Re: State Theory of Money

On Jun 24, 10:43 am, The Trucker <mik...@xxxxxxxxxxx> wrote:
On Sat, 23 Jun 2007 22:36:50 -0500, Mark M. wrote:
*Anarcissie* wrote:
....
Of course, a lot depends on what money _is_ these days. If it
is something created privately by belief, then a lot of it could
disappear very quickly. That is something I am trying to
figure out.

A worthy subject of study. Let us know what you discover.

Money has 2 forms: One is simply credit issued by banks. The other is
fiat money issued by government. These monies trade on par but have
completely different controls.

If I am reading Hummel correctly we are now in a
state of affairs where most money is created privately
and we don't know how much of it there is. I am
interested in this not because I am trying to create
policy -- I don't think anything I think, say or do
will change any government's or bank's monetary
policies -- but I am interested in trying to figure out
what's going to happen next. I think that depends
on what money is. If presently existing money is
mostly created by belief, it can disappear, leading
to very rapid deflation (for example). This sort
of outcome would be much less likely if most
money had a physical form.

A message or two back I said something about
how, if people started distrusting the value of
stocks or real estate, they might move their
money into commodities, leading to sharp
rises in commodity prices that had little to do
with supply and demand for the actual
commodity. But if money is just made up it
doesn't necessarily have to move from one
place to another -- instead, it may wink in and
out of existence, like virtual particles in
Quantum Mechanics. In that case a different
arithmetic is required -- a much trickier sort
of arithmetic than subtracting x here and
adding it there, I would think.

.

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