Tuesday, January 08, 2013
Money money money
I presume y'all have encountered the tidal wave of blather about the trillion dollar platinum coin. Paul Krugman is for it, in case you need an intro, so it can't be all bad. Most people are having a very hard time grasping this concept, and it I guess it does seem kind of ridiculous. But that's because most people don't know what money is.
It's fairy dust. It's fiction. It's purely symbolic. And that is true, by the way, whether it's made out of gold, or paper, or nothing. The proof? There's a society that already uses money which, like the trillion dollar platinum coin, never leaves the vault. The people of Yap, a real fantasy island, have two-ton rocks, mined from a distant island, which are money. But they never move. They just change ownership. One of them, in fact, lies at the bottom of the ocean, due to a transportation accident, but it still counts. Somebody owns it, and they are accordingly affluent.
The little pieces of paper with dead presidents are just an accounting convenience, as you have learned since you started paying for everything with a credit card. In fact, if you didn't have your wallet on you, or you were between paychecks, in the old days you might write an IOU to your friend or your grocer. Guess what? You printed money, just as surely as the government does. That's all money is -- a symbol.
One of the enduring, and mysterious quirks of conservative ideology is that they just can't grasp this idea. It offends something deep in their psyche, that money isn't actually worth anything but a promise. They somehow believe that gold and silver have "real" value and therefore should be money. But think about it for a second: the value of all the stuff that people buy and sell, all the debt they owe, is far more than the ostensible value of all the gold and silver in the world. All money is backed by real assets, it just doesn't happen to be gold. If I can buy a car or a house or lunch with a sum of money, the sum of money is worth that much, identically as it's worth whatever amount of gold it can buy. There is no difference.
Once Ron Paul gets his tiny brain around that idea, the rest of his nonsensical worldview will melt away like the snows of March.