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kentuck

(111,511 posts)
Tue Oct 22, 2013, 08:10 PM Oct 2013

What is "money"?

It's only paper, right? It is not backed by gold or any other asset - only the good faith of our government - is that correct?

Money is only valuable so long as we can trade it for other goods. A dollar is only good for what it will buy. If it takes $10 to buy an apple, then it is not worth very much. There was a time when the minimum wage could buy a lot more, even though it was less than today.

And why should we worry about inflation when 98% of the people have less and less?

Money is relative to labor. If money is worth less and less, then labor is worth less and less, per its value in the marketplace. It's only good for what it will buy.

69 replies = new reply since forum marked as read
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What is "money"? (Original Post) kentuck Oct 2013 OP
The US dollar is a Fiat currency johnd83 Oct 2013 #1
The problem arises when... kentuck Oct 2013 #4
No, quite the opposite johnd83 Oct 2013 #5
Isn't that what I said? kentuck Oct 2013 #8
IMHO it is the inequality johnd83 Oct 2013 #15
Yes. kentuck Oct 2013 #16
Keynesian economics Lifelong Dem Oct 2013 #17
I would argue we currently have too much money coming from too little productivity. Nuclear Unicorn Oct 2013 #30
Fiat currencies, by their very nature, are inflationary Warpy Oct 2013 #6
Inflation isn't necessarily a bad thing johnd83 Oct 2013 #7
The best times we ever had was when wages were tied to productivity. kentuck Oct 2013 #9
Concur. See my Post #30 Nuclear Unicorn Oct 2013 #31
All currency is fiat currency eridani Oct 2013 #47
Precious metals are NOT, by definition, fiat currency Art_from_Ark Oct 2013 #54
Metal prices fluctuate because of irrational human whims eridani Oct 2013 #60
You can't just go making up your own definitions Art_from_Ark Oct 2013 #61
I still maintain that all currencies are based on social arrangements eridani Oct 2013 #62
Yes, governments set denominational values but markets set prices. Nuclear Unicorn Oct 2013 #63
Fiat currency means the government-issued money is unbacked Art_from_Ark Oct 2013 #67
Can't argue with any of that. Thank-you for the conversation. n/t Nuclear Unicorn Oct 2013 #68
I agree, commodity backed currencies are no better johnd83 Oct 2013 #59
Money is a concept. CK_John Oct 2013 #2
...by which we measure our pain. deutsey Oct 2013 #32
It's debt that someone owes us Warpy Oct 2013 #3
Still a really memorable piece of music Fumesucker Oct 2013 #10
Yep! kentuck Oct 2013 #11
Hell yes Warren DeMontague Oct 2013 #21
But if we instead had the $17 billion dollars in debt in the hands of American consumers.... kentuck Oct 2013 #12
I make it quaker bill Oct 2013 #13
Are you speaking of the value of money or...? kentuck Oct 2013 #14
No, it is neither quaker bill Oct 2013 #18
Not all labor has the same value. GreenStormCloud Oct 2013 #39
Labor is subject to the law of supply and demand. kentuck Oct 2013 #40
True but that value derived from the necessity would be an incentive to competition. Nuclear Unicorn Oct 2013 #49
Your art does not create money, it competes for money that already exists. CJCRANE Oct 2013 #20
Not actually true quaker bill Oct 2013 #24
You create value - but only if other people are prepared to pay for it. CJCRANE Oct 2013 #25
I would argue the consumer ultimately assigns value. Nuclear Unicorn Oct 2013 #50
You are creating Wealth, not Money jmowreader Oct 2013 #22
Wealth is expressed quaker bill Oct 2013 #26
Your art is creating money for you CJCRANE Oct 2013 #27
all money is magiced up out of nowhere quaker bill Oct 2013 #41
Wealth becomes money when you either exchange it for or use it as money jmowreader Oct 2013 #33
What I believe is indeed irrelevant quaker bill Oct 2013 #42
Can you buy a car with your art? Or food? jmowreader Oct 2013 #45
It is really this simple quaker bill Oct 2013 #46
a final point quaker bill Oct 2013 #43
The IRS taxes on inventory? I thought they taxed income from completed transactions? Nuclear Unicorn Oct 2013 #64
The change in value of inventory is income. quaker bill Oct 2013 #65
But your inventory has no real value until someone pays for it Nuclear Unicorn Oct 2013 #66
If true, then inventory is a great way to hide income. quaker bill Oct 2013 #69
Cabbage Electric Monk Oct 2013 #19
PhD theses can be and have been written on that question Recursion Oct 2013 #23
Most money exists only as account balances in computers. FarCenter Oct 2013 #28
At this point, it's not even paper - it's data points .... Myrina Oct 2013 #29
I think a lot about creating a society that no longer uses money. hunter Oct 2013 #34
You have to have something standard that everyone will accept. kentuck Oct 2013 #35
With the powerful computing systems we have these days, and most every family having a cell phone... hunter Oct 2013 #38
That sounds like the goal of the "bitcoin" project jmowreader Oct 2013 #48
No. Bitcoins are a point metric as well. hunter Oct 2013 #56
We already had a multi-dimensional barter system CJCRANE Oct 2013 #51
I think that's because everything is measured in dollars. hunter Oct 2013 #57
Interesting idea. CJCRANE Oct 2013 #37
The powers who control the creation and distribution of money do tell people what to do hunter Oct 2013 #55
Money is meaningless Shankapotomus Oct 2013 #36
An arbitrary metric for ones right to make arbitrary demands of ones fellow citizens. nt bemildred Oct 2013 #44
one of the two Niceguy1 Oct 2013 #52
Money is whatever people believe customerserviceguy Oct 2013 #53
Exactly! econoclast Oct 2013 #58

