Discussion What is money?

[Forever Sleep]

Maybe this sounds like a weird question... What I mean is- is all the money in the world represented in physical form- in the shape of notes, coins, gold or whatever? I'm guessing not. In which case- it's virtual. How weird that something virtual- numbers on a screen can cause so much suffering if they turn red or, there aren't enough of them.

Where did it come from originally? Surely, it's like energy or water- it's not destroyed- it just flows from one source to another. You work and get paid by your employer. You spend the money on a new watch. The watch manufacturer spends the money paying their employees, paying taxes, paying their rent and running costs- it just keeps changing hands- right?

But, it had to start out somewhere. Who decides when and how much to add to the enormous pot? It just seems so abstract to me in a way. I used to think- when a country was in debt- why don't you just print more money?! But I guess that shows how naive I am about economics. Any maths/money geniuses here willing to explain it simply to a lay person?

 

[Guy Smiley]

 

[Forever Sleep]

Really good video. The contrast is so disgusting when you see it like that- between rich and poor.

Not that I'm advocating it as a thing but, makes you wonder- if the poor didn't reproduce, could the rich exist?

 

[Guy Smiley]

Really good video. The contrast is so disgusting when you see it like that- between rich and poor.

Not that I'm advocating it as a thing but, makes you wonder- if the poor didn't reproduce, could the rich exist?

Someone has to serve and work for the rich. The rich sure ain't gonna do it themselves!

 

[would]

Maybe this sounds like a weird question... What I mean is- is all the money in the world represented in physical form- in the shape of notes, coins, gold or whatever? I'm guessing not. In which case- it's virtual. How weird that something virtual- numbers on a screen can cause so much suffering if they turn red or, there aren't enough of them.

Where did it come from originally? Surely, it's like energy or water- it's not destroyed- it just flows from one source to another. You work and get paid by your employer. You spend the money on a new watch. The watch manufacturer spends the money paying their employees, paying taxes, paying their rent and running costs- it just keeps changing hands- right?

But, it had to start out somewhere. Who decides when and how much to add to the enormous pot? It just seems so abstract to me in a way. I used to think- when a country was in debt- why don't you just print more money?! But I guess that shows how naive I am about economics. Any maths/money geniuses here willing to explain it simply to a lay person?

All the money is not represented in physical form. A large amount of the money in the world is debt on balance sheets. There is actually a classification system used to differentiate the different estimates of how much money exists of earth depending on what you classify as "money." These are sometimes referred to as "money stock measures.": M1, M2, M3 etc. "Money" as in one or more valuable items exchanged for another has existed for as long as transactions have existed, but the first fiat currency was most likely used in China during the 10th century.
Money in the modern world "gets added to the pot" by centralized banks and governments (and in small amounts by counterfeiters). This is what happens every time the United States "raises the debt ceiling" and subsequently allocates "new" money to various ventures.
Many countries do "just print more money" to repay debts, but if they do this too quickly, they can enter hyperinflation and completely devalue their currency. Look to Venezuela as a modern example of this, but it should be noted that there are many more examples of hyperinflation throughout history.

 

[Pluto]

 

[carac]

One of the things I think about is whether the inherent value of a coin is worth more than the corn itself. Like I can use a two pence peice as a base for models, if I actually wanted to buy a packet of bases they could cost about 10 pence each lol

I remember stories of hyperinflation in Germany where people would burn money for fuel because it was cheaper than actual fuel itself or people would steal a basket of money but leave the money and just take the basket.

I thought this meme was quite interesting



Also in the Philomena Cunk (I love her) video she talks in the end about the value of a penny

 

[Apathy79]

Until 1971, money was exchangeable for gold at a fixed rate - governments couldn't just print it unless they got more gold. And every country that tried to hyperinflated their currency extremely quickly and made it entirely worthless. There's a book called Extremely Popular Delusions and the Madness of Crowds that shows some 1700s and 1800s examples of that brilliantly in the first few chapters.

In 1971, the US abandoned the gold standard, and the rest of the world followed. So now money has no intrinsic value other than what we determine it has as a society. And due to printing, the value of each dollar decreases over time.