply to maximize token values
(which it should not be) making money tighter doesn’t always
work
— No matter how deeply obliged and motivated, people without
opportunities to work in a productive economy may have little
real value to offer in exchange for fiat money
— For the most part, real economic value cannot be stored, it must
be produced and reproduced every day
— Money as a store of value is a convenience, an easy, durable
claim on future value. But it is only a claim. That future value will
still need to be produced
— If holding money is very profitable, too many people may do just
that rather than try to earn future value by investing to produce it
43. …fiat money is an activity, not a thing
• Weakness can be strength (cont’d)
— Reducing the value of holding money — impairing its function
as a store of value — can paradoxically be essential to
maintaining or expanding the real economic value that money is
supposed to store, because an alternative to holding money or
government paper is to invest in the real economy
— The net effect of weakening can be to encourage investment
and so strengthen the currency in real terms over time!
— In a recession, when real economic activity is subdued,
policymakers frequently “loosen", to encourage people to invest
(or to consume, generating demand that inspires investment) by
reducing the attractiveness of using money or claims on money
as a stores of value
— This is smart policy, not “debasement”
• Every aspect of economic policy that affects the productivity of real
resources in the economy can affect the value of fiat money
44. …fiat money is an activity, not a thing
• Fiat money is an activity. Maintaining it requires ongoing
management.
45. …how fiat fails
• Fiat fails when the sovereign that manages it fails
• Obviously, there’s a chicken / egg problem in that statement
• But…
— “Debasing the currency” is always an insufficient explanation for
fiat failure
— A healthy sovereign can do a lot of borrowing / printing if it
wants to, and support the value of its currency with high interest
rates or taxation
— For “debasement” to be fatal, an issuer must have reached
limits, in terms of the real productive capacity of the economy,
its ability to incentivize or mobilize use of that capacity, or its
political capacity to tax to support the value of the currency
— Fiat failure is never due to “printing” alone. It represents an
imbalance between printing and capacity, which usually reflects
the desperation of a state already trapped by obligations it has
no capacity to meet. Fiat failure is a symptom of a sovereign that
is already in crisis. (Ex: Weimar, Zimbabwe, confederacy)
46. …how fiat fails
• Contrary to the armchair musings of amateur political scientists,
there is little evidence that democracies routinely vote to weaken
fiat currencies as a form of redistribution.
• On the contrary, the clear preference among advanced Western
democracies is for short-term strength even when that may do
long-term damage to the economy!
— Wealthy creditors and older people prefer strong money to
weak, and are usually more influential than the young or
marginally employed in Western capitalist democracies
— For example, both the US and the EU have maintained much-
too-strong currencies since the 2008 financial crisis, even
though long-term growth trends have very likely been impaired
by that policy
— Politics seem to favor hard money, not soft
— The US in the 1970s is an interesting counterexample. The
young, huge, politically restive baby-boom generation punched
above its age politically, and tolerating high unemployment in
that generation would have meant social crisis.
47. …conclusion
• Fiat currency is an extremely resilient social technology that takes
advantage of a very deep aspect of human behavior — our
susceptibility to obligation — to define tokens of freedom that are
extremely valuable and serve the functions of money splendidly.
• Fiat currencies exist as technologies embedded in institutions,
particularly in sovereign states and banking systems
• Fiat currencies, when managed well, outperform all known
competitors. Even when managed poorly (as they seem to be
now), they tend to hold their own.
• The serious problems with fiat currency are ethical. Fiat currency
management is an incredible lever for social control, and people at
the center, in government or in the banking system, have many
opportunities for corrupt self-dealing. Fiat value depends upon
people falling into obligation, which carries with it an unpleasant
whiff of bondage.
• Improving on fiat currencies, via cryptocurrencies or any other
means, is a worthy project. But I hope you’ll understand how fiat
currencies work — and they do work — and focus on remedying
their serious ethical deficiencies.
48. …acknowledgments
This talk presents a modification of the chartalist framework for understanding
modern money. Chartalism was pioneered by Georg Friedrich Knapp in 1905,
and has been a controversial and important perspective on money ever since.
The most prominent contemporary chartalists, from whom I’ve learned a lot,
are the “Modern Monetary Theorists”, who include Randy Wray, Pavlina
Tcherneva, Scott Fullwiler, Stefanie Kelton, Marsall Auerback, Warren Mosler,
and many others I apologize for omitting. The MMT-ers have a very particular
set of views, some of which I’m sympathetic to and some of which I am not. But
I’ve learned a lot from them.
JP Koning has a great blog on money, called Moneyness. I think the
perspective presented here is quite different from any Koning would take, but
his work came up a lot in my mind as I put this talk together.
http://jpkoning.blogspot.com
Christine Desan has an interesting book called Making Money that describes
in great detail monetary evolution in Great Britain along lines recognizably
related to this talk. http://isbn.nu/9780198709589
Uncountable conversations with blog commenters and e-mail
correspondences have shaped these ideas.
Probably none of these people would endorse my views!