johnd83

(593 posts)
1. The US dollar is a Fiat currency
Tue Oct 22, 2013, 08:20 PM
Oct 2013
http://en.wikipedia.org/wiki/Fiat_money

The problem right now is referred to as a "Liquidity trap" because the people with money are just sitting on it. The velocity of money is just as important as the total amount of money. The goal of QE is to increase the velocity of money but it hasn't had much effect.

http://en.wikipedia.org/wiki/Liquidity_trap

The wingers freak about about fiat currencies not being as stable as gold backed currencies but the great depression was partially caused by the gold standard.

http://en.wikipedia.org/wiki/Causes_of_the_Great_Depression#Gold_Standard

kentuck

(111,511 posts)
4. The problem arises when...
Tue Oct 22, 2013, 08:24 PM
Oct 2013

there is too much money chasing too few goods. I don't think we have that problem today.

johnd83

(593 posts)
5. No, quite the opposite
Tue Oct 22, 2013, 08:26 PM
Oct 2013

The US has lots of productive capacity that can't be consumed because of a shortage of "money" in the hands of normal citizens, which is odd because the money is fiat to begin with.

kentuck

(111,511 posts)
8. Isn't that what I said?
Tue Oct 22, 2013, 08:31 PM
Oct 2013

There is not too much money, there is a shortage of money. We have a lot of goods and productive capacity, but we don't have the money to purchase them.

johnd83

(593 posts)
15. IMHO it is the inequality
Tue Oct 22, 2013, 09:14 PM
Oct 2013

1% of the population has a tremendous percentage of the total assets and income.

 

Lifelong Dem

(344 posts)
17. Keynesian economics
Tue Oct 22, 2013, 09:35 PM
Oct 2013

They don't hire because demand is weak. Demand is weak because no one has money.

Nuclear Unicorn

(19,497 posts)
30. I would argue we currently have too much money coming from too little productivity.
Wed Oct 23, 2013, 10:01 AM
Oct 2013

Fiat currency isn't evil as long as there's actual economic activity to support it; but if we have $1 million for $1,000 worth of economic activity we hit hyper inflation and a crash of currency value.

That in turn tends to lead to panicked reactions by the government in fear of the righteously pissed electorate and skyrocketing interest rates and the people dumb enough to get you into that mess to begin with are never smart enough to do anything except deepen the crisis (see: Weimar Republic, Zimbabwe, Argentina, et al).

However, once the currency crashes it makes your labor more attractive to foreign capital as you become the 3rd world country other counties outsource their jobs to -- assuming the government isn't confiscating every dollar that crosses the border because then dollars stop crossing the border.

