5 ms·

I would still say money is conserved, in the same sense that charge is conserved in physics. Sure, you can create electrons by pair production, but you always c

I would still say money is conserved, in the same sense that charge is conserved in physics. Sure, you can create electrons by pair production, but you always create positrons with them. See also the Dirac Sea. With money, you always create debt and loan together. And yes, both can "move around" like a currency, just like electrons and holes (missing electrons) can move around in a solid, or electrons and positrons can move around in free space. "Primary" money - I don't know if there is an economic term - is strictly conserved. It's almost sacrosanct in our society, nobody would ever just create money. Even when they talk about printing money, it's always through loans (ultimately from the central banks), and never by actually throwing on the press. Also, destruction of money is extremely rare - mostly it is devaluation of assets, but rarely somebody burning cash etc..

febeling 8y ago
Not sure what you mean by "primary" money, but I can't think of a definition that would make that statement ("is strictly conserved") true. All money is in the books of the central bank, and it all has counterpart assets to it, and is all based on contracts with a maturity of less than a year. So if no-one renews there is no money, regardless of definition, in circulation after that time. Edit. Coin would be the only exception, but that's a negligibly small item in the balance.
zwaps 8y ago
First, there are all sorts of different "moneys". There's official definitions of M0 to M3, but those are just categories. Manner of payment is achieved in different ways, and all these things have different societal, economic and judical relationships to each other. But speaking of the official classifications, money is not conserved or constant, can be destroyed or created and change its relationship to other categories. Ex: https://3.bp.blogspot.com/-Dd1sW5ny2F0/Tb1e6oteMuI/AAAAAAAABx8/TjjrYFWEvBY/s1600/M1M2Change.png https://3.bp.blogspot.com/-Dd1sW5ny2F0/Tb1e6oteMuI/AAAAAAAAB... Where M0 is cash, and M1 are funds directly available for payment and so forth.
- zwaps 8y ago
  And while M0 is usually the most stable, not only DOES cash get created and destroyed, this is even independent of loan/debit creation (which is another measure entirely). Central banks may call in and destroy, convert, or give out cash to banks with and without changing loans/debits and so forth, for all sorts of considerations. It's really not that simple.
qubex 8y ago
Wealth is most definitely not a conserved quantity. Think of the equity of a typical household. It includes some equity in their flat, which has a current market value. Down the street a developer buys a whole building block at a slight premium to rid itself of extant tenants and in so doing drives up the estimated value of local real-estate, including our household's equity. They've just gotten richer. They could even remortgage their house and monetise that increase in wealth. They could sell it and buy a bigger flat in another part of town. So no: wealth is not conserved. Quantified (maybe), but definitely not conserved.
- SiempreViernes 8y ago
  Well, the material basis of wealth is part of the physical world so how does this non-conservation work out? Is wealth coupled with some "valuation potential" that offsets the wealth down to some "inherent" material value, or is value just entirely fictional?
  - qubex 8y ago
    The things that can be owned are not necessarily physical. Think of intellectual property, which is essentially information about the permutations into which that physical matter can be arranged, and you'll notice that there's a huge excess of potential ownership. Financial derivatives are similarly only very loosely related to the world of material, and yet they account for trillions of dollars’ worth.
    - SiempreViernes 8y ago
      Ok, so basically you're saying that one can own arbitrary bits of phase space? But does this really give you non-conservation? Doesn't your remark just clarify that non-conservation comes from ignoring most of the space of possible ownership until someone bothers to go there? I mean, there is clearly a difference between the value of (sensible) financial derivatives and the value of the death star to the imperial court in the Star wars universe. So the connection to physical reality clearly matters somehow.

febeling 8y ago

Not sure what you mean by "primary" money, but I can't think of a definition that would make that statement ("is strictly conserved") true. All money is in the books of the central bank, and it all has counterpart assets to it, and is all based on contracts with a maturity of less than a year. So if no-one renews there is no money, regardless of definition, in circulation after that time. Edit. Coin would be the only exception, but that's a negligibly small item in the balance.

zwaps 8y ago

First, there are all sorts of different "moneys". There's official definitions of M0 to M3, but those are just categories. Manner of payment is achieved in different ways, and all these things have different societal, economic and judical relationships to each other. But speaking of the official classifications, money is not conserved or constant, can be destroyed or created and change its relationship to other categories. Ex: https://3.bp.blogspot.com/-Dd1sW5ny2F0/Tb1e6oteMuI/AAAAAAAABx8/TjjrYFWEvBY/s1600/M1M2Change.png https://3.bp.blogspot.com/-Dd1sW5ny2F0/Tb1e6oteMuI/AAAAAAAAB... Where M0 is cash, and M1 are funds directly available for payment and so forth.

zwaps 8y ago
And while M0 is usually the most stable, not only DOES cash get created and destroyed, this is even independent of loan/debit creation (which is another measure entirely). Central banks may call in and destroy, convert, or give out cash to banks with and without changing loans/debits and so forth, for all sorts of considerations. It's really not that simple.

qubex 8y ago

Wealth is most definitely not a conserved quantity. Think of the equity of a typical household. It includes some equity in their flat, which has a current market value. Down the street a developer buys a whole building block at a slight premium to rid itself of extant tenants and in so doing drives up the estimated value of local real-estate, including our household's equity. They've just gotten richer. They could even remortgage their house and monetise that increase in wealth. They could sell it and buy a bigger flat in another part of town. So no: wealth is not conserved. Quantified (maybe), but definitely not conserved.

SiempreViernes 8y ago
Well, the material basis of wealth is part of the physical world so how does this non-conservation work out? Is wealth coupled with some "valuation potential" that offsets the wealth down to some "inherent" material value, or is value just entirely fictional?
- qubex 8y ago
  The things that can be owned are not necessarily physical. Think of intellectual property, which is essentially information about the permutations into which that physical matter can be arranged, and you'll notice that there's a huge excess of potential ownership. Financial derivatives are similarly only very loosely related to the world of material, and yet they account for trillions of dollars’ worth.
  - SiempreViernes 8y ago
    Ok, so basically you're saying that one can own arbitrary bits of phase space? But does this really give you non-conservation? Doesn't your remark just clarify that non-conservation comes from ignoring most of the space of possible ownership until someone bothers to go there? I mean, there is clearly a difference between the value of (sensible) financial derivatives and the value of the death star to the imperial court in the Star wars universe. So the connection to physical reality clearly matters somehow.