4 ms·

Author should actually read about the history of money before making grand statements about what money is and isn't for, and what makes it good or bad. Statemen

by swombat 13y ago

Author should actually read about the history of money before making grand statements about what money is and isn't for, and what makes it good or bad. Statements about how inflation is "erosion of wealth" indicate a gross misunderstanding of the historical purpose of money and the effects of deflation. Money is a medium of exchange. Historically, it's been mostly very, very unreliable, and over the last 100 years or so has actually been remarkably solid even as a way to store wealth. But if you want to store wealth for a long period, currency is not your best bet by any stretch.

p4bl0 13y ago
Argh I'm sorry I downvoted you because I ripped on my trackpad, I wanted to upvote you :-/.
digitalengineer 13y ago
Might I suggest: "When Money Dies" ? The classic history of what happens when a nation’s currency depreciates beyond recovery. http://www.amazon.com/When-Money-Dies-Devaluation-Hyperinflation/dp/1586489941 http://www.amazon.com/When-Money-Dies-Devaluation-Hyperinfla...
curiouslurker 13y ago
Since you mention studying the history of money, Niall Ferguson's Ascent of Money documentary is excellent: http://www.youtube.com/watch?v=4Xx_5PuLIzc http://www.youtube.com/watch?v=4Xx_5PuLIzc
- lmm 13y ago
  I found him quite dry; Debt: The First 5000 Years was much more readable.
  - evgen 13y ago
    Unfortunately, Debt is better labelled as fiction regardless of how readable it might be.
    - lmm 13y ago
      I'd be interested to read a counter-case; he seemed to at least give citations.
      - evgen 13y ago
        Interestingly enough, the endnotes and cites are often a problem for Graeber (e.g. Not supporting what he is claiming, etc.). For interesting critiques start with Tyler Cowan and Brad DeLong and work your way towards crooked timber. Graeber is trying so hard to be a Howard Zinn for the occupy generation that he misses the fact that Zinn actually did his research and knew what he was talking about, while Graeber has a "throw everything against the wall and see what sticks" approach to facts and references.
sien 13y ago
Here is a list of incidents of hyperinflation. How many are in C20 and beyond? How many prior to that? http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hyperinflation http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hype... Inflation that is rapid and is not covered by interest is most definitely an erosion of wealth. Specie backed currency was a much better store of money than fiat currency. For example, gold was $35 dollars an ounce when the US went off the gold standard at the end of the Bretton Woods agreement in the early 1970s. The USD has now lost 95% of it's purchasing power against gold since then. It took the Romans 200 years to do the same with a currency backed by gold. However, this is not to say that Specie backed currency is a good idea. The expansion of the money supply is, overall, a good thing when well managed. Indeed, a great problem with bitcoin is that it doesn't expand as the economy does. There is an excellent book by a former FT journalist who now works at The Economist on the history of money called 'Paper Promises' that should be on anyone's reading list if they want to understand money, and indeed the economy, better.
- swombat 13y ago
  Specie backed currency was not a better store of money, because the levels of redeemability of the paper notes were highly variable. Banks went bust all the time in those days, taking all your savings and all the currency and loans issued by them with them. Deflationary periods were even more disastrous than hyper-inflationary periods. Once the banks started popping, they shrunk the money supply along with their numbers, caused further deflation, and further ruined everyone. Specie backed currency issued by a strong, ethical central bank with a solid management team in a stable country might be a better store of wealth - but how rare are those? Historically, very. In the long run, we are all dead and there is no good store of wealth. In the short run, however, diversified investments in stable countries are a decent store of wealth - certainly better than any currency holding. Which is why you don't see rich people hoarding vast sums of cash. They typically keep very little money in the form of cash, because it's the least reliable. Cash, currency, is valuable as a medium of exchange, not of storage.

by swombat 13y ago

p4bl0 13y ago

Argh I'm sorry I downvoted you because I ripped on my trackpad, I wanted to upvote you :-/.

digitalengineer 13y ago

Might I suggest: "When Money Dies" ? The classic history of what happens when a nation’s currency depreciates beyond recovery. http://www.amazon.com/When-Money-Dies-Devaluation-Hyperinflation/dp/1586489941 http://www.amazon.com/When-Money-Dies-Devaluation-Hyperinfla...

curiouslurker 13y ago

Since you mention studying the history of money, Niall Ferguson's Ascent of Money documentary is excellent: http://www.youtube.com/watch?v=4Xx_5PuLIzc http://www.youtube.com/watch?v=4Xx_5PuLIzc

lmm 13y ago
I found him quite dry; Debt: The First 5000 Years was much more readable.
- evgen 13y ago
  Unfortunately, Debt is better labelled as fiction regardless of how readable it might be.
  - lmm 13y ago
    I'd be interested to read a counter-case; he seemed to at least give citations.
    - evgen 13y ago
      Interestingly enough, the endnotes and cites are often a problem for Graeber (e.g. Not supporting what he is claiming, etc.). For interesting critiques start with Tyler Cowan and Brad DeLong and work your way towards crooked timber. Graeber is trying so hard to be a Howard Zinn for the occupy generation that he misses the fact that Zinn actually did his research and knew what he was talking about, while Graeber has a "throw everything against the wall and see what sticks" approach to facts and references.

sien 13y ago

Here is a list of incidents of hyperinflation. How many are in C20 and beyond? How many prior to that? http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hyperinflation http://en.wikipedia.org/wiki/Hyperinflation#Examples_of_hype... Inflation that is rapid and is not covered by interest is most definitely an erosion of wealth. Specie backed currency was a much better store of money than fiat currency. For example, gold was $35 dollars an ounce when the US went off the gold standard at the end of the Bretton Woods agreement in the early 1970s. The USD has now lost 95% of it's purchasing power against gold since then. It took the Romans 200 years to do the same with a currency backed by gold. However, this is not to say that Specie backed currency is a good idea. The expansion of the money supply is, overall, a good thing when well managed. Indeed, a great problem with bitcoin is that it doesn't expand as the economy does. There is an excellent book by a former FT journalist who now works at The Economist on the history of money called 'Paper Promises' that should be on anyone's reading list if they want to understand money, and indeed the economy, better.

swombat 13y ago
Specie backed currency was not a better store of money, because the levels of redeemability of the paper notes were highly variable. Banks went bust all the time in those days, taking all your savings and all the currency and loans issued by them with them. Deflationary periods were even more disastrous than hyper-inflationary periods. Once the banks started popping, they shrunk the money supply along with their numbers, caused further deflation, and further ruined everyone. Specie backed currency issued by a strong, ethical central bank with a solid management team in a stable country might be a better store of wealth - but how rare are those? Historically, very. In the long run, we are all dead and there is no good store of wealth. In the short run, however, diversified investments in stable countries are a decent store of wealth - certainly better than any currency holding. Which is why you don't see rich people hoarding vast sums of cash. They typically keep very little money in the form of cash, because it's the least reliable. Cash, currency, is valuable as a medium of exchange, not of storage.