History of money, 20th century and earlier

[Bomb#20]

And if I thought I had some point to make, I'd use complete sentences, not just the gibberish meme "Money is debt."

Wait a sec. Now you object to gibberish memes?

When we sell something for a pack of cigarettes or 5 grams of peppercorns we need not look to an authority for approval; we accept that medium of exchange because the cigarettes or spice has an intrinsic worth independent of its use as money.

What in the name of ever-loving Cthulhu is "intrinsic worth"? How can it be detected? How can disputes about it be resolved? And why the bejesus would anyone suppose a foul-smelling cancer stick contains a non-negative quantity of it?

 

[Loren Pechtel]

You can look at it both ways. It's an asset to it's owner--but it's a promise to pay and thus also a debt.

Does one write "Bread is hunger" because bread can address someone's hunger?
And if I thought I had some point to make, I'd use complete sentences, not just the gibberish meme "Money is debt."

And now you show up, parroting . . . parroting WHAT exactly? Do you think your sentence here adds special insight?

If I receive tobacco (old Virginia money) for my labor and then give the tobacco to my brother because he likes to smoke, who's in debt to whom exactly?

And why not deal with complete sentences to add meaning anyway? Is this thread about the History of Money? Or is it about semantic obfuscation?

Money is debt! Bread is hunger! Time is money! Cheese is Wednesday!

I was simply pointing out that showing it's an asset doesn't show that it's not a debt. Think of the cartoon about two men pointing to a figure on the ground, one says "six", the other says "nine". You won't understand money unless you understand it's dual nature.

 

[Bomb#20]

We won't condone the meme "Money is debt." If someone wants to argue this viewpoint is useful, please begin with a paragraph explaining what the meme even means: It has about 3 distinct and contradictory interpretations.

Money IS debt. Knowing this IS fundamental;

"he is a barbarian, and thinks that the customs of his tribe and island are the laws of nature." - Julius Caesar*

There is nothing fundamental about money being debt. Money is anything a community uses as money. People in modern societies often mistake "Money is debt" for a law of nature when it is nothing but the custom of our tribe. Different societies' choices for what to use as money are all equally money, but there are advantages to some choices and disadvantages to others, and for the sake of its many advantages, modern societies have made the strategic choice to use debt as money. That is why money is debt.

(* The GB Shaw character, not the ruler.)

... that money is debt seems to me both fundamental and straightforward. It's going to require more than a mere paragraph to explain, but I am sure that you are aware that the complexity of an explanation isn't evidence of its falsity, or its lack of merit.

To illustrate that money is debt, consider a barter economy. Joe has a pig; He wants to trade it for Sam's corn, but harvest is a few months away.

Your explanation runs off the rails right at the beginning -- it postulates an indebtedness situation from the get-go, a bloody futures contract! But it's perfectly possible to develop the practice of using bits of metal as a method for breaking up multiway trades into sequences of two-way trades even when all the parties already have their trade-goods in hand. So if you want a "Money is debt" explanation not to be a circular argument, you need to be able to show the metal bits are debts even when they aren't being used to implement loans.

In a very real sense, any money you have is a representation of what you are owed by the world at large.

That appears to be some sort of metaphysical Social Contract gobbledygook. "The world at large" isn't the sort of thing capable of owing anything. Debts are owed by someone to someone.

 

[Swammerdami]

We won't condone the meme "Money is debt." If someone wants to argue this viewpoint is useful, please begin with a paragraph explaining what the meme even means: It has about 3 distinct and contradictory interpretations.

Money IS debt. Knowing this IS fundamental;

"he is a barbarian, and thinks that the customs of his tribe and island are the laws of nature." - Julius Caesar*

There is nothing fundamental about money being debt. Money is anything a community uses as money. People in modern societies often mistake "Money is debt" for a law of nature when it is nothing but the custom of our tribe. Different societies' choices for what to use as money are all equally money, but there are advantages to some choices and disadvantages to others, and for the sake of its many advantages, modern societies have made the strategic choice to use debt as money. That is why money is debt.

(* The GB Shaw character, not the ruler.)

... that money is debt seems to me both fundamental and straightforward. It's going to require more than a mere paragraph to explain, but I am sure that you are aware that the complexity of an explanation isn't evidence of its falsity, or its lack of merit.

To illustrate that money is debt, consider a barter economy. Joe has a pig; He wants to trade it for Sam's corn, but harvest is a few months away.

