What is money?

[ThePythonicCow]

It seems to me that one of our problems in understanding what's happening with financial, economic and monetary matters is understanding what money is.

Money is the abstraction of goods and services. The phrase "everything has its price" captures this idea.

So ... what's the problem?

The problem is not whether money is represented by gold, paper notes, bitcoins, sea shells, or computer bits. Well, that can be a practical issue ... if we used sea shells for money, then Bill Gates might have trouble storing his wealth ... details.

The problem is who issues the money, and to what purpose. How does money come into existence? Who controls that?

The issuance of whatever society accepts as money is perhaps the greatest practical power in our money based civilization.

If governments issue money, then it depends on who controls the government.

If a government that truly served the people issued the money, then it would print money to pay for goods and services of value to the people, such as perhaps transportation infrastructure. However, given the power inherent in money creation, one can wager a large sum that if such a government existed, then soon the most power hungry individuals, the sociopaths, would strive to the leading positions of control in, or over, that government.

If gold and silver mined by individuals, and minted by a public treasury as a public service to those miners into coins of the realm, creates money, then those miners, and those who can profit from them, will be the "new rich" of the land. This doesn't usually last long either, as "robber barons" soon develop monopolies over essential services and begin extracting the wealth of the hard working miner.

If gold and silver held in government central banks is the primary source of money that is genuinely backed by that metal, then this is as above - government issued money. And as above, government soon comes under the control of those who aspire most to control - the sociopaths.

If gold and silver held in private banks is the primary source of money that is genuinely backed by that metal, then bank CEO's earn more than government Presidents, and it is as above, with the politicians soon bought and sold by the banksters.

If, as we have in most nations now, banks issue money by lending it into existence, then the banks get in exchange for their money not primarily goods and services of value to the community, and not primarily monopolies over essential services, but rather debt - mortgages, liens and bonds on the property and future income streams of the indebted. Soon enough, almost every person, corporation and government "owes their soul to the company store", is a debt slave.

In all these cases, the issuers of money eventually over do it, killing the goose that is laying their golden eggs. Governments minting precious metal coins devalue the precious metal content of those coins (see further the Decline and Fall of the Roman Empire.) Governments printing money print too much. Banks lending money into existence lend too much (for example the loans to those with no ability to repay in the mortgage crisis that peaked about 2007, and loans to governments far in excess of anything they can ever repay as in the present sovereign debt crises.)

It matters not what form money takes. It matters who issues it, and for how long the community can keep the control of that issuing agency aligned with the well being of the community and out of the hands of the sociopathic would be bastards in power.

That is what money is.

[GuyFox]

Maybe you should start by dismissing some fantasies

People are right when they say that Banks "create money out of thin air." That is true. But it is NOT the whole story.

A Loan and a deposit are created at the same time. But no one borrows money to keep it on deposit, since the loan interest will exceed what the banks pays out for a deposit.

So what happens next? And what are the implications for the banking system?

I can say more. But I want to see if we are on the same wavelength first

[ThePythonicCow]

What it meant for the US Dollar to be the world's reserve currency was that, for international trade and contracts, it was the de facto "coin of the realm." Dollars could be exchanged in the world markets for energy, armies, nations, corporations, and monopoly markets.

When the majority of the users of a form of money refuse to use it, in protest of the dastardly ways of the money issuer, and when that majority forms some other monetary means for their trade and commerce, then the issuer of that rejected money loses power. The power of money creation is immense, and in the case of the US, it will be losing immense amounts of power. Soon, I think.

Hopefully, world trade can somehow continue at a reasonable pace, as the present world economy is quite dependent on world trade, communication and financial transactions.

It will not matter much whether the new forms of money used for settling international trade are "gold backed" or not, as the gold in question lies (or so they claim) in the vaults of governments, major banks, the uber-wealthy and/or institutions such as the IMF and BIS.

What matters is who issues the money, and whether (for how long) they work in the interests of the community of humanity.

When the US Dollar explicitly loses its current status, I am quite certain that whomever gains the powers of money creation for world trade settlement and contracts, or for domestic currency within the US, will in either case be already powerful institutions, entities or families.

What I don't know is whether those powers will be another front for the same evil bastards who been messing with our civilization for so long, or whether those new creators of world trade money are genuinely opposed, from the very top, to the evil bastards we've suffered under so long.

And ... if they are genuinely opposed ... how evil are they now or will they be seen to be, once they gain the upper hand. Will it be another case of "meet the new boss, same as the old boss?"

