What is Money?

in #daostreet7 years ago (edited)

Zimbabwe_$100_trillion_2009_Obverse.jpg
Would you spend your scarce time working for this?

Money as a concept is an abstraction upon human social arrangements. Countless books have been written to explore endless rabbit holes of both modern and historical financial systems. I will attempt to put down a clear picture in the time it takes you to drink your morning coffee.

Money is a claim on future work or energy: This view on money captures the very real idea that if money has value and an individual possesses money it then follows that an individual can exchange this money with another individual or firm for something of value from them. One of the things of value that almost all individuals share is the ability to do work. Therefore money can be viewed as potential future "work".

Sound money: Money has critical implications for human interaction therefore it should be based on fundamentally sound principles. A society that agrees to use a certain form of money should reach consensus on basic features of that money like supply and costs associated with transacting. So-called Sound Money advocates will argue the Federal Reserve does not practice Sound Money with the US national currency because its methods for creating more money are not based on solid foundations nor is the FED held accountable for decision-making nor is it an inclusive decision-making institution. The central banking model itself is one of the largest vestiges from an industrial era where it made sense to centralize decision-making.

"Scarce money creates abundant & abundant money creates scarcity." - I first heard this quote from Jimmy Song (https://everipedia.org/wiki/jimmy-song-bitcoin/) and it immediately struck a chord with me. In my opinion, money is a resource for creating more assets and ultimately wealth. It is important never to confuse money and wealth. When money is scarce there is an incentive to create quality goods and services. When money is abundant that is a signal that its value may be lower and the incentive to create quality goods and services may deteriorate. The health of an economy is measured by the quality of its goods and services and not its money supply. In my opinion, this is the strongest argument for a monetary system based on sound principles. To increase the global wealth and prosperity of mankind.

So you are probably asking yourself "@john-robert is sure critical of existing institutions, but we know all that. Is he going to offer a better alternative or just further the fear-mongering about money currently on the internet?" I am glad you asked - I do propose a better system for the above considerations. Stay tuned for the next post - U5dsy7Ldd7fvfMAHNKJxnrK4nWDuLc7_1680x8400.png

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Just as I was looking for your proposed solution, I was made to wait for the next chapter. :=( No problem, I will be here expecting the next article. :=)

Thanks @ronaldovelino you are a very aware and intelligent individual. I look forward to your comments tomorrow.

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Money is just a value placed on anything chosen to be money, as long as the person accepting that token, perceives it to have value. I person shipwrecked on an island with no food has no value for silver and gold, food and water would be the most valued commodity. But eventually, paper money, FIAT, will have no value, when compared to real assets. A $100 Federal Reserve Note form the USSA cost $0.11 to print. To me, no value, some BTU value for burning, some interesting colored flame when the ink burns..........Any opinions ???

You said it yourself; not all things of value need be money but all money need be a store of value : "person shipwrecked on an island with no food has no value for silver and gold, food and water would be the most valued commodity" If you were an economy of one then money would clearly have no utility. On the other hand for a society to function properly it is important to share similar concepts of what can serve as a store of value.

That is some dark humor: comparing the value of a fed reserve note to the BTU from burning it.. but there is definitely something to your point. If tomorrow the entire world were to snap out of a shared delusion that the USD has value then yes the notes may not be worth the paper they are printed on.

There is a world of difference between currency, money, and commodities. In my opinion money is a currency that retains its function as a store of value. Fiat currencies can attempt to achieve the store of value purpose but that becomes very difficult as banks fulfill their other activities of increasing and decreasing the supply of currency. In an ideal world money and commodities would both hold their value to varying degrees and gold/silver coins are an example of attempting to combine the two in the form of "commodity money"

Thank you for your continued support of SteemSilverGold