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What is money, anyway?

• WinterMount223 5y ago
  At the bottom there’s only exchange for labor.
• rapjr9 5y ago
  So an obvious question is, what happens as the oil behind petrodollars loses value as renewable energy takes over? This transition is already happening. The difficulty for countries of repaying debt in dollars and the war in Ukraine has exposed how petrodollars take away economic autonomy which is yet another incentive to move away from petrodollars. One consequence is that the USA will gradually (or quickly) lose the ability to sanction other countries. Another is that Saudi Arabia and other petro-states (Russia, Mexico, Venezuela) will lose power and income. Countries that used to borrow in dollars will borrow in some other currency or at least a wider range of currencies (which may or may not increase their stability). What are the other likely changes? How might this all eventually rearrange and sort itself out?
• Shadonototra 5y ago
  money, dept, ownership inefficiency at its best, humanity would transcend faster into the next Age without these primate level concepts
• KETpXDDzR 5y ago
  I read the whole article only to get a crypto sales pitch at the end -.-
• throw0101a 5y ago
  Some good books on the general topic that I've read over the years are Debt: The First 5000 Years by Graeber: * https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years Money: The True Story of a Made-Up Thing by Goldstein (also of NPR's Planet Money): * https://www.goodreads.com/book/show/50358103-money https://www.goodreads.com/book/show/50358103-money * https://en.wikipedia.org/wiki/Jacob_Goldstein https://en.wikipedia.org/wiki/Jacob_Goldstein And The Power of Gold: The History of an Obsession by Bernstein: > In this exciting book, the late Peter L. Bernstein tells the story of history's most coveted, celebrated, and inglorious asset: gold. From the ancient fascinations of Moses and Midas through the modern convulsions caused by the gold standard and its aftermath, gold has led many of its most eager and proud possessors to a bad end. And while the same cycle of obsession and desperation may reverberate in today's fast-moving, electronically-driven markets, the role of gold in shaping human history is the striking feature of this tumultuous tale. Such is the power of gold. * https://www.wiley.com/en-us/The+Power+of+Gold:+The+History+of+an+Obsession,+2nd+Edition-p-9781118270103 https://www.wiley.com/en-us/The+Power+of+Gold:+The+History+o... * https://en.wikipedia.org/wiki/Peter_L._Bernstein https://en.wikipedia.org/wiki/Peter_L._Bernstein Bernstein was also the author of Against The Gods: The Remarkable Story of Risk.
  • jonahbenton 5y ago
    The Nature of Money, Geoffrey Ingham, predates Bitcoin and the financial crisis, but it is still the most incisive theoretical discussion of money I've read. If Debt: The First 5000 Years is undergrad, The Nature of Money is grad.
    • throw0101a 5y ago
      Any comment on Ingham's Money: ideology, history, politics?
    • vishnugupta 5y ago
      +1. You beat me to posting it. As you rightly pointed out it’s not an easy read. I also recommend “The Invention of Coinage and the Monetization of Ancient Greece”. It succinctly covers second order effects of money. I got a good understanding of histories of phenomena that we take for granted such as salary. It’s fascinating to read about the transition. As a meta, I’ve been fortunate to witness a similar momentous transition computers and internet/communication. I wonder what other transition we are going through right now.
      • herodoturtle 5y ago
        > I also recommend “The Invention of Coinage and the Monetization of Ancient Greece”. Seconded ^_^
    • cyber_kinetist 5y ago
      Nice recommendation, I've added to my reading list. I have read Graeber's Debt and it's a great book but always thought that it left out many so questions unanswered. His anthropological treatment of money is quite nice until feudalism, but when he starts explaining the start of the Enlightenment and the gold standard in Europe things seemed very rushed and inadequately explained. Also it only touches upon our current system (post-Bretton Woods neoliberalism) briefly in the last chapter, which was a letdown since I though Graeber would have many comments about our current configuration of society.
  • 5y ago
• NickBusey 5y ago
  This looks to be a potentially interesting article. I started scrolling. I kept scrolling. It is long. 23,000 words long. wordstotime.com says it will take roughly 3 hours to read. Distrust any comment on the content that appears before the post is at least 3 hours old. Similarly how can we upvote it fast enough for the algorithm to not bury it before anyone has a chance to read it.
  • siavosh 5y ago
    Might need to become an automated check before comments are allowed on HN articles.
    • makeitdouble 5y ago
      Imagine trying to comment on an academic research paper with a very clear abstract, just to be locked for 5 hours because of the 50 pages of the actual paper.
      • simsla 5y ago
        I once saw a 5 page conference paper with a 120 page appendix. I admit I didn't read the appendix.
  • lettergram 5y ago
    Took me about 40 min lol I have followed this writer for some time, always pretty good and VERY detailed. If you don't know about bitcoin / historic currency, it's a great read. Covers the basis.
  • gruez 5y ago
    >It is long. 23,000 words long. wordstotime.com says it will take roughly 3 hours to read. That's if you read out loud (23,000 @ 140wpm = 2:45 hours). If you silent read, you can get around 240wpm (1:36 hours).
  • 2143 5y ago
    What if somebody had read the article before it was submitted to HN?
• mostertoaster 5y ago
  I like to think of money as a manifestation of some slice of time you manage.
• hsavit1 5y ago
  This is a really concise and informative YouTube video on the same subject https://www.youtube.com/watch?v=Hd_HIGMMKDA https://www.youtube.com/watch?v=Hd_HIGMMKDA
  • bedobi 5y ago
• paulgb 5y ago
  > It’s also worth understanding Gresham’s law, which proposes that “bad money drives out good”. Given the choice between two currencies, most people spend the weaker one and hoard the stronger one. Eh, that's not really Gresham's law, which applies when there is a fixed (by law) exchange rate between two currencies. Quoting Hayek’s Denationalization of Money, “What Jevons, as so many others, seems to have overlooked, or regarded as irrelevant, is that Gresham's law will apply only to different kinds of money between which a fixed rate of exchange is enforced by law.” (Emphasis his)
  • Geee 5y ago
    True. What actually happens, is the opposite, known as Thier's law[0]: "Good money drives out bad". When given free choice (free competition between currencies), people prefer to accept the good money, which eventually drives out the bad money from circulation. Or more clearly, the bad money loses demand and therefore its value. [0] https://en.wikipedia.org/wiki/Gresham%27s_law#Reverse_of_Gresham's_law_(Thiers'_law https://en.wikipedia.org/wiki/Gresham%27s_law#Reverse_of_Gre...)
  • cf141q5325 5y ago
    You dont disagree with the author. The key phrase is "given the choice" from the consumer perspective. That people who sell will demand the stronger if they have the option isnt surprising.
    • paulgb 5y ago
      With a free-floating exchange rate, the buyer wants to use the weaker currency and the seller wants to accept the stronger one. The seller can set prices in each according to his preference, and the buyer can decide which to pay vs. which to save according to hers. The market will discover an exchange rate between the two currencies accordingly, but no economic law dictates that one will drive out the other. Gresham’s law applies when the seller is bound to a certain rate of exchange between the two currencies. The buyer will therefore pay in the currency she has the least desire to hold for the long term. As a result of everyone doing this, over time all trading will be done in the less-desirable currency.
• smallmouth 5y ago
  It's whatever the other person wants it to be.
