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Unveiling the Banking Sector's Secrets
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Unveiling the Banking Sector's Secrets
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Steve Keen considers the following as important:
This could be interesting, too:
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| Unveiling the Banking Sector's Secrets |
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There are many ways to conceptually describe money. I thought I’d give it a try.
Money is a convergent phenomenon, brought into existence by mimetic evolution to become a trusted proxy for the abstract concept of value.
Too complicated for a very simple thing.
Money is a bookkeeping system of debt in a society.
"Value" is just a number which counts the amount of debt like 5 in 5 meter counts the length of something.
@@ThomasVWorm
Indeed, at a functional level, money can be seen as a system for accounting debt.
I believe your comment illuminates the misunderstanding. The 'value' I speak of is more akin to the regard that something is held to deserve; the importance, worth, or usefulness of something. Not the numerical amount denoted by an algebraic term; a magnitude, quantity, or number.
If that was not what caused the misunderstanding, feel free to ask for further clarification.
@@henrikstromberg2572 I think, the misunderstanding is, that there is anything else than the functional level.
When you have 5 $, the "5" is the value and the "$" is the unit like in 5 kg. Both tell you how much you have of something.
With money we try to compare things, which do not all share the same properties like weight and even if, they are hard to compare anyway. But practically it is related to the effort needed, to make the commodities available. And nobody ideally wants to have more effort when giving compared to those, he receives from.
So if you give 10 eggs now you expect to get 10 eggs returned to you later. This is what all the bookkeeping of debt is all about.
But since a comparable value is hard to find, people created a lot of esoteric ideas about what "value" may be. But practically it should make things comparable in order to determine the amount of debt.
Money is the liability of those, who must return the money to the banking sector: the debtors.
The liability is created when the debtor buys something and the liability vanishes as soon as the debtor sells something.
And "exchange" is a very misleading term. Debt is permanent. We do only have a change of debt. When you die it is very unlikely, that your wallet is empty and your bank account will be at zero. You either still owe to others or more likely, others owe to you. "Exchange" implies the immediate equalization of giving and getting. With debt there is a time lapse between the two. Plus, money allows to fraction the liabilities and distribute the assets, which means, the creditor-debtor-relationships are permanent, though they change permanently.
I think, most economists misunderstand the bookkeeping with what it is all about.