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RE: What is Money?

in #daostreet7 years ago

Money is just a value placed on anything chosen to be money, as long as the person accepting that token, perceives it to have value. I person shipwrecked on an island with no food has no value for silver and gold, food and water would be the most valued commodity. But eventually, paper money, FIAT, will have no value, when compared to real assets. A $100 Federal Reserve Note form the USSA cost $0.11 to print. To me, no value, some BTU value for burning, some interesting colored flame when the ink burns..........Any opinions ???

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You said it yourself; not all things of value need be money but all money need be a store of value : "person shipwrecked on an island with no food has no value for silver and gold, food and water would be the most valued commodity" If you were an economy of one then money would clearly have no utility. On the other hand for a society to function properly it is important to share similar concepts of what can serve as a store of value.

That is some dark humor: comparing the value of a fed reserve note to the BTU from burning it.. but there is definitely something to your point. If tomorrow the entire world were to snap out of a shared delusion that the USD has value then yes the notes may not be worth the paper they are printed on.

There is a world of difference between currency, money, and commodities. In my opinion money is a currency that retains its function as a store of value. Fiat currencies can attempt to achieve the store of value purpose but that becomes very difficult as banks fulfill their other activities of increasing and decreasing the supply of currency. In an ideal world money and commodities would both hold their value to varying degrees and gold/silver coins are an example of attempting to combine the two in the form of "commodity money"

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