History of money, 20th century and earlier

[bigfield]

Do iPhones have "intrinsic worth"? Diamonds? Heroin? Beanie babies?)

None of those things have intrinsic worth.

 

[bigfield]

* - "coins with an intrinsic worth". By now only the willfully obtuse could be unaware how I use this term.

= coins made of a commodity that's still tradeable even if you melt the coins down.

 

[bilby]

* - "coins with an intrinsic worth". By now only the willfully obtuse could be unaware how I use this term. If instead the phrase provokes another half-dozen posts repeating the same confusion as we've seen, I give up. (Would it be disrespectful to ask my detractors the questions they've still not answered? Do iPhones have "intrinsic worth"? Diamonds? Heroin? Beanie babies?)

Worth is an OPINION. Inanimate objects do not have opinions, and as such cannot have intrinsic worth.

People have differing opinions about the worth of iPhones, diamonds, heroin, Beanie Babies, ounces of gold, and anything else you could use as money.

So not only can no monetary token have intrinsic worth; No monetary token even has universally agreed worth.

The widest agreement arises for official currencies, such as the US Dollar; But if you try to buy an ice cream at Sydney Zoo using US Dollars, you will discover that Australian retailers consider them to be insufficiently valuable to accept - unless you offer far more of them than a comparison of the ice cream stand price list and the current USD/AUD spot price would suggest, you will not be eating ice cream today.

Intrinsic worth isn't a coherent idea. Not if you apply it to gold; Not if you apply it to diamonds. It's not a thing. It's a category error. Worth (or value) is an opinion.

 

[bilby]

* - "coins with an intrinsic worth". By now only the willfully obtuse could be unaware how I use this term.

= coins made of a commodity that's still tradeable even if you melt the coins down.

Gold coins are worth considerably more before you melt them down, to most people. Traders don't want the trouble of weighing and assaying metal, and if they are asked to do so, they won't do it for free.

 

[bigfield]

Also:

Precious metal as money -- what could be more specific than coins with an intrinsic worth almost identical to its purchasing power(*)?

What's the difference between "intrinsic worth" and "purchasing power" here?

"Intrinsic worth" here seems to refer to the price I could get for the gold if it were melted into a lump of metal. But "purchasing power" seems to the price I could get for the intact coin.

 

[Swammerdami]

* - "coins with an intrinsic worth". By now only the willfully obtuse could be unaware how I use this term.

= coins made of a commodity that's still tradeable even if you melt the coins down.

Thank you, bigfield! Though I'm not sure if you're the ONLY other inhabitant of the IIDB universe who finds my distinction useful... Or are just taking pity on me!

BTW, the reason, if any, why diamonds and beanie babies lack intrinsic worth is NOT just that they lose value upon being melted!

 

[bigfield]

BTW, the reason, if any, why diamonds and beanie babies lack intrinsic worth is NOT just that they lose value upon being melted!

Gold also loses value upon being melted down from coins, right?

What's the difference between diamonds and gold, though?

Both:

• Are commodities.
• Are mostly used for ornament.
• Are expensive because their supply is artificially constrained.
• Are valuable for no good reason other than people want to have them. ("Diamonds are a girl's best friend.")

 

[Swammerdami]

BTW, the reason, if any, why diamonds and beanie babies lack intrinsic worth is NOT just that they lose value upon being melted!

Gold also loses value upon being melted down from coins, right?

Is this supposed to be a 'Gotcha'? Or just an acknowledgement that people didn't bother reading the OP?

Before prescribing future money, let's review the history of money. In this thread I propose to discuss money in the 20th century and earlier.
. . .
A two-gram silver coin stamped with the face of a king is worth more than 2 grams of raw metal; but that's just because the coinage is CONVENIENT -- it lets us avoid weighing or assaying the silver. An official mint has tied its reputation to the coin.)
. . .
Please note that any debasement was soon reflected in the value received for the money (British money in this example) overseas, or anywhere assay tests revealed the debasement. This was intrinsic-worth money not fiat money. A penny containing only 90% of the earlier penny's silver would purchase only 90% as much as the earlier penny. A ruler who devalued would get only a "quick fix" while the market adjusted, with a cost in long-term reputation.