With our currency policy the Fed is selling baseless money to banks at just above 0.0% in the hopes the money will be lent out by the purchasing banks to us peasants at low interest rates. The hope is we will create enough small business and home loans etc. that our borrowing generates enough revenue and economic activity to give substance to the currency. It's the currency cart before the economic horse.

Except the money is staying in the upper tier of the currency markets as traders keep selling the dollars back and forth to each other at ever inflating prices. In other words the Fed is subsidizing a currency bubble and we will pay for it within the next 3 to 10 years. Not to mention that little, if any, of this surplus cash is reaching its intended market niche which is why the recession is lingering.

The 1%ers that crashed the economy with the housing bubble have now shifted to getting rich off their self-generated currency bubble only this time instead of the banks creating their own mess the Fed is subsidizing their theft with 0% money purchases. But us taxpaying peasants will have to pay for the bonds once they come due which means we get to pay them after they fuck us.

Warpy

(112,133 posts)
6. Fiat currencies, by their very nature, are inflationary
Tue Oct 22, 2013, 08:28 PM
Oct 2013

and ours has certainly been no different. That's why prices and benefits need to be indexed to inflation.

The whole thrust of economic policy over the last 40 years has been to eliminate inflation. They've nearly done it but at the cost of destroying the middle class and offshoring nearly all the decent paying jobs that used to sustain it while weakening the country.

I say offshoring has weakened this country because there is no way we could survive a trade embargo--we don't even make our own textiles any more.

Obviously, we need a massive shift in policy direction, one that will maintain the savings of people who are unable to work through disability or retirement while tolerating the inflation that is built in to fiat currency. At the same time, we need to raise the wage floor and rebuild our industrial infrastructure.

The wealthy will fight it all tooth and nail, of course.

johnd83

(593 posts)
7. Inflation isn't necessarily a bad thing
Tue Oct 22, 2013, 08:30 PM
Oct 2013

as long as wages keep up. Offshoring has prevented wages from rising which is one of the major economic problems right now.

kentuck

(111,511 posts)
9. The best times we ever had was when wages were tied to productivity.
Tue Oct 22, 2013, 08:33 PM
Oct 2013

It created the largest middle class ever.

eridani

(51,907 posts)
47. All currency is fiat currency
Fri Oct 25, 2013, 05:54 AM
Oct 2013

If metals had some kind of inherent worth, why do their prices fluctuate?

Art_from_Ark

(27,247 posts)
54. Precious metals are NOT, by definition, fiat currency
Fri Oct 25, 2013, 08:01 AM
Oct 2013

Fiat currency is, by definition, currency, that is, circulating money, that is NOT backed by precious metals. No country in the world has a precious metals currency, although China is said to be eying to have the yuan eventually backed by gold.

The prices of precious metals fluctuates because a) they are not currency, b) they are bought and sold on a market with fiat currency, and c) their supply is in a constant state of flux. When the United States had a gold-backed currency, one dollar was worth a designated weight in gold (1.5 grams), and that remained in effect for most of 100 years.

eridani

(51,907 posts)
60. Metal prices fluctuate because of irrational human whims
Fri Oct 25, 2013, 05:36 PM
Oct 2013

Just like official currency rates fluctuate because of human whims.

To me "fiat" means nothing but that an exchange medium has value because people AGREE to use it for that purpose. That applies to anything that human beings have ever used for money.

The agreement runs into problems only when it becomes disconnected from the real economy, which consists only of human and natural capita.

Art_from_Ark

(27,247 posts)
61. You can't just go making up your own definitions
Sat Oct 26, 2013, 04:19 AM
Oct 2013

and expect everyone to go along with you. That's not how it works.

"Fiat" in this case specifically refers to government decree. Currency is circulating money, coin of the realm. It is not coupons, scrip, tokens, or wampum. It is given specific denominations by the issuing authority, which in nearly all cases is a government. The government decrees, by fiat, that one piece of paper is worth $100, while another piece of paper is only worth $1, yet the intrinsic value of the paper is the same, which is to say nearly zero. The currency has nothing backing up its value except for confidence in the issuing authority.

