Re: Paying for Katrina


"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote

> If "money" were just a shorthand for keeping track of the exchange of
> goods, you are describing what is basically a barter economy. A key
> feature of a modern economy is credit, sometimes over many years as
> with mortgages or long term bonds. There is no way your definition of
> money fits into the real world economy.


Here's a purely real-world, modern transaction: I trade a ten-dollar bill
for a movie ticket. We don't call that "barter", but that's just a
linguistic convention, not an economic insight. An economist would surely
allow that if I got the $10 for mowing your lawn, I did in essence exchange
my labor for the ticket.

No sensible economist would insist on tracking my particular ten-dollar-bill
through the box office, to the studio, to the best-boy grip's wages, and
back to you, the guy who sold him a pizza six months ago. But neither would
he deny that your making a pizza had something to do with getting your lawn
mowed. Money and credit just makes the transaction more roundabout than the
straight "barter" of you giving me a pizza to mow your lawn.

The dispassionate Martian naturalist would see us all busily producing goods
and services. He would see us each consuming different goods and services
than we individually produce. And he would notice that some of us consume
more goods and services than others. He might try to explain how all this
happens. Maybe he could _not_ explain it without hypothesizing the
existence of "money".

But, as a naturalist, he would not say that we produce and consume "money".

-- TP



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