Your explanation runs off the rails right at the beginning -- it postulates an indebtedness situation from the get-go, a bloody futures contract! But it's perfectly possible to develop the practice of using bits of metal as a method for breaking up multiway trades into sequences of two-way trades even when all the parties already have their trade-goods in hand. So if you want a "Money is debt" explanation not to be a circular argument, you need to be able to show the metal bits are debts even when they aren't being used to implement loans.

In a very real sense, any money you have is a representation of what you are owed by the world at large.

That appears to be some sort of metaphysical Social Contract gobbledygook. "The world at large" isn't the sort of thing capable of owing anything. Debts are owed by someone to someone.

Thank you, Bomb#20 for helping to dispel this meme. If there were much utility to it it would be good to discuss it here -- and of course bank-created money CAN be viewed as IOU -- but it's not only a useless digression when discussing intrinsic-worth money, the 3-word sentence "Money is debt" is just plain confusion.

Unlike bilby apparently, I have actually read (or skim-read) David Graeber's long book titled Debt where he pushes this meme. A few excerpts should show that it is Bomb#20 who captures the essence of this peculiar meme:

Even our ancestor Adam is no longer figured as a creditor, but as a transgressor, and therefore a debtor, who passes on to us his burden of Original Sin [here Graeber is paraphrasing Nietzsche.]
...
Why were cattle so often used as money ? The German historian Bernard Laum long ago pointed out that in Homer, when people measure the value of a ship or suit of armor, they always measure it in oxen-even though when they actually exchange things, they never pay for anything in oxen . It is hard to escape the conclusion that this was because an ox was what one offered the gods in sacrifice. Hence they represented absolute value. From Sumer to Classical Greece, silver and gold were dedicated as offerings in temples. Everywhere, money seems to have emerged from the thing most appropriate for giving to the gods.
...
While everyday market transactions, at shops or stalls in the agora, were here as elsewhere typically conducted on credit, the mass production of coinage permitted a degree of anonymity for transactions that, in a pure credit regime, simply could not exist. Pirates and kidnappers do business in cash-yet the loan sharks at Aegina's marketplace could not have operated without them. It is on this same combination of illegal cash business, usually involving violence, and extremely harsh credit terms, also enforced through violence, that innumerable criminal underworlds have been constructed ever since. In Athens, the result was extreme moral confusion . The language of money, debt, and finance provided powerful-and ultimately irresistible--ways to think about moral problems. Much as in Vedic India, people started talking about life as a debt to the gods, of obligations as debts, about literal debts of honor, of debt as sin and of vengeance as debt collection. Yet if debt was morality-and certainly at the very least it was in the interest of creditors, who often had little legal recourse to compel debtors to pay up, to insist that it was-what was one to make of the fact that money, that very thing that seemed capable of turning morality into an exact and quantifiable science, also seemed to encourage the very worst sorts of behavior?

David Graeber's book is (was?) on-line, but I have my own copy on my laptop -- the time-stamp shows I downloaded it in 2015. Perhaps it is very interesting, but please start another thread to discuss it. (As shown, some push the "Money is debt" meme all the way back to the "debt" which is Adam's Original Sin in the Garden of Eden!) But in this thread we're reviewing the mechanics of money-creation to gain insight about possible 21st-century directions.

 

[Swammerdami]

And if I thought I had some point to make, I'd use complete sentences, not just the gibberish meme "Money is debt."

Wait a sec. Now you object to gibberish memes?

I think this is a sarcastic insult directed against Swammi, but I have no idea what it's in reference to.
You'll need to be more explicit if you want me properly repentant or chagrined.

When we sell something for a pack of cigarettes or 5 grams of peppercorns we need not look to an authority for approval; we accept that medium of exchange because the cigarettes or spice has an intrinsic worth independent of its use as money.

What in the name of ever-loving Cthulhu is "intrinsic worth"? How can it be detected? How can disputes about it be resolved? And why the bejesus would anyone suppose a foul-smelling cancer stick contains a non-negative quantity of it?

The whole idea of "intrinsic-worth money" is that disputes need NOT arise. If you didn't want silver, you could ask for payment in gold, tobacco, oxen, whatever.

In the Virginia Colony, tobacco was used as money. People who hated tobacco still accepted it as money because OTHER PEOPLE thought it had value.

