The Concept of Money Explained

Discussion in 'General Philosophy' started by Farsight, Mar 17, 2007.

  1. Farsight


    I know this might not sound like physics, but bear with me, because Time is Money, isn't it?

    Show me some money, I say. So you pull out a £10 note. We both know that’s money right?

    Wrong. Check the small print: “I promise to pay the bearer on demand the sum of ten pounds”.

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    Your tenner isn’t really money. It’s what’s known in the trade as a promissary note. A mere promise to pay money. Basically it’s an IOU, but from the Bank of England. OK if you’re in the States or Oz maybe you don’t get the small print, but your buck or buckaroo is still a promissary note, a mere IOU, it’s not really money.

    OK you say. How about this here penny? You hand it to me. I turn it over in my hand. It’s coppery and shiny. New. Freshly minted. But what is it? It’s a piece of stamped metal. Nowadays it's copper plated steel, but there’s been all sort of variations involving copper tin and zinc, usually alloyed as a bronze.

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    I could make them in my garage. But it isn’t worth it, especially “Since May 2006, all circulation Canadian pennies from 1942 to 1996 have an intrinsic value of over $0.02 USD based on the increasing spot price of copper in the commodity markets...” Anyhow, a penny is similar to the milk tokens I remember from when I was a kid. And those useless slot-machine tokens I brought home from Blackpool. That shiny new penny is just a glorified milk token, acceptable to more than just the milkman. And what notes and coins are is cash. Money tokens. They aren’t really money. We have to forget about cash.

    Where do you keep your money? I ask you. In the Bank you reply. Where in the Bank? I say. In the vault, you say. To which I say: But that’s not money, that's just cash. You change tack and tell me your money isn’t in the vault. It’s in your account. You’ve got your salary going into your bank account every month. Whoa. Where is this account? I say. In the bank, you say. Where in the bank? I say. On the computer, you say. I could say "Where on the computer?" but I won't. Because now we’re getting somewhere. Your money is just intangible information, maybe on a computer somewhere. Before they had computers your money was in a ledger. It was just a bit of inky writing in a big black book. With as much real existence as a bit and a byte and a bar tab. And every month your employer tells your bank to reduce his glorified bar tab and increase yours.

    Did you get that? Money is just a glorified bar tab. An agreement about IOUs. Nothing is moving into anywhere, or out of anywhere else. Ah, I can hear you saying, what about the gold standard? Shrug. Gold was only “money” because everybody agreed that this nice and shiny metal was worth having. So were pretty little sea shells once upon a time. Imagine a pirate landing on a deserted island, the native people wiped out by some pestilence. The pirate kicks amongs the ruins, hawking and spitting at finding only sea shells and no gold.

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    Because there isn’t any money if people don’t agree that its money. Because money doesn’t exist. Not really. That’s why when you spend money it doesn’t disappear. It isn’t destroyed. You’ve got less of it, and the shop’s got more, but nobody’s really got more or less of anything. It’s just a bar tab. Do you know how money is created? Governments allow banks to lend money to people who build houses and cars and flatscreen TVs that everybody agrees are valuable. Then the money that was magicked out of nowhere really does exist. But it doesn’t really exist because it was never really created in the first place. But it does. And it doesn't. But it gets things done, and it makes the world go round, and everybody wants it.

    Doesn’t really exist. Doesn’t get created or destroyed. Makes the world go round. Everybody wants it.

    Does that remind you of anything?

    Does that remind you of Energy?

    Oh yes, I can explain Energy.
    Last edited: Mar 17, 2007
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  3. Oniw17 ascetic, sage, diogenes, bum? Valued Senior Member

    Yes, money is only virtual worth based on the worship of shiny rocks, et cetera....but...there's a little captain in all of us.
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  5. dixonmassey Valued Senior Member

    It's rather "money unexplained". We all know that money are worthless per se, anyway, we value money more than anything else. Explain this.
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  7. w1z4rd Valued Senior Member

    In South Africa, our pre 1991 money used to have a promise from the bank to pay the owner of the note the value in gold.
  8. nietzschefan Thread Killer Valued Senior Member

    You'll all find out when the banks fail in the next global crisis.
  9. paulfr Registered Senior Member

    Doesn’t really exist. Doesn’t get created or destroyed. Makes the world go round. Everybody wants it.
    Not true.
    A chair exists I think you will agree.
    But does inflation or unemployment ?
    You cannot touch them and they are just numbers on a page.

    You see your fallacy ?
    Concepts and the words that symbolize them DO exist.
    They exist in our minds as models of the world we see or measure.
    Just because you can not touch them does not invalidate them.
    That is exactly what makes them so important because they are
    intellectual abstractions [tools] that assist thought and progress.

    You had it right in the beginning .... money is a promise to pay.
    Currency, stocks, bonds, future contracts, derivatives, etc.
    And if all money were destroyed in an instant, people would
    first revert to primitive barter and then just begin making promises
    all over again until the system recreated itself.

    Does that sound like something that does not exist ?
    Last edited: Mar 18, 2007
  10. nietzschefan Thread Killer Valued Senior Member

    That's the problem, at SOME POINT someone HAS TO PAY.
  11. Ogmios Must. learn. to. punctuate! Registered Senior Member

    Money is recognition of service; a favour paid, a favour gained. It's what is has always been. Expendable fame.
  12. nig Registered Senior Member

    They are not existants as such though. An idea does not exist does it?
  13. Satyr Banned Banned

    Money is an abstraction of time.
  14. Mosheh Thezion Registered Senior Member

    YES... this all began in the usa in 1933... with the new gdp backed dollar.

    debt currency... everybodies debt.

    they did this.... because in this way.... there is no real limit to the amount of money you can have in circulation.


    it is represented by debt.

    I have offered a very real long term solution to allow for a long term transition over from debt money to real money, and assets.

    Thus far, i am happy to say, the powers that be, have NOT said 'no'...

    and i am still alive.

  15. ubermich amnesiac . . . Registered Senior Member

    quite the opposite i would argue. time is the abstraction. money exists. money is the incarnation, a proxy for time as we know it. hence the theory of time value of money.
  16. heliocentric Registered Senior Member

    I think Robert Anton Wilson called them 'survival tokens', which is rather a good way of putting it i think.

    All money as far as im aware though is or should be backed up by precious metals though, so in the event of all the markets collapsing you should have something tangible to trade.
    In theory anyway, im sure the governments would simply confiscate it all as they did in Argentia a while back.

    Thats to the best of my knowledge anyway, someone please correct me if im talking arse-gravy.
    Last edited: Mar 24, 2007
  17. Roman Banned Banned

    I thought it was an abstraction of energy.
  18. Ophiolite Valued Senior Member

    Point 1: Your Economics 101 was doing passably well until this point. Money can be created and it can most certainly be destroyed. Save us both a lot of time (and money) by agreeing.
    Point 2: In regard to an earlier point, well actually, time is money, in some circumstances. Money is an agreed upon neutral yet quantifiable value for goods or services. As such it is perfectly correct to equate a timed period of valuable service contribution with a sum of money.

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