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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 to
by 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 agoFiat, 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 agoThat something can be used for X does not mean that it is used for X.
- tmn 5y agoDid 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 agoI 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.