• bedobi 5y ago
• eric4smith 5y ago
  The coins in John Wick. I was wondering about that just yesterday. "What are the value of those coins?" I thought. There seems to be a mint (episode 3), and the guy who runs the whole thing (the central bank) seems to live out in the desert. Who sets the value? Can anything be money? (let's forget about the intrinsic value of the gold itself for a moment.). It seems that these coins are used within the community of the criminals themselves and the bank sets their value. It also seems that the community can pay for things with fiat currency or these coins. And it seems that one can exchange these coins for fiat currency too. The John Wick universe is an interesting example to see the practical use of another currency in everyday use embedded in a world of fiat currency. But what really got me thinking (I know, late to the party)... money can be anything. Anything that a community decides what it is. As the community becomes larger it becomes more valuable, but also it comes with more problems too (the USD as example).
  • deleted 5y ago
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  • JimTheMan 5y ago
    It's only implied, but the coins also bring a certain required 'illegitimacy' to a transaction. ie, if I turned up with cash to organise a hit... you might wonder who I was and if I was a cop. But if I instead rocked up with mafia gold, well then I've passed the sniff test for being part of the underworld.
    • grenoire 5y ago
      Less so illegitimacy but simply showing that you're a member of the underworld. Even if you stole the coin, you still know it's tender.
• rmah 5y ago
  The author seems to overlook one of the fundamental purposes of money. Which isn't too surprising given her background, but somewhat disappointing given the topic of her site. That is, she ignores the role of money as a unit of account. Traditionally, something is considered money when it can fulfil three functions: 1) Act as a medium of trade 2) Act as a store of (economic) value 3) Act as a unit of account The last is critically important in the modern context because one of the fundamental uses of money today is to measure economic wealth/income/activity/potential. Many commodities can act as #2. Many abstractions can act as #1. Few things act as all three.
  • tmn 5y ago
    Fiat, gold, digital are all fine for units of account it seems? Did her not explicitly touching on this augment any of the main points?
    • rmah 5y ago
      That something can be used for X does not mean that it is used for X.
      • tmn 5y ago
        Did you read the article? Your original comment was just an implicit discrediting of the author. It’s hard to see how point is relevant to the main concepts of the ‘article’(small book). I’d be happy to hear your expanded thoughts on the implications of ‘that something can be used as a unit of account does not mean that it is used as unit of account’ has on any of the more interesting points at play.
  • philbert101 5y ago
    I guess you didn’t read the article. A quick search shows she mentions it 8 times. Here are just a few: > We can define currency as a liability of an institution, typically either a commercial bank or a central bank, that is used as a medium of exchange and unit of account. > Central Asians at the time of Battuta, as a nomadic culture, used livestock as money. The unit of account was a sheep, and larger types of livestock would be worth a certain multiple of sheep. > Prices of most things stay relatively stable or preferably keep going down as priced in the most salable good (such as gold, historically) over the long run, but go up in most years when measured in a depreciating and weaker unit of account such as the British pound.
• bgroat 5y ago
  A lot of people are going to come in and say that money isn't real. Which is true. But I like to think in boolean and float terms. 0 is not real. 1 is real. Cash in a reserve currency is ~0.9 Visa/MasterCard are also ~0.9 BTC is probably around 0.7 A shit coin is <0.5 Which is to say, it isn't real. You're right - that's not a useful stance, and all of the unreal things aren't therefore equally "real"
  • canadaduane 5y ago
    I think a better categorization is to split things into "socially constructed reality" and "physical reality". Two types of "real". Money and God are solidly in the "socially constructed reality" type of "real." Light and Gravity are in the "physical reality" type of "real." Things in the "socially constructed reality" category depend on network effects--who believes and upholds the truths within your network. That might map to your "float" values, as not all currencies are upheld by unanimous agreement within various networks.
    • stormbrew 5y ago
      There is a physical manifestation of something that we describe as light or gravity, but our understanding of those things is, in fact, socially constructed just like "money" (or really, an economy) is. We have an imperfect model of what both light and gravity are and we use that model to describe things we observe, but the map is not the territory and it's actually incredibly important to understand that. In all three kinds of things, belief that something is true -- even mass, near unanimous, collective belief that it is -- does not make it so. That was true for Newtonian physics and gravity as it is for, say, the idea that "interest rates and inflation are connected."
• sylware 5y ago
  Henry Ford "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."
  • reducesuffering 5y ago
    And Ford was a clear anti-semite. For all we know, he's probably alluding to some jewish conspiracy fantasy of his.
    • imtringued 5y ago
      Yeah, the jewish conspiracy theories never made sense. If people with $1000 on their bank accounts want 3% interest they get $30, then they act surprised that this means that rich individuals also get 3% interest, which if you are a millionaire is $30k or 1000 times more. There's bound to be some jew millionaires or even billionaires because there are a lot of jews on the planet. Nobody cares about christian billionaires because they are too common. It's kinda the same thing with land. Homeowners vote in regressive zoning and lower property taxes and then point the blame at high profile companies like Blackrock taking advantage of the same laws to boost their property values. A house price 20% increase is the same for everyone but real estate companies benefit more because they have more houses. The fundamental problem is that everyone wants to benefit at the expense of other people and they let the big guys get away with it because restricting their benefit would restrict your own benefit.
    • timcavel 5y ago
• xstefen 5y ago
  Money is a token created for the exchange of goods and information. It's as real as birds. https://www.youtube.com/watch?v=RPrczfY6eTs https://www.youtube.com/watch?v=RPrczfY6eTs
• deleted 5y ago
  [deleted]
• Deprogrammer9 5y ago
  Money is a representation of someones debt, for without debt money could not exist. "Modern money is debt and debt is money".
  • wnoise 5y ago
    This article distinguishes currency, for which that is true, from money, for which it is not. It is an idiosyncratic definition, but it is the one this article uses.
    • stephen_g 5y ago
      I think ultimately it's a useless distinction. People try to argue about "sound money" and all that, but more and more my view is that both the historical/anthropological evidence and the realities of our modern economic systems point towards the debt as money theory, and that sound money just doesn't really exist. Commodities like gold are commodities, and currency (which is money) is different.
• sumedh 5y ago
  > Kind of like how we don’t use Fedwire transfers to buy coffee, bitcoin base layer transactions are not well-suited to buying coffee. Visa transactions that run on top of Fedwire, or lightning transactions that run on top of bitcoin, can be used to efficiently buy coffee. That is in interesting perspective. I always wondered how can BTC scale if the average folks cant use it to make instant payments.
  • Quindecillion 5y ago
    Bitcoiners have been banging that drum for a long time, since the block size war and the inception of the Lightning Network. Takes a long time for the message to spread outside the Bitcoin bubble because Bitcoiners are largely ignored by the wider community.
• Splizard 5y ago
  Money is a form of energy, where conservation and the laws of thermodynamics apply. I'm surprised that there isn't widespread understanding of this. The common understanding appears to be that money is just an imaginary human-thing and that often "we would be better off without it". Consider the case of a crypto mine being established in a remote and isolated location in the desert (or on the moon) with plenty of sunshine and solar power. As long as the mine has an internet connection, it can use the available solar energy to mine crypto and send them to anyone on earth. This physically results in the mine being able to transmit energy wirelessly across vast distances. Almost like magic. Sure, it's not in an electrical form and there is energy loss, but at the end of the day, the result is a very real physical capacity to do work.