(I've reddened one sentence to make clear that precious-metal's money owed its value to the metal's preciousness, not to an arbitrary imprimatur.)

What's the difference between diamonds and gold, though?

Both:

• Are commodities.
• Are mostly used for ornament.
• Are expensive because their supply is artificially constrained.

Yeah, I forgot about the soldiers shooting the prospectors of 1849 whenever they found a new lode.

• Are valuable for no good reason other than people want to have them. ("Diamonds are a girl's best friend.")

This query suggests to me that your earlier posts were just condescension. There are reasons why some valuable items are better suited for use as money than are other items. bigfield claims that "iPhones do NOT have intrinsic worth." And what do we think of bilby's recent pronouncement?

Inanimate objects do not have opinions, and as such cannot have intrinsic worth.

Perhaps this repetitive disdain for the term "intrinsic worth" has amusement value, but it has little or anything to do with the thread topic.

 

[Bomb#20]

* - "coins with an intrinsic worth". By now only the willfully obtuse could be unaware how I use this term.

= coins made of a commodity that's still tradeable even if you melt the coins down.

= coins. Coins are always made of a commodity that's still tradeable even if you melt the coins down, even modern zinc pennies.

Your hypothesis doesn't match Swammi's use of his categorization.

... intrinsic-worth money has no such dependence. 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. ...

Ancient Sumeria. More than 5000 years ago there was already money-oriented accounting and trading in Mesopotamia. Barley and silver were the two intrinsic-worth materials most often used for reference. ...

Other intrinsic-worth materials. In addition to silver, gold, or electrum (silver-gold alloy), other materials have been used as intrinsic-worth money. Barley and cattle were used as moneys of account in ancient Mesopotamia but were too bulky for cash convenience. Peppercorns were used variously in Europe, and tobacco in the Virginia colony;

... And the Roman coins were continually rescaled and debased. The denarius was still 90% silver in the Reign of Commodus but by the time of Claudus II the coin was just brass. The only reason debased Roman money was functional at all was the power of that Empire. The fiat money was good for taxes and that was the major cash expense for many people. ...

On the one hand, cigarettes, peppercorns, barley, cattle and tobacco are not still tradeable if you melt them down, yet Swammi counts those as "intrinsic worth". And on the other hand, brass from melted denarii is still tradeable, but Swammi counts denarii as fiat money. We don't yet have a consistently applied explanation of what "intrinsic worth" means better than Swammi's words from post #42:

IOW it has WORTH that is INTRINSIC to it​

 

[Bomb#20]

What's the difference between diamonds and gold, though?

Both:

• Are commodities.
• Are mostly used for ornament.
• Are expensive because their supply is artificially constrained.

Yeah, I forgot about the soldiers shooting the prospectors of 1849 whenever they found a new lode.

Presumably, the artificial constraint on gold bigfield had in mind was the human tendency to hoard it. There's an awful lot more gold than gallium, yet gold is a lot more expensive.

• Are valuable for no good reason other than people want to have them. ("Diamonds are a girl's best friend.")

This query suggests to me that your earlier posts were just condescension.

This is an unbelievers' forum. When you say something that doesn't make sense to people here they're going to challenge you on it. Why do you find it so offensive for people not to take your word as settling matters? Explain yourself better or don't, your option, but quit lashing out at unbelievers for acting like unbelievers.

 

[steve_bank]

More simply money is an agreed upon form of barter. The only value many has is what cam be done with it in terms of goods and services.

The Big Mac index, published by The Economist, is a novel way of measuring whether the market exchange rates for different countries' currencies are overvalued or undervalued. It does this by measuring each currency against a common standard – the Big Mac hamburger sold by McDonald's restaurants all over the world.Feb 2, 2024

On the gold standard the value ot the dollar was tied to gold.

Off the gold standard the government controls the value of money in terms how much much of something can be bought. Morey varies in accordance with supply and demand, value fluctuates as the economy varies. We complain about China not letting its currency float. They arbitrarily set the value against the dollar.

