Half a croissant, on a plate, with a sign in front of it saying '50c'
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Infinity banknote

Worth whatever you want it to be
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A banknote of infinite value. This is the only unit of currency, and since it has infinite value, can be exchanged for any number or kind of goods or services. Taxation is a single note for each person per year, change is given in an arbitrary number of notes, people are paid in a similar way, and the exchange rate is the same for all denominations, since it is equal to an infinite number of units of any other currency. Therefore it can be used anywhere in the world and need not be backed by government. Everyone is equally wealthy.

The design of the note is a single A4 piece of white paper. Since everyone is infinitely rich, there's no need for security measures because there is no motivation for counterfeiting.

In fact, why not just decide it exists already? I've got some printer paper downstairs. My financial problems are over. No more inflation, no recessions, no real need for welfare and so forth. And, if you want, you can go out and buy a supertanker for the cost of a paperclip.

nineteenthly, Jan 23 2009

50-Billion-Dollar Bills. http://www.money.co...ced-in-zimbabwe.htm
Tangentially approaching infinity as we speak. [Cedar Park, Jan 26 2009]

The gold standard http://www.youtube....watch?v=MMb8Csll9Ws
Half-baked drivel [nineteenthly, Jan 28 2009]

Greenspan's Gold standard paper http://www.gold-eag...reenspan011098.html
early monitary philosophy of the former fed chairman that probably did not really change much. [MercuryNotMars, Jan 29 2009]

The Alpha Strategy http://www.bioratio.../alpha_strategy.pdf
A sort of book equivalent of "When Economics Attacks" meets "Economics for Dummies" meets "Mad Max beyond the Thunderdome" - still, it's nicely written and quite entertaining. [zen_tom, Feb 02 2009]

[link]






       Inflation being what it is, you would soon require an infinity-plus-one banknote.[]
sninctown, Jan 23 2009
  

       I don't get the joke.
Zimmy, Jan 23 2009
  

       Adding, subtracting, multiplying and dividing by any finite number or by the same kind of infinity equals infinity. Infinity dollars of any kind = infinity pounds of any kind = infinity pengő and so forth. Therefore there can be no inflation and all exchange rates are equal.
nineteenthly, Jan 23 2009
  

       I think there are some senarios that need played out. As zimmy said I don't get the joke but I will make one. When hyperinflation sets in and it becomes worthless at least it will still fit in your pocket. great planning ahead. you are in the wrong category for that I think maybe public: ecology: accounting?
MercuryNotMars, Jan 23 2009
  

       OK, suppose you have an economy where a paperclip costs a penny, a sports car fifty K (is that right? I've never bought a sports car). Say average income per annum is twenty K. People get a wage rise and several decades later, we all hope, a paperclip costs tuppence, a sports car one hundred K and average income per annum is forty K. Then you have hyperinflation and you get the taking wheelbarrows of money down to the stationers scenario because a paperclip costs a grand, annual income is two billion and a sports car costs five billion, and so on.
Suppose inflation becomes infinite, which is in a sense the logical conclusion of hyperinflation. In that situation, inflation ceases to exist, because multiplying any finite positive number by infinity gives you infinity. Therefore, all financial transactions in the economy have the same value. Consequently, rather than sitting around worrying about how much things will cost and how much you're getting paid, why not just decide, once and for all, that the denomination of your banknote is infinite? Wages would then be infinite, income tax and VAT infinite, interest on credit and debit would be zero and exchange rates would be infinite. Such a currency would be worth nothing, so there would be no point in trying to forge it. Therefore it might as well be a blank piece of paper.
  

       Is that fungible enough?
nineteenthly, Jan 23 2009
  

       I think I get the joke, now. Well, maybe I did several months ago.
Buy things that keep pace with inflation with your extra money, if you're worried about hyperinflation. (I am, a bit).
Zimmy, Jan 23 2009
  

       I am having a hard time taking it as a joke because I beleive that there are people who think like this. Fiat money is a myth. you cannot make real money simply by printing it. it must be made redeemable by someone.   

       Either I can buy everything with it or I can't. The world is definitly finite. If I can buy it I sure am not going to sell it. If your money requires me to sell it then it is not money but a court order.   

       If it truely is money why do I work. Why would anyone who is equally wealthy work? Can they earn more? Where will actual wealth come from?   

       Your math starts to sound fancy when you talk about different kinds of infinities I certainly did not hear of it until in a proof class for math majors. dividing infinity by the same kind of infinity does not always equal infinity I cant think of a case where it does actually. Assuming it does though you are going to have to find people that know that to make the exchange. I for one will probably ignore that fact once I buy everything.
MercuryNotMars, Jan 23 2009
  

       I have a somewhat unpopular view of work which probably explains why i have no money. I believe that if a job is worth doing, it´s worth doing for free. Nevertheless, money exists and is necessary in real life. I don't work for money, though i occasionally get paid. Getting paid more is not the only motivation for promotion and the like. It´s also stuff like social status and more interesting work. Living without work, paid or otherwise, is a sad and meaningless existence which can drive one to suicide or insanity.   

       In normal situations, just because someone wants to buy something off me, that doesn't mean i have to sell them it.   

       Surely dividing an infinity by the same infinity leads to an undefined result or possibly one. Dividing aleph one by aleph null wouldn't equal one though, would it? Then again, i can't think of a situation in financial terms where any sum of money would be divided by an infinite quantity. Well, i can actually. Maybe the wages paid to someone immortal with an eternal career?
nineteenthly, Jan 23 2009
  

       I only remember enough about infinities to not jump to conclusions You sure are using the terminology though. I see the other recent idea on bank notes now and think I get where this is coming from
MercuryNotMars, Jan 23 2009
  

       Yes, it's the logical conclusion, but at that extreme it gets a bit peculiar. The other extreme is also interesting. What if all bank notes have zero value? Transactions would be carried out by nominal debit and credit alone, for instance by moving zero money in and out of banks. That sounds like a similar situation to me. What if all currency was negative?
nineteenthly, Jan 23 2009
  

       This is actually hurting my head, my trying to understand.
By negative currency, do you mean that it would represent a promise to repay a debt somehow?
Zimmy, Jan 23 2009
  

       It's an IOU.
Spacecoyote, Jan 23 2009
  

       ANNO: The premise is false. Infinity can be divided into an infinite number of smaller units. Since this currency can only be used for one transaction it is finite in nature. It can buy one loaf of bread or a thousand but only one time. In the absurd case "how many blank pieces of paper does one blank piece of blank paper buy?". Money is worthless. When the unspoken rules of our society fail money is worthless as are deeds, bonds, stocks, checks, contracts. These have value because we trust that they do.   