On the other hand, precious metals have, by definition and historical precedence, intrinsic value. A government can stamp a one-ounce disk of gold and give it an arbitrary value of $50, but that coin will never circulate for $50 because its intrinsic value is far higher than its face value. The only time gold would be a fiat currency would be if a government gave that same one-ounce disk of gold a face value of say, $2000 ($700 more than today's market value), and the coin actually circulated as money at that face value. But the only coin that (ostensibly) meets that criterion today is the 100,000 yen commemorative coin that Japan issued in 1986 and 87 to commemorate the 60th anniversary of the Showa Emperor. The face value is worth a little more than $1000, yet the gold value is only around $950.

eridani

(51,907 posts)
62. I still maintain that all currencies are based on social arrangements
Sat Oct 26, 2013, 04:53 AM
Oct 2013

State-level governments are just the most formal social arrangement that we have.

Nuclear Unicorn

(19,497 posts)
63. Yes, governments set denominational values but markets set prices.
Sat Oct 26, 2013, 07:55 AM
Oct 2013

A teenager working at McDonald's could earn $75.00 an hour and we'd think that was awesome until we discovered the cheapest loaf of bread costs $10.00. That means wage-to-consumer price wise he's no better off than the kid making $7.50 an hour in a place where bread only costs $1.00. The government may set the value on the currency but the market will tell you how much of that currency is required to buy something.

Art_from_Ark

(27,247 posts)
67. Fiat currency means the government-issued money is unbacked
Sat Oct 26, 2013, 10:08 AM
Oct 2013

The $75 per hour wage you described is an example of what I was trying to explain earlier-- the value of fiat currency relies in large part on confidence in the issuing authority, because there is nothing else backing it up. A government can say that a piece of paper with no intrinsic value is worth $100, but if it's at the point where $100 is barely an hour's wage for a low-paying job, then that is a good sign that confidence in the issuing authority is diminished-- much like what happened with the Jamaican dollar, and, as a more extreme example, what happened with the Zimbabwean dollar.

In other words, the government has been issuing loads of unbacked paper to the point where it is quickly losing its value. The value of money is based upon its scarcity. When a government prints up too much of it, and it makes its way into circulation, then it becomes less scarce, and thus less valuable.

However, in a precious metals-based monetary system, the government is restricted from issuing unlimited paper money, because it is bound to have a certain amount of precious metal in reserve to back it up. If the paper is issued in amounts that exceed what the government has in reserve, then the paper loses its value, but the gold retains its value . This is essentially what happened in Mexico and Japan in the late 1800s-- there was not enough gold in reserves to back up the paper money in circulation. The gold yen and peso, which had been essentially equal to a US gold dollar, were revalued so that 2 pesos (or 2 yen) were equal to one old gold peso or yen (and the gold coins were reduced in size as a result). Meanwhile, a gold-backed US paper dollar at the time was still equal to one dollar (although unbacked American paper currency, like what was issued during the Civil War, was often discounted in relation to the gold dollar).

johnd83

(593 posts)
59. I agree, commodity backed currencies are no better
Fri Oct 25, 2013, 01:12 PM
Oct 2013

The gold standard was a disaster in the first half of the 1900s.

Warpy

(112,133 posts)
3. It's debt that someone owes us
Tue Oct 22, 2013, 08:23 PM
Oct 2013

for our labor or other considerations. Instead of bartering like goods, which is a limited system, we are given debt markers which can then be exchanged for whatever we need--food, clothing, shelter, internet service, SUVs, whatever.

Money has no intrinsic value apart from being a debt marker that can be exchanged for real stuff.

kentuck

(111,511 posts)
12. But if we instead had the $17 billion dollars in debt in the hands of American consumers....
Tue Oct 22, 2013, 08:41 PM
Oct 2013

It would probably create a serious inflation problem?

As it is, paid to our Treasury note holders, there is little possibility for inflation.