The phrase "Intrinsic worth" doesn't imply some Divine Design or Moral Meaning. It just means the money had value in and of itself, without reliance on any guarantee by a government, banker or debtor.

Does this help?

 

[Bomb#20]

Unlike bilby apparently, I have actually read (or skim-read) David Graeber's long book titled Debt where he pushes this meme. A few excerpts should show that it is Bomb#20 who captures the essence of this peculiar meme:
...
David Graeber's book is (was?) on-line, but I have my own copy on my laptop -- the time-stamp shows I downloaded it in 2015. Perhaps it is very interesting, but please start another thread to discuss it.

So who indicated an interest in discussing his book? You appear to be giving Graeber credit for the "Money is debt" meme. I heard that meme many years before Graeber wrote about it.

 

[Bomb#20]

And if I thought I had some point to make, I'd use complete sentences, not just the gibberish meme "Money is debt."

Wait a sec. Now you object to gibberish memes?

I think this is a sarcastic insult directed against Swammi, but I have no idea what it's in reference to.
You'll need to be more explicit if you want me properly repentant or chagrined.

How much more explicit could I have been? Which part of 'What in the name of ever-loving Cthulhu is "intrinsic worth"?' didn't you understand?

So no, it wasn't a sarcastic insult directed against Swammi; it was a sarcastic insult directed against Swammi's opening post of the thread, specifically the post's reliance on the gibberish meme "intrinsic worth".

When we sell something for a pack of cigarettes or 5 grams of peppercorns we need not look to an authority for approval; we accept that medium of exchange because the cigarettes or spice has an intrinsic worth independent of its use as money.

What in the name of ever-loving Cthulhu is "intrinsic worth"? How can it be detected? How can disputes about it be resolved? And why the bejesus would anyone suppose a foul-smelling cancer stick contains a non-negative quantity of it?

The whole idea of "intrinsic-worth money" is that disputes need NOT arise.

Need schmeed. A dispute did arise -- you claim that a cigarette has intrinsic worth and I dispute it. What observation settles our dispute? How is your claim that it has intrinsic worth falsifiable?

If you didn't want silver, you could ask for payment in gold, tobacco, oxen, whatever.

In the Virginia Colony, tobacco was used as money. People who hated tobacco still accepted it as money because OTHER PEOPLE thought it had value.

The phrase "Intrinsic worth" doesn't imply some Divine Design or Moral Meaning. It just means the money had value in and of itself, without reliance on any guarantee by a government, banker or debtor.

Does this help?

Only in the sense that it makes plain the unreasonableness of what you're arguing. How the heck do you figure the money had value "in and of itself" when the reason people were accepting it was because OTHER PEOPLE were accepting it? That's not "in and of itself"; that's "in and of somebody else".

At one point the Romans used salt for money. I can see why some would claim this money had value "in and of itself": if other people stopped thinking it had value and stopped accepting it in payment you could still use the salt you'd been paid with to avoid dying of electrolyte deficiency. But cigarettes? Seriously? How much more perfect an example of valuing only due to a circular argument, an infinite regress of opinions, could you ask for?

Okay, maybe this is an even more perfect example (and I know it's 21st-century but bear with me -- it captures the nature of the phenomenon in a pretty pure form): Bitcoin. Would you claim a bitcoin has "intrinsic value"? People value it only because they expect others to value it -- apart from betting on other people's expectations, all it's good for is turning coal into atmospheric CO2 on a grand scale. And yet it satisfies your criterion for "intrinsic value": no reliance on any guarantee by a government, banker or debtor. If those traits are what make it worth $50,000, and make them collectively worth a trillion dollars, well, you can duplicate those traits. You can make up your own cryptocurrency and issue an Initial Coin Offering. Would that make you a trillionaire? A billionaire? Hey, it worked for Dogecoin.

 

[Swammerdami]

I do NOT understand the confusion.

When you accept a U.S. banknote it is imprinted as "Legal tender for all debts public and private." You needn't worry whether the paper is worth a dollar. A government has guaranteed its value.

When you accept a certified check or traveller's check guaranteed by the Bank of America, you need not worry about the value of the paper. BofA has guaranteed that the paper is a form of money.

But when you accept cigarettes as payment in an environment where cigarettes are valued and used as money, it doesn't matter whether you smoke or not. It doesn't matter that the surgeon-general has tried to explain to you the horrors of lung disease. And it doesn't matter that no government or banker has guaranteed the use of cigarettes as money. The cigarettes are valued -- even if not by you -- by and of themselves.