       (META-ANNO: Your final paragraph describes a situation without the problems and benefits of a society. If you have the power to take a supertanker from someone else you can, even today; consider pirates and bank robbers. the rules and trusts of society are weak and easily overturned if you have the balls. You can even choose to free your mind of these rules without turning to violence. Humans can have life without this. Give it a try, I find it to be the most terrifying and invigorating thing that a modern person can do. )
WcW, Jan 24 2009
  

       what if income tax rates go above 100%. you would actually pay employers to work for them to get the tax refund.
MercuryNotMars, Jan 24 2009
  

       Actually, no one would work (officially at least).
Spacecoyote, Jan 24 2009
  

       Yes, an IOU is negative currency. My thought there was that inflation and interest involve raising to a positive power, deflation to a negative power, but subtraction also occurs, and doing different mathematical operations on money, such as changing the sign, does weird things. Negative currency would just be discarded. Zero value or infinite value currency amount to the same thing, i think. It's not a question of a single note for everything so much as random numbers of notes for all transactions, since all positive multiples of infinity are infinity.   

       [WcW], countable infinity can be divided into an infinite number of smaller units, but uncountable infinities can't. An uncountably infinite banknote, however, can't be reached through infinite inflation, so it's an essentially different kind of currency. Aleph-one divided by infinity is still aleph-one. So, infinite inflation mightn't do this but a fiat introduction of an aleph-one note would.   

       Thanks, [UB], i'm very hazy on the concept of money. In that case, anything could represent the value, since if the Universe is finite, its material contents are worth less than the note. Therefore, the Universe itself could be a unit of currency. That wouldn't allow enough to go round, so i propose that each possible world be used as a banknote representing aleph-one units of currency and that this be represented by title deeds to parallel universes held by people instead of banknotes. After all, there are aleph-one of those so there are probably enough to go round.   

       Incidentally, i used to help run a LETS. When we hit the inflation problem, i suggested solving it by "charging" random negative and positive sums, but the scheme collapsed before the policy went into effect.
nineteenthly, Jan 24 2009
  

       In the US, the metal in nickles is worth 20% more then the amount on the face of the coin.   

       So if you melted down $100,000 in nickles and sold the metal, you'd be able to buy a $20,000 car, then you could go to the bank and get $100,000 more nickles, repeat, and then you'd have a car for your wife.   

       Unfortunately I'm not the only one to think of that, so there are laws and such, as UnaBubba suggests.   

       Hmm. If we switched to the nickle standard, everyone could redeem their dollars for nickles, as all the banks already do this, and this would satisfy all the libertarians, who could then put the nickles under their pillows and feel safe.
mylodon, Jan 24 2009
  

       The idea is flawed because to matter how high hyperinflation goes, you will still be infinitlely far from infinite inflation. Numbers go on infinitley so no matter how far you get, you never gat any closer. On the latter, I won't get all Objectivist, but people will use something to trade, if it is not currency then everything will be barter or starvation.
MisterQED, Jan 24 2009
  

       The fact that a person who has nothing to trade, no skills to barter, and in fact never possessed or produced anything, can, by the power of pieces of paper, live comfortably and have the benefits of thousands of talented and productive hours of human labor is not an extraordinary thing; it is the very basis of capitalism.   

       The leisure wealthy love to complain about the lazy poor, but even a bum has to walk from place to place to get his free food and shelter. It is the rare person in the western world who can claim that they made their own way in the world, living in balance with their personal productivity. Even the working poor rarely produce as much as they consume.
WcW, Jan 24 2009
  

       ha ha ha infinitely uncountable hyper inflation. I don't know if I get the joke yet but I sure am laughing.   

       Money should be thought of in terms of being less valuable than the amount of wealth that currency can command. the more currency you print the more you divide that amount by a larger number   

       Next, when I think of why I and everyone should trust a dollar because it represents constant value. It is not technically the gold standard but the gold standard was the gold standard just so long as the bank doesn't run out of gold. This was regulated by means of not printing too much. This is easily emulated by comparing to the gold market or certain details of the bond market, some other commodity or even a mix. same thing.   

       an infinite note undercuts the value of a curency to do it's job and reduced the fundimental about of value the currency as a whole can command fundamentally this reduced amount divided by the number of shares outstanding * the number that you command is the value of your money. you are dividing by a number that contains your infinity and multiplying that number by a fininte number that has become really small.
MercuryNotMars, Jan 24 2009
  

       I imagine an infinite banknote would cause (or be the result of) infinite inflation in whatever currency and thus be infinitely worthless.
Spacecoyote, Jan 24 2009
  

       [MisterQED], i'm suggesting that inflation be abolished by deliberate creation of banknotes with an uncountably infinite denomination. It can't happen on its own, but it can happen as a result of a deliberate decision. I agree that the chances are that people would trade anyway, perhaps even using the bits of paper representing their possession of parallel universes.
[WcW], people do profit without doing a lot themselves, but i think that makes their lives ultimately unsatisfying and i don't envy them. It's bad enough sitting in a shop for an hour on minimum wage, having done everything one can think of that needs doing, waiting for customers, but even that has a purpose. I suppose i could satisfy myself that i'm providing funding to keep others in work if i lived off investments, but it's pretty abstract and not very real. An entire lifetime of that would make me sick in the head. In any case, i agree.
[MercurynotMars], any finite quantity of commodities is worth less than uncountably infinite, so it will be worth less than the face value of the note. The real world is real, not counterfeit, therefore it can be used as a banknote in this respect. If there are an infinite number of possible worlds, each one can be used as a banknote in the same way, but proof of ownership would be necessary. Therefore, issue title deeds for the other universes and use them as banknotes. Each one is unique and hard to fake. In a sense, there is a standard similar to the gold standard here. The value of the note is in the universe it represents.
Then again, maybe not all parallel universes are created equal. An empty one would be worth little, except maybe as somewhere to get away from it all, whereas one where the strong nuclear force is slightly higher would have more precious metals in it, so it would be worth more. What you could do in that case is to issue title deeds for universes of different value, and those could have different denominations.
nineteenthly, Jan 24 2009
  

       //any finite quantity of commodities is worth less than uncountably infinite, so it will be worth less than the face value of the note//   

       Possibly mathematically, but logically I don't think that anyone will accept that this small piece of paper given to you as a days wages is worth more than the house you are trying to buy with it. No matter how many zeros (or infinities) are printed on a banknote it is still only worth as much as what the person selling the commodity thinks it is worth. I think that if you are lucky you will get a situation where the word 'Infinity' replaces the word 'pound', 'dollar', 'euro' instead i.e. That will be 3 Infinity 50 please when buying a pizza or one hundred thousand infinity for a house. If you are unlucky, enough people will accept that your banknotes are only really useful as firelighters, the currency will be worth zero, and people will have to use an alternative one or go back to bartering.
MadnessInMyMethod, Jan 24 2009
  

       But, there is a way of introducing denominations by kudos. A blank sheet of paper which was once owned by Elvis would be worth more than one which only i have owned, so blank pieces of paper with the right cachet might work.
nineteenthly, Jan 24 2009
  

       I would like you to tell me if I should be taking you seriously or if you yourself beleive this to be a joke.   

