Dan Coffin and Thomas de Smet begin to talk about money. In fact, de Smet lectures Coffin. I will analyze what they say but it is getting late here so let me just introduce the subject first.
Five Stages
Production.
Barter.
Money.
Banks to store money.
Banks to lend money at interest.
A bank:
lends money that is not its;
lends more than is in its possession;
charges interest;
thus, makes money from (speculative) money.
That is a truly simplistic summary but already I feel that a process that started with material production has become entirely immaterial. Next, I will read de Smet's exposition. (Weather permitting, we might visit the Lake District tomorrow and I have a meeting in the evening.)
7 comments:
It's more a matter of matching resources to demand. Money (and credit) do this rather well, under most circumstances; money isn't a thing in itself, but instead a method of labelling things, a representation.
Kaor, Mr. Stirling!
And, I'm not sure how long currencies based on nothing, really, but gov't fiat can continue to do this "matching of resources to demand."
Sean
Sean,
Somewhat blushing I now realise that I read your "can continue" as "can't continue", so pray consider my ramblings an unnecessary long agreeing with you. :)
Johan,
I was reading your comment and may have somehow accidentally clicked to delete it. Would you be able to reproduce the gist of the comment even though you now think that it was based on a misreading of a comment by Sean? Sorry about this.
Paul.
OK - I was saying that fiat money essentially derives its value from the same source as the precious metals that used to "guarantee" non-fiat money earlier in history, namely the expectation to be able to exchange them for goods and services.
In that sense, they are almost as good as gold, the most important difference being that gold can be used in any country whereas a national currency can not. Fiat money tends to loose its value mainly from shortages of goods and services, destroying the expectation of exchange (like lately in Venezuela). But precious metals are not immune from this either, although they are not affected by purely national shortages - preppers hoarding gold coins against the coming collapse of civilization are wasting their money, because who would sell their last morsel of food, their last rounds of ammo or their precious few gallons of clean water for gold?
An international and internationally accepted fiat money, if handled by a competent central bank, would be quite litterally as good as gold.
Johan,
Thank you. I thought that that was what you are saying. Accidental deletion has never happened before and hopefully never again.
Paul.
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