The dollar was the desired current because globally people had confidence in its stability. A dollar in your hand was not going to suddenly be worth half of what it was, unlike some currencies. There is runaway inflation today in some places.

Money and monetary policy are linked and can not be separated. Whether a check is money or not IMO is semantics. Money in hand or in a bank account or in any form reflects how much of goods and services you can acquire.


Electronic transfers or sending paper bank drafts on a stagecoach in the 19th century west are not really different.

The term 'wire transfer' probably refers to the original telegraph system. The Atlantic sea cable enabled and currency transfer between North America and Europe.

Up through the 20th century if you wanted to send money to someone securely you handed cash to an Western Union office who wired a message to another office where somebody would be handed cash.

Or Travelor's Chcks which I think are discontunued. They were once condidered 'as good as cash' wolrd wide.

The methods of trafer have changed but the form goes far back in history.

 

[Swammerdami]

On the one hand, cigarettes, peppercorns, barley, cattle and tobacco are not still tradeable if you melt them down, yet Swammi counts those as "intrinsic worth". And on the other hand, brass from melted denarii is still tradeable, but Swammi counts denarii as fiat money. We don't yet have a consistently applied explanation of what "intrinsic worth" means better than Swammi's words from post #42:

IOW it has WORTH that is INTRINSIC to it​

I've highlighted a confusion in Red. Coins of copper were used as fiat markers: In most cases the intrinsic value of the copper, brass or bronze was MUCH less than the coins' nominal monetary value. Since almost EVERYTHING has SOME worth, I thought -- incorrectly perhaps -- that the term "intrinsic-worth money" would imply that that "worth" was close to the monetary value.

At least one of you has already indicated that these pages and pages of haranguing could have been avoided had I chosen the term "commodity-as-money" rather than "intrinsic-worth money." Given that, why continue the harangue? There are Browser add-ons that will change every instance of "intrinsic worth" to "furshlugginer." Would that stifle this hijack?

I happen to prefer the term "intrinsic-worth money." For one thing, "commodity-as-money" might lead to Bomb#20's confusion: Copper coins trade at MUCH more than the copper's intrinsic worth, but are still made from a "commodity."

 

[Bomb#20]

Fair enough; but if your categories were well-defined in the first place this wouldn't be a judgment call -- you could just compare a new type of money with the existing definitions and see if it satisfies them.

Whatever. I put the OPPOSITE spin on this.

The categories of money I defined for 2oth century and earlier were VERY specific.

That would be these:

In this thread we refer only to definition 1. A shorter definition would be simply "cash." For our purpose we classify money into just three types:

• intrinsic-worth money
• fiat money
• bank-created money

Precious metal as money -- what could be more specific than coins with an intrinsic worth almost identical to its purchasing power(*)?

A definition that does not contain the term being defined would be more specific. A circular definition is only of use to people who already know what it refers to. So if you won't define "intrinsic worth" noncircularly then people will just have to ask you whether this or that qualifies in order to gradually work out what your underlying criteria are. That's why I asked if Bitcoin has intrinsic worth. If your category were as specific as you think then you would not have needed to say "Answers of Yes, No and Maybe are all valid!".

Bank-created money is/was also very specific. An (often) trustworthy banker maintains confidential records showing the balances of his customers, and provides pieces of paper (or parchment) that constitute promises to pay out precious metals.

Well, if you defined the term "bank" it would be more specific. Does a simple IOU from a well-known rich guy of good reputation count as "bank-created money"?

The main POINT was NOT that all possible types of money were easily so classified, but that all types of money USED BEFORE THE 21st CENTURY could be so easily classified into three types.

What is it about the turn of the 21st century that makes the invention date of something influence whether it's hard to classify? If you had clear definitions then the invention date would be immaterial.

I am not an expert on crypto-currency, but for Bitcoin specifically there are HUGE deviations from ANY type of 19th- or 20th-century money. The "money" depends on a protocol that can be hijacked if anyone gets (50%) control of the mining. Balances and transaction history are publicly known (anonymous IDs can be and are decoded, via spending, by law enforcement). It is the CONTRAST between the types of money that worked for centuries and new proposals for "money" that are especially interesting.