The problem with our economy is the exact opposite. There is not enough money in the hands of consumers.

quaker bill

(8,227 posts)
13. I make it
Tue Oct 22, 2013, 08:43 PM
Oct 2013

literally from scratch. I start with metal and natural stone. I melt the metal, alloy it, roll it, hammer it, weld it. I take the natural stone, cut it, grind it, and polish it. I bring the two together into necklaces, pendants, bracelets, earrings, rings....

I take stuff I paid a little for and sell it for a lot more. The difference between what I paid and what I receive is money that literally never existed, because I created the new value of these physical things from thin air, with ideas and a hammer.... The total amount of "real value" in the world increases, ever so slightly.

People value it, and that value is the "money" I receive. We have to stop thinking of "money" as a finite thing. If it was a finite thing, I could not make it.

kentuck

(111,511 posts)
14. Are you speaking of the value of money or...?
Tue Oct 22, 2013, 09:00 PM
Oct 2013

the value of labor?

Or as Lincoln noted: "Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are as worthy of protection as any other rights. Nor is it denied that there is, and probably always will be, a relation between labor and capital producing mutual benefits."

-- Abraham Lincoln

quaker bill

(8,227 posts)
18. No, it is neither
Wed Oct 23, 2013, 04:07 AM
Oct 2013

what I make has more value because it is "art". "Art" is notional, as is "money", and "value". The things I make have the materials value which is small in that you could only pawn what I make at a fraction of its price. These things have no practical utility in that they are not "food, clothing, or shelter". They are given value as art. They are not perishable, and are not consumed in any real sense, say like a bushel of corn.

There is roughly $75 trillion in value floating about in this country. Currency is the way we exchange small slices of this pie. When I make new work from scratch, the $75 trillion grows just a tiny bit. People are not buying my labor, that is my day job. People are buying my art, it is not valued in proportion to the hours spent to make it. Sometimes I wish it were, other occasions I am happy it is not.



GreenStormCloud

(12,072 posts)
39. Not all labor has the same value.
Wed Oct 23, 2013, 07:41 PM
Oct 2013

Consider two blacksmiths. Both work hard and put in eight hours of work. Both use up the same amount of material. Blacksmith "A" produces 40 excellent horseshoes. Blacksmith B is a poor smith and ruins all of his horseshoe attempts and produces nothing but scrap steel. Both put in the same amount of labor. Would you claim that their labor had equal value?

kentuck

(111,511 posts)
40. Labor is subject to the law of supply and demand.
Wed Oct 23, 2013, 08:10 PM
Oct 2013

If the crappy blacksmith was the only blacksmith in town, he could ask for a higher price than the blacksmith in the town 30 miles away, for example.

Nuclear Unicorn

(19,497 posts)
49. True but that value derived from the necessity would be an incentive to competition.
Fri Oct 25, 2013, 05:57 AM
Oct 2013

Would you sit idle an watch some incompetent lout make money hand over fist knowing you could better serve the demand and make all that money for yourself?

CJCRANE

(18,184 posts)
20. Your art does not create money, it competes for money that already exists.
Wed Oct 23, 2013, 04:56 AM
Oct 2013

When someone buys your art they make a choice on how to spend their spare money.

It's the same with any product or service.

Simply making the product or offering the service does not "create" money. It creates more choice.

quaker bill

(8,227 posts)
24. Not actually true
Wed Oct 23, 2013, 08:07 AM
Oct 2013

It seems you may be confusing "money" with the amount of currency in circulation. These two things are very different and independent. The asset value of things owned in the US accumulates to roughly $75 trillion. There is nowhere near $75 trillion in printed money in circulation. If there actually was $75 trillion in printed currency, a "run on the banks" not be possible, as they would have the cash.

When I take $100 worth of things I own and make something new that never existed before which is now worth $500, the Fed does not print up the $400 difference, and the $75 trillion grows by $400 when it is bought.

WHen the home I bought in the 90's is sold for far more than I paid for it, the Fed does not run the presses to print up the difference, but the difference is part of the 75 trillion. I could receive that difference in printed currency, or in mouse clicks into my accounts, but it is just as real either way.

Money is not the same as currency. It only feels that way.

CJCRANE

(18,184 posts)
25. You create value - but only if other people are prepared to pay for it.
Wed Oct 23, 2013, 08:13 AM
Oct 2013

And when people pay for your products it means they're not spending their money on something else...