       What you are talking about is first dividing a finite value that the currency can demand by an infinite number or an uncountably infinite number. all you are doing is commanding an amount that approaches all of a finite amount. a finite amount that slips through your fingers as you have just undercut the integrity of the currency. you simply have a note that commands all of nothing. I bet that you are right it will have value, historical value a folly a joke a gag a lesson on infinite stupidity. somehow the person in charge of maintaining constant value of a currency fell asleep at the wheel   

       You are certainly going to have a hard time making change. a currency's value is partly that it flows
MercuryNotMars, Jan 25 2009
  

       This is meant to be a joke. Any psychotic thinking i might have does not manifest itself clearly in this idea. However, in a sense, money itself is absurd. I am talking about dividing uncountably infinite value by finite or countably infinite numbers. An uncountable infinity divided by any finite number is still uncountably infinite. Since only a finite number of financial transactions can be made, they would then all have uncountably infinite value and therefore be of the same value.   

       Right now on eBay, there's a quintillion pengő note on sale for thirty-two quid and it has six days to go. It has a value. If it stays at that value, i could go down my local wholefood coop and negotiate with them (they're friends) to exchange it for a couple of weeks' worth of groceries. They could stick it back on eBay and maybe make a profit. There's a precedent for this because like my business, they participated in the LETS before it collapsed.
If at some point an aleph one banknote was produced, it would end up with value and i could actually buy things with it in the same way. It may even be that i could produce one as a novelty item and sell it. Then it would have value even without a bank or government backing it, like monopoly money has value.
nineteenthly, Jan 25 2009
  

       Almost baked in Zimbabwe. [link]
Cedar Park, Jan 26 2009
  

       uncountably infinite value is not the correct term again currency commands a finite value that you are dividing by an uncountably infinite number of denomoniations. denomination=division you are not multiplying. you are dividing. You are then multiplying times the number of shares. if there is one infinite bill that makes the holder have all of it. all of nothing, nothing being the value that the currency as a whole can command.   

       You present me with a legal uncountably infinite bill with which you demand from me your attention and consideration in trade for what I have. upon realization of it's existance all the finite money in my pocket ceaces to have value as you have just showed me all the money in the world relatively speaking. upon my understanding of the existance of the state of the currency at large I understand that all the money in the world has a ratio of value that remains approximately equivalant in ratio to the finite money in my pocket. the infinite money in your pocket represents all of nothing to me. Perhaps with this advanced warning I can con someone in the world to selling me something with the toilet paper finite money in my pocket. I am certainly not going to divest myself of any valuable objects in the face of the collapse of the value of currency. I will instead trade it for anything I can get. if there is lots of infinite money printed then no one of them has much collector's value.   

       Money is absurd? only when you add on fallicies surrounding it. It of itself is a useful tool. You certainly don't seem to recognize a denomination as a share of value. If I had to guess. I can't help but think you beleive in fiat money.
MercuryNotMars, Jan 26 2009
  

       In many ways, i don't understand the concept of money. In some circumstances, i give a talk to an organisation and they pay me for it, then in others i do the same thing and i pay them. This depends on whether its interpreted as a service to me, generally publicity for which i have to pay, or a service to them, generally informative, educational or entertainment, i assume. In both situations, however, there is an element of the other. When i give talks to inform, it raises the profile of my "profession", and when i give the same talks to publicise, it also informs the audience. I'm referring to presentations with exactly the same content here.
If i'm a shop assistant in a shop on my own and a customer comes in, that is of value to them and me. They get the stuff they wanted to buy and sometimes advice or information, but i get the pleasure of their company. Since the latter stops me from brooding on something which might not be healthy, that's a service to me for which i haven't paid. Is it usually possible to separate the two?
I get satisfaction out of treating clients, giving talks and teaching, so should i pay for that? Can i come up with a financial value for it which i should then subtract from their fee?
So no, i seriously fail to understand the concept of money because to me, many transactions seem to be two way.
nineteenthly, Jan 26 2009
  

       I like your last anno 19thly. It explains very nicely what you've been saying (and I've been arguing with) for your last couple of ideas, and now I get where you are coming from (and like it). Sadly, the world doesn't work like that, and probably can't. As BigSleep said, I'd tend to take the enjoyment out of the money equation - you enjoy working there, they enjoy having you working there, and think more like money=survival (If they don't pay me, I can't eat...I die). Not perhaps the nicest way of thinking about it, and it still doesn't quite work - I'd still spend money to go to a theme park, and I do a job that I enjoy rather than one that pays more that I wouldn't enjoy, but I'll just ignore that for now, 'cos my head is starting to spin.
MadnessInMyMethod, Jan 26 2009
  

       Money is just a method of quantification - by making it unquantifiable you take that property away but the requirement for being able to count things still remains.   

       If the current recession continues, we'll be looking deflation in the eye - would this idea be any different if you substituted the words "Infinity" for "Zero"?
zen_tom, Jan 26 2009
  

       It looks like it is time to bring back the "bureau of valuation" --- which before deleted would value individuals contribution in the abscence of a market...   

       But be careful an idea like this one might end up costing you money (or perhaps just fame and fortune).
madness, Jan 26 2009
  

      
//Fiat money is a myth. you cannot make real money simply by printing it. it must be made redeemable by someone. //
  

       -----------   

       As long as someone takes the money out of circulation, it works. So the US prints up trillions of dollars without any backing and China collect them, a nice symbiosis until the day China decides to buy up all our manufacturing plants with their nest egg of dollars.
ldischler, Jan 26 2009
  

       Money that decides what it's worth according to its perceived value of YOU -- SmartMoney, It's Anything It Wants to Be™
Spacecoyote, Jan 26 2009
  

       //Money is intrinsically worth less than the face value of that money, or people scrap it and sell the scrap for more than it represents in worth.//   

       The US 1 cent piece is currently (depending upon what copper is doing right now and if it's made before 1982) worth more than it's monetary designation.   

