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Thanks! I'll look into that! My current analogy of money is kind of that society is a giant vending machine capable of producing eg hamburgers, thai massage, a

by itmag 15y ago

Thanks! I'll look into that! My current analogy of money is kind of that society is a giant vending machine capable of producing eg hamburgers, thai massage, anal lube, laptops, BMWs, etc. Money is kind of tickets that you put into this vending machine. And then there are people loaning out these tickets (banks) and also there are different kinds of tickets (currencies) and vending machines (countries) with exchange rates. Another analogy: money is to the bottom-level production of value (ie real goods and services) as functional programming is to assembly language. Ie you can do a lot of cool tricks and abstractions with it, but you can also shoot yourself in the foot with endless recursive data structures and what not. Am I on the right path here? I seem to grok most things in terms of analogies and pictures btw, it's how my mind works. This isn't always a good thing, though, sometimes it's more useful to see something as sui generis (unlike anything else) rather than to say "it's like X". When I have more time I'm going to read my copy of this book: http://en.wikipedia.org/wiki/Georg_Simmel#The_Philosophy_of_Money http://en.wikipedia.org/wiki/Georg_Simmel#The_Philosophy_of_...

nhaehnle 15y ago
My current analogy of money is kind of that society is a giant vending machine capable of producing eg hamburgers, thai massage, anal lube, laptops, BMWs, etc. Money is kind of tickets that you put into this vending machine. And then there are people loaning out these tickets (banks) and also there are different kinds of tickets (currencies) and vending machines (countries) with exchange rates. You may want to think about what contractual obligations are represented by those tickets. A simple example would be literal tickets such as the fare tokens you can buy for many subway systems. When you own such a ticket, you have a claim on the subway system (in an accounting sense): the system is obligated to let you enter in exchange for the ticket. When that happens, the ticket is destroyed for all intents and purposes. A deposit at a bank is also such a ticket. When you have a deposit, the bank is obligated to let you exchange your deposit for paper money. It is also obligated to let you make transfers, and that's where things become a bit more complicated. It gets weird with paper money. Paper money is a liability of the government, but the government is not obligated to give you anything "real" in exchange for the paper money. The only thing it is obligated to do is to accept your paper money as a tax payment. So at first sight, that might seem not ubiquitously useful. However, it just so happens that because paper money is the way to pay your taxes, lots of people want paper money. Hence you can use your paper money to buy things from other people, even though the paper money does not represent any kind of contractual obligation between you and the seller. (An exception to that may be in legal tender laws; but for the most part, legal tender laws are unnecessary.) Then you go back and realize that most of our monetary system actually takes place in computers and not using paper money, and you look into how deposits at banks are proxies for "government money", in particular reserves. And down the rabbit hole it goes ;)
- itmag 15y ago
  Head is spinning.

by itmag 15y ago

nhaehnle 15y ago

My current analogy of money is kind of that society is a giant vending machine capable of producing eg hamburgers, thai massage, anal lube, laptops, BMWs, etc. Money is kind of tickets that you put into this vending machine. And then there are people loaning out these tickets (banks) and also there are different kinds of tickets (currencies) and vending machines (countries) with exchange rates. You may want to think about what contractual obligations are represented by those tickets. A simple example would be literal tickets such as the fare tokens you can buy for many subway systems. When you own such a ticket, you have a claim on the subway system (in an accounting sense): the system is obligated to let you enter in exchange for the ticket. When that happens, the ticket is destroyed for all intents and purposes. A deposit at a bank is also such a ticket. When you have a deposit, the bank is obligated to let you exchange your deposit for paper money. It is also obligated to let you make transfers, and that's where things become a bit more complicated. It gets weird with paper money. Paper money is a liability of the government, but the government is not obligated to give you anything "real" in exchange for the paper money. The only thing it is obligated to do is to accept your paper money as a tax payment. So at first sight, that might seem not ubiquitously useful. However, it just so happens that because paper money is the way to pay your taxes, lots of people want paper money. Hence you can use your paper money to buy things from other people, even though the paper money does not represent any kind of contractual obligation between you and the seller. (An exception to that may be in legal tender laws; but for the most part, legal tender laws are unnecessary.) Then you go back and realize that most of our monetary system actually takes place in computers and not using paper money, and you look into how deposits at banks are proxies for "government money", in particular reserves. And down the rabbit hole it goes ;)

itmag 15y ago
Head is spinning.