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what_is_money

What is Money

money just makes it easier for people not to share.

It is a human created fiction. Or combined human trust.

https://www.youtube.com/watch?v=nzj7Wg4DAbs

Some people think that money is coins and notes. Most of the money in the world is NOT in the form of coins and notes. There is simply not enough coins and notes in the world to represent all the money in the world.

Most of the worlds money, is simply figures in computers.

Currency, another term for money, is just the word used to describe the name, of what is used, in a particular country or region, as the means of exchange. Dollars, Yen, Euros, whatever. Currency allows people to sell and purchase goods and services, without having to swap goods and or services for other goods or services. Currency is a convenience. Rather than having to decide how many bicycles are worth a car or how many apples are worth an orange, the currency, thats applicable to that particular country or region, is used.

There are two types of currencies, Fiat currencies and non Fiat currencies. Fiat currencies, are backed by the laws of the country concerned. Non Fiat currencies are backed by something else, usually, a precious metal such as gold or silver At some point, most world economies, switched from non Fiat, to Fiat currencies. This is been good, because since it happened, the total wealth of the world has increased dramatically. The reason being, because there is only a finite amount of precious metal or whatever else would be used to back a non Fiat currency, whereas there is an unlimited money that can be created by numbers in computers.

Some people, are of the belief that Fiat currencies can not exist, in the long term, because they are considered a ponzi scheme. A ponzi scheme is where current investors, are paid a return on their investment, by new investors entering into the scheme. Ponzi schemes, eventually collapse, when ther are not enough new investors entering the scheme, to pay the existing investors. This cannot happen with a Fiat currency because, they themselves, are not an investment and there is NO limit to how much currency can be created, because Central Banks can create more currency whenever they need to. Remember they don't even have to print the money, as it is just figures in computers.

I am not aware, if there is any limit to the amount of currency any particular countrys Central Bank can create. Central Banks, legally, have to control a country's money supply, so there is enough currency in an economy to transact business, but not so much that the money is devalued by inflation. Putting limits, could severely restrict that.

As indicated earlier, Fiat currencies are only backed by the laws of the country concerned. So what is backing up the law. That depends on the country involved, but in most democratic countries, it is simply, trust of people, in the system of law. Therefore money, currency are, in fact, only backed by trust of people.

Actually, even non Fiat currencies are backed by the trusted of people. Envision the situation where, for whatever reason, there was a worldwide lack of food. Food could end up being more valuable than gold, such that it became what backes up a currency or it itself became the currency. As has happened, previously, in history. You cant eat gold.

As it says at the beginning of this document money is fiction, because it is just, combine human trust.

But another thing you may have got out of reading the above is that money is created by Central Banks out of thin air. They can do so because all money is fiction and fiction is very easily created.

See My created Anarchy Currency

The biggest central bank in the world is the American Federal Reserve. Unlike it's name implies, it is not part of the American government. No more than federal Express is government owned. The American Federal Reserve is owned by conglomeration of private banks.

what_is_money.txt · Last modified: 2020/11/26 15:41 by geoff