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Money: medium of exchange, store of value, unit of account. Intrinsic utility doesn't really enter into it; the value of money is inherently social, because it
by barrkel 9y ago
Money: medium of exchange, store of value, unit of account.
Intrinsic utility doesn't really enter into it; the value of money is inherently social, because it relates to other people. You're either going to exchange it for something now, exchange it for something in the future, or hypothesize an exchange to put a numeric value on something concrete, a number you can compare with other numbers.
- gumby 9y agoRight, which is why you need the total money supply to grow/shrink roughly in proportion to the total aggregate wealth (whatever that is -- an ill-defined, poorly understood social construct which we all "kinda" know). This is what gold bugs (and their bitc equivalents, and...) don't understand: their money supply changes randomly and completely out of phase with the actual economy, with empirical evidence of disastrous consequence. Great in theory, dreadful in practice. Accounting has a magical provision for this at unusual sequence points (i.e. asset sales): goodwill. When the asset denomination (i.e. cost) is out of whack with what is thought to be the underlying value, the delta is magically stuck in a bin called "goodwill" which then depreciates, slowly smushing it into the overall money supply.