In any case, soon enough, the US Dollar will cease to be the dominant form of money used for international trade settlement and contracts, and will retreat to being just another national currency (of a heavily indebted nation with a shortage of manufacturing capacity and an excess of pension and social service promises that it cannot meet.)

[ThePythonicCow]

Posted by GuyFox (here)
Maybe you should start by dismissing some fantasies

People are right when they say that Banks "create money out of thin air." That is true. But it is NOT the whole story.

A Loan and a deposit are created at the same time. But no one borrows money to keep it on deposit, since the loan interest will exceed what the banks pays out for a deposit.

So what happens next? And what are the implications for the banking system?

I can say more. But I want to see if we are on the same wavelength first

Correct - money is not printed out of thin air - it is lent into existence. I write an IOU, the bank writes a deposit entry into my account. The bank began the day with neither, and ends the day with a liability (the money on deposit that I can take out) and a balancing asset (the loan document, which provides the bank with a future income stream or repossession of property.)

Given that these loans (essentially) always have interest associated with them, that means that X amount of goods and services are made available to me today (when I borrow X dollars), and Y amount of goods and services are returned to the bank in the future, where Y is always greater than X. Since banks rather insist on keeping their interest rates greater than the inflation rate (the rate at which the purchasing power of the currency declines over time), Y is therefore greater than X not just in nominal dollar terms, but in real spending power for goods and services.

This only works when the real economy, the actual amount of goods and services per person, is expanding. So long as I can be confident that I will be getting genuinely wealthier (as I was when I was taking my computer degree in the mid 1970's), then it makes fine sense for me to borrow money, as I know I can easily pay it back later.

But the real value of the goods and services available to each person cannot increase exponentially (at some typical rate) forever. Impossible. Eventually the debt due now for past borrowing exceeds, in terms of the value of the actual amount of goods and services expected to be repaid in the present term, the total value of the goods and services available. The debt must eventually fail.

Lending money into existence with interest bearing notes is guaranteed to fail for two reasons:

1. The basic problem that all money schemes have with sociopaths gaining control, and
2. The additional problem that the promised repayments eventually exceed the capacity to repay.

[ghostrider]

money is just green paper , it might as well be monopoly money , it just paper ... they print money to pay the bills every month , seems to me they would just print up all the money they need , they killed it's value already anyhow ...they say we have a debt of 17 trillion , I say who do we owe the money to ??? did we borrow 17 trillion , if so why ??? they have a printing machine , they can just print all the money they need , they shouldn't have to borrow from anyone ...

[ThePythonicCow]

Posted by ghostrider (here)
money is just green paper , it might as well be monopoly money , it just paper ...

No, it's not just paper.

It's the other half of a loan.

It's value depends on the property and/or future income streams of the economy of the nation or region issuing it, from which the loan payments will be made.

(I speak for our current common forms of money such as dollars, yen, euros, ...)

It is that debt that eventually strangles our economy. The lenders (the big banks) end up owning far too much of all property and future income and tax revenue streams, and the borrowers end up being unable to invest in life sustaining or business development (capitalization) activities, because its all going to pay debt.

Then we all become poorer. Money buys less, as governments try to inflate their debts away. Money can no longer buy as much, for less is produced to sell. Money no longer is as available, as fewer have jobs and jobs pay less in real purchasing power.

Money is not just paper. Thanks to its origins in debt (buy now, pay later) money is a call on future economic activity. When that economic activity declines or collapses, that money does the same.

[Craig]

can we say no?

As in we no longer accept that as a form of currency - only if we are debt free I guess, but if we say no, do we rob them of power?

Not just 1 or 2 but millions of us.

[ThePythonicCow]

Posted by Craig (here)
Not just 1 or 2 but millions of us.

Sure, in some theoretical world, millions of Americans could reject US Dollars.

In the economic world that most of us live in, far from self sufficiency, that would require we had an agreed upon alternative money.

I have no clue how we get from the world I know to that theoretical world, however .

And, just as when nations have said no to trading in the US Dollar (as, for example, Iraq and Libya), there would be "hell to pay". The Dollar Pay Masters don't like holdouts, and they are the best armed paymasters in (currently publicized) human history.

Our best hope, amongst the alternatives that I consider plausible, would be for (1) the US Dollar to lose reserve status (2) the world wide economic depression to not be too severe and to not have major accompanying wars and (3) the new bastards in power to be kinder and gentler than the old bastards that have been in power for so long.