So if your company becomes very successful then a rival company might go bankrupt because people prefer your goods.

Nuclear Unicorn

(19,497 posts)
50. I would argue the consumer ultimately assigns value.
Fri Oct 25, 2013, 06:08 AM
Oct 2013

Whatever Quaker Bill may pay for materials and presume his labor to be worth is subject to what the consumer is willing to pay. If his number is higher than the consumer's number then he is in trouble. The consumer, in a proper marketplace, is the final arbiter of value; which, I think, is not too far from what you wrote.

jmowreader

(50,807 posts)
22. You are creating Wealth, not Money
Wed Oct 23, 2013, 07:30 AM
Oct 2013

Money is a universally accepted medium to be used in the transfer of wealth. And money can be any object, as long as everyone agrees on the value of that object. Wealth is material possessions, which is what you're making.

CJCRANE

(18,184 posts)
27. Your art is creating money for you
Wed Oct 23, 2013, 08:35 AM
Oct 2013

but that doesn't mean it's creating money out of nothing.

If you take your art to a small African village you'll find that the villagers can't afford to pay for your art because they don't have any money. They can't just magic some up out of nowhere.

quaker bill

(8,227 posts)
41. all money is magiced up out of nowhere
Thu Oct 24, 2013, 07:03 AM
Oct 2013

it is a completely human invention, and before we invented it, none existed. I could indeed take my art to third world countries and trade it for whatever they call money there, at the price that market would bear, (given they had any interest in owning it). Different markets would bear different prices.

jmowreader

(50,807 posts)
33. Wealth becomes money when you either exchange it for or use it as money
Wed Oct 23, 2013, 03:53 PM
Oct 2013

If you create a ring, you have taken...oh, $100 worth of materials and turned it into a ring. You may believe this ring to be worth $500, but it's only worth that if the person who wants to buy it thinks that too. We had this discussion when gold was $1800 per ounce: I believe gold is worth $600 per ounce. If it is selling for more than I think it's worth I won't buy any. The same holds true with your art, or my photos, or someone's labor: it will only be exchanged for something another person has - money, food, new cars, whatever- if the person wishing to sell and the one willing to buy agree on its value.

Money doesn't have that problem. We all agree that a $20 bill is wortb twenty dollars.

Wealth can become money if exchanged for it, but wealth in its raw form isn't money.

quaker bill

(8,227 posts)
42. What I believe is indeed irrelevant
Thu Oct 24, 2013, 07:15 AM
Oct 2013

The stack of cash I obtain is relevant.

We all agree that a $20 is a $20, but what that $20 will buy varies. This is why there is a "dollar index" and a forex market. The value of money is what varies, this is the source of inflation (in theory).

jmowreader

(50,807 posts)
45. Can you buy a car with your art? Or food?
Thu Oct 24, 2013, 02:34 PM
Oct 2013

And by that I don't mean buying the car with money you earn from it, I mean taking the art to a dealer and leaving with a car. The answer is no, for the same reason Farmer Smith can't take ten sides of beef or Mr. Hoover can't take a truckload of vacuum cleaners: those things aren't money. They are wealth, but to be useful in trade wealth usually has to be translated into money by selling it for money. The only people that can create money are government central banks; they can create an object, bestow a value on it and have that value be accepted by all.

Wealth does not create money. When you create art it adds to the combined wealth of the world, but new money is not created to buy it; the person who buys it must make a value decision: is this item more valuable to me than any other item? If a kettle or a door is more valuable than a piece of art, that item will be bought instead of your art.

quaker bill

(8,227 posts)
46. It is really this simple
Fri Oct 25, 2013, 05:43 AM
Oct 2013

When I make something new and place it into inventory, the IRS taxes it exactly the same as the wages I get from my day job, whether I sell it or not. If I sell it, they tax the cash I receive for it, if I do not sell it, I am taxed on the increased value of my inventory as income. As far as the IRS is concerned, the two are precisely identical and handled in the same way on my 1040. IRS does not make the distinction you argue for.

