Money: What is it?

fluxo

I think in a certain sense money is a belief system: it only has any value because people believe it has value. As soon as collective belief in a currency crumbles, it becomes worthless. Or rather collapses down to its intrinsic worth.

When there was hyperinflation in Germany, all sorts of odd uses for printed money were found. This guy is papering his wall with it:

                                                                                                                                               

This woman is using it to fire her stove:

                                                                                                                                               

In these cases just about the only value the money has is its intrinsic worth, its utility value as paper.

raduv1

Hmm intrinsic value was paper 20 to 30 years ago and money in a society that values wealth was paper back then . In this digital age money not wealth becomes diluted as it becomes easier to spend than earn , for most. This has indeed created a vacuum of spending beyond your means . Was not a problem for a population that had a paypacket where the little disposable income went into a bank account rest went on bills. Money was more respected than it us now .

EarthRod

Paper money doesn't exist as a value in itself, all it is is a form of an IOU note. For example, a piece of paper which says IOU £20 and signed by the bank. The piece of paper in itself is worthless and the value only lies in the trust that the bank will honour the IOU.

Same with bank accounts. There is nothing of value in the account, only the trust that the bank will honour the sum in the account if required.

When I was in Uganda in the 1980s the value of the Ugandan Shilling was almost worthless. It required a sack full of paper money (literally) to purchase the weekly grocery shopping. Bartering was taking over because the Ugandan paper money had hardly any value and the US dollar or the UK pound was the currency of exchange (on the quiet).

SteakAndCake

All Fiat economies are based solely on trust.  This why when confidence is a system is shaken like the recent Brexit vote, you see the devaluation of a currency.  There is nothing tangible backing this money since we dropped off the gold standard.  

It's also another reason why it's disingenuous to talk about the national economy as though it were a household budget as politicians seem fond of in their justification of Austerity.  You don't need to balance the books, you just need to maintain trust in the system.

Sonic67

Money isn't everything but it can buy everything.

Sonic67

It can't buy me love.

SteakAndCake

Money can buy you an hour of love.

Be careful. If you have money you will find ladies will suck you dry.

Every night apparently.

KiLLiNG-TiME

Literally awesome, figuratively, not so much.

fluxo

Personally i'd like to see a resource based economy but all the people with to much ££££$$$$ they so NO !!

fluxo

I've been thinking again about quantitative easing, which is also explained in the document I linked to above.

In short, the Bank of England owns hundreds of billions of pounds of government debt that it acquired through its QE programme.

But the BoE is owned by the government:

"The Bank of England, established in 1694, is a corporation wholly owned by the UK government."

Source: How we are governed | Bank of England

The government has borrowed hundreds of billions to spend on services etc., and it owes that borrowed money to itself. The government has already agreed to not pay interest to itself on this loan to itself. What about the debt? Will it ever have to pay that back?