"worthless" paper - how taxation makes money worth something

so its intrinsically worthless but worth so much we'd all die without it??????????

 

Yes

No


Two persons in the early 20th century who didn't trust banks were determined to accumulate some wealth to leave their children. Both were paid with $20 gold coins and were keeping them under their bed mattress and by 1934 each had accumulated $10,000. One who found the mattress uncomfortable because of the lumps created by the gold coins decided to exchange them for a $100 paper bills for more comfort. A few decades later both died and their children found notes telling them to look under the mattress for their inheritance.

If that story doesn't help you understand, revise it to have happened around the time of the Civil war with both persons living in the Confederate States with the coins exchanged for Confederate dollars.

Paper money has value only as long as the entity mandating its use/acceptance continues to exist.

Would you die without money? I wouldn't, although I would have to reduce my dependency on things which had to be bought with money, in my case only electricity and telephone as the only tax I pay is on income which would then be eliminated and there is no property tax where I live. While many people have allowed themselves to become dependent on money for both their needs and their wants. I have not.

 

all agree I'm sure so why bother to point it out?? You seem like a first grader who has just discovered that 1+1=2

 

My original post remains true, so why did it take so many posts for you to finally agree? Slow learner, huh?

 

original post is by Joakim florence????????????????????????????

 

But "My" original post to which you responded was by me. Time to get beyond 1+1=2, now try to commit 1+2=3 to memory.

 

why so afraid to tell us the point of this post you are talking about?? What does your fear teach us??

- - - Updated - - -

if so why so afraid to tell us what you original post was? Do you fool yourself when you dodge substantive debate?

 

Do you have difficulty keeping up with what is being discussed? What has 'fear' to do with the thread topic?

Here it is:

Are you on or off antipsychotic medication when you post such questions?

 

Why not cut the BS and tell us why you won't give me your intrinsically worthless currency??

 

Go back and read my post #52 and your response #53 noting the part of my post you quoted in your response.

If that doesn't answer your question, wait a few years and maybe it'll sink in.

 

Why not cut the BS and tell us

why you won't give me your intrinsically worthless currency??

 

Obviously you either didn't read or didn't understand the words used in my post #52 and/or your own post #53. If you lack a dictionary there are many available on line.

"Paper money has value" BUT "only as long as the entity mandating its use/acceptance continues to exist."


intrinsic
belonging naturally; essential.

In your own words, 1+1=2 or do you no longer accept that to be true?

 

dear, there is a better chance that you will be kidnapped by space aliens than that the US govt will not continue to exist. Do you know why you are alerting us to such utter trivia and thinking yourself clever for doing so??

 

If two persons had saved $2000 around 1910, and one placed 100 $20 coins in a small safe while the other converted his to 20 $100 bills and placed them in an envelope in the same safe to be given to his heirs in the year 2010, 100 years later and if both only had one heir living on that date which would you prefer to be the heir of? The same government exists today, just different politicians, and the face value of the inheritances remains the same as the day they were put into the safe, and I'm sure any business in the nation would gladly accept either at their face value for payment of a debt.

I'm not saying our fiat money has no value, but the value diminishes over time while things which have true intrinsic value, gold, silver, copper, nickel, land, etc. acquire a higher value relative to the money we use to purchase them, not to mention the price of everything else.

 

Well we are all consuming about 14 times what we did in 1910 so perhaps fiat money is just fine, and, my money is not diminishing over time but rather growing thanks to investments whose returns are inflated too.

 

While there are those of us who are able to put inflation to use in staying ahead of it a growing number of the population, and generations yet born, are being made to face much more difficulty in achieving a self sufficient life, and placing a greater demand on government and working/taxpaying citizens to provide all or some of their needs and wants while inflation continually increases that cost, not to mention the increase in the number being provided for.

 

Nothing magical about NAIRU- more a black art, I'd say.
How to put your economy in a straight jacket.

 

Shame on you! The market is completely rational. Ask any mainstream Neoclassically trained economist. All their models say so.

So rational is the market that bubbles simply do not exist and neither does debt, so debt cannot possibly create something like a mortgage bubble, which is why debt and bubbles have no place in mainstream economic models.

I'm really enjoying this thread. Thanks for starting it.

 

We are conflating a number of different issues here - this is understandable, as money (like space and time) is a slippery subject.

Taxation establishes a basic ground floor. It establishes a minimum demand for the official state currency.

Fiat makes it universal within national boundaries. Law establishes that it MUST be accepted for all debts, public and private - this is the actual meaning of fiat. Fiat is an order of the state backed by law. It does not imply a gold standard, or a lack of a gold standard - that is a completely separate issue.

The nature of money is that it is a marker for debt, a universal IOU that is fungible (may be passed around). This is stated clearly on the note itself: "legal tender for all debts."

It is the debt itself that is money. Banking accounts denominated in dollars. That is money. Any liquid financial asset that can immediately be converted into dollars in a banking account is also money, because under normal conditions it acts like money. Treasuries, corporate bonds, equity shares, consumer debt, money market funds, etc are all part of the money supply.

These types of financial assets are convertible into dollars, without any control or direction of the Fed (or similar CB institution in UK, Japan, etc.). A private bank may create money by lending irrespective of its reserve position and without any further action of the government. (This is not my 'opinion,' incidentally. I have posted statements from the Fed, Bank of England, etc. which state this explicitly.

QE does not directly increase the money supply. It does support the prices of financial assets. Generally the net effect is deflationary, if large t-bond holders park their money in treasuries, rather than making capital investments in new equipment, new products, opening new markets, etc.

The mandate of the Fed is to target interest rates through the rates they charge banks. They may also purchase public and private financial assets, but the long-term efficacy of this procedure is questionable, at best. It probably should be limited to crash conditions, when liquidity needs to be supported.

As it stands now, there is too much liquidity, and not enough demand for that level of bank liquidity. This can only be cured by fiscal actions, not monetary actions.

 

Let's get one thing straight. Fed does not control the money supply. It controls interest rates, through the interest it charges banks.

 

you are correct that the market is very very very rational indeed, but it is far far less so when the govt is interfering with it and thus blinding people from its price signals. Do you understand?

 

Totally confused and liberal. Feds purpose is to control money supply with use of 3 tools; interest rates being one of those 3 tools. Reserve requirements and open market operations are the other 2 FYI. Isn't learning fun?

 

demand can be increased by fiscal policy????? Wrong of course!! The economy grew from the stone age to here thanks to the supply of new inventions, not because of fiscal policy. Did you think the govt invented things??

 

People efficiently delude themseves without government intervention

https://en.m.wikipedia.org/wiki/Extraordinary_Popular_Delusions_and_the_Madness_of_Crowds

 

100% wrong and liberal of course. the people are not a monopoly like govt so any delusion can be exposed long before it spreads to the entire population. A liberal govt monopoly bureaucratic delusion is automatically imposed in an instant on the entire population. 1+1=2. This is a very fundamental libertarian principle!! It was my humble honor and duty to teach it to you.