If this is really still unclear, I pity you and give up. Start a new thread -- Swammi is a dunce or whatever.

 

[Bomb#20]

I do NOT understand the confusion.

When you accept a U.S. banknote it is imprinted as "Legal tender for all debts public and private." You needn't worry whether the paper is worth a dollar. A government has guaranteed its value.

And what is that worth, the promise of a government? You're very funny, Highness.

The US has never defaulted on its debt — except the four times it did

To paraphrase Daniel Patrick Moynihan, you are entitled to your own opinion about the debt ceiling, but not to your own facts about the history of U.S. government defaults.

thehill.com

When you accept a certified check or traveller's check guaranteed by the Bank of America, you need not worry about the value of the paper. BofA has guaranteed that the paper is a form of money.

And? Banks fail all the time. Five banks failed last year in the U.S. -- most famously Silicon Valley Bank, and it wasn't even the largest.

But when you accept cigarettes as payment in an environment where cigarettes are valued and used as money, it doesn't matter whether you smoke or not. It doesn't matter that the surgeon-general has tried to explain to you the horrors of lung disease. And it doesn't matter that no government or banker has guaranteed the use of cigarettes as money. The cigarettes are valued -- even if not by you -- by and of themselves.

Certainly not by themselves -- cigarettes don't value stuff. As for "of themselves", that appears to be another gibberish meme. Cigarettes are valued for the same reason dollars or Jackson Pollack crapsterpieces are valued -- because the person expects others to expect others to trade something they want for them. In all your cases -- government notes, banknotes, cigarettes -- you need to worry about the same two things: the possibility that other people will stop accepting the items as trade goods, and the possibility that they'll accept them but offer less than you expect in exchange, Both of these things happen to the stuff people acquire for future trade, whether someone has "guaranteed its value" or not, whether you say it is "valued of itself" or has "intrinsic value" or not, and whether it's classified as "money" or "debt" or "commodity" or "equity" or "real property" or "intellectual property". "Value" is not a thing; there is only the probability that you can find someone who will give you what you want for what you can offer. The probability that someone will keep a promise has no special status; it's just one of the many consideration that goes into estimating the probability that you'll get what you want.

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If this is really still unclear, I pity you and give up. Start a new thread -- Swammi is a dunce or whatever.

Dude, you posted an OP in which you espoused some premises. If you didn't want people to talk about whether your premises were correct, what did you want? A chorus of "Yes, you're right."s?

 

[Swammerdami]

I spent some time reviewing the history of precious-metal coinage to highlight the fact that money was based on gold and silver from ancient times all the way until 1930 when the Bank of England closed its gold window.

But bank-created money came into use long before 1930. There was banking in the ancient world, but -- in part because of the fragility of papyrus documents -- details are not known with certainty. For details, and to get translations of the actual banking documents from Northern Italy in the Late Middle Ages, I've already linked to the book by Lopez and Raymond (both Professors of History) which shows documents (translated from Latin) from the early Commercial Revolution. (They don't seem to clarify how many of these documents were written on parchment and how many on paper. It was in the 13th century that Northern Italy had its first paper mills, probably using paper stock imported from the East. How much more convenient is paper? Did Europe's "Commercial Revolution" and the use of paper go hand-in-hand? Only at one point do the Professors assert that mention of "soaking" (erasing) a document implies that it was on parchment.) The Classical world used coins for commerce, but more primitive bartering was practiced as money fell into relative disuse during Medieval times. This was in part due to scarcity of silver, but also due to the difficulty of sending money long distances. In addition to the risk and delay of traveling with precious cargo, how could the coins be properly evaluated at their destination? The purity of coinage varied from place to place.

There was a need for money-changers, expert in evaluating a variety of money types, and these money-changers evolved to be bankers. Lopez & Raymond mention an Oath the money-changers in one town were required to take: their integrity had to be beyond question.

One excerpt from the Lopez-Raymond book is not a banking document, but rather a few paragraphs written in Florence 1442 as advice about money-changers and bankers in Venice. A "fractional reserve" system of banking is described.



I'd plan to wait until the weird nattering about "intrinsic-worth" and "money is debt" had stifled, before beginning this "chapter" on bank-created money. But I'll post this first part of Chapter 2 now, and perhaps attend to the nattering.