As noted upthread, the details of technical implementation are what mainly separates Bitcoin from Yap stone money. They depend on protocols that can be hijacked but in practice won't be due to natural difficulty; balances and transaction history are publicly known. Yap money is blockchain implemented manually: consensus of human memory instead of computer memory; it's much like implementing a precedent-based legal system using oral history.

Do Yap Rai-stones have intrinsic worth? Are they fiat money? Are they bank-created?

(Would it be disrespectful to ask my detractors the questions they've still not answered? Do iPhones have "intrinsic worth"? Diamonds? Heroin? Beanie babies?)

No and no. "Intrinsic worth" is an imaginary metaphysical construct like "Qi" that has no referent in the real world.

 

[Bomb#20]

On the one hand, cigarettes, peppercorns, barley, cattle and tobacco are not still tradeable if you melt them down, yet Swammi counts those as "intrinsic worth". And on the other hand, brass from melted denarii is still tradeable, but Swammi counts denarii as fiat money. We don't yet have a consistently applied explanation of what "intrinsic worth" means better than Swammi's words from post #42:

IOW it has WORTH that is INTRINSIC to it​

I've highlighted a confusion in Red. Coins of copper were used as fiat markers: In most cases the intrinsic value of the copper, brass or bronze was MUCH less than the coins' nominal monetary value.

In most cases the market price of the copper, brass or bronze was MUCH less than the coins' nominal monetary value. Is that what you meant? I assume you do not mean that "intrinsic value" and "market price" are synonyms.

Since almost EVERYTHING has SOME worth, I thought -- incorrectly perhaps -- that the term "intrinsic-worth money" would imply that that "worth" was close to the monetary value.

This might go better if you could find a way to say what you mean without using metaphysical terms like "worth" and "value". Is your criterion for money categorization, then, simply whether the number written on a unit of money has a large effect on people's decisions about how much goods and services they'll trade for the unit? If the number makes little difference then you call it "intrinsic worth" or "commodity money"; if the number makes a big difference then you call it "fiat money" or "bank-created money"? And in the latter case you subcategorize based on what the number means?

Given that, why continue the harangue? There are Browser add-ons that will change every instance of "intrinsic worth" to "furshlugginer." Would that stifle this hijack?

It's not a hijack; it's people trying to understand your claims. If you changed every instance of "intrinsic worth" to "furshlugginer" people would ask you what you mean by "furshlugginer".

 

[bilby]

Perhaps this repetitive disdain for the term "intrinsic worth" has amusement value, but it has little or anything to do with the thread topic.

Then you shouldn't have included it in your OP; And you shouldn't have continued to use it even after it became clear that it was problematic for your audience.

If you insist on using the phrase, I will insist on repeating my objection that it is nonsense.

If you both wish to avoid that, and believe that "it has little or anything to do with the thread topic", why do you keep bringing it up?

I put it to you that it is, in fact, a key premise in your beliefs about what money is, and that you want to avoid discussion of it because you can't defend it, while also wanting it to be "baked in" to any further discussion of the topic, because it is an essential precursor to everything else you think you know about money.

 

[bilby]

For one thing, "commodity-as-money" might lead to Bomb#20's confusion: Copper coins trade at MUCH more than the copper's intrinsic worth, but are still made from a "commodity."

That's not a "confusion"; It is a fact.

All money has commodity value AND value as money. The latter is more subject to whim, but both are opinions. A banknote is typically most valuable in its role as money, rather than as a physical object; but that can change if you run out of toilet paper.

 

[steve_bank]

There are legal definitions of what constitutes assets. Legally an asset is anything you own that can be converted to cash to settle debts, pay taxes, or settle law suits.

Intellectual property are assets. If you on the rights to something you can be sued for it to pay a debt or have it seized by the IRS to pay taxes.

An asset is something of value owned by an individual or organization. An asset can be physical property like a building or intangible property such as a patent. Assets are an important part of and differ in many areas of law.