Often, like the funds I have invested in the market, or stored in the bank, I have to go through the intermediate step of converting them to currency form to make an exchange. While I have not bought a car yet, I have bought many things after converting this value to the currency form. However I am buying a boat motor with it, direct 1 for 1, no cash step in the middle. I will report that as income too.

quaker bill

(8,227 posts)
43. a final point
Thu Oct 24, 2013, 07:40 AM
Oct 2013

in my business when I take that $50 in materials and turn it into a $500 item, and then place the item in my inventory, I am taxed on the $450 difference by the IRS, as income, exactly the same whether I sell it or not. The IRS treats it exactly the same as money, so it is money. In that they are part of the entity that issues the stuff, they get to define it, they call it money and tax it, so it is money.

Nuclear Unicorn

(19,497 posts)
66. But your inventory has no real value until someone pays for it
Sat Oct 26, 2013, 09:51 AM
Oct 2013

If you and/or the IRS claim Value X but you can only sell for a price of half-X you've been taxed at twice of your actual income. Conversely, you could cheat by under-declaring value but selling at an actual higher price.

I'm sure snow removal machines are worth a lot more in Michigan than they are in Florida, regardless of the Florida snow-blower retailer's inventory.

quaker bill

(8,227 posts)
69. If true, then inventory is a great way to hide income.
Sat Oct 26, 2013, 09:19 PM
Oct 2013

I am in fact required to pay taxes on both revenue from sales and increased value of inventory. You don't have to believe it, but I do have to pay it regardless. I declare it at the price marked. Usually I get the marked price, sometimes a bit less, but never more, at least so far.

The IRS treats the value as quite real, every bit as real and exactly the same as the folding money in my pocket.

You think it is imaginary, but I have made only a few things that did not eventually find a buyer. It is not imaginary to me as I can count on it like the sunrise, just sometimes a bit less predictable for timing.

It may defy your sense of reality, but it is simply true. This is not philosophy, I am simply stating reality exactly as I live it. Do with the info as you please.

Myrina

(12,296 posts)
29. At this point, it's not even paper - it's data points ....
Wed Oct 23, 2013, 09:38 AM
Oct 2013

... data comes into your online bank account on payday, data goes out when you shop or pay bills.

I don't think of it as anything more tangible than that anymore.


An aside - I was told at the drive thru this morning that the bill I presented to pay for breakfast was fake.
It was a $20 I got from an ATM - which should be bank/gov't backed, right?
Paper money doesn't even have value in some cases anymore.

hunter

(38,565 posts)
34. I think a lot about creating a society that no longer uses money.
Wed Oct 23, 2013, 05:28 PM
Oct 2013

A society that is able to abandon money for something better, probably by technical and social innovations, a society that makes "money" obsolete.

What would a high technology society that doesn't use "money" as a means of accounting look like? Could such a society grow within our existing economy or would the present moneyed class see such innovation as a threat and crush it?

kentuck

(111,511 posts)
35. You have to have something standard that everyone will accept.
Wed Oct 23, 2013, 05:43 PM
Oct 2013

Some people may not accept tulip bulbs, which at one time was "money".

hunter

(38,565 posts)
38. With the powerful computing systems we have these days, and most every family having a cell phone...
Wed Oct 23, 2013, 07:08 PM
Oct 2013

... maybe we could implement some kind of modern multi-dimensional barter system. I don't know.

First off we need to create a society in which everyone can be secure in their person, a society where everyone has good food to eat, a safe place to live, access to appropriate medical care, and a good education no matter their current economic situation. In that environment people could experiment with new, innovative sorts of trade.

Until then I think we need single payer health care, free public education early childhood through college, good government jobs for the currently unemployed, government support for the unemployable, with inflation controlled by taxing people in the higher strata of the economic food chain.

We need to create a "trickle up" economy with money created for the benefit of lower income people who will spend it for necessities and simple comforts (movies, camping in national parks, eating "out" a few times a month...this list is endless) and then skim that money off the top by taxation before it rots causing inflation, buying politicians, or stagnating in bizarre financial games that do not improve our society.

