How To Think Part 2: Money

A short and probably inadequate discussion of the economic role and origin of money.

People will try and tell you all sorts of funny things about money, what it is, where it comes from. A sure sign people are talking out of their arse is if they say something like 'modern money is just debt'. Debt is owing money. Money can't be owing itself. Come on...

But even respected economists like to oversimplify things, and I've horribly oversimplified a lot here, but in a non ideological way, so hopefully you'll learn something and be able to deal with strange economic ideas when and if they arise in discussion.

Category:

Howto & Style

Tags:

• Money
• Economics
• Government
• Monetarism
• Keynesianism
• Yap
• Stone
• Paper
• Gold
• Standard

[TheTrueEconomist]

amazing voice!!! :D

[JmkLcAeJsm]

That video is, no joke, one of the dumbest things I have ever, ever seen. I have made my position clear on a comment on said video.

[The34gl3]

@JmkLcAeJsm I think John Mcmurtry puts it much better than me. It's a one and a half minute clip so do take a watch.

/watch?v=44lN0x91jMY

[The34gl3]

@JmkLcAeJsm What I'm trying to say is that MONEY, in it's holistic entity, is the root problem. And the argument "it's just the way it is" doesn't fly for me. "Borrowing money is the way that poor people become rich, it's the most fundamentally egalitarian thing"

Well... your mind lock is impressive here. The ONLY way someone can be rich is to have someone poorer next to him. So what do you mean by "egalitarian"? Money is inherently, this is very clear to me, unegalitarian.

[JmkLcAeJsm]

Ok, so you'd argue that the US and UK are in 'servitude'? Would you argue that someone who's borrowed money to buy a house is in a more or less secure position than someone renting?

Borrowing money is the way that poor people become rich, it's the most fundamentally egalitarian thing, to allow people without wealth the same advantages that people with wealth have.

[The34gl3]

@JmkLcAeJsm Of course debt is always a bad thing. Debt means servitude. A person in debt is always easy to coherce into lower class jobs. A country in debt is a country in servitude. How do you think the American Empire was built from the 50s to now? Economically. The military only goes in when the "trade agreements" fail. I'd tell you to look at "Confessions of an Economic Hitman" by John Perkins.

The money supply is determined by the creation of deposit money but the interest is not available

[JmkLcAeJsm]

Point one, what do you mean? Is debt always a bad thing? If so why? The 'money supply' is determined by the creation of deposit money, what is it you mean by 'does not exist in the money supply'? Clarify your thinking on this!

Point 2 I agree, I've explicitly stated that I don't think economic growth is a good thing to target in another video.

[The34gl3]

@JmkLcAeJsm I don't agree when you say it doesn't presuppose. The very structure of the global economic is inherently flawed.

-We create money out of debt and charge interest on that money/debt that does not exist in the money supply. The existing money plus the interest is always outstanding.

-We base our whole economic model on "growth". That's not even remotely "economical" and also presents the human race with an irreconciable attempt: To grow forever in a finite planet.

-

[JmkLcAeJsm]

@The34gl3, further thoughts. What is it exactly that you're cross about? Would you prefer a system where banks are not allowed to create deposit money? What would be the advantages of such a system?

[JmkLcAeJsm]

The economic system doesn't presuppose anything, it is what it is. Our analysis of it often does assume these things, and our analysis is often flawed.

Much wrong headed policy is made on the basis of economic theory which has long been discredited, and I used to be involved in changing that. I sold out because the price was too good, but hey ho, no one's perfect.

The point is though, conspiratorial and fanciful ideas about money don't help us. Let's deal with reality.