  • fennecs 5y ago
    I too burn $100 notes for fuel.
  • woodruffw 5y ago
    The laws of thermodynamics do apply, which is why this sentence: > This physically results in the mine being able to transmit energy wirelessly across vast distances. ...is complete bunk. No energy is transmitted when you mine and then transact in Bitcoin: you've used the energy to produce a proof of work, one that others arbitrarily value and exchange for different energy. Restructured: it should be clear that no trust scheme can magically transfer energy; it can only transfer tokens than can be exchanged for energy. In other words, any trust scheme that has extraordinary power requirements is strictly worse than one that only consumes energy once (i.e., when ultimately purchased).
  • copperx 5y ago
    The metaphor breaks down when you realize that there is barely a correlation between the amount of work produced and the amount of money spent.
  • AgentME 5y ago
    >Consider the case of a crypto mine being established in a remote and isolated location in the desert (or on the moon) with plenty of sunshine and solar power. As long as the mine has an internet connection, it can use the available solar energy to mine crypto and send them to anyone on earth. This physically results in the mine being able to transmit energy wirelessly across vast distances. When the person wants to spend the crypto to get energy later, then new energy still has to be produced in addition to the energy used for mining (either by burning fossil fuels or using some of the capacity of renewables). If they're producing 100 units of energy to run their miner to get enough crypto to buy 100 units of energy later, then there's twice as much energy having to be produced than if they didn't run their miner. Money is a tool for humans to allocate resources between themselves. It's not energy storage. If there was only one person on Earth that could freely use any resources available to them, then they wouldn't ever have any use in "saving up energy" by crypto-mining to spend later because it's not saving up energy. It's making energy and spending it on IOU notes to trade to other people for energy they make. It's only when you add other people to the system that it makes any sense to do. Though ideally, the people would be able to coordinate together to come up with a solution that doesn't involve twice the energy being made with half of it going into making IOU notes.
• sebastianconcpt 5y ago
  Money is quantification of Praexologic [1] actions, currencies are its measuring units. [1] https://en.wikipedia.org/wiki/Praxeology https://en.wikipedia.org/wiki/Praxeology
• skybrian 5y ago
  There are many ways to think about it, but one I find amusing is that a national currency is a federated system of many smaller currencies that trade at par. Paper money is clearly not the same thing as an electronic record in a bank account. Paper can't be stored in a database. They are kept equivalent because banks (and people) trade them at par, for example using ATM's. Each bank (including central banks) has its own computer system for its accounts. Bank account money never leaves a bank's computers. There's no way to get it out of the computer, any more than you can remove your virtual treasure from an online role playing game. So this seems like a good way of thinking about what happens when a bank creates money. They can create virtual currency in their own computer system, not in anyone else's. It doesn't make them richer, any more than a game company creating virtual gold pieces makes them richer. The money is either meaningless (if held by the bank itself) or a liability (if it belongs to a bank customer). To a bank, only outside money counts as wealth. Transfers happen via trades. To pay anyone not using the same computer system, a bank needs outside money of some form. So inside money and outside money are clearly different. To a customer, money in Bank A might seem equivalent to money in Bank B, but to Bank A, only dollars in Bank B are assets, and to Bank B, only dollars in Bank A are assets. So, one way to approach the "what is money" question might be to look at payment systems. How is it that all these different sub-currencies are made to trade at par?
  • throw868788 5y ago
    Realising this is what made money a lot easier to understand for me, and simplified the difference between different kinds of money. In the end its easier just to think of them as different currencies with stable pegs. It answers questions like - how can the banks issue money? Of course some of them are easier to exchange with (e.g. bank credit over notes) and this makes them more useful in trades. For example (bank money = real money) only because the bank is willing to keep the peg at (1.00 bank credit = 1.00 real currency) as you state whenever you use an ATM, take money out at the counter, etc. When the bank runs out of real money to maintain this peg it can and has deviated in the past (e.g. people selling their bank accounts at say 30c to the dollar in the great depression). In normal times however their much smaller money stock is enough to keep the peg going against the usual net deposit/withdrawal flow. Of course if a central bank comes in and can lend that bank unlimited real money the peg could be maintained. Indeed that can and has happened.
• plondon514 5y ago
  As my economics teacher said many times throughout the year of studies I had with her: “Money is what you can give to someone else for a sandwich”
• tryptophan 5y ago
  She doesn't mention the whole tether fiasco at all, which is the strongest point against bitcoin currently in my opinion. Tether is a completely unregulated de facto 'bank' that makes up a very significant portion of the demand for bitcoin. If that blows, bitcoin will inevitably go with it. Buying bitcoin is betting not on bitcoin, but on tether.
  • sjtindell 5y ago
    Doesn’t quite ring true to me. Bitcoin was blowing up in price way before Tether came around. Although the Tether setup is shady, it’s not propping up Bitcoin. I would rather say that when Bitcoin falls next (it does in cycles) then Tether may collapse.
    • kovacs 5y ago
      Tether came out in 2014. This is a pretty good overview of all that's happened and why the parent's comment is actually relevant. https://www.theverge.com/22620464/tether-backing-cryptocurrency-stablecoin https://www.theverge.com/22620464/tether-backing-cryptocurre...
      • sjtindell 5y ago
        By 2014 BTC had already gone up from $0.0000000001 or something like that to $30. To be conservative you could use the early exchange prices of $0.10 or so. Do the math. It was blowing up way before Tether. Yes, Tether is one of the biggest frauds on the planet right now. I repeat, Tether’s fall would not cause the collapse of Bitcoin. These other comments saying “oh it’s smaller than usdc so btc would be fine” are even missing the point. It’s like nobody can mentally conceptualize an asset that has gone up 100,000% or much, much more. $1000 spent on MtGox in the early days would be over $200,000,000 today. It’s not one coin or one tweet or one company driving that absolute monster of speculation. But in my opinion Bitcoin’s collapse, a real one that goes to zero, would represent such a significant shift in the upward paradigm that it would mean the end of every single other cryptocurrency in their current iteration, including Tether and even Vitalik’s world computer. They would return in another form. Just my thoughts.
• archhn 5y ago
• choppaface 5y ago
  I think the author meant to put this in the crypto section: > During World War II, when the Japanese Empire invaded regions throughout Asia, > they would confiscate hard currency from the locals and issue their own paper > currency in its place, which is referred to as “invasion money“. These > conquered peoples would be forced to save and use a currency that had no > backing and ultimately lost all of its value over time, and this was a way for > Japan to extract their savings while maintaining a temporary unit of account > in those regions. The author also fails to cover fraud and wash trading. Besides Invasion Money, Crypto is the only other thing on the list where debts can disappear without any transfer of value.
• burlesona 5y ago
  I found this a thoughtful and informative read, and I especially like the term “proof of force” to describe fiat currency, which I hadn’t heard before. I don’t think this is going to significantly change the way most people on hacker news think about bitcoin, but I will say that it changed my perspective on the problem of network scalability. If you think of Bitcoin not as competing against Visa, but as competing against the bank settlement network, then it makes a lot more sense.
