AW: fort knox

cwiljes@bol.de cwiljes at bol.de
Fri Jul 26 09:49:28 CEST 2002


John Jarvin wrote:
> There is nothing backing those greenbacks but 
> our own collective word that we all agree
> they are worth something.

Sometimes a simple fact of live hits you like a ton of bricks.
As did this info with me. 

So we all agree that these small pieces of paper or pieces of metal
are worth something. We think they are worth much more than the 
material value of the paper or metal they are made of. And because all 
of us believe this (or have agreed to think so) it's a self fulfilling 
prophecy.

But how do we agree how much worth it is? How do we measure "worth" 
to begin with? We can't measure worth in monetary value because it 
is the money's value we want to determine. So we determine the money's 
value in goods: This small piece of paper with a "10" printed on it 
is worth

   100    eggs
or   1    visit to the cinema
or   0.01 of "Uncle Scrooge" #1 in fine condition

But how do we determine the goods' value? We cannot use money because this
would result in a circulary definition.

Even worth: Think about a person (or duck) who considers money as a good,
so he does not use the money to be goods but wants to have the money just
because it is money. If all people would think so, money would no longer be 
money but we would need another form of "symbolic good".

The same happened to gold: Gold is not a worth in itself. Or why should I
want 
to own this stuff? What can I do with a ton of gold? Nothing! But it is
scarce,
so in the beginning of history it was ideal to be used as a "symbolic good"
- 
as money. Nowadays we can control the scarcity of money by government
institutions 
and international conventions. And if any country does not follow theses its
currency
will soon get worthless because people lose faith in it. Just like people of
ancient 
time would have if somebody would have found an indefinite supply of gold:
inflation.

There are some goods which I would like to call "semi-currencies": Objects
which
are not as desirably as their monetary value. These goods share some traits
with money:

- stamps
- stocks
- comic books

To be precise: If someone buys a comic book for an astronomical sum this
does
not automatically make the comic book a "semi currency". If he want's to
have it 
for himself (just like Scrooge wants money) it's not money! But if he buys
it
simply because he thinks someone else will want to buy it for a higher
amount
it soon might become a semi-currency. So I think there is no sharp contrast
between
"money" an "good".

The whole thing gets even more complicated since we started using money
which has no
(controllable) physical representation at all: Just little numbers on paper
or in a computer.
What is their worth? It is this: The good name (=reliability) of those who
are involved 
in it's transaction. So it's just this: A promise! It's an IOU (="I owe
you"). You can trade
these IOUs to others. But in the end it all boils down to trust. But trust
in whom? In the 
seller? the bank? the government? the future? I am beginning to get lost
here. 
Sorry, I got carried away a bit ;-)

Cord



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