 

[Swammerdami]

I do NOT understand the confusion.

When you accept a U.S. banknote it is imprinted as "Legal tender for all debts public and private." You needn't worry whether the paper is worth a dollar. A government has guaranteed its value.

And what is that worth, the promise of a government? You're very funny, Highness.

What's your point??
Did I say or imply that government- or bank-created money was certain of its nominal value? No, just the opposite. There would hardly be point in distinguishing intrinsic-worth money from bank-created money if the latter had a definite value.

Oh, nitpicking galore. One will seize on the word "guarantee." A guarantee is no better than the guarantor. If this is the Gotcha you're ranting about all I can say is STIFLE! You're just eager to belittle Swammi's writing on any grounds. That is very UNBECOMING.

guarantee
a formal promise or assurance (typically in writing)...

A "promise" does not provide certainty. Cf. "I won't cum in your mouth."
Do I have to explain even this??

The US has never defaulted on its debt — except the four times it did

To paraphrase Daniel Patrick Moynihan, you are entitled to your own opinion about the debt ceiling, but not to your own facts about the history of U.S. government defaults.

thehill.com

When you accept a certified check or traveller's check guaranteed by the Bank of America, you need not worry about the value of the paper. BofA has guaranteed that the paper is a form of money.

And? Banks fail all the time. Five banks failed last year in the U.S. -- most famously Silicon Valley Bank, and it wasn't even the largest.

??
I guess I really do need to explain even this.

guarantee
a formal promise or assurance (typically in writing)...

A "promise" does not provide certainty. Cf. "I won't cum in your mouth."

But when you accept cigarettes as payment in an environment where cigarettes are valued and used as money, it doesn't matter whether you smoke or not. It doesn't matter that the surgeon-general has tried to explain to you the horrors of lung disease. And it doesn't matter that no government or banker has guaranteed the use of cigarettes as money. The cigarettes are valued -- even if not by you -- by and of themselves.

Certainly not by themselves -- cigarettes don't value stuff. As for "of themselves", that appears to be another gibberish meme. Cigarettes are valued for the same reason dollars or Jackson Pollack crapsterpieces are valued -- because the person expects others to expect others to trade something they want for them. In all your cases -- government notes, banknotes, cigarettes -- you need to worry about the same two things: the possibility that other people will stop accepting the items as trade goods, and the possibility that they'll accept them but offer less than you expect in exchange, Both of these things happen to the stuff people acquire for future trade, whether someone has "guaranteed its value" or not, whether you say it is "valued of itself" or has "intrinsic value" or not, and whether it's classified as "money" or "debt" or "commodity" or "equity" or "real property" or "intellectual property". "Value" is not a thing; there is only the probability that you can find someone who will give you what you want for what you can offer. The probability that someone will keep a promise has no special status; it's just one of the many consideration that goes into estimating the probability that you'll get what you want.

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I've crossed out useless gibberish. I've thought of you as quite smart by IIDB standards, Mr. Bomb, but you must have got up on the wrong side of the bed this morning.
If you must continue to comment, please make your further remarks more intelligent.

If this is really still unclear, I pity you and give up. Start a new thread -- Swammi is a dunce or whatever.

Dude, you posted an OP in which you espoused some premises. If you didn't want people to talk about whether your premises were correct, what did you want? A chorus of "Yes, you're right."s?

Of course not! Criticism is appreciated. But surely you can't blame me for hoping the criticism will be more competent than what we see here.

 

[Loren Pechtel]

We won't condone the meme "Money is debt." If someone wants to argue this viewpoint is useful, please begin with a paragraph explaining what the meme even means: It has about 3 distinct and contradictory interpretations.

Money IS debt. Knowing this IS fundamental;

"he is a barbarian, and thinks that the customs of his tribe and island are the laws of nature." - Julius Caesar*

There is nothing fundamental about money being debt. Money is anything a community uses as money. People in modern societies often mistake "Money is debt" for a law of nature when it is nothing but the custom of our tribe. Different societies' choices for what to use as money are all equally money, but there are advantages to some choices and disadvantages to others, and for the sake of its many advantages, modern societies have made the strategic choice to use debt as money. That is why money is debt.

No--while we use debt as money that's not what we mean by saying money is debt.

