What Is Money?

  • metta

    Posts: 39108

    Jan 17, 2011 2:40 AM GMT
    This American Life, is one of my favorite podcasts. They recently did an episode to explain What Is Money.


    You can listen to the episode here:
    http://www.thisamericanlife.org/radio-archives/episode/423/the-invention-of-money

    Enjoy!
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    Jan 17, 2011 12:25 PM GMT
    Anybody aware that a US penny (pre 1981) contains just under 3 cents worth of copper? (To give an example of what is happening to money.) At this point, a 25 cent silver quarter is worth roughly the same as a $5 bill is today...

    Part way through listening... really, nothing new so far (aside from the description of "some egghead in a room waves a magic wand and creates money.") Money is worth exactly what people believe it is worth. The only reason a $100 bill is worth more than a $1 bill is what- the valuable ink and special paper, or because we all "know" it is? I think one of the best written books I have read on the subject is ""Fiat paper money the history and evolution of our currency." Which is the history from the Chinese thousands of years back to fractional banking to... It was written by Ralph T Foster (who I believe is a professor at Berkley.)

    In the spirit of this post I would like to list all of the countries whose citizens stopped believing that their paper currencies were worth anything at some point in the past. Angola, Argentina, Austria, Belarus, Bolivia, Bosnia and Herzegovina, Brazil, Bulgaria, Chile, China, Free City of Danzig, Georgia, Germany, Greece, Hungary, Israel, Japan, Krajina, Madagascar, Mozambique, Nicaragua, Peru, Philippines, Poland, Republika Srpska, Romania, Russian Federation, Taiwan, Turkey, Ukraine, United States, Yugoslavia, Zaire, Zimbabwe

    Actually, scanning that list, I notice it is incomplete as it does not include countries such as France and Sweden to name two right off the top of my head...

    Right now, Argentinians are buying new cars and parking them because they know that the car will be worth more next year than now.

    Zimbabwe had inflation of 100% PER DAY in the past. The value of your house would double each day in terms of dollars... However, your beer would cost twice as much if you bought it on your way home form work as if you bought it in the morning... What fun!

    Finally, how does the US dollar stack up looking at the purchasing power of $1?
    US_Dollar.jpg
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    Jan 17, 2011 1:03 PM GMT
    Well, I'm done listening. I wish they would have explained who "owns" the FED. I don't think that they bothered mentioning that the FED is made up of member banks. They did say that the government does not own it- but they did not bother to say who it is that has the ability to create a couple of trillion out of thin air and who usually benefits from that.

    It could be that they worried about the mental health of their listeners if they explained that the FED creates money out of thin air and then purchases treasuries from banks after having just explained that banks own them...

    Anyhow, good listen. Thanks.
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    Jan 17, 2011 2:39 PM GMT
    west77 saidWell, I'm done listening. I wish they would have explained who "owns" the FED. I don't think that they bothered mentioning that the FED is made up of member banks. They did say that the government does not own it- but they did not bother to say who it is that has the ability to create a couple of trillion out of thin air and who usually benefits from that.

    It could be that they worried about the mental health of their listeners if they explained that the FED creates money out of thin air and then purchases treasuries from banks after having just explained that banks own them...

    Anyhow, good listen. Thanks.