[TODD & NORA]

..........

[guayabal]

As a side note... my dream is having a super battery (or capacitor) as a wallet and being able to exchange real energy (watts-hour) by charging/discharging the battery instantaneously on each transaction (for goods or services).

[Eram]

Hi Paul,

tyvm for taking the time to explain all this.

I was just thinking about the creation of money tonight and maybe you know the answer to a question that arose.

At the moment, the Fed is printing money like crazy right?
About 75 billion a month if I am correctly informed.

What is this money used for?
I mean... it is physical paper money if I understand it correctly.
How do they bring it into circulation and how does it help the USA economy?
Especially, since the FED is a privately owned institution, how does this relate to the public interest of the USA government and the struggling economy.
It seems that by printing this money, the FED is doing the USA government a service (at least the seem to try to) and this is puzzling me, since their interest is not that of the masses, but only to those who own the FED.
So my question is two fold I guess:

• What happens with the printed money and how do they bring it into circulation?
• What is the interest of the FED to do this? Are they only serving the public interest of the USA economy (there is probably much more to it)? This is where it becomes puzzling to me.

[Eram]

Posted by Paul (here)

Since banks rather insist on keeping their interest rates greater than the inflation rate (the rate at which the purchasing power of the currency declines over time), Y is therefore greater than X not just in nominal dollar terms, but in real spending power for goods and services.

This only works when the real economy, the actual amount of goods and services per person, is expanding. So long as I can be confident that I will be getting genuinely wealthier (as I was when I was taking my computer degree in the mid 1970's), then it makes fine sense for me to borrow money, as I know I can easily pay it back later.

Is this the sole reason why it is necessary to have an ever expanding economy? I have always wondered about this and never understood the reason for it.

Posted by Paul (here)
Lending money into existence with interest bearing notes is guaranteed to fail for two reasons:

1. The basic problem that all money schemes have with sociopaths gaining control, and
2. The additional problem that the promised repayments eventually exceed the capacity to repay.

What happens when it eventually fails? There must be examples from the past I presume. Was Argentine an example?
What happens to the people in power (in control of the money system) when it fails?

[aheb]

There are definitions of money and of currency. Money is a means of exchange for goods and services . It must be rare durable,divisible,fungible and a store of value so gold and silver or any precious metal or commodity can fit this description. Currency can fit all the above definitions but it is not a store of value, and so it is not money.

I don't believe that it matters if your government issues currency, gold will still be money somewhere on the planet and indeed when countries have tried to supplant the dollar by using Gold, as gadaffi did they are quickly murdered and their regime overthrown and fiat currency is used instead of money. They quickly build a central bank and start issuing debt based,fractional reserve currency and the globalist elitist ponzi scheme continues.

It is all built on lies, because the governments and bankers don't believe in currency either. The International Monetary fund has the third largest holding of gold in the world. The Bank for International settlements ( The Central Bank for all Central banks) only recognises Gold as money and, before the IMF will agree to help a country all the country's gold must be deposited in either London or New York hence the looting of Crimea's gold.

What we are seeing now is the collapse of the global currency system because of mis use by the West we have two camps the West who support currency and the East who are loading up on Gold to back their currency.

[Bill Ryan]

-------

Essential viewing (simple, animated, and extremely well done):

Money as Debt

Source: https://youtube.com/watch?v=jqvKjsIxT_8

[Operator]

Posted by shmoopie_3119 (here)
Money is information.

Maybe rather obfuscation of information. When someone barters and offers a bike or 100 grams of
cocaine it would tell a lot where someone's riches are coming from.

Money hides the trail how it was earned/obtained and breaks the door wide open to corruption ...

[TargeT]

Posted by Paul (here)
I have no clue how we get from the world I know to that theoretical world, however .

Bit-coin, or one of the crypto-currency variants.

Posted by guayabal (here)
As a side note... my dream is having a super battery (or capacitor) as a wallet and being able to exchange real energy (watts-hour) by charging/discharging the battery instantaneously on each transaction (for goods or services).

very interesting concept, since money ultimately is representative of energy; this sort of makes a lot of sense.... HOWEVER, money would be dangerous and unstable (at current tech levels).

This form of "money" makes a lot of sense because we all require energy to function... so even if someone "inflates" the "money" source people benefit as there is just more energy to go around.

Posted by Eram (here)
Hi Paul,

tyvm for taking the time to explain all this.