  • ftlio 5y ago
    > If you think of Bitcoin not as competing against Visa, but as competing against the bank settlement network, then it makes a lot more sense. Yes, this is Bitcoin precisely. If you then lock your bitcoins in different schemes with different security models or transaction amortization tradeoffs, you carry the risk of the scheme, not the settlement layer and unit of account. You can experiment with different forms of commodity money, fiat money, and all the monetary policy therein and the proof will be in the pudding of who ends up with more of the underlying, finitely scarce coin, but you can never risk anyone's coin that doesn't join the scheme.
  • trompetenaccoun 5y ago
    As someone who's into economics and finance (as well as cryptocurrencies), I'm less concerned with what everyone thinks about Bitcoin and a lot more with what they know about money in general. It's scary when you first realize most people have no clue how our civilization works and what holds it all together. This is a very fragile system, it benefits those with money/power, but it's also ripe for disruption because it's not consciously supported by the majority of the world's population. How can someone go through life and never ask themself what money is, where it comes from, why their paper bills keep getting worth less year over year... Most of us consume things on a daily basis, but never stop to think what actually happens there, where the value of the money comes from, what determines the price of the product, etc.
  • deleted 5y ago
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• devin 5y ago
  Lyn Alden’s articles are fantastic opportunities to learn a lot, but I have a hard time swallowing their takes on crypto.
• a_square_peg 5y ago
  One way that I've been thinking about this is to define money as something that facilitates economic activities that's some multiple of its total value and use it as a litmus test to see if something is functionally money or not. If it's the other way around, where the total value exceeds the economic activities by many multiples, it should be classified as an asset. For instance in some situations, cigarettes or packs of ramen are performing the role of money when it facilitates some economic transaction denominated by it. For dollar, you can see how the US GDP is many multiples of total value of dollars available and the same goes for the Euro too. On the other hand, stocks, real-estates, and gold are all assets by this definition. For instance, gold has market cap of ~$10T but the global gold market is perhaps something like $500B/yr - say from extraction to retails. By this definition, Bitcoin is closer to asset than money. If it were close to being money, the value of economic activities facilitated by Bitcoin would be in multi-trillion dollar range and I just don't see that happening anytime soon. Of course, this doesn't say anything about its value as digital asset of some sort but I think the rhetoric of cryptocurrency as money doesn't really hold.
  • vishnugupta 5y ago
    This is a good mental model which I use from time to time to evaluate if something is money or not. > stocks, real-estates, and gold are all assets So what infers the quality of "asset" on these things? IMO it's their intrinsic use value. E.g., I could build a house to shelter me on a land, gold could be used to build electronics, stocks generate cash flow. Most of these assets are natural resources which humans need to lead a good life. So there is a natural demand for these resources regardless of whether they are used as currency or not. Said this way, I just don't get what's the intrinsic use of a bitcoin? I totally get the intrinsic use of ETH; I could use it to execute a smart contract i.e., it's a currency to get some computation done. What is the natural demand driver for bitcoin? I just don't know.
    • a_square_peg 5y ago
      Yeah, I think the economics of Bitcoin is fascinating to watch. Been curious too what the market price of it would be if one took out the speculative aspect.
• beastmodemoney 5y ago
• beastmodemoney 5y ago
• dqpb 5y ago
  Money is the API of a market. A market is a protocol for massive heterogeneous multi-agent coordination. It’s effective because it requires minimal transfer of information between agents.
• vmception 5y ago
  Long winded article whew I have a good grasp on the abstraction necessary to accumulate value abstractly A lot of financial engineering that comes naturally to me requires alot of inspiration to people I need to collaborate with Understanding how money or currency is a proxy, a glue to get exchanges of value to occur, really require some bending of thought, for a lot of people The velocity or multistage component is hardest for people
• openfuture 5y ago
  Money is persuasion. You can use it to change people's behaviour. Once people lose trust in money then it is no longer persuasive. This is when authority starts resorting to violence instead.
• jmyeet 5y ago
  It's kind of amazing to think that the system that underpins an awful lot of human activity is a collective delusion. This is one problem gold bugs seem to gloss over: sure your currency might technically be backed by gold (or whatever) but that's only the case because there's an enforcement mechanism on the humans involved (ie the government). And that government only exists because the people collectively will it. So there's really no difference between this and a fiat currency. It gets even funnier when Crypto Bros start proselytizing about blockchains. Here one tiny part of the system has been replaced a simple consensus by computers. But that's where it ends. As soon as crypto (including NFTs) meets the real world, meaning if you use your Bitcoin (for example) to purchase something (weird concept I know) that isn't on the blockchain as well then you've just added a trust requirement where collective delusion has to act as an enforcement mechanism.
  • stazz1 5y ago
    The bread I can buy to satisfy hunger is certainly not a delusion. Currency is an abstraction for negotiating and prioritizing satisfaction of needs. Yes, it's very blurry, but delusion seems to be quite a stretch if you ask me. Of course, many hold this view these days because we can print money et cetera, but there are still fundamentals at play such as needs, wants, resources, surplus, production, means of production, the harvest, and so forth. These are not delusional things, these are non-negotiable aspects of any civilization and any human collective as an inextricable part of the surrounding environment and availability of and access to resources. What do you reckon
    • jmyeet 5y ago
      Yes but why doe sthe baker accept that currency for the bread? They do so because of the collective belief in that currency's value.
      • deleted 5y ago
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      • mjburgess 5y ago
• pseingatl 5y ago
  According to John Buchan, frozen desire. Also see, 𝙏𝙝𝙚 𝙂𝙧𝙖𝙢𝙢𝙖𝙧 𝙤𝙛 𝙈𝙤𝙣𝙚𝙮, by Felouz.
• pseingatl 5y ago
  According to John Buchan, frozen desire. Which was also the title of his book about the subject. Also see, 𝙏𝙝𝙚 𝙂𝙧𝙖𝙢𝙢𝙖𝙧 𝙤𝙛 𝙈𝙤𝙣𝙚𝙮, by Felouz.
• langsoul-com 5y ago
  Fiat money seems to be getting more worthless by the day. There's very good reason why assets surge in price. Great for the day to day, but need hard assets for long term. $100 won't have good purchasing power in 20 years time.
  • numlock86 5y ago
    > $100 won't have good purchasing power in 20 years time Yes, but it basically boils down to this question: Why would you keep those $100 for 20 years anyway? If you think about that you inevitably end up at having assets instead.
  • lottin 5y ago
    This is probably why most people don't keep $100 bills in their pockets for 20 years.
• rkagerer 5y ago
  I feel like energy may become the ultimate form of money. Likely always will be in greater demand than supply (at least on a macro basis). Probably won't have many "magnitude of order" technological improvements after we crack fusion. And oil and bitcoin are already a form of it, in a sense.
  • lottin 5y ago
    > Likely always will be in greater demand than supply (at least on a macro basis). If demand is always greater than supply it means that the market isn't working as it should. In a well-functioning market price will adjust so that the supply is equal to the quantity demanded.
    • rkagerer 5y ago
      That's fair, thanks for pointing it out. I meant more in general that over the long term humans will always find ways to utilize all the additional / cheaper energy that ever becomes available. Historically the pattern has been: New supply --> cheaper prices --> new applications --> more demand I don't think there will ever be such a thing as "enough", even when civilization gets to the stage where we measure in units of stars.