       There's a $10,000 fine and / or a five year prison sentence for melting them down, though.
Zimmy, Jan 26 2009
  

       Thanks, [MadnessInMyMethod], i appreciate being appreciated. I would say two things about what you say. I agree the world doesn't work like this, but i think that may be to do with the likes of critical mass and tipping points. As an ingrained pessimist, it's hard for me to say that. The other thing is about your theme park example, which isn't exactly your point but it made me think this. When parents take a child to, say, a theme park, a fast food place or a monosemic children's film (e.g. no adult in-jokes), they are paying but they would rather not be there on the whole. The reason they do go is that they love their children and they want them to be happy. That's a completely different kind of economy, based on gifts, a system which exists today in some indigenous societies and existed in the past and maybe even today in international relations, but it's mixed up with the money economy.
[zen_tom], you could substitute zero for infinity, and in fact i did mention that before. Money could also be seen as energy in a non-physical usage of the term.
[Madness], tell me more.
[ldischler], a similar thing happened with silver and China in the days of the silk road, hence the gold standard and presumably the opium wars.
[Zimmy], so if you had profited more than ten K from it, it would still be worth your while, but would that be when they started to incarcerate you?
nineteenthly, Jan 26 2009
  

       I like the money-as-energy analogy. In one form or another it doesn't actually do much, it's only in its conversion from one state to another that anything exciting happens.   

       I wonder if there is a thermodynamic viewpoint - an "econodynamic" set of laws that describes the ebb and flow of money.
zen_tom, Jan 26 2009
  

       Yes, i think it works. I don't know if you can exactly translate it into the likes of "money cannot be created or destroyed", but it frequently reflects work as if it's turned into matter. Often the price paid for something reflects the fact that the person who buys it either can't or doesn't want to spend the time needed to create it from raw materials. Education, training and experience frequently come into the equation, which for the producer are investments in their future earning capacity. If i get someone else to collect nettles or dandelions for me, i would need to pay them for their time. I can do that in kind by giving them money off their consultation. If, on the other hand, i collect my own nettles, i've invested my own time in that and i can sell it on. In mass production, i'm paying for the energy used in the factory to produce something, and also for the energy used by the workers which they've derived from food and oxygen. However, it isn't that fair because the same amount of energy expended by a worker in China is cheaper than that expended by one in the West (unless they work for Primark, apparently).
nineteenthly, Jan 26 2009
  

       I wasn't thinking of an energy/monetary crossover (that's been thought of before as well) but as two separate accounting systems.   

       1) Energy - we count it in units of joules, and it can exist in many different forms (kinetic, electrical, potential, chemical etc) - and how much energy (in any particular form) you have isn't important until you want to convert it from one state to another. The formulae that govern how these conversions work in nature form the Laws of Thermodynamics - and Physics in general.   

       2) Money (or more generally, wealth) - it's (normally) counted in currency units, and can exist in many different forms (cash, equities, commodities, property, political and military power and time (bit of a stretch those last ones)) - It doesn't matter how much of any of those things you have until you convert them from one thing to another. "Econodynamics" might describe the laws that govern how these different forms of wealth can be converted from one to another.
zen_tom, Jan 26 2009
  

       Hmmm lets make joules worthless so that we can all fly...
madness, Jan 26 2009
  

       Oddly enough, I think money has to be created to at least keep pace with population growth, otherwise there will be bad deflation.   

       [nineteenthly], You ought to get a copy of Heinlein's "For us the Living" (at least I think that's the one). There is a very unusual economic system described that I haven't had enough time to fully comprehend in it. You might like it.
Zimmy, Jan 26 2009
  

       [zen_tom], in the latter case, i actually have some real world experience of this! We set up a LETS using a unit called the "Leaf", as in Douglas Adams. The going rate was set at ten leaves an hour, regardless of the service offered. There was a problem with goods. I offered German tuition and translation and herbal consultations for one leaf per six minutes. At the time an initial consultation took six or seven leaves and a German lesson, i.e. one hour, ten leaves. We ran into several problems. One was how to value different skills, but we stuck to the flat rate. This meant that offering to do something while needing transport or childcare to do it would completely wipe out one's leaves. Another was what to do about goods. There was a farm on the scheme. It offered under the going rate for farm labour, wouldn't take any other kind of labour, e.g.building, wiring, plumbing and so on, despite there being professional builders, plumbers and so forth of a good reputation on the scheme, and it only offered food - can't remember the "cost". The end result was that it got all the leaves and didn't "spend" them. The other problem was that some people tried to convert directly into sterling at different rates, so for example someone offered photocopying at one leaf per sheet of A4. Since at the time my going rate in sterling for herbal consultations was twenty-eight pounds a session, that was equivalent to about four quid per photocopy, which is rather a lot. Consequently, we had an inflation problem and the scheme collapsed. My suggested fix, as i mentioned before, was to subvert the scheme by "charging" random amounts of leaves, in order to cause the scheme to collapse and replace it with a system where people simply registered what they offered or wanted and just did it for each other. Although this didn't happen, Freecycle came along shortly afterwards and is, i think, sufficiently similar to use instead, so that's what we do. It is goods rather than services and there are restrictions, but it's also substantially similar to LETS without any actual production, unfortunately.
nineteenthly, Jan 26 2009
  

       I really am as poor as i said i was and what i just described really did happen. I abandoned the LETS because it had become a shambles. The situation arose several years ago before my professional body went peculiar and decided to stab its members in the back, so at that time i was able to derive a significant income from it. It's a long and harrowing story. My conclusion, as i may have mentioned before, is that the organisation one respects is the one about whose internal workings one knows nothing.
nineteenthly, Jan 26 2009
  

       I think you might be getting the new notion of //Money cannot be either created or destroyed// from my very insistant and repetitive comments regarding the finite nature of money. While I have been close to saying that and thought about it I didn't quite say it. It is quite evident that money came from somewhere and was not always around. Henry Hazlett points out that supply is demand. The supply of grain is the farmers demand for other goods and services. If you want to increase demand for something you increase the supply. This coorisponds nicely with: population times individual production. Money's place in all this is as a facilitator. It's value in our minds is based on past success. it's success is based on people's acceptance not the government. with this in mind the conversation about rendering unto Caesar the things that are Caesar's makes a lot of sence. As long as Caesar does not undercut his currency with overtaxation or overprinting (even the value of gold can be undercut by taking it as soon as you give it). The people give it value. somehow it is worth more to use currency than forgoing the benefit and bartering. They cannot both chose to participate and not participate in Caesar's economy. Whether or not Caesar knows it his benefit is the success of his subjects.   