Look at money. Can I eat the electrons in the bank? Use them for shelter? No--they're useless. Money exists to transfer value, nothing more. Possessing money means you have contributed value to society, it is the measure of this value and can be exchanged for goods and services that actually are of use to you. Thus it is a debt on society. The fact that it is a debt that will be constantly shuffled around rather than ever repaid does not change this.

This is also why simply adding money does no good. The value of money is the ratio of money to things which you can buy. Adding money doesn't create anything and thus prices just adjust to the new ratio. (And this is why eat-the-rich schemes do not work. Their money represents tools and whatnot, taking it away adds nothing to the consumer side of things. It just makes future people very hesitant to put their money into long term things.)

Your explanation runs off the rails right at the beginning -- it postulates an indebtedness situation from the get-go, a bloody futures contract! But it's perfectly possible to develop the practice of using bits of metal as a method for breaking up multiway trades into sequences of two-way trades even when all the parties already have their trade-goods in hand. So if you want a "Money is debt" explanation not to be a circular argument, you need to be able to show the metal bits are debts even when they aren't being used to implement loans.

And what about situations where such a division is impossible? I can't sell a line of code to someone, it would be useless. I have to trade a complete program--and almost no other market participants will have anything valuable enough to trade for that.

In a very real sense, any money you have is a representation of what you are owed by the world at large.

That appears to be some sort of metaphysical Social Contract gobbledygook. "The world at large" isn't the sort of thing capable of owing anything. Debts are owed by someone to someone.

Nevertheless, it's an accurate model without which money can't exist.

 

[Loren Pechtel]

In the Virginia Colony, tobacco was used as money. People who hated tobacco still accepted it as money because OTHER PEOPLE thought it had value.

The phrase "Intrinsic worth" doesn't imply some Divine Design or Moral Meaning. It just means the money had value in and of itself, without reliance on any guarantee by a government, banker or debtor.

Does this help?

Other people would provide things in exchange for it. You accept tobacco as payment because you know society accepts it as payment and thus you can use it to get what you actually want. It's this expectation that underlies the concept of money.

 

[bilby]

I spent some time reviewing the history of precious-metal coinage to highlight the fact that money was based on gold and silver from ancient times all the way until 1930 when the Bank of England closed its gold window.

But bank-created money came into use long before 1930.

The second sentence appears to be a contradiction of the first.

Unless you are asserting that banks created gold or silver.

Most money was pegged to gold and silver before 1930, but that says no more about the "intrinsic worth" of those metals, than the pegging* of the French Polynesian Franc to the euro says about the "intrinsic worth" of the euro.









* It's probably a coincidence that 'pegging' can also mean 'getting fucked by something completely artificial'.

 

[Bomb#20]

There is nothing fundamental about money being debt. Money is anything a community uses as money. People in modern societies often mistake "Money is debt" for a law of nature when it is nothing but the custom of our tribe. Different societies' choices for what to use as money are all equally money, but there are advantages to some choices and disadvantages to others, and for the sake of its many advantages, modern societies have made the strategic choice to use debt as money. That is why money is debt.

No--while we use debt as money that's not what we mean by saying money is debt.

Look at money. Can I eat the electrons in the bank? Use them for shelter? No--they're useless.

But people don't have to use electrons in the bank for money. You're describing the custom of our tribe and mistaking it for a law of nature. The Sumerians used barley for money. Yes, they could eat it.

Money exists to transfer value, nothing more.

What evidence do you have for that claim? What evidence do you have that "value" even exists? As far as I can see, money exists to persuade people to do what other people want them to do.

Possessing money means you have contributed value to society, it is the measure of this value

That makes no sense. Some people possess money who have contributed nothing to society. People can be literally born with money -- a dying man with a pregnant wife leaves money in his will to his unborn child. And of course people regularly give money to their children with no regard for anything the child has contributed. My parents gave me an allowance when I was a child, and a bike. If the bike didn't mean I'd contributed, why would the allowance mean that?

and can be exchanged for goods and services that actually are of use to you. Thus it is a debt on society.

Non sequitur. It can be exchanged for goods and services that actually are of use to you because the people who'll exchange goods and services for it want to, not because they owe you, let alone because some nebulous abstract third party you label "society" owes you.

The fact that it is a debt that will be constantly shuffled around rather than ever repaid does not change this.

No, but the fact that you offering money to people who don't want to exchange goods or services for your money doesn't imply they're obligated to, does change this. If the money were a debt, then they would be.