What we have now is a eutrophic economy. The rotten money at the top is smothering the economic life below it.

jmowreader

(50,807 posts)
48. That sounds like the goal of the "bitcoin" project
Fri Oct 25, 2013, 05:54 AM
Oct 2013

All you can actually buy with bitcoins is heroin, but that's okay. Especially for the people who like heroin.

hunter

(38,565 posts)
56. No. Bitcoins are a point metric as well.
Fri Oct 25, 2013, 11:52 AM
Oct 2013

It's an interesting concept, to "mine" certain unique numbers as if they were gold or silver, but that's going backwards in comparison to what I'm thinking about.

CJCRANE

(18,184 posts)
51. We already had a multi-dimensional barter system
Fri Oct 25, 2013, 06:31 AM
Oct 2013

which represented a combination of effort/labor/skill/scarcity for each product or service, in a reasonably fair way.

Since the 70s the effort/labor/skill part has become increasingly undervalued.

Then with the bailouts in '08 the system was turned upside down with catastrophic failure being rewarded. So nowadays financial reward seems increasingly arbitrary with no real connection to effort/skill or traditional business ideas of risk/reward.

hunter

(38,565 posts)
57. I think that's because everything is measured in dollars.
Fri Oct 25, 2013, 12:18 PM
Oct 2013

The "Newtonian" model of economics, all those pretty concepts and equations we learned in micro- and macroeconomics, are complete rubbish, and our belief in them has caused a worldwide environmental catastrophe that will destroy this civilization.

Everybody is following the same model, but it doesn't reflect physical reality.

CJCRANE

(18,184 posts)
37. Interesting idea.
Wed Oct 23, 2013, 06:49 PM
Oct 2013

The fact is that money is a way for developed, organized societies to get things done without explicity telling everyone exactly what to do...or letting everyone do whatever they want.

The former is totalitarian communism, the latter is anarchy.

hunter

(38,565 posts)
55. The powers who control the creation and distribution of money do tell people what to do
Fri Oct 25, 2013, 11:47 AM
Oct 2013

A very clear example of this would be the "red-lining" of neighborhoods. It used to be explicit, but now this behavior is mostly hidden because it's illegal.

You could have two men, one white, one black, each with identical jobs, identical incomes, working in the same local factory. The black guy wouldn't be able to get a mortgage on a house in the "white" neighborhoods or suburbs.

All these horrors go on today, but in more subtle ways. Money is not created in a manner that benefits everyone. It is controlled by an oligarchy. They don't fight the unions any more, or the civil rights groups, they just move the whole damned factory to a place where they have more control over the workers.

Shankapotomus

(4,840 posts)
36. Money is meaningless
Wed Oct 23, 2013, 06:01 PM
Oct 2013

I think practically all value on earth traces back to the sun. Plants take the energy from the sun, some animals eat the plants and still others eat the plant eaters but it all traces back to sunlight. Sunlight is the true money. People say they "worked for this" and they "worked for that" but everything we "own" traces back to either the forced appropriation of another living entity's energy or the claiming of inanimate resources that never 'belonged' to us in the first place. It's funny how "It's mine because I worked for it!" is used as the "valid" and sole justification for a person's claim to a resource while they ignore any animal's claim to its resources that exerts the same energy to acquire them. The truth is, nobody truly works for or "earns" anything on this planet. We just take it. Follow the chain of commodities and it will end with someone who is either seizing or gathering them up without payment or reimbursement. And if we are going to take it we might as well recognize there are other beings on this planet that need to live and figure out a more equitable method of distribution.

customerserviceguy

(25,183 posts)
53. Money is whatever people believe
Fri Oct 25, 2013, 07:23 AM
Oct 2013

will allow them to get something else they want when they trade goods or services for it. Once upon a time, it was only gold and silver, then bronze became money when the ruling authority certified it as being so.

Today, we believe that what electrons put up on our computer screens is money, and some of us snicker at the victims of Bernie Madoff for being so naive as to believe the statements that he manufactured with paper and ink.

What's insidious about inflation is how it destroys faith in money, it causes people to do things they otherwise wouldn't do if they thought that whatever they consider money to be of relatively stable value. I remember the inflation of the sixties and the seventies, and what they did to peoples' expectations. We really don't want to go back there.

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