  • Quindecillion 5y ago
    Buckminster Fuller conceived of the "kilowatt dollar". Bitcoin fulfills this role well, but people are too busy conflating its energy consumption with carbon emissions.
• babagabooj 5y ago
• OrlandoHakim 5y ago
  I am surprised no one has shared these two important documentary videos on money: Money as Debt: https://www.youtube.com/watch?v=2nBPN-MKefA https://www.youtube.com/watch?v=2nBPN-MKefA Principles for Dealing with the Changing World Order by Ray Dalio: https://www.youtube.com/watch?v=xguam0TKMw8 https://www.youtube.com/watch?v=xguam0TKMw8
• EdwardDiego 5y ago
  Hate to say it, but it wasn't the petrodollar that killed US car exports, it was terrible build quality, same thing that crippled the British car industry.
• nighthawk24 5y ago
  "You can't have decentralization, censorship resistance, self sovereignty, ownership of your own stuff without privacy." - Zooko Wilcox-O'Hearn, Founder of Zcash. If anyone wants to give Shielded ZEC a try, get a Zcash Wallet from https://z.cash/wallets https://z.cash/wallets This is how fungibility looks like: https://zcashblockexplorer.com/transactions/d51f29739b75368390f952ab285d259cd37b7fd47e1741d8c2d086c032e10428 https://zcashblockexplorer.com/transactions/d51f29739b753683...
• VinLucero 5y ago
  My new insight from this work was around the Central Bank Digital Currencies (CBDC) being framed as “varying in value” depending on who owns the asset. Are there any other business examples where an asset ( without any other craftsmanship/ work / energy input ) changes in value based on who holds it?
  • vinny06 5y ago
    Yes, the Chinese social credit system. CBDC's are programmable money, like crypto currency smart contracts. They (the banks and governments) will decide how and whether you can spend your credits. But almost no one realizes the horrors this will bring. With CBDC's your government or even your employer can decide how you are able to spend your money(credits). They can disallow you from paying your rent when you did not take your mandatory experimental Covid19 booster shot. Or they can disallow you to pay for gasoline if they think you've used too much.. The possibilities are endless. This is not a conspiracy, do your own research! This is why crypto currencies are so important for us; banks and governments cannot control them. If we lose crypto currencies we will lose our freedoms eventually. The fight of governments and banks with decentralized crypto currencies are not about electricity usage or money laundering at all. It's all about absolute power and control over the people. Again, do your own research!
• mdp2021 5y ago
  Surprised the books from Niall Ferguson are not mentioned: -- Ferguson, Niall - The Ascent of Money -- Ferguson, Niall - The Cash Nexus The standards of Niall Ferguson are very, very, very high. I would also keep an eye n his site, niallferguson.com , particularly on his ongoing journalistic production: https://www.niallferguson.com/journalism https://www.niallferguson.com/journalism
  • santiagobasulto 5y ago
    Heads up for anybody interested in The Ascent of Money: I bought the kindle version (amazon.com) and it was just pictures (literally, photographs) of a physical book.
    • mdp2021 5y ago
      I remember that system (electronic books through that distributor): at least as of a few years ago, you had to check (through a preview system) before purchase whether the book was only scanned or available as proper text.
• m0llusk 5y ago
  This misses much such as the dynamics of money. The velocity of monetary exchange in a society is important and has layers. Rich people save the extra they make while working people spend. Gold retains value in part by holding other values down with deflation. Money is only one aspect of capital flow. And Nassim Taleb's analysis that Bitcoin is not a currency but rather an inherently volatile security casts a shadow on this analysis.
  • hawk_ 5y ago
    The article literally states that Bitcoin isn't a currency - where is the shadow?
• neilwilson 5y ago
  "Of course, we could just as easily ask, since the government is using force to collect taxes to provision itself, why can’t it just collect commodity money like gold with a tax, and then spend that gold to acquire its necessary provisions? " Because that commodity then first has to exist, and sometimes it doesn't - as the 'specie shortage' period in England in the 17th Century that brought the 'free minting' period to a close, and created the Bank of England shows. [0] Why bother, when splitting twigs in half, or indenting a receipt on paper achieves the same ends at much lower cost? What makes fiat currency work is that nobody else can issue the unit of account that the central authority requires in settlement of taxes. Anybody who does is jailed. Anybody who fails to pay is jailed and has their assets confiscated. Since the central authority arises from the organisation of the population as a group, it has the political and physical power to enforce the tax on everybody who wants the protection of that group. Anybody who doesn't is 'outlawed' in one way or another - which is effectively a death sentence. [0] "Money, Politics and Power", Richard A Kleer: https://amzn.to/3tHSRto https://amzn.to/3tHSRto
• OscarCunningham 5y ago
  I don't understand how people can talk about fiat currency and call it 'backed by nothing' without mentioning that the central banks do in fact have assets whose value exceeds the amount of their currency in circulation. The dollar would not in fact lose its value if we all stopped believing in it, because the Fed would hit their inflation target by selling off their bonds until the price came back up.
  • bogota 5y ago
    Who would buy bonds and with what if in this scenario we all didn’t believe in the green back?
    • OscarCunningham 5y ago
      I'm imagining that people still have the dollars, they just believe they're worhtless. So people are happy to trade them away to anyone offering something valuable in exchange for them. The question I expected you to ask is why people wanted the bonds, since all they're backed by is future dollars. The circularity is resolved by the fact that people know that there will be some demand from the government for dollars, since the government has outstanding dollar-denominated debt.
      • OGWhales 5y ago
        > there will be some demand from the government for dollars I think an important cause of demand you're missing is that people still need to pay taxes in dollars.
        • OscarCunningham 5y ago
          If people earned bitcoin and paid taxes in bitcoin the government would still need to exchange those bitcoins for dollars in order to pay its debts.
          • OGWhales 5y ago
• sytelus 5y ago
  Money is claim on human labor.
• lkrubner 5y ago
  My favorite book on this, the history of money in modern times, and the growing use of debt to create an economy, is covered by the French historian Fernand Braudel, in his book, The Wheels Of Commerce: https://www.amazon.com/Wheels-Commerce-Civilization-Capitalism-15th-18th/dp/0060150912/ref=sr_1_2?crid=2NK4IIKS1GJXA&keywords=fernando+braudel+commerce&qid=1648453263&sprefix=fernando+braudel+commerc%2Caps%2C68&sr=8-2 https://www.amazon.com/Wheels-Commerce-Civilization-Capitali...
• elisharobinson 5y ago
  i think we can have physics like discussion for money . where joule ~ money and joule / sec ~ value , i am making a distinction between money and value where money is more discrete(quantized) and value is continuous . The second secret ingredient is compute. OP(like FLOP) ~ money and OPS ~ value . putting it together we get , M = OP * E * K where OP -> total no of operations E -> energy spent K -> some constant . Dimensionally money has same SI unit as Joule , Total operation is a dimensionless variable . V = M / T {having same SI unit as Watt} value is money per unit time and Goverments / services / business should be seen as value generators the same way we describe the power of an engine as horsepower or watts . This model is completely different than market analysis of prices / value . Not to mention that majority of value traded is done outside of open markets . This model makes the assumption that all players in the value chain (producers and consumers) are agents with repeatable instructions ie put,Get,push,add,mov,etc. Since there is No SI unit for instructions I propose the Unit for measuring instructions be MOV operator , This is because of my belief taking inspiration from the X86 MOV operator which was proven to be turing complete with the movfuscator(https://github.com/xoreaxeaxeax/movfuscator https://github.com/xoreaxeaxeax/movfuscator). What this means IMO all computable operations can be broken down to move operations. Lastly this system views markets as interaction between agents . And makes the assumption that agents that do not sustainably price their goods / services will fail to operate in the longrun. And views variance / volatility in prices as a outcome of chaotic interaction between agents rather True indicator of value.
