Money: The Mystery of the 21st Century

I am always amazed at the levels of entitlement among people involved in public institutions. The widening chasm in the American Discourse is also a matter of great concern to me, as entitlement sweeps the next generation, & each new crop of young people seem more entitled than the one before. Why? What is the source of this mindset? Why do people believe that other people owe them a living?

I have been a philosopher & a student of the human animal all of my life. I am constantly intrigued by the root motivations of people, & the source of thinking & the evolution of philosophical agendas. The more i observe humanity, & analyze the thinking processes, motivations, & mindset of people, the more i have concluded that there are core differences in our perceptions about Reality. There are misconceptions that build upon each other, to arrive at a mythical view of Reality that has no basis. The fundamentals are flawed, & the subsequent conclusions are based on faulty assumptions.

Myth: Govt creates money.
IMO, this is the central flaw of modern progressivism. This is where leftist thought begins in their perception of reality, & where all other flaws in their thinking & conclusions originate. The reason is that this is not really a myth. Govt DOES print money. But they do not create the SOURCE of wealth.. they do not originate the True Source of money. Unfortunately, this myth is not only with the progressive left. It is sweeping the thinking of conservatives & other philosophical world views.

Money is merely a symbol of wealth. It is a means of exchange. All wealth in the human collective is created by Labor. Somebody has to work to create wealth, which is then represented by govt printed money.The ONLY source of wealth is in productive labor. The engine that drives the Human Economic Train is productive labor for the survival needs of humanity.

1. Sustenance: Food & water
2. Protection: Housing, clothing, physical defense from the elements & predators.

Those are the essentials. You can live without a smart phone, but not without water. You don't need tv or music, but you won't live long without food. EVERYTHING that we do is predicated on someone working for these essentials, & the rest of us buying their products with the fruits of our own labors.
THAT is the Human Economy: You work & produce a needed commodity. Someone else does the same. You trade your products.
ALL of the wealth generated in a society is done at the survival level. Luxuries & incidentals come later. Observation of many 3rd world countries, all of the animal kingdom, & the history of man should make this plainly obvious, but for some reason, it is increasingly mysterious, & the source of wealth is seen as coming from a Magical Provider: The Govt.

Bastiat wrote of this in the 1800s:
"Government is the great fiction through which everybody endeavors to live at the expense of everybody else."~Frederic Bastiat

For the most part, people do not see themselves as mooching off of other people. They believe that Govt has a Mystical Ability to provide all the necessities of life: Food, clothing, housing, health care, pensions, & jobs. But that is a flawed perception of govt. Human governance is merely a collective action for justice & social protection. That is its prime directive. The working people of the land provide their hard earned wealth to PAY someone to administer justice & protection in society. That is the essence of Govt. And when those in this protective role use their assigned power to plunder & exploit the working man, they have failed in their basic duty, & no longer provide a useful service. They have become complicit with the looters of the working man, & no longer protect his labors. They have joined with the predators & eventually the working producers of the land cast them out & organize a new collective system of govt. Historically, the changes in human governance have not always brought periods of freedom & prosperity. Most of the time, it has been, 'Meet the new Boss... same as the old Boss'.

The Reality is that SOMEONE has to work & produce the necessities of life. Govt does not create food, housing, or clothing. They can only TAKE from those who have. That is why redistribution has a look & feel of Govt as the source of these things. The recipients of the free stuff do not see the force employed in taking it from someone else. They imagine huge warehouses of stuff.. a goose that lays golden eggs, or a money tree that generates the necessities of life automatically. They do not see themselves as mooching off of other people, but merely taking their fair share from the govt.

But it is a lie. It is Fiction. Govt has NOTHING, except what they take by force from someone who has worked. The champions of govt like to portray it as govt making things fair. The evil corporate exploiters of the working man are the targets of their Social Justice, not the actual working man. But that is a diversion. The corporate exploiters of the working man are ALMOST ALWAYS complicit with the govt looters. They work together in harmony to fleece the producers of the nation, to enrich themselves & to empower themselves with votes from useful idiots who believe the Lie. But they do not actually fleece the evil corporatists. All they ever do is plunder the working man.