       Technically accepting a paper currency is to become subject to the tax of inflation.
MercuryNotMars, Jan 26 2009
  

       [MercuryNotMars], i'll get back to you in a sec, i just want to reply to [bigsleep].   

       Sometimes what people call reason is actually rationalisation, but recently i too have concluded that people can behave rationally. That's a leap of faith, ironically. Concerning organisations, the issue is really what can be done alone and what can be done as a group. No-one will ever agree totally with anyone else, but to get things done they end up working together and the extent to which they cope with others' differences varies. I have sort of painted myself into a corner by wanting total control over what i do as a result of not trusting people enough. That manifests itself as poverty because, for example, i end up trying to do my own marketing due to my suspicion of others. But, the money goes out to an advertiser followed by nothing coming back. This happened many times, and my conclusion was eventually that for some reason, despite positive feedback and word of mouth, for some reason advertising, even professionally produced and targeted, turns out to be a waste of money for herbalism. As it happens, this is reflected in the experience of other herbalists in Britain. However, this is also an example of my lack of trust and my reluctance to take risks. My statement about organisations reflects my view of my own professional body, [grayure]'s professional body, the main British home education support group and a number of other groups such as the local council, but probably also a lack of trust and a tendency for me to be a control freak. So, point taken i think, or is it? Feel free to enlighten me if i've missed it. Oh and by the way, no umbrage taken in case that sounds stroppy.
nineteenthly, Jan 26 2009
  

       Oh, and the other thing is of course my bivalent thinking, i.e. organisations are either perfect or "satanic" (which clearly can't be so).   

       Anyway, [MercuryNotMars]: In terms of money supply being finite, what do you make of the tendency of a civilisation's sphere of influence changing size? Lots of silver left Christendom along the silk road and it adopted the gold standard, then gold in the Americas started to be used as well, which led to inflation - gold was worth less because there was more of it. On the other hand, the price of spices has come down a lot because the source is no longer carefully protected. Is it true that in a sense the value of gold went down as a result of the labour of those who went to the New World for whatever reason, in conjunction with a change in the nature of the work done by the indigenous people there? Is that the energy invested in gold, which brings it down, or have you something else in mind?   

       I don't know if you have the gold standard in mind. If so, whereas fiat currency is very vulnerable to inflation, gold isn't immune either. Its price would surely be affected at least by its utility - use on digital electronics and in anti-rheumatic drugs comes to mind, i'm not a chemist so i may be missing something. Also, surely the more gold is available, the cheaper it is, isn't it? I recognise that it may not be that simple because if gold was discovered on Venus, the difficulty of mining it and bringing it back would presumably mean it was effectively unavailable for the time being. Likewise, the quantity of gold in the Milky Way as a whole is probably many billions of times the quantity available to us now, but its unavailability presumably means it doesn't influence the price.
nineteenthly, Jan 26 2009
  

       I take the point, [bigsleep] and you made me giggle. Even so, at this late stage i wonder if i have any way of opting in, since it seems to be who you know rather than what you know, plus apparently some kind of competence in accreditation, which is lacking in certain quarters.
nineteenthly, Jan 26 2009
  

       My concern is regressive demand, or whatever you call that thing which means cheaper, better value services do better in recessions. My situation is complicated by the accident of living in a city where one herbalist charges five times the modal fee for the rest of the country. I may also have difficulty distinguishing between attempts to haggle and genuine protestations of not being able to afford services. I'm aware of charging a little less than most people, but the difference is mainly in the area of the consultations rather than the remedies. I'm also a bit weird due to my departure from vitalism, which gives me a different approach.
nineteenthly, Jan 26 2009
  

       Alan greenspan stated that his use of gold as a measure of inflation was because The amount in reserve is high in relation to either it's production or use. Commodity markets are relative while you could say that the price of gold drops or rises the opposite could be said for whatever commodity you are using to measure it. The thing about a commodity like gold is that it is quite independant from stupid bureaucrats who think they can create money by order of a government agency. A double in supply of gold is no small feat and represents real value added to an economy. Your currency though not dirrectly redeemable for Gold is on a pseudo-gold standard perhaps based on a few commodities perhaps including gold. Gold is very subject to inflation as taxation either slows an economy to where you cant get anything out of money or no one is allowed to keep the gold that they receive or spend it as they see fit.   

       The way you regulate a currency to achieve constant usable transmitable value is the same as under a gold standard. The gold standard is the gold standard only so long as you don't run out of gold. It has to be a market driven decision how to expand or contract the money supply. A market was all that the gold standard acheived.
MercuryNotMars, Jan 26 2009
  

       Right, thanks. Would it not be possible to have a gold bubble? If there was speculation that a drug which happened to be a gold compound greatly increased longevity and that turned out to be false after a couple of years, or that it was supposedly possible to do cold fusion with it as with palladium but that was later refuted, would that not raise its value artificially high?
nineteenthly, Jan 26 2009
  

       //Would it not be possible to have a gold bubble?//   

       Or the Opposite of a gold bubble, like we probably have right now.   

       There are some that believe that silver is being shorted on Comex by an order of magnitude more than actual silver exists to honor the contracts.
They say that this is being done in order to make it appear that inflation is not really that bad.
(Gold is thought to have some connection to Silver in price, but the current ratio is quite a bit out of whack).
  

       but yes, I think you can have a gold bubble. If enough people get scared about the validity of their currency, but the currency actually doesn't fail, then people will begin to sell off gold for currency.   

       It might be beginning to happen in England now, I'm not sure, though.
Zimmy, Jan 26 2009
  

       Take a look at gold prices - whenever there's bad news, gold gets more expensive - it's seen as a safe bet when everything else is going crazy. If your currency is sinking, you abandon ship and go for solid ground - and precious metals is about as solid as it gets - why? Because short of national governments dumping their reserves, or a massive unmined source being discovered, there's a very limited amount of it. As more people want to clamber on to that finite amount of solid ground, it gets even more expensive. If there ever was a gold bubble, it's happening right now.   

       Platinum is rarer than gold, and further, is a vital component in catalytic converters - the price is likely to be on a pretty stable climb as its availability dwindles - or people start driving electric cars and the requirement for cats drops.   