This is also why simply adding money does no good.

That makes no sense either. Whether simply adding money does any good depends on the macroeconomic situation -- it does good in a recession and harm when there's high inflation. Whether money is a "debt on society" isn't the sort of thing that comes and goes with the business cycle.

The value of money is the ratio of money to things which you can buy. Adding money doesn't create anything and thus prices just adjust to the new ratio.

Sure it does -- it creates demand. It creates the willingness of people to pay other people to create goods and services.

(And this is why eat-the-rich schemes do not work. Their money represents tools and whatnot, taking it away adds nothing to the consumer side of things. It just makes future people very hesitant to put their money into long term things.)

Money doesn't need to "be debt" or "represent tools" or possess any such metaphysical traits in order for taking it away to add nothing to the consumer side of things and make future people very hesitant to put their money into long term things; that's plain cause-and-effect.

Your explanation runs off the rails right at the beginning -- it postulates an indebtedness situation from the get-go, a bloody futures contract! But it's perfectly possible to develop the practice of using bits of metal as a method for breaking up multiway trades into sequences of two-way trades even when all the parties already have their trade-goods in hand. So if you want a "Money is debt" explanation not to be a circular argument, you need to be able to show the metal bits are debts even when they aren't being used to implement loans.

And what about situations where such a division is impossible? I can't sell a line of code to someone, it would be useless. I have to trade a complete program--and almost no other market participants will have anything valuable enough to trade for that.

I guess I was unclear -- I'm talking about dividing complex transactions, not complex products. For instance, you have a chicken and you want to trade it for shoes, but the shoemaker doesn't want a chicken. She wants a knife. Lucky you -- the knifemaker wants a chicken. So the three of you can make a deal, a triangular exchange. But figuring that out and getting you all together to make your three-way trade is a pain in the neck. (And it was just dumb luck that you only needed three people -- it could just as well have taken a fourteen person chain to make it beneficial to all of you.) But if everybody wants silver then you can break up the three-way deal into two two-way deals. You trade your chicken to the knifemaker for a lump of silver. Then you trade the lump of silver to the shoemaker for shoes. Now you're done, and you never need to know or care that the shoemaker is going to trade his lump of silver for a knife. The silver is money, and it's doing its money job perfectly, even though none of you owe any debts to, or are owed any debts by, one another, or "society", whoever the heck that is.

In a very real sense, any money you have is a representation of what you are owed by the world at large.

That appears to be some sort of metaphysical Social Contract gobbledygook. "The world at large" isn't the sort of thing capable of owing anything. Debts are owed by someone to someone.

Nevertheless, it's an accurate model without which money can't exist.

Show your work.

 

[Swammerdami]

I spent some time reviewing the history of precious-metal coinage to highlight the fact that money was based on gold and silver from ancient times all the way until 1930 when the Bank of England closed its gold window.

But bank-created money came into use long before 1930.

The second sentence appears to be a contradiction of the first.

No, not at all. Intrinsic-worth money was gold or silver (or rarely, tobacco, peppercorn, etc.)
A piece of paper implying that a bank will pay gold or silver to the bearer or assignee was bank-created money.

These two sets are DISJOINT. Money was never SIMULTANEOUSLY coins of precious metal AND a bank's promise written on PAPER.

I don't have a clue how you got confused about this. Did you imagine that instead of being written on parchment or paper, banks' instructions were written on sheets of gold or silver?

Unless you are asserting that banks created gold or silver.

Do you think I am?

Most money was pegged to gold and silver before 1930, but that says no more about the "intrinsic worth" of those metals, than the pegging* of the French Polynesian Franc to the euro says about the "intrinsic worth" of the euro.

It's a good nothing I never remotely implied that then.

 

[bilby]

No, not at all. Intrinsic-worth money was gold or silver (or rarely, tobacco, peppercorn, etc.)
A piece of paper implying that a bank will pay gold or silver to the bearer or assignee was bank-created money.

These two sets are DISJOINT. Money was never SIMULTANEOUSLY coins of precious metal AND a bank's promise written on PAPER.

So, you are drawing a distinction between essentially worthless paper, whose value exists only because people believe in its value; and essentially worthless yellow metal, whose value exists only because people believe in its value.

I mean, gold does have some actual uses, but then, so does paper.

Neither has "intrinsic value" as far as I can see; Money used to be a king's promise written on bits of gold, and now it's a bank's promise written on bits of paper, and apparently the way in which these things are importantly different is so obvious that you can't express it in words.

