From: Kevin Peterson (email@example.com)
Date: Wed Jan 24 2007 - 00:55:45 MST
On 1/11/07, R. W. <firstname.lastname@example.org> wrote:
> "Credit" is a deliberate misnomer. You don't receive credit. You are
> given debt. Debt in full excess of whatever it is you may wish to possess.
> You are given the opportunity to be indebted to whoever creates this
> ephemeral "money" which is literally created out of thin air with nothing
> but ignorance backing it. They sell you an illusion so you can get "stuff"
> and then once you pay they have more credited illusions to give some other
Credit is not a misnomer. Credit is the prearranged opportunity to borrow
(and take on a debt). Just as you are better off having a job, you are
better off having credit. Having a job entitles you to nothing but the
prearranged opportunity to sell your labor at a given price.
Of course, credit does have two meaning. There's a credit to your account
meaning you have received money, and there's a credit line, meaning what I
mean above. But have any sort of option is always worthwhile.
What is important with regard to money is not what it is based on. No doubt
a Roman legionnaire would laugh if someone tried to pay him in promises, but
I don't think you'd appreciate being paid in salt. Similarly with cigarettes
What is important with money is what you can exchange it for, how convenient
it is to engage in transactions with it, the expected change in the value of
the commodity over time, and the uncertainty of the change over time. We
already have currencies diverging somewhat. Consider the differences between
cash in my wallet, money in a checking account, and money in a CD. They all
have different advantages and we exchange one currency for another to
Money isn't going to go away until scarce resources and separate entities
controlling those resources with differing interests go away, because money
is the most efficient method of allocating scarce resources. Even under
communism, the factory managers had to resort to barter systems in order to
keep things running as smoothly as they can.
Improved technology, meaning lower transaction costs and lower cost of
information, opens up even more exotic forms of currency. Our current
monetary systems could not exist without the ability of banks to communicate
(the ... reserve rate? is that the name for the fraction of deposits held?
would have to be much higher).
What's missing in the original post considering things like "usable energy"
is that we've advanced to the point that we don't need to say "I'll give you
10kwh for that pack of cigarettes" and I have to, I don't know, give him a
can of gasoline. A currency based on power would be exchanged just as any
other, and the unit of account would probably have a defined location and
medium, like 10kwh of electricity at the point of generation at X power
plant. But I'd still pay my electric bill, and it might cost me 30kwh to
have that 10kwh delivered to my home. Since the value varies at a given
location, the currency can be stabilized by instead pegging it to 1kwh
credit is 1/100 of a kwh at any of 100 power plants. You could establish
such a system by contracting to buy power from the powerplant (in your
kwh$), sell it to consumers (for kwh$), and also make loans to people (in
kwh$ for kwh$ interest), thus increasing the money supply beyond what can
actually be produced.
I don't think the goulash currency example is that likely because we are so
good at basing currency on nothing. The only way I see that as likely is if
there is no single currency in sufficient supply.
Oh, first time poster. Software engineer in California, studied some
cognitive science and economics at school.
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