  • danuker 5y ago
    > joule / sec ~ value That makes no sense. Value and money should have the same unit. Let's say it's "$". There is already a term for what you are describing in $/second: "income" (if you include all assets of a company) or "cash flow" (if you only include cash).
    • elisharobinson 5y ago
      i see that cash and cash flow as 2 different things , so made the case of cash or $ ~ joule and value or cashflow ~ joule / sec.
• dclowd9901 5y ago
  Skimming this article and it seems like people still really don’t get it. Fiat currency doesn’t exist because convenience or mechanisms of fungibility or anything else mechanical about the medium. It exists because a _country_ backs it. A _country_ guarantees it. And I don’t mean a “country” in sociopolitical terms. I mean a literal country. A land that is full of people and all the value therein. Their potential value, their military value, their moralistic value, their natural value, and so on and so forth. This is why crypto doesn’t work. The second any major fiat player (ie, A COUNTRY) goes against it, it’s dead in the water.
• known 5y ago
• 7demons 5y ago
  In old times people had no money, they exchanged goods (barter). So money is some sort of substitute, a promise to do the job for the bought goods/services.
• birdyrooster 5y ago
  Stellar is the future of crypto currency because of their work on CBDCs. They've been around for nearly a decade and are firmly entrenched in the government financial policy space (SDF has been the only foundation publicly participating with White House and US Congress). They move money around the world today with many partnerships including MoneyGram. They recently hired a new executive leadership position for their CBDC product that came from the Fed. Their network is the only one in the CBDC space with a non-profit corporation operating it. Governments are working to create their own CBDCs right now and want turn key solutions that meet standards like ISO 20022 (which Stellar has). XLM is the coin which is used to power network operations in service of creating markets for CBDCs and other crypto assets. The Stellar network fee for transactions is 0.00001 XLM, which is far cheaper than other coins, especially at the price and volume XLM will be for the foreseeable future.
  • Jleagle 5y ago
    Many coins have all of these positives. This just reads like an advert.
    • birdyrooster 5y ago
      Can you name some examples? The only ones that come close are Ripple and Hedera and they still have their disadvantages when considering a direct collaboration with the US Government for a CBDC.
  • birdyrooster 5y ago
    Oh and Ukraine is piloting a CBDC with Stellar right now.
• imtringued 5y ago
  What is money, anyway? From what I can tell, no human on earth understands the nature of money. There are only some people who are further away from the truth than others. >Save: When we save, we store our resources in something that is safe, liquid, and portable, a.k.a. money. This serves as a low-risk battery of future resource consumption across time and space. No, that is not how any of this works. It literally doesn't work like that. Think about it this way. If there is no money, then owning a car in 2000 and not doing anything with it will incur costs. You need to store the car, you need to clean it, you need to send it to inspections. It will lose its value as new models are introduced. The vast majority of physical capital depreciates. When you are saving, you produce more than you consume, meaning you have idle physical capital. That physical capital can be given to someone that needs it, who will then give you money in exchange. The car isn't gone. It's not stored. It's being used by someone else. If you spend the money to buy a new car, a new car has to be manufactured. When you think about it, what money is doing in this case is you are making an agreement in 2000. The deal is, you produce and I consume in 2000, in 2020 I produce and you consume. If you were to reset the money system at the end of every year completely, then you would notice that anything produced within a year, must start being consumed within that year. Saving is the act of swapping the consumption and production relationship across production periods. When you consider the fact, that the human you are making an agreement with has to exist in the future, you should notice that starvation, aging and demographic declines are not some acts of theft or expropriation that humans born with the original sin of entropy commit behind your back. The idea that there is a battery is wholly illogical. The fact that we even pretend that money lets us travel through time and space is the mistake rooted in most currency systems. You can't store labor, nobody has invented a Futurama style freezer that preserves human bodies and even if we did, we would most likely run out of capacity sooner than later. >Invest: When we invest, we commit resources to a project that has a decent likelihood of multiplying our resources but also comes with a risk of losing them, by trying to provide some new value to ourselves or others. This is incorrect again. As mentioned above, savings must be put to use or the human time that those savings represent a claim on will disappear without the futurama tech. This means that even if the likelihood of a return is zero and you are guaranteed a loss, you must still invest your savings or let someone else do it on your behalf. >The majority of people in the world don’t invest in financial assets; they are still on the consumption stage (basic necessities and daily entertainment) or the saving stage (money and home equity), either due to income constraints, consumption excesses, or because they live in part of the world that doesn’t have well-developed capital markets. Or maybe it's because young people aren't born with land ownership and must buy it off some old fart? >Commodity Money >In this way of thinking, money should be divisible, portable, durable, fungible, verifiable, and scarce Ancient egyptians didn't get the memo. They didn't have scarce money. They had money that was immediately available to anyone who worked, especially if said work was on a farm. Since money is immediately available, it doesn't have to be reproduced or as people love calling it "printed", there was no need to generate more of it if people are willing to give it up voluntarily. The idea, that money should be structured like land, so that you must get it from rich people, is a mistake. For a lot of poor people, borrowing with interest leads to a debt trap. So the alternative, is then to replicate the exclusive currency as those who have too little cannot get it from those who have too much. The solution is to stop making a currency exclusive to small fractions of the population. A lot of people complain about money printing and inflation, yet the money supply has risen so much faster than inflation, the excessive monetary savings of the rich have grown so fast and yet people complain that the saver is getting screwed despite having record levels of savings even adjusted by inflation. All that money isn't ending up where it should be, so you can't ever stop making more of it. >Durable means the money is easy to save across time; it does not rot or rust or break easily. Said ancient egyptians had money that rots, which forced them to save in the way I outlined above. They actually had to do the production consumption time swap, they actually had to talk to people and seek agreement whether they want to be in debt. They can't just hold onto money and extort the rest of the population by reminding them that they are mortal and that futurama freezers don't exist and thereby force them to go into debt for the medium of exchange that is needed to trade with parties completely unrelated to the rich that can only be obtained through them. Unutilized capital simply disappears through rotting, giving the "capitalist" zero power over the rest of the population. In other words, if money can be owned, then it cannot be merely an abstract unit of account. That money has to represent physical capital directly and in its entirety. >Unlike a dollar, which is an asset to you but a liability of some other entity, you can hold gold which is an asset to you and a liability to nobody else. Yes, now notice the mistake. You can have an asset which requires the consent of the entire society that accepts gold as payment and you never ask them. You think you have an agreement even when nobody is on the other side. That is the true source of inflation. You plan to consume X amount of resources in the future but nobody agrees to produce X amount of resources at the time you want to consume, the prices of goods goes up. Deflation happens when someone plans to produce but nobody plans to consume in that time period. Thus, due to human psychology, there will be an endless cycle between booms and busts, due to the fact that production and consumption schedules are inherently mismatched as nobody is forced to make such an agreement, nobody is forced to make a plan for the future. Everyone has liquid money that can be spent at any moment, which makes it impossible for producers to anticipate what they have to produce. If the battery theory were correct, then inflation or deflation shouldn't be possible as you can magically store everything including humans in your battery.
