Monday, August 10, 2015

On Money

Part of a conversation with Max Hernandez, author of an interesting book entitled "Thieves (sic) Emporium"

"Smart boy. Money is what people say it is. And sometimes, people change their minds. So money is not always the same thing. Today, the answer to your question is dollars. But, tomorrow, it might be gold."
Sam, you forgot a key factor in your "subtle" definition: the reason people "say" the dollar is money is because the FedGov has a gun held to their heads demanding that they accept it in transactions. That's all. If those (legal tender) laws were revoked, OR if it became obvious to a critical mass that the gov is running a scam, people would "change their minds" in a heartbeat. Except for the cows, of which there are many. But even they'd learn soon.
What's the scam? I'm glad you asked. It's substituting that which is NOT money for that which IS.
NOW we need a definition, don't we?
Your definition excludes the free market, which is what Parker fears above all else. In order to arrive at a proper definition of money, you must include a free market IN MONEY, which we haven't had in a long time.

If I may jump in here for Sam, please explain something to me. Is it your contention that the entire world economy has been, since 1971 (or 1933, or 1913, or 1694, take your pick) operating without money? And, as nearly as I can tell, also mostly without barter, right? So what do you call the type of economy that has been in existence since then, this strange beast that uses neither barter nor money?
Humanity needs something to facilitate three-party transactions. Without that 'thing', we would all be condemned to a tribal existence because specialization of labour would be practically impossible. You can play whatever games you want with definitions, but, for my 'money', that 'magic' substance, the one that allows civilization to exist, is always best called 'money'.
Are we using the U.S.Dollar for that 'magic substance' right now because we are forced to? Maybe. But the point is irrelevant as far as its definition is concerned. Whether pushed into using a particular candidate for it by force or not, money is what the marketplace chooses it to be.

I know about money's solving the problem of coincidence of wants, so you needn't start from square one. You're using two terms that should be called something else: Money, and the US Dollar. What passes for "money" these days is really "currency". "Money" has the attribute of being a store of value. The so-called "US Dollar" doesn't have that attribute. As far as "US Dollar" is concerned, it should be called the Federal Reserve Note, or FRN. The term "US Dollar" has a definition. The use of that term by the authorities (not necessarily by yourself) in referring to the FRN is fraudulent.
" is what the marketplace chooses it to be." I agree. But in the case of the FRN, the marketplace didn't do the choosing. The choosing was done for us by our betters.
As an aside, people speak of substituting "paper" for metal. "Paper" is not what's being offered. The government printing press doesn't print paper per se, it prints documents. This is the scam. A document's value is not in itself, but in what it refers to, in the information contained. The dollar "bills" or Federal Reserve "notes" (both of which terms indicate debt) make a promise to pay. In the case of the dollar bill, it's 371.25 grains of silver or 1/20.67 ounce of gold. In the case of the FRN, it's...nothing.
Whether paper, base metal (in the case of coins), or computer entries, the FRN is a document which promises to pay nothing. To quote Ben Bernanke, FRNs can be created in unlimited quantities "at essentially zero cost". This is not a characteristic of an item of value. That is, it doesn't fit the definition of a scarce resource. The marketplace only assigns values to items which have this attribute of scarcity. This is why, in your (excellent) story, the FedGov was willing to summarily execute those attempting to cut in on its monopoly. They wouldn't do this to gold miners. On the contrary, they'd stand ready to buy their product.
BTW...JFK, like your fictitious characters, found out how serious the FedGov is about protecting its monopoly.

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