As long as this perception of money & wealth remains, entitlement & collectivist delusion will continue. People do not see their survival needs coming through productive interdependency, but from a Magical Provider. Govt has become the new god, & the free stuff is manna in the wilderness.

 

I 100% agree.

 

I don't think they're that naive to think wealth is created by govt. They see folks with mansions and yachts and think 'I could do just fine with just a little of that' and suddenly they lose the desire to support themselves.

And to be fair, theres a lot of money (wealth) sitting unused by folks who enjoy little more than watching others struggle over the scraps that arent locked up, so I can't find total fault with the sentiment... the naivate is in the notion that people can be forced to be fair with their wealth. It will never happen, and all historical attempts show that the effort to this end creates even more suffering.

There is no cure for greed. The sooner we stop worrying about who has more than us and focus on how we can become happy without their help, the better off we'll be.

 

Money is like time.

They do not exist.

We just think they do.

 

If money was gold coins then it would be real.

But being paper it is just imaginary.

 

Money from investment is usury. Interest is gained on your investment, which someone pays for the use of your capital. THAT person provides the labor to increase the investment, the capital has no power to increase itself at all. Interest is NOT wealth building. It is a stagnating, diluting process without the energy of productive labor behind it.

Municipal bonds, or any collective enterprise is not a wealth building process. It can be a useful one, in providing infrastructure or other collective benefits for all of society, but it does not make the nation wealthy. it does just the opposite. It is a TAX upon the producers, taking their hard earned labors for some collective project. If this project benefits all of society, it is justified by the tax PAYERS. But the govt taxers, the contractors, & the administrators do not produce any wealth for the nation, or add to national production in any way. They are an expense for a prosperous society. A poor people cannot afford to pay govt administrators, contractors, material suppliers, healthcare workers, soldiers, policemen, firemen, or any other public servants. That is why there are so few collective projects of any value in 3rd world countries.. that & the corruption that is rampant in them.

 

Money is a man made commodity. It is nothing but a symbol of value.. a representation of the goods or services offered in exchange for other goods or services. So Man, whether in positions of govt power or not, has the ability to 'create' this symbol. The true wealth is the goods or services provided by human labor.

This System of money has evolved in the human animal over thousands of years. It is a better solution for storing & carrying the wealth we have created than the items themselves. The problem lies in the nature of the storage unit. It lends itself to corruption & manipulation by unscrupulous charlatans. Money has ALWAYS been counterfeited by crooks & scoundrels. Whatever the storage unit, it has been faked. And the problem becomes exponentially worse when the ISSUER of the currency/money is complicit in the faking. This is what has happened with the American dollar. It was once a stable currency, with the full force & confidence of the American System of government. But thieves & scoundrels have infiltrated this system, & manipulated the currency for their own enrichment & their cronies. They have, in essence, counterfeited the dollar. By printing more than the value it represents, they dilute the real value of the dollar, which causes inflation. But all that does is steal from those who own these symbols of wealth, by behind the scenes meddling with the currency. Instead of providing a stable, consistent, reliable symbol of American wealth & production, they print out billions of paper symbols with nothing but reputation & nostalgia to back them. It is like a ponzi scheme.. a bubble of their own creation that will burst at some time, if drastic steps are not taken to bring stability & security to this global currency.

 

Try thinking of this in a different way, perhaps it will help us all understand money. Say a nation wants to introduce a currency into the economy and make everyone standardize on that single currency. What would that nation have to do in order to get everyone to use that currency? Well, the first problem is how to get everyone off whatever currency or exchange medium was used prior. The government could arrest people for using the older currency. It could declare that currency to be illegal. It could arrest everyone who used that currency. This might work in a very small country but how would any government enforce this across millions of people? The government could just spend the new currency into existence replacing the older currency when it buys goods a services. It would still have only touched the total economy though since the government is usually a fraction of the overall economy. It could tax us and force us to pay in the new currency making it a crime not to pay taxes and they could refuse any other payment. Using this method, it would be advantageous for the people to create reserves in the new currency because that was the only way they could pay taxes. How would they get this new currency? By working for the government or selling the government something of value which they paid for with the new currency.