• kkfx 5y ago
  I have a far shorter and simpler definition: money are a unit of measure a certain cohort of people agree to accept. They measure "valuables" things to trade, from goods to human work. Private money so money == debt is a popular not-that-modern and widespread scam to keep a strong grip on the society by a small number of people. In the past we have had a bit of power subdivisions: - army power, represented by the State - religion power, represented by the clergy - economy power, represented by merchants Army need religion to keep people obeisant and economy to have natural resources and means to transform them for war and life. Religion need army to be protected, to crush enemy religions and economy to remain in power. Economy need army to protect it's own interests and religion to justify it's own crimes. After the French revolution economy became the State and a religion. And that's why economy now is ruled by dictatorial thieves and being those just "economist" they can't rule well. As clergy they have learnt very well how to pasture the masses, but as State they both do not really know how to fight a war nor how to rule a country and that's the reason of our deep crisis. The rest is noise. Any dictatorship to remain in power need a vast majority of loyal and obedient subjects, to elicit them they need to give something, not just rhetoric, the classic panem et circense. Since there are oppositions they need to give much while they earn much, much more, and so resources get depleted quickly, that a war arrive to justify the disaster, sometimes suffice if there are a ready resourceful and fable enemy, sometimes not and dictators end up badly. Some try to ride the revolt sacrificing some puppets to be substituted by other, again sometimes work, sometimes no. Since we need a society to live well money remain anyway a unit of measure and people keep accepting it at different weight depending on the current situation and the game keep going. The best video-tutorial I see is in a small part of a Colombian movie "El Concursante", perhaps some can find subs in various languages https://youtu.be/WpGhcDg7IJ4 https://youtu.be/WpGhcDg7IJ4
• Xcelerate 5y ago
  As a data scientist, perhaps this is a case of a hammer looking for a nail, but personal finance made a lot more sense when I started treating “money” as: 1) a collection of arbitrary rules invented by humans, 2) probability distributions over the ability to exchange certain assets at different points in time, 3) a giant optimization program. So, the terms “U.S. dollar”, “fixed rate mortgage”, “401k”, “capital gains”, etc. don’t really have any inherent meaning beyond the set of rules that govern their interactions. This rule system itself can change over time depending on politics and human emotions, so you have to try to model the dynamics of this meta-system as well, even though that’s pretty difficult. Once you’ve gathered all the different rules into some programmatic representation, then you decide what it is you want out of life and at what points in your life, then you start optimizing. For example, would you rather have a 10% chance of having $1,000 on some future date, or a 1% chance of having $10,000? The expected return is the same in both cases, so your optimization should really consist of targeting a specific shape for the entire distribution of outcomes rather than a single number (or specific assets). Not surprisingly, the average person (including me) does not have the right combination of 1) detailed knowledge of the global financial system and its rules, 2) how all these rules are likely to change, or 3) the technical background to implement the advanced mathematics required to optimize all of this in an accurate way that actually makes valid predictions. So most people instead just guess and base their financial plans on their hunches about how “money” works, and large organizations that have the time to do all of this modeling in a more rigorous way come out much further ahead. I still think simplifying the “rules” of finance would be one of the best things we could do to reduce wealth inequality, as inequality seems to largely be hidden in the highly volatile landscape of the cost function for the optimization problem I described.
  • Apofis 5y ago
    Money isn't complicated. Save money, invest it into index funds long term, don't spend more than you earn, make sure you purchase a property, and never rent. We got through COVID due to monetary policies the Federal Reserver, White House, and Congress enacted, all levers that would disappear in this "paradise" crypto nerds/enthusiasts sell where our government loses all control over money. Further, Venture Capitalists borrow money from Investment Banks who borrow money from the FED, how do we all envision this process working if our government can no longer issue money? A nebulous "DAO" with smart contracts? I'm not sure I'm comfortable with that.
• dools 5y ago
  It's interesting to see Mosler quoted here, despite the fact that so much energy is expended trying to define something that Mosler defines very simply: Money is a tax credit. Even commodity money is fiat, because without the stamp from the mint it cannot be used to pay taxes. If you want proof of this, all you have to point to is the fact that coins minted in antiquity still exist, despite the fact that they were alloys. Money is a tax credit, everything else is a commodity. It's very simple.
• nicoburns 5y ago
  Ultimately, money is a measure of economic power. It is the ability to obtain goods and services from others in practice.
• suction 5y ago
  Personally, I'm tired of every generation of Rogan-grade meatheads discovering this and believing they're the first ones to realize. The internet now makes all of us witnesses to this phenomenon of badly educated people thinking this and other pillars of modern society are "secret knowledge" when they're basically just not educated enough to know about them.
  • _notathrowaway 5y ago
    And why is it bad that poorly educated people are getting more education? I don't know you, but your comment comes across as fairly elitist.
    • kaydub 5y ago
      It's not them learning that's "bad" it's the pontificating.
      • jmeister 5y ago
        You’re free to look away.
    • suction 5y ago
      I'll take that as a compliment, not even kidding.
  • xyzzy123 5y ago
    It's hardly a secret, but people who live their whole lives with a relatively stable currency experience a very powerful illusion. I think it's fair to say that the crypto boom has greatly increased the general public's sense of the slippery nature of money. The main other way you might get that broad understanding is by close exposure to currency collapse, hyperinflation or extreme volatility. It's kind of a tribute to the USD that it's so mindblowing when people figure it out.
    • suction 5y ago
• ianai 5y ago
  I don’t see mention of another fundamental concept to money and resource allocation here in the comments about this article. (I only skimmed it briefly myself as life is short) The measure of the economic valuation of anything that can be traded is based on a persons “willingness to pay” (WTP) for the trade involved. This seems fundamental to both currency and anything looking to define itself as currency. I don’t see an inescapable reason for everyone to have a WTP to convert traditional money for cryptocurrency. Take email. Everyone nowadays needs an email account for many critical needs. It might be possible to function as an adult without an email account, but that probably requires more than a few sophisticated machinations. And of course people pay for the infrastructure to have an email account - cell phone for a client, perhaps some privacy for a free email account or actual money for other email accounts. Email is actually so useful and critical that people are willing to pay many times over a course of decades in service of that email account. Email has many inescapable uses and most people are thus willing to pay to have the use of an email account.
• mbg721 5y ago
  The college economics class definition is that money has multiple functions: it's a unit of account, a store of value, a medium of exchange. That's true whether you're living in the gold-standard world or the fiat petrobuck world.
• ilaksh 5y ago
  The challenging thing for reasonable people and economists is that although Bitcoin is the undisputed digital gold, cryptocurrency continues to evolve and improve. Money is now a high technology. Whereas money actually in use generally is not. Similarly with other aspects such as transportation or government. High tech exists, but generally is not deployed. Effectively this means that the structure of society becomes more and more out-of-date as it lags behind advancements and developments. Also, if you aren't familiar, do some investigation into the historical relationship between clans, gangs, kingdoms, and nation-states.