ASSET Definition & Meaning - Black's Law Dictionary

Find the legal definition of ASSET from Black's Law Dictionary, 2nd Edition. A financial contract or physical object with value that is owned by an individual, company, or sovereign, which can be used to generate additional value...

thelawdictionary.org

A financial contract or physical object with value that is owned by an individual, company, or sovereign, which can be used to generate additional value or provide LIQUIDITY. Assets are credits to the balance sheet, and may include CASH, investments, ACCOUNTS RECEIVABLE, LOANS granted, INVENTORY, real estate, plant and equipment, and GOODWILL. Assets are characterized by varying degrees of LIQUIDITY, and may be funded through DEBT or EQUITY. See also LIABILITY.

 

[bigfield]

And on the other hand, brass from melted denarii is still tradeable, but Swammi counts denarii as fiat money.

I guess the difference between a brass coin and a silver coin is how much value you lose by melting it down?

 

[steve_bank]

Nickel has value outside of coin production, it is used in car batteries, among other products. If you were to melt down a single nickel today, the metal would be worth approximately $0.079, or nearly 60% more than the coin's face value.Mar 31, 2022

The 'melt values' of silver coins.

U.S. Silver Coin Melt Values | Silver Dollar Melt Value | NGC

See melt values for U.S. silver coins, including morgan silver dollars and silver quarters. NGC provides historical coin melt values, coin price information and a melt value calculator.

www.ngccoin.com

 

[Swammerdami]

What is it about the turn of the 21st century that makes the invention date of something influence whether it's hard to classify? If you had clear definitions then the invention date would be immaterial.

Cryptocurrencies are something that didn't happen to exist in the 20th century. If that's my fault, mea culpa

"QE" (Quantitative Easing) can be viewed as a special case of money creation that hardly existed until the 21st century. This was a possible topic for discussion, but there seems to be zero interest in my point of view so I've largely abandoned my intended discussion. (Should I ask the Mods to change the thread title? What does "intrinsic" mean? -- would that be more appropriate?

Do Yap Rai-stones have intrinsic worth? Are they fiat money? Are they bank-created?

These were excluded by OP, since they arise in a primitive society which doesn't use "cash money." Those stones are expensive status symbols (used for dowries or such), rather than cash used for routine exchange.

Perhaps this repetitive disdain for the term "intrinsic worth" has amusement value, but it has little or anything to do with the thread topic.

Then you shouldn't have included it in your OP; And you shouldn't have continued to use it even after it became clear that it was problematic for your audience.

Don't take this personally but neither you nor any other Infidel was my intended audience. I enjoy putting my thoughts on paper on the 'Net. I've got dozens of folders on my computers each with dozens of files of commentary, but placing some of my more recent musings in a relatively permanent 'Net location is satisfying for me. I've learned not to expect much here. Do I need to list a dozen threads into which I've put much effort and met with about zero response? Having my tutorial on the history of money hijacked into epistemological gibberish about the meaning of "intrinsic" is "par for the course"! I don't intend to revise it; the gibberish in response just gives me a mixture of amusement and irritation. (And if your goal is NOT to irritate me, I honestly wonder why you bother.)

Nickel has value outside of coin production, it is used in car batteries, among other products. If you were to melt down a single nickel today, the metal would be worth approximately $0.079, or nearly 60% more than the coin's face value.Mar 31, 2022

I suppose this is a 'Gotcha'! I wrote that base-metal small change was a form of fiat money, and it turns out some coins have an intrinsic worth greater than their monetary value! "Boo! Gotcha gotcha! MAGA! Freedom is slavery! Ignorance is strength." Why don't you guys just say that the existence of nickel coins means you've won the thread!!

Just for fun, I checked out today's prices for a few metals. All prices are USD per kilogram.

Fr - ??
Au - $65,482.00
Pt - $28,621.00
Ag - $734.00
Sn - $26.09
Ni - $16.98
Cu - $8.37
Zn - $2.38
Al - $2.18
Steel - < $1.00

Francium may be the rarest naturally-occurring metal but I chose not to use this price quote. Francium's 22-minute half-life gives it limited application.