       Which takes me to a point I don't think's been made yet - money isn't *all* about what you can do, or give to the community, it's also about what you can withhold from the community. If you have a valuable service that the community needs, and the power to withhold it except to those who will make it worth your while, you are in demand and become rich. In contrast, slaves are forced by the community to provide their services for free.   

       Gold is valued on the basis of its scarcity, and those who own it are only made wealthy because they can further limit its availability - in the 30's, in order to sort out the financial crisis at the time, the US government made it illegal for people to hold their own gold, and in forcing people to give it up, drove down the price - people could no longer withhold their access - the US Treasury, now holding all the gold (a la Auric Goldfinger) and capable of withdrawing access to it on a massive scale, was able to immediately push the price (in Dollars anyway) up, and their enforced purchase of its citizens gold went up in price x-fold - I think this was one of the factors that helped kill off the (international) gold standard (other than a massive war and subsequent devastation in Europe).
zen_tom, Jan 26 2009
  

       [zen_tom], you've just crystallised something in my mind which was sort of there already but you made it explicit. I pay trade prices for certain things, notably herbs in some circumstances, and i'm aware of a huge mark-up. That which is useful but can be withheld? Very interesting. It also sounds rather nasty, but you've really said a lot. Then again, it's also what's valued but withheld, not just useful and withheld. There's a distinction between what's valued and what may be valued. Useful things may or may not be valued.
nineteenthly, Jan 27 2009
  

       I didn't mean for it to sound nasty - but that is kind of how it is. Plants do it too, if it's any consolation. A tree withholds its 'goodness' until such time as it fruits, at which point it makes that fruit available to anyone who is able to eat it, and disperse its seeds. If the tree just expressed fruit willy nilly without all the seed business, it wouldn't get very far, in tree terms.   

       In the process of creating fruit, the tree distils all manner of sunlight and soil and water into a tasty morsel - in a way that a monkey just can't do.   

       In the rain forest, trees fruit in such a way that they don't all do it at once, forcing the monkeys to rush about in a way most inconvenient to them, but which stops a glut of fruit occurring at any one time. So the trees are withholding their assets in order to reach an optimal price for them. And yet, nobody could seriously castigate the trees for being capitalist exploiters of the monkey proletariat.
zen_tom, Jan 27 2009
  

       I've had similar thoughts about plants too, and i linked them to cybernetics. It connects in my mind to the traditional association between planets and herbs, but that's a long story and more about a sort of non-taxonomical classification system than astrology.
nineteenthly, Jan 27 2009
  

       If a bourgeois tree falls in the woods, does it make a sound?
Zimmy, Jan 27 2009
  

       A Googel note = a bill with a value so high, the note lacks the space to express its value.   

       el dueno
el dueno, Jan 27 2009
  

       You could use scientific notation, or just teeny tiny writing.
If you gave a googol proletarian monkeys a googol typewriters, they would eventually produce the complete works of Karl Marx.
nineteenthly, Jan 27 2009
  

       //Gold is valued on the basis of its scarcity, and those who own it are only made wealthy because they can further limit its availability - in the 30's, in order to sort out the financial crisis at the time, the US government made it illegal for people to hold their own gold, and in forcing people to give it up, drove down the price - people could no longer withhold their access - the US Treasury, now holding all the gold (a la Auric Goldfinger) and capable of withdrawing access to it on a massive scale, was able to immediately push the price (in Dollars anyway) up, and their enforced purchase of its citizens gold went up in price x-fold - I think this was one of the factors that helped kill off the (international) gold standard (other than a massive war and subsequent devastation in Europe).//   

       1. I contend that any stable currency is that way because it is on the gold standard though the government itself does not conduct the market it is still the same. 2. though you may have alluded to it by saying (in dollars anyway) it wasn't the price of gold that changed, it was the value of the dollar 3. you can't exactly buy gold and make it scarce and sell it at a scarce price. the last bits of gold you buy as a major player in the market is the most expensive(probably). and the first bits you sell are the most profitable(probably). There is no evicence that cornering the market can make you rich   

       "An example occurred in the late 1970s and early 80s when brothers Nelson Bunker Hunt and Herbert Hunt attempted to corner the world silver markets, at one stage holding the rights to more than half of the world's deliverable silver.[1] During Hunt's accumulation of the precious metal silver prices rose from $11 an ounce in September 1979 to nearly $50 an ounce in January 1980.[2] Silver prices ultimately collapsed to below $11 an ounce two months later,[2] much of the fall on a single day now known as Silver Thursday.[3]" wikipedia   

       henry hazlett pointed out in the book that commodity traders have on average unwittingly subsidized farmers who sell their crop at harvest. subtracting storage costs harvest is evidently on averate the best time to sell, worst time to buy right when the commodity is most available. It is hard, near impossible to predict since you are outpredicting each other.   

       A price is never up to one person even if a pricetag is. A real price can only be determined where two people agree to exchange. price fixing is a money losing proposition(govt or private). therefore the market is all knowing and is the very definition of self regulation. only the most willing sellers and most motivated buyers meet in a public market. I never second guess the market.
MercuryNotMars, Jan 28 2009
  

       I don't think we have any such fines here in the states. I think people blamed the high gas prices on Bush being chummy with big Oil. but.. we get along fine here in the states with our lower gas prices than you losers. I don't think we have had any monopoly busting since Clinton started taking on Microsoft(the trigger for the internet bubble colapse). I may be wrong but I don't recall any mergers being denied either.   

       I think the reasons why your government does that is because they are stupid/they are good at finding strawmen to beat up to convince you they are necessary. You would probably save more money if those bureaucrats that look for that stuff were turned out into private industry to make a real contribution to society. I don't have a problem with monopolies just so long as they are not government sponsored.   

       Gut reaction that I have no problem with posting and looking up the facts in the morning. Why a government does something is usually tied to what uninformed masses will vote for not what makes sence. It seems a bit circular to base your reasoning on that. I think I will stick with the back of my breakfast cereal box for my economic guidance
MercuryNotMars, Jan 28 2009
  

       //only the most willing sellers and most motivated buyers meet in a public market// Wuh?!
Spacecoyote, Jan 28 2009
  

       No, that bit (at least) is true. Imagine a bunch of people who have apples crowded together on the right, and a bunch of people who want apples to the left. To make a sale a buyer and a seller have to meet.
Now draw a bunch of parallel lines down the market that represent price - with low prices towards the buyers on the left and high prices towards the sellers on the right.
To make a sale, the buyers must approach the sellers and the sellers must approach the buyers - where they meet, determines the price. - If there's only one seller, he might be happy to stay all the way over on his side of the market and wait for the most determined buyers to walk all the way over - conversely, a single buyer might feel suitably lethargic and make the sellers do all the legwork.
Ignoring these last two extremes, assuming that there are always multiple competing buyers and sellers, each deal is struck by the two most determined people at any one moment.
Government Price fixing would be like erecting a fence beyond which sellers (or buyers) can't go.
Cartel-like behaviours would involve all the sellers (or buyers) getting together and drawing the other side out by refusing to deal below (or above) a particular price.
zen_tom, Jan 28 2009
  

       I think i'll probably post an idea about fluffy bunnies next. See link.
nineteenthly, Jan 28 2009
  

       The current economic crisis is all about under estimating the risk associated with debt (or over estimating the debts value). In essance a lender builds up a balance sheet and then sells its business on to someone for more than it is worth.   