This is exactly how nations run their economies and currencies. So now the question becomes what backs up this new currency? Gold and silver long ago became too restrictive for the purposes of backing currencies. FIAT money was created to solve the problem. FIAT money has a long history within humanity. The Chinese used FIAT currency when silver became scarce during the 1500s. We went to FIAT money when gold stores could not keep up with the amount of money needed to run a growing economy and global trade. What backs it up? The government backs it up. If you return a US dollar to the mint and ask for equal value in return, they give you another US dollar. As long as that dollar has the full faith and credit of the issuing nation behind it, it remains of value.

So while governments do not directly create all the wealth in a nation, it does protect that wealth through its institutions, laws and management of the economy itself. The top post mentioned Bastiat as a reference for his position. Bastiat lived in the early 1800s in France. Money at that time was mostly backed by gold and silver reserves. The field of economics was a young discipline, data was virtually non-existent, there were no real central banks and banks themselves were unregulated. It is understandable that his views described the economic mess of his time. Today however, we have much more information and money is a global commodity that ties everyone in the world together in a large global economy. If the government did not create money, something else would have to do it and that entity would end up having the same problems as any government does in regards to money.

In the case of FIAT money, the only cost the government incurs in creating this money is administrative. The only danger is inflation. If you control inflation, the risks of FIAT money can be contained by a central bank which is exactly how we do it ourselves. Say one day in the future the US government collapses and we break up into 50 different nations. What would happen to the US dollars in circulation? They would all be worthless unless some other nation or entity agreed to take them in and replace them with a new acceptable currency. That new currency would end up being another FIAT currency.

 

No.
Dollars are a trade good.
No one is backing them. No government.

The currency is worth as much as someone will trade you for it.


Yes the value can rise and fall.
No you don't need more or less to run an economy.

You have fractions. It's a number. You can divide $100 an infinite number of ways.
Just as you can divide $200 an infinite number of ways, just as you can divide $449,645,456,464 an infinite number of ways.

Printing money is just stealth confiscation of wealth and stealth reduction in wages.

 

There are two other arguments as well.
There is the Geolibertarian-type argument that some wealth is not a product of human labor, and then there is the theory that there can be difficulties assimilating certain segments of the population into the wider network of economic exchange, and maximizing their productivity. Sometimes this doesn't just happen on its own.

So while there is truth to what you are stating, it's not the end-all truth about how everything works.

Around where I am, there are many employers looking to hire workers, but at the same time they are still very selective and don't want to take the risk hiring people with a certain type of history, and so there are still a fair number of chronic unemployed (and homeless) people disconnected from the job market.
Obviously your way of looking at it doesn't explain that side of the story. I suppose individual reputation and verification is as important as individual value.

 

I recommend incorporating Say's Law into your essay. It's important as it's a foundation of economic thinking, and it basically boils down to the idea that one cannot consume without first producing. Money is, as you say, a symbolic tool meant to facilitate trade, but it is not wealth.

 

Still not wealth. However, it's not subject to the theft by inflation. Gold still is money. It's just been outlawed by most countries for us as "current" money.

It is value by fiat and by the number printed on the paper. Like all commodities, it is still subject to supply and demand. No legislator or dictator can cast a magic spell that overturns the fundamental laws of economics, no matter how powerful they are or how hard they try.

 

It had nothing to do with trade. It had to do with governments needing a way to fund massive bureaucracies, militaries, and warfare. The productive class will always find a way to remain productive. The unproductive ruling class will use fiat to steal more wealth. You don't point out the fact that every time the Chinese created a fiat currency, it failed in less than a century.

With what? Oh, right, violence. No government has anything that it did not confiscate first.

Try going to the Treasury with those dollars. They won't sell you a bond for cash.

Governments destroy wealth. They create nothing, but act like a parasite on top of the productive in order to enrich the plutocracy.

And there is nothing he said that doens't apply today. Data does not overcome logic. Money is not mysterious. The fundamental laws of economics are not kept secret by a cabal of Harvard-trained PhD economists. Anyone who can understand sports can understand economics.

The danger is collapse. Every fiat currency in history has collapsed or has lost tremendous value and will collapse. The US has already seen that happen twice. What gives you the indication that it will not happen again? Belief in your rulers and what they tell you?