  • maxerickson 5y ago
    Irreversible smart contracts are dumb. Having access to the legal system is actually good. Having to implement your own safeguards to store large amounts of value is bad.
• spacemanmatt 5y ago
  I think this covers it pretty well https://www.youtube.com/watch?v=f2KZ_wWWeYM https://www.youtube.com/watch?v=f2KZ_wWWeYM
• mihaic 5y ago
  I've only skimmed the article, but this is one of the time I'm reminded of Pascal's words: "Please excuse this long letter, I did not have time to write a shorter one". It feels like a few more edits could have really helped condense the material, as I don't want every theory of money to start with Rai stones. Perhaps edits might not have changed the message, as I feel it's just one abstraction level too far from reality in order to merely argue for the inevitability of cryptocurrencies.
• lvl102 5y ago
  Money is time. Money is also resource. When you combine these two you get the sh_t show we have today.
• Dagobert_ 5y ago
  I thought that the "Barter theory" was mostly forgotten by now. This was an hypothesis proposed as early as Adam Smith. However, it appears now that most "primitive" societies did not use barter but rather the sharing and gifting of resources. This is the currently favoured hypothesis: the Sharing Economy.
  • stjohnswarts 5y ago
    favored by who? why can't I find a single reference to "early societies were sharing economies". Also that doesn't seem to scale well since. I share with my friends, family and neighbors, but none of those people can make me a PS5
• eigenvalue 5y ago
  “Some people whose work I’ve drawn from for this article, from the past and present, include Carl Menger, Warren Mosler, Friedrich Hayek, Satoshi Nakamoto, Adam Back, Saifdean Ammous, Vijay Boyapati, Stephanie Kelton, Ibn Battuta, Emil Sandstedt, Robert Breedlove, Ray Dalio, Alex Gladstein, Elizabeth Stark, Barry Eichengreen, Ross Stevens, Luke Gromen, Anita Posch, Jeff Booth, and Thomas Gresham.” Quite surprising to me to not include Nick Szabo in that list. This article alone should have qualified Szabo for inclusion: https://nakamotoinstitute.org/shelling-out/ https://nakamotoinstitute.org/shelling-out/
• randbox 5y ago
  > Historically, a number of cultures have attempted periods of paper currency, issued by the government and backed by nothing. Often it was the result of currency that was once backed (a gold standard or silver standard), but the government created too much of the paper due to war or other issues, and had to default on the metal backing by eliminating its ability to be converted back into the metal upon request. In the late 1600s and early 1700s, the American colonial assemblies directly issued paper money to provide liquidity for farmers, so they did not have to barter with commodity crops such as tobacco. There was no prior government currency backed by gold, farmers paid tax in farm products. > In that sense, currency devaluation becomes a form of tax and/or wealth confiscation. The public holds their savings in the paper currency, and then the rug is pulled out from under them. There was no substantial devaluation or inflation of paper money in the colonies which emitted money using the public land-loan office system with no gold or commodity backing. In Pennsylvania the currency held most of its value for the 45 years the colony was permitted to issue it. It only declined 20% over its entire life time relative to the metal backed British Pound despite new currency continually being placed into circulation for immigrant farmers at low interest rates of 3-4%. > Fiat currency is interesting, because unlike the history of commodity money, it’s a step down in terms of scarcity. Gold beat out all of the other commodity monies over centuries of globalization and technological development, and then gold itself was defeated by… pieces of paper? In Poor Richard's Almanic, Benjamin Franklin explains the labor theory of value, and how if farmers spend their time digging holes to search for Spanish gold they will be poorer than if they had spent their time plowing their fields. > Fiat money, if you like, is backed by men with guns. When money is issued as credit, the value of the money is backed by the personal property and assets which the borrower stands to lose if they do not collect back money in the same unit of account after spending and investing it so that they can avoid a default or foreclosure. > The answer is that it doesn’t have to, but it wants to. By issuing its own currency, it profits from seigniorage, which is the difference between the face value of the money and the cost to produce and distribute it. In the land-loan office system, the government profits from interest. When it places new money in circulation by issuing credit to create liquidity it is acting as a public bank. The interest on loans which place new currency into circulation acted as a tax spent on infrastructure and public services, which was paid to the state rather than a private financial sector, which even Adam Smith admitted in the Wealth of Nations was sufficient to for most of the expenses of the state. It's always surprising when American authors omit a discussion of American colonial money from a discussion of the history of money, given that American colonies were the first western governments to issue paper money and conduct extensive experiments on the subjects.
• yieldcurvinator 5y ago
  Money is memory, great paper.
• carapace 5y ago
  Giordano Bruno said that whatever has the most value and least cost of storage becomes money.
• incomingpain 5y ago
  >Money is a surprisingly complex subject. Its not though is it. It's tremendously simple but nobody is taught and the subject is censored for good reason. >and yet what humanity has defined as money has changed significantly over the centuries. Centuries doesnt matter unless you're looking to understand why the USA is about to majorly collapse. Follow slavery along timeline for dutch and qinq, to british, to usa, to now uighurs in china. To become #1 you need slaves, when you ban slavery you lose your empire. Lets ignore the centuries. When the USA got into extreme debt during WW1 they went off the gold standard because otherwise they would effectively have gone bankrupt. Suddenly the government could 'print money' and they did. Bretton woods came along after great depression and tremendous debt of ww2. IMF basically switched to fiat but really what it was backed by north american natural resources. Not just gold, but oil, lumber, etc. When Nixon nuked this in 71-73. He was a crook but something happened that surprised everyone. The markets went up... it literally didnt make sense. USD should have collapsed. Technically if say during the 1980s, the US government switched to keep debt to gdp below 50% and never went beyond. They could have done that. The problem is that us politicians kept printing money. The financial crisis pushed the USA above 100%. The USA is officially bankrupt. Covid basic income schemes printing trillions only exacerbated the problem. >However, depending on where they live in the world, people are not very accustomed to keeping track of the quality of money itself, or deciding which type of money to hold. The USD has ~40% inflation locked in. At 7% it's going to take a few years. Everyone who is subject to USD reserve currency or for that matter uses the USD will be getting educated. This education will have consequences in many ways. For the first time the US people living right now will get to experience and feel their government debt. Obviously im not nostradamus but I have a feeling as a way to punish china and prevent the yuan from gaining this super power of being the reserve currency. The 'west' will all agree some crypto will be the new reserve currency they all trade in. Some proper non-deflationary nor inflationary currency. We are already seeing this happen as a grass roots movement. You know what happens when that happens? Countries which are heavily in debt will be required to fix their debt situation. Places like Germany or Switzerland who have decided by constitutional requirement to balance the budget and reduce debt are about to become immensely wealthy.
• jokoon 5y ago
  It's important to remember how money requires a lot of regulations, because without enforced regulations and laws against fraud, money quickly becomes pointless. I don't dislike capitalism, I just dislike how corruption quickly makes capitalism immoral, especially when money goes across borders. It's sad but capitalism will never manage to gain support if it's corrupt.
• timtas 5y ago
  So it’s pretty obvious few commenting here read any of the article. Most simply express their own preexisting view at length, and make no attempt to engage the author’s ideas. They’re not even aware they’re contradicting the article. Rampant Dunning-Kruger.