       This is made easy because we use an arbitrary unit (money) to value the debt, package it up and sell it on. [The alternative probably requires the buyer to have a huge cold store where people can put the stuff they grew in the back yard of the house they bought]...   

       This crisis and all the others that I know about was caused by a small group of individuals that found a way to confuse the market. (To be clear they managed to create and control a bubble.) So my sarcasim is apt because it is not possible to confuse the laws of physics. That is, it is not possible to decide that joules are worthless and then fly home...   

       That said, it is clear that if an economy insists on using an "agreement to pay" as legal tender it requires regulation of the associated markets.   

       My two cents would be to reverse the decision that shares need not be redeemed by the issuing company (for a percentage of the current net worth). This regulation actually enforces the separation of price and value. To my mind all such regulations are incorrect...
madness, Jan 28 2009
  

       //Tangentially approaching infinity as we speak//
sp. "asymptotically"
coprocephalous, Jan 28 2009
  

       Yes, asymptotically, but is there any arrangement of circumstances which would make it tangential? The cost of lighting, for example, is sinusoidal if the price of candles stays the same, because the length of the day varies as a sine wave. I've read a claim that the price of gold is similar, though i am very dubious about that. Inflation can be exponential, but could it really be tangential in nature for some reason?
nineteenthly, Jan 28 2009
  

       Isn't tangentality a relationship descriptor? I mean you can grow exponentially, no further information required, but if you do anything tangentially, it has to be in respect of something else.
zen_tom, Jan 28 2009
  

       A tangent is a derivative. Given a system of order n a tangential system has order n - 1. With respect to a curve (a system with two degrees of freedom) a tangent is a straight line (with one degree of freedom). A function that is equal to its derivative is the exponential function and its limit is an asymptote...   

       Now at this moment you are confused so I should be able to sell you something for more than it is worth. Unless of course there is some regulation preventing me...
madness, Jan 28 2009
  

       In the case of the sinusoidal cost of lighting, the cost is a function of axial tilt, latitude and direction of Earth's axis of rotation. A tangent as a trigonometrical function could conceivably vary in the same way concerning prices, or in some other way, and there would then be a process akin to inflation which, however, actually reached infinity (though countably rather than uncountably). I'm speculating on how that might happen.
nineteenthly, Jan 28 2009
  

       [19thly] I would like to offer you a cup of common sense and it will only cost you $999.99... get it while you can!
madness, Jan 28 2009
  

       [MNM], the US Gov't stopped the Hunt Corner and then fined them afterwards. Without intervention, they possibly could have cornered the market.
Zimmy, Jan 28 2009
  

       Maybe common sense could be used to back up currency, since it seems to be so scarce?
nineteenthly, Jan 28 2009
  

       Thank you for the legwork on that research UnaBubba. I guess my conclusion is there are a lot more stupid people than I thought.   

       I think my statements were pertaining to commodity markets. It does however extend to any market so I couldn't help but stick my neck into that discussion.   

       What are the benefits to consumers of companies making a large profit off of them? Sector profits encourage sector investments. That capital is put to work providing more supply to that sector. The logical conclusion to investors when government regulates profits in this manner is that there is that much less sector profitability. There is therefore less incentive in competitive undercutting or even internal corporate investment. For oil companies that has meant no new investments in refining capacity in the states which has caused seasonal supply chain hiccups. For prescription drugs an investment slow down would constrict research and new drug creation. I don't see any long term benefit to consumers of these fines or regulations.   

       I don't see why I can't consult with anyone I want when setting a price for my property. People sell things at low prices to encourage volume of selling. Even a monopoly has that fact in mind. A monopoly also must price low enough to secure market share. High prices are a form or rationing to ensure availability to the people who can make the most use of it. If you can't afford it in an industrial usage setting and a banker won't get you a loan to buy it I think we can all see that you would be wasting it. If you are not starving and not naked then please respect everyone’s right to sell at any price they choose or not sell at all while consulting with anyone they choose.   

       For the purposes of this discussion it is the market with kajillions of market votes that we all make that must be consulted in establishing a value of a useful currency. Whether you respect it or not it is the only method that garners respect of redeemers of currency. It is in fact how you come to view your currency whether you deny it or not. There are way to many people in the world who think money is evil and somehow still participate in the market. Any need that you can't satisfy on your own relies on the market that is made better (more liquid and available) with money.
MercuryNotMars, Jan 28 2009
  

       [MNM] Makes the point that given complete information and enough buyers and sellers "the market" will work out the right price for any good, including the exchange rate/value of a currency.   

       I made the point earlier that markets are rarely free. In particular a good free market requires regulation. Not regulating a market allows small groups of individuals to fix prices. Its a bit like running a poker game where people are allowed to cheat --- sooner or later the game is gonna end badly...   

       So anyway a currency cannot function if the issuer sets its value to infinity. I cannot think of a transaction that does not end with a "hold up"...
madness, Jan 28 2009
  

       [bigsleep], there are currencies quite similar to what you describe. There are the LETS of course, and time dollars, but others too. In the 'seventies, there was something called the Constant based on particular quantities of edible crops and i think there are also gold-backed currencies in the US separate from the dollar, aren't there? Is that not similar to what you mean?
nineteenthly, Jan 28 2009
  

       The IMF won't allow a gold backed currency, or any other standard of currency backed by a thing that will not inflate. I have no idea why.
Zimmy, Jan 28 2009
  

       The only currency used as currency in the States that I have ever heard tell of is the dollar. People use gold the store it and call it Gold bullion even if it used to be currency before my time. I would rather own shares in companies that make money(not that that worked this year, I am down $70,000 for the year). You can be as excentric as you want but you can't walk up to a cashear and expect them to do anything useful with a lump of gold. I think between inflation and deflation are really the only two choices available. Inflation near zero is ideal if you can't inflate you might be deflating. I imagine the idea is that you don't want people thinking of holding dollars as an investment strategy it sure doesn't build wealth. I think of the interest rate as a combination of what people should be able to earn with capital(real economic growth) and inflation plus time/interest rate fluxuation risk premium. This is kind of illustrated with ibonds(inflation adjusted bonds). If you have no economic growth and deflation no one will buy a bond and the government in doing something unexpected pays off bonds in expensive deflated dollars. Not only is this bad but you loose one measurement of inflation/deflation in the bond market. I have not exactly got this all worked out but horded dollars in a deflation environment might produce dumping of you try to cure it with printing money. I think of it as towing a car with a rope you want to keep the chain taught with the brake so that you dont pull off the bumper with a big jerk. I am not sure how this is handled under a classic gold standard, maybe I havent worked this all out. IMF may just be stupid as well but that is my guess for a reason.   

