Money

How do we give change again?

The dismal science Economics

Economic systems

$  Free market   €  Social democracy   ☭ Socialist economy

Major concepts

American Recovery and Reinvestment Act of 2009 Michael Snyder Amartya Sen Murray Rothbard Asbiro University

The worldly philosophers

Paul Krugman Ben Bernanke Andrew W. Mellon Dick Armey v - t - e

“”Money, it's a crime Share it fairly, but don't take a slice of my pie Money, so they say, is the root of all evil today. But if you ask for a rise it’s no surprise they’re giving none away

—Pink Floyd

Money is anything which serves as a means of exchange, a store of value, and a unit of account and represents only an extremely small fraction of the real wealth of any given society or country where it is used. Throughout history money has taken many different forms, such as sea shells, whale teeth, cocoa beans, pieces of electrum stamped with the seal of the king, and stone wheels. Most people tend to think of "money" as being synonymous with coins, or cash. But they are, in fact, not the same thing, and have separate histories. Today, nearly every economy on Earth uses fiat currency.

Origins

Humans used the first forms of money to take account of gift exchanges, typically in ritualized ceremonies when buying a wife, or as compensation for a murder or an injury to another, for example. Most resources were not traded for money and did not have any kind of monetary value assigned to them at all. When money was exchanged, the exchanging parties usually understood it to represent a relation between themselves and not the value of the objects traded. During these exchanges, sometimes something as simple as a wooden stick could be used to represent an amount that was owed, as well as a promise to pay it back. Money in the form of coins made of rare metals came into vogue only in the iron ages, when large-scale warfare made it necessary to have a unit of exchange that wasn't backed only by personal relationships, trust, and promises.^{[citation needed]}

The barter myth

There's a relatively common fable about the origins of money that gets promulgated: essentially, in prehistoric society, if you wanted to get something, you would have to trade for it. If you wanted to get an orange, you need to give them an apple. But if the orange farmer already has apples, you're out of luck. So you could trade around and eventually get something the orange farmer wants, or (so the fable goes) you could invent money and trade that instead, cutting out all the issues with trading.

The problem with this story is that it's completely fictitious. This parable likely starts with Adam Smith hundreds of years ago. Since then, it has bubbled up to both justify and attack the current economic systems. In reality, there's basically no evidence that any society created money this way. It doesn't make a lot of sense, if you think about it; the idea of trade as described sort of presupposes money already existed. Thankfully, this myth isn't really thrown around in any serious circles anymore, but it will be wheeled out by certain dorks. Late anthropologist David Graeber's later work on debt contains perhaps the most famous and thorough debunking of this myth.

Types of money

A Fiat 500, bought with fiat currency

Fiat currency

Traditionally, some state or similar organization backed money with some sort of commodity, such as gold or silver — and there are some who liked it much better that way. Today, most money is "fiat currency" which has no intrinsic value except as determined by the government. Cranks often claim that with the lack of a commodity to back them, dollars are worthless, forgetting that gold is just a shiny yellow metal that, for much of history, especially back before its high electrical and thermal conductivity gave it practical use, was only valuable because people decided it was.

Furthermore, "fiat" does have some solid backing: taxes. People with property must acquire money in order to pay their property tax, and the Big Bad Gummint doesn't accept Monopoly money. So even if everyone suddenly decided that things were better when you could sell your daughter for 5 goats, people are still going to accept money. Some countries have a useless one-cent coin that costs more to make than it's worth.

Cryptocurrency

See the article on Bitcoin for the most famous cryptocurrency and descriptions of additional ones.

Cryptocurrency is a form of digital currency that uses cryptography to maintain control — this represents the only form of digital currency that works to any degree. Digital currency is a type of currency that only exists in the digital realm of cyberspace. Two forms of cryptocurrency exist, centralized and decentralized.

Centralized cryptocurrency

Centralized cryptocurrency is controlled by a central bank, which itself is usually controlled by a government. Essentially, this form is the same as real-world currency except for it not existing in the physical world. It is not clear why cryptography would be needed to enforce its consistency, since the trusted central bank would already take charge of that. While it hasn't been applied yet, hypothetically in the future, centralized fiat crytocurrency would be something to replace real-world currency with. The other kind is decentralized cryptocurrency.

Decentralized cryptocurrency

See the main article on this topic: Bitcoin

Decentralized cryptocurrency is a form of virtual currency using cryptography to maintain control. Virtual currencies are digital currencies that are completely decentralized. If you want to know what this is, the best known example is Bitcoin, or barely legal fake money if you prefer. Unfortunately, in spite of it being completely decentralized, it is used in dozens of countries worldwide. Libertarians, minarchists, anarcho-capitalists, laissez-faire capitalists, Conservapedians, technophiles, and criminals often support decentralized cryptocurrencies due to their being completely outside the government. However, this can lead to the issue of drastic changes coming out of nowhere, and it can be used as a commodity at best, and will get you arrested at worst, sometimes even for unexpected reasons. Some people have argued that decentralized cryptocurrency is actually little more than a get rich scheme or a method by which one can easily launder money earned through illegal means.

See also

• Bitcoin: When you want to play with imaginary money.
• Tether: When you want to play with imaginary dollars.
• Gold standard (economics): When you want to play with soft, highly conductive, money.
• Inflation: When your money is worth less.
• Liberty Dollar: When you want to play with real, but incredibly illegal, money.
• Monetary policy: When you just want to play with a lot of money.
• United States dollar: When you're tired of using loonies.
• Greed: What happens when you have too much money.
• Sound money: No, it's not Bitcoin for musicians, but an aversion to fiat money (and often a weasel word for gold buggery, which is a specific variant of sound money).

External links

• U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion
• Web3 is going just great "…and is definitely not an enormous grift that's pouring lighter fluid on our already-smoldering planet." — Molly White's crypto critque blog