I was just thinking about the creation of money tonight and maybe you know the answer to a question that arose.

At the moment, the Fed is printing money like crazy right?
About 75 billion a month if I am correctly informed.

What is this money used for?
I mean... it is physical paper money if I understand it correctly.

Generally it is NOT physical paper.. the term "printing money" is just easier for most people to understand, the "money" that is being created right now is usually just 1's and 0's (digital).

Posted by Eram (here)
How do they bring it into circulation and how does it help the USA economy?

for the most part it's not brought into circulation, it's used to "fluff" up accounts and keep banking solvent.. an easy way to think of it is just shifting papers around your desk, it seems like activity is going on, but really not much is happening.

Posted by Eram (here)
Especially, since the FED is a privately owned institution, how does this relate to the public interest of the USA government and the struggling economy.
It seems that by printing this money, the FED is doing the USA government a service (at least the seem to try to) and this is puzzling me, since their interest is not that of the masses, but only to those who own the FED.

Well, since the FED creates the money with interest attached at the creation point, that means that there will never be enough money in existence to pay off the debt created... that's not a service, that's slavery.

Posted by Eram (here)
So my question is two fold I guess:
[*]What happens with the printed money and how do they bring it into circulation?

it can happen a lot of ways, one of the more common ways is they "buy" bonds from the US government (which is another debt contract, at a set interest rate) or they buy stocks from walstreet, or they buy debt from other places

Posted by Eram (here)
[*]What is the interest of the FED to do this? Are they only serving the public interest of the USA economy (there is probably much more to it)? This is where it becomes puzzling to me.[/LIST]

They create the money with interest attached, so they will always "profit" more than what they create, but aside from that, since we have almost no oversight on their books, they can literally "buy" anything they want anywhere in the world. the amount of control they have due to this "service" they provide is almost inconceivable.







those were some quick answers, it's a very complex situation.

[Soulboy]

Posted by aheb (here)
hence the looting of Crimea's gold..

Wasn't it the Ukraine's gold instead of Crimea's?

[TargeT]

Posted by Soulboy (here)

Posted by aheb (here)
hence the looting of Crimea's gold..

Wasn't it the Ukraine's gold instead of Crimea's?

another very complex situation... Crimea was a part of russia, then ukraine, and now russia again... who's gold was it really, if I call your house "TargeTia" then claim your assets as mine, are they really mine or are they yours because it was your house first.... that whole area has a very very long and complex backstory to it.

here's some good info on the situation (its a tiny bit dated):

Source: https://youtube.com/watch?v=6Wv6lgyOUGk

[Soulboy]

Posted by TargeT (here)

Posted by Soulboy (here)

Posted by aheb (here)
hence the looting of Crimea's gold..

Wasn't it the Ukraine's gold instead of Crimea's?

another very complex situation... Crimea was a part of russia, then ukraine, and now russia again... who's gold was it really,

Hi TargeT, I do NOT want to pretend I'm an expert on any of this, faaaaar from it in fact, but I thought that the gold was looted after Crimea was annexed and that the story never was that Crimea's gold was taken, but that of the Ukraine, but it may well be that Crimea's gold was stored in Kiev. Like I said, I'm no expert and will stay out of this from now on haha

[Jake]

Posted by Eram (here)
Hi Paul,

tyvm for taking the time to explain all this.

I was just thinking about the creation of money tonight and maybe you know the answer to a question that arose.

At the moment, the Fed is printing money like crazy right?
About 75 billion a month if I am correctly informed.

What is this money used for?
I mean... it is physical paper money if I understand it correctly.
How do they bring it into circulation and how does it help the USA economy?
Especially, since the FED is a privately owned institution, how does this relate to the public interest of the USA government and the struggling economy.
It seems that by printing this money, the FED is doing the USA government a service (at least the seem to try to) and this is puzzling me, since their interest is not that of the masses, but only to those who own the FED.
So my question is two fold I guess:

• What happens with the printed money and how do they bring it into circulation?
• What is the interest of the FED to do this? Are they only serving the public interest of the USA economy (there is probably much more to it)? This is where it becomes puzzling to me.

I'd recommend this animated vid to anyone trying to wrap their brains around the Federal Reserve,, and how money is used to control people and take over countries. This cartoon is required viewing in my family!! It has more of an American Dream slant to it,,, but it answers a lot of questions.

Source: https://youtube.com/watch?v=tGk5ioEXlIM

Thanks Paul,..

Jake.