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> Money is not the same thing as economic output; it just divides that economic output. The explanation here about "new energy" is quasi intellectual gibberish.

> Money is not the same thing as economic output; it just divides that economic output. The explanation here about "new energy" is quasi intellectual gibberish. Money stores the value of that economic output. We used to use gold as money because it was hard to inflate. No one can create gold without doing work, therefore it evolved over time to be valuable because of its rarity. That makes it a strong store of value over time, unlike say apples or oil, which would be poor money. Fiat currency can be created without work; it is not rare, you are at the whims of whoever has the power to create it. If you had to store value over 100 years, you would not keep it in cash or bonds. You'd buy land, gold, or possibly stocks, because those things are much harder to create. > Moreover, most monetary expansion is caused by private banks through lending; they don't need a central bank to do this. The central bank uses tools like reserve requirements and bond purchases/sales to raise and lower the money supply in response to macroeconomic trends. Without a central bank, the money supply can still be expanded. Private banks implement whatever the central bank tells them. Who sets the interest rate? Does a lower interest rate increase private lending or decrease it? Why can't private banks hold 0% in fractional reserve?

cinquemb 5y ago
> Money stores the value of that economic output. One must also consider whether it is a medium of exchange at any given point in time, if its used as an unit of account, the variable storage/protection/transportation costs, durability against the elements, fungibility, accessibility, liquidity, etc. > Who sets the interest rate? Does a lower interest rate increase private lending or decrease it? Why can't private banks hold 0% in fractional reserve? Take a look at "5% fixed-floating swap, Receive fixed"[0], who sets those float-fixed (or even the float-float) swap rates for the myriad of financial instruments, mostly in bilateral transactions with no third party involvement, that start at zero initial value and supposedly yield a non zero number, ever involving in complexity in response to demand and outside the awareness and interests of most people despite being very integral to their daily lives? Hint: by far, not just central banks (which at least in the US are owned by private banks at different branches)… [0] https://en.wikipedia.org/wiki/DV01#Risk_%E2%80%93_duration_as_interest_rate_sensitivity https://en.wikipedia.org/wiki/DV01#Risk_%E2%80%93_duration_a...
- coralreef 5y ago
  > One must also consider whether it is a medium of exchange at any given point in time, if its used as an unit of account, the variable storage/protection/transportation costs, durability against the elements, fungibility, accessibility, liquidity, etc. Yes, there are many commodities making many tradeoffs as money. Over time, through trade and travel, societies adopted gold as the premier base of money, because of its superiority in the tradeoffs they cared about. Gold was chosen by the market as the best monetary medium. Nobody chose fiat. Dollar bills originally represented redeemable vouchers for gold stored in a bank, and so while the storage/protection/transportation costs of paper notes is/was superior to carrying gold bars, those vouchers were worthless unless you could reliably redeem them for gold. Those paper notes are worthless if people didn't trust the bank/government issuing them, which is how bank runs started. Eventually the gold peg was removed, and the continuous debasement of dollars has somehow been accepted as feature, not a bug. Every decade unto infinity, dollars will become worth less. This does not work in the long run. We are in an era of great economic productivity thanks to technology, but I fear these gains hide the weaknesses in our monetary systems.
  - cinquemb 5y ago
    > Gold was chosen by the market as the best monetary medium. The same market has also accepted: > and the continuous debasement of dollars has somehow been accepted as feature, not a bug. Every decade unto infinity, dollars will become worth less. As well as accepting a host of other things beyond paper notes redeemable for x. > Nobody chose fiat. The shareholders of the federal reserve branches did… > but I fear these gains hide the weaknesses in our monetary systems. I don't have that fear, the market will adapt with the times based on demand and risks individual actors perceive relative to the power they have to make their desires a reality, rather than some hypothetical idealized scenario we can carve out in our minds about how it "should" be. Some to this day only do commodity (i.e. certain multi party tested quality of gold and oil) settlement with other actors, others are okay with rehypothicated UST's and AAPL paper, and others are ok with BTC/ETH/USDT/beenie baby tokens/etc.
    - coralreef 5y ago

cinquemb 5y ago

> Money stores the value of that economic output. One must also consider whether it is a medium of exchange at any given point in time, if its used as an unit of account, the variable storage/protection/transportation costs, durability against the elements, fungibility, accessibility, liquidity, etc. > Who sets the interest rate? Does a lower interest rate increase private lending or decrease it? Why can't private banks hold 0% in fractional reserve? Take a look at "5% fixed-floating swap, Receive fixed"[0], who sets those float-fixed (or even the float-float) swap rates for the myriad of financial instruments, mostly in bilateral transactions with no third party involvement, that start at zero initial value and supposedly yield a non zero number, ever involving in complexity in response to demand and outside the awareness and interests of most people despite being very integral to their daily lives? Hint: by far, not just central banks (which at least in the US are owned by private banks at different branches)… [0] https://en.wikipedia.org/wiki/DV01#Risk_%E2%80%93_duration_as_interest_rate_sensitivity https://en.wikipedia.org/wiki/DV01#Risk_%E2%80%93_duration_a...

coralreef 5y ago
> One must also consider whether it is a medium of exchange at any given point in time, if its used as an unit of account, the variable storage/protection/transportation costs, durability against the elements, fungibility, accessibility, liquidity, etc. Yes, there are many commodities making many tradeoffs as money. Over time, through trade and travel, societies adopted gold as the premier base of money, because of its superiority in the tradeoffs they cared about. Gold was chosen by the market as the best monetary medium. Nobody chose fiat. Dollar bills originally represented redeemable vouchers for gold stored in a bank, and so while the storage/protection/transportation costs of paper notes is/was superior to carrying gold bars, those vouchers were worthless unless you could reliably redeem them for gold. Those paper notes are worthless if people didn't trust the bank/government issuing them, which is how bank runs started. Eventually the gold peg was removed, and the continuous debasement of dollars has somehow been accepted as feature, not a bug. Every decade unto infinity, dollars will become worth less. This does not work in the long run. We are in an era of great economic productivity thanks to technology, but I fear these gains hide the weaknesses in our monetary systems.
- cinquemb 5y ago
  > Gold was chosen by the market as the best monetary medium. The same market has also accepted: > and the continuous debasement of dollars has somehow been accepted as feature, not a bug. Every decade unto infinity, dollars will become worth less. As well as accepting a host of other things beyond paper notes redeemable for x. > Nobody chose fiat. The shareholders of the federal reserve branches did… > but I fear these gains hide the weaknesses in our monetary systems. I don't have that fear, the market will adapt with the times based on demand and risks individual actors perceive relative to the power they have to make their desires a reality, rather than some hypothetical idealized scenario we can carve out in our minds about how it "should" be. Some to this day only do commodity (i.e. certain multi party tested quality of gold and oil) settlement with other actors, others are okay with rehypothicated UST's and AAPL paper, and others are ok with BTC/ETH/USDT/beenie baby tokens/etc.
  - coralreef 5y ago