 

Money has taken center stage & has become more significant to western man than the things it represents. Food, clothing, housing, & the bare necessities are taken for granted as natural rights, & money is seen as a symbol of status & power. Cars, luxury, exotic homes, sprawling estates, trendy clothing, electronics, & social status are pursued, while the necessities of life are taken for granted.

Very few young people see the interdependency of society in our survival. They do not see economics as a mutual exchange process of wealth creation, where the necessities of life are created by different people, exchanged for money, & used to buy other necessities. But that is the essence of the human economy. Govt manipulations are not the economy. Mandates for wages, or prices, or quotas, or limits on what you can produce are management policies. They do not create anything. If anything, they are negatives on the real economy, & give a false sense of Ability to govt. And govt bureaucrats love to feel powerful & in control of the huddled masses under them.

Currency, declared by fiat. it is not wealth. It is merely a symbol of wealth, which the issuers hope to use to enrich themselves & their cronies. People like George Soros have become filthy rich by manipulating the currencies of the nations. But this is done by sleight of hand, not by creating anything of value. When the industrialists rose to power & wealth, they did so by creating something.. trains, tracks, tractors, farm implements, refrigeration, canneries, storage. These were life's necessities being created or preserved.. they were DIRECTLY related to human survival. Even soaps & cloth were essential parts of human survival, & those who made them supplied a product in demand, that people were willing to give of their labors to get. But moneyshuffling creates NOTHING. It is a diluting process of leaching the true wealth of the nation by manipulation of the currency. That is what bankers, politicians, special interests, investors, & many others rely on.. they do not create any wealth for the nation, but merely leech upon the producers, taking the actual wealth that was created & cutting it with a cheap filler.. like a drug dealer. They convert it to a currency, then take some of that currency for themselves. They are non creative.. moochers & looters of the producers.

 

Not sure how in the world you came to these beliefs but perhaps you should take a dollar out of your pocket and look at it, read it. If after you do you still maintain that no government backs money then there is nothing more to discuss with you.

 

You are mixing up money with what happens to money once you allow bankers to manipulate money to skim profits or generate profits by their actions. They are two separate things. Money in and of itself is guilty of nothing.

 

Then there is nothing more to discuss with me.

What exactly is it you feel the government is going to give you in exchange for your Dollar bill?

Do you feel they will swap it for a coffee perhaps if you present it at the Federal Reserve?
No. They won't.

You can exchange it for a coffee at Starbucks but precisely nothing from the state bank.

 

This is more just theoretical in economics, but sometimes the Central Bank (the entity that issued the money) will sell off some of its Reserve Assets.

In that sense, money is theoretically backed by something, in a very diminutive sort of way.
But most of the value of money comes from its utility in paying tax obligations.

 

Actually, they would look at you like you are a moron and then politely say "I will take your dollar bill and give you this nice new dollar bill in exchange".

 

Yeah, that's what I thought.
So your money isn't directly backed by the government.
It's not a promissory note.

Perhaps it once was in the days of the Gold Standard. But frankly I doubt it.

The government can still back the currency.
Still use monetary policy to keep it's value stable. Still accept it as a method of payment.
But that's not the same thing.

So we have a FIAT currency. it is essentially backed up by nothing at all and money, currency, is a trade good.
An intermediary product used to better facilitate trade. A commonly accepted mechanism/medium of exchange.
It is easier to carry £20 in your pocket than it is 5 chickens.

 

actually we use it to pay all our obligations, taxes are about 40% of our obligations 1+1=2

 

not really true. Buying one currency and selling another
as Soros did shows faith or lack if it an economy. The free market exposes liberal manipulation of a currency or country

 

But i bet you keep close track of your imaginary money anyway

I also bet you never use gold coins to buy things, even though you could

 

One thing i do not understand
People want “real” money
They say gold is real money

Ok
Gold coins exist, you all have the choice of buying and using gold coins for everything except paying taxes
Theoretically this is what you WANT to do. Yet none of you do what you COULD do, and what you CLAIM that you WANT to do. WHY NOT?

 

Wait a minute, your first sentence is incorrect. It is indeed backed by the government, that is the whole point of having a soveriegn currency. If the government were to disappear, the US dollar would go as well. See any Roman coins in circulation? How about confederate dollars? I have some old GDR coins, worthless. I also have some pesetas, francs, marks and lira, all worthless.