       Perhaps you have heard of the fed chairman setting federal reserve rates. He either sets rates based on what the economy is or he hurts the economy further. The economy slows down the rate should come down. His only power is not messing up. You can thank him if it goes right just like you can thank your neighbor/neighbour for your present wealth because they didn't steal your property.   

       to review the thing I like about the classic gold standard is not great accuracy or absence of any value fluxuation. It is it's independance from fiat money schemes and stupid mind game tricks like thinking that makes your goods cheaper overseas so that you sell more. You might as well set your clock an hour ahead so that you get to work on time. Gold going up or down by 50% is nothing compared to hyperinflation or crazy schemes.
MercuryNotMars, Jan 29 2009
  

       how is gold any more stable than any other commodity? the value of gold has hardly been "stable as a rock" the past six months, frothy more like. people who want a return to the gold standard are out of touch with modern economic reality. supply and demand sets the value for gold, bread, milk, and dollars, currency is traded, speculated, produced, reserved, exported and coveted just like gold, oil and sex. the government has a monopoly on the production side of the equation, nothing more. If it abuses that monopoly, under supplying or over supplying, it affects demand (value, inflation/deflation). Since demand is finite, value of currency is limited, never infinite, as many an inflationary regime has discovered. It's really much simpler than people believe.
WcW, Jan 29 2009
  

       Does the government have a monopoly on the production side of the equation? In a largely electronic system, can you be sure that every dollar or pound note is "government issue"? I'm not sure, but I can't believe that there's a 1:1 relationship between all the money in people's bank accounts and actual paper. Everytime you lend someone money at an interest rate, you are generating wealth (converting their labour into money) that's how money is 'created' - Central Banks will try to print money at a rate in line with their published interest rates, but if the real economy is ticking over at a growth rate that doesn't meet these published rates, that's when you see inflation or deflation. In the old days of empire and colonial expansion, gold would have been a suitable backing material because its 'generation' would have been linked to the primary goals of the nation i.e. acquired loot through conquest but in the much more equitable world of today - a nation's wealth is based only on the size of its markets, its productivity and its overall balance of payments.
zen_tom, Jan 29 2009
  

       The US does have other currencies, sometimes legally dubious ones. An example is the liberty dollar, backed by silver, which operates i think in Texas. Another was the Phoenix dollar, which was similar. Both of them were closed down. In England, i.e. here, we ran into legal problems regarding whether LETS counted as a currency, which would firstly have been illegal and secondly meant there was an exchange rate. We in Leicester got round the problem by charging or paying rates which didn't make sense in monetary terms, so for example the photocopying versus professional services thing makes it difficult to set a value in sterling and therefore difficult to tax. We also had problems with local government trying to co-opt the scheme and pretend it was theirs, and they set up their own. I would say it was backed up by time spent working, on the whole.   

       I can't remember the legal argument for LETS not being currency, but i know there is one. However, there honestly have been actual private currencies in the twenty-first century in the United States, backed up by silver.   

       Concerning the stability of gold, it's generally possible to say that a particular item is staying constant in value and everything else is going up and down, though it may be more sensible in some cases than others. For instance, Mars bars have been used to measure the "real" costs of other things because they are composed of several different commodities or something - can't remember the detailed reason and i don't want to fake it by going to "X-versity".   

       Clearly there are several times the quantity of money in the world than the quantity of notes and coins. Looking at it that way though, adding all the credit and debt in the world up, you find that the world owes itself money. That strikes me as a highly nebulous and abstract concept which, once again, confuses me and makes me doubt the notion of money is coherent.
nineteenthly, Jan 29 2009
  

       Money is an "agreement to pay" between the holder and the issuing organisation usually the government --- that is the government agrees to redeem the holder with an equal amount of goods and services. Money is therefore transferable because the holder is anonymous.   

       Since money is an "agreement to pay" it is a little bit independent of time. You can add up all the assets and debts and get a negative number because entities have agreed to pay up at a later date.   

       This is different to cash flow... if any entity does not have more money comming in than going out it is liquidated and the creditors get what is left. We have just seen the biggest cash flow problem in living memory and loads of big names have been liquidated...   

       If a government cannot make good its debts then one option is to print more money which causes inflation internally and devalues the currency externally.   

       Alternatively the reserve (and or commercial) bank(s) can actively devalue their currency by converting cash reserves to a weaker foreign currency. So long as that currency is backed by a larger number of people that have a greater ability to pay, i.e. their "aggreement to pay" is stronger. After buying foreign currency the banks balance sheet will show the same amount of debt in a weaker currency than its assets so is effectively better off. This is what is begin done to the pound (and euro) at the moment...
madness, Jan 29 2009
  

       That isn't the only explanation i've heard. I've also heard that it's attributable to money-laundering and accounting errors, among other things, including the reason you mention.
nineteenthly, Jan 29 2009
  

       [zen_tom] //I can't believe that there's a 1:1 relationship between all the money in people's bank accounts and actual paper// - there isn't, and that's why credit cards are inherently inflationary. When you spend money on your credit card, that money is created for the period until you pay it off.
hippo, Feb 02 2009
  

       Yep, that's right - any lending practice - assuming 'fractional reserve' - will generate money (and thence, inflation - depending on the prevailing climate) - I was responding to [WcW]'s point about governments having a monopoly over the money supply (and my imagined consequence being that there would be a 1:1 relationship between 'money' and what a government prints)
zen_tom, Feb 02 2009
  

       Why would Australian banks be better?
nineteenthly, Feb 02 2009
  

       //Why would Australian banks be better?//   

       Would you want to lose the money of people who commited crimes severe enough to get banished?
Zimmy, Feb 02 2009
  
      
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