And, of course, money absolutely was SIMULTANEOUSLY coins of precious metal AND a bank's promise written on PAPER. To give just one example, between 1817 and 1914, you could buy five pounds worth of stuff in a London market place with five gold sovereigns; OR with a "white fiver" banknote. The white fiver pre-dated the 1817 sovereign, having been issued as early as 1793; And it outlasted it, remaining in circulation until 1945. (And it wasn't the first five pound banknote to be produced).

 

[Swammerdami]

No, not at all. Intrinsic-worth money was gold or silver (or rarely, tobacco, peppercorn, etc.)
A piece of paper implying that a bank will pay gold or silver to the bearer or assignee was bank-created money.

These two sets are DISJOINT. Money was never SIMULTANEOUSLY coins of precious metal AND a bank's promise written on PAPER.

So, you are drawing a distinction between essentially worthless paper, whose value exists only because people believe in its value; and essentially worthless yellow metal, whose value exists only because people believe in its value.

I mean, gold does have some actual uses, but then, so does paper.

Neither has "intrinsic value" as far as I can see; Money used to be a king's promise written on bits of gold, and now it's a bank's promise written on bits of paper, and apparently the way in which these things are importantly different is so obvious that you can't express it in words.

And, of course, money absolutely was SIMULTANEOUSLY coins of precious metal AND a bank's promise written on PAPER. To give just one example, between 1817 and 1914, you could buy five pounds worth of stuff in a London market place with five gold sovereigns; OR with a "white fiver" banknote. The white fiver pre-dated the 1817 sovereign, having been issued as early as 1793; And it outlasted it, remaining in circulation until 1945. (And it wasn't the first five pound banknote to be produced).

This is ALL completely confused. I'm going to leave it here to see what response it gets from others, hoping to learn if any Infidel is reading the thread and paying attention.

 

[bilby]

No, not at all. Intrinsic-worth money was gold or silver (or rarely, tobacco, peppercorn, etc.)
A piece of paper implying that a bank will pay gold or silver to the bearer or assignee was bank-created money.

These two sets are DISJOINT. Money was never SIMULTANEOUSLY coins of precious metal AND a bank's promise written on PAPER.

So, you are drawing a distinction between essentially worthless paper, whose value exists only because people believe in its value; and essentially worthless yellow metal, whose value exists only because people believe in its value.

I mean, gold does have some actual uses, but then, so does paper.

Neither has "intrinsic value" as far as I can see; Money used to be a king's promise written on bits of gold, and now it's a bank's promise written on bits of paper, and apparently the way in which these things are importantly different is so obvious that you can't express it in words.

And, of course, money absolutely was SIMULTANEOUSLY coins of precious metal AND a bank's promise written on PAPER. To give just one example, between 1817 and 1914, you could buy five pounds worth of stuff in a London market place with five gold sovereigns; OR with a "white fiver" banknote. The white fiver pre-dated the 1817 sovereign, having been issued as early as 1793; And it outlasted it, remaining in circulation until 1945. (And it wasn't the first five pound banknote to be produced).

This is ALL completely confused. I'm going to leave it here to see what response it gets from others, hoping to learn if any Infidel is reading the thread and paying attention.

So, you agree that:

the way in which these things are importantly different is so obvious that you can't express it in words.

...and you hope that somebody has an actual argument, that they will bring along to support your faith.

Don't hold your breath.

 

[Swammerdami]

I MIGHT have identified some of bilby's confusion.

Perhaps he thinks that by differentiating two types of money -- intrinsic-worth and bank-created -- I am speaking of two different monetary systems. NO. The two types of money typically co-existed -- each could be used (and were used before 1930) in the same system.

Thus in the U.K. system you MIGHT have received a 1-pound banknote (bank-created money) when you sell your widget OR you might have received a gold guinea coin (intrinsic-worth money). The banknote MIGHT be "backed" by gold, but that's beyond the scope of our discussion as yet. Some of us are still having trouble with the basic vocabulary.

Originally that gold guinea coin was valued at "one pound 'sterling'" (20 shillings) but its value rose. Can you guess why?

Spoiler

It was an intrinsic-worth coin and its gold content meant it was worth more than its nominal value. In 1667 Samuel Pepys reported that a guinea coin traded for 24 or 25 shillings.