I see. So the primary factor that dictates the value of food is the nutrient content. So a box of oatmea is worth more than a box of Twinkies, and the Twinkies worth more than a jar of caviar? And the primary determinant of the value of a car is its ability to move you to where you need to go? So a Ford is worth the same amount as a Jaguar?
By this standard money also has real value. It can be used an a a marker of social status, used to light fires and used as an agreed unit of trade.
As is the ability to light fires or designate social status. But we both know that money does not derive its value from those traits. Just as we both know that the value of a Jaguar is not based on its ability to move people around. And the value of a Twinkie is not based on its nutritional content
Monetary worth is a purely subjective, human concept. Nothing in the universe has inherent worth.
Just because something has intrinsic value does not mean it cannot also have subjective value as well.
Other than its use as tinder or a bookmark. Money’s value as a marker of social status is a reflection of its representational value. Lose that and lighting your cigar with $100 bills means less than using a bic.
Money’s value is purely subjective. But material goods and services do have intrinsic value as well as subjective value. Otherwise why need money in the first place. Money is only worth what you can get for it. Thus what you get for it has worth.
The term intrinsic value is intrinsically valueless. No one in economics uses it anymore except in certain specialized ways. That any material has intrinsic value is now something to be debated among philosophers.
Yes, certain things, starting with air, food, clothing, and shelter, are necessary. That says nothing about their value, which constantly shifts, changes, and evolves. Money, as you correctly say, puts a numerical value on these things but it is a subjective value because the things themselves have only subjective value.
For the purposes of arguments like these threads, intrinsic value does not exist.
Not trying to salvage the idea but …
How much currency passes through the Department of Treasury (or is it the BPE) that could be destroyed? Is it enough to couteract some of the effects of a debt-sized influx of currency?
Intrinsic value absolutely does exist. Often it’s set as the market price but the market could fluctuate and over/undervalue many things. The inefficiencies in the market exist solely because of things being over/undervalued of the “correct” price.
Now there is not such thing as a specific dollar amount - no more no less - but certainly a range of accepted prices based on the utility of the good/service in question.
**St. Cad: **I don’t know the figures, but I can guarantee it’s too small to matter, plus the fed would never use such a primitive method to reduce the money supply.
I say “primitive” not to denigrate your idea, but just to highlight the fact that there are far more efficient and elegant ways of manipulating the money supply.
However just for the sake of argument, what you would be looking at is MB (monetary base) less excess reserves - which is basically all of MB.
Here is a graph of MB. Unfortunately, it doesn’t seem as if the St. Louis Fed (the keepers of monetary and other data) break out the components.
You’re saying something similar to the technical definition that I linked to. So I know about that definition and already discounted it in this context.
Essentially all of the National Debt consists of bonds. Anyone who has ever bought a federal government bond, has held part of the national debt. And that can be pretty much anyone who wants to. Some bonds are held by foreign investors, large and small, and some are held by ordinary citizens who are saving up for retirement or for their kids’ education.
It’s also worth noting that as of right now, the debt isn’t actually a big problem. The problem with going into debt is that you eventually have to pay it back, with interest. But as of right now, the federal government is able to borrow money at an incredibly low interest rate. When interest rates are low enough, it makes sense to borrow as much money as you can, and then put it all into investments that have higher returns. Admittedly, for most of the investments the government makes, it’s tricky to calculate exactly what their rate of return is, but the bar isn’t set very high.
Now, it’s certainly possible (even likely) that, at some point, lenders will decide that the return on government bonds isn’t high enough to bother with, or that the risk isn’t low enough to justify the low returns. When this happens, the interest rates on government bonds will start going up, and the government debt will start becoming a problem. At which point we should start solving it.
Chronos: I don’t really think you can properly say that there is an ROI (return on investment) when it comes to govt expenditures. Fiscal policy just doesn’t work that way. How would you calculate ROI for Medicare or defense or social security for example?
What agencies like Moody’s, Fitch and S&P look at is the ratio of debt to GDP. Once you go over 100%, that’s generally considered to be risky territory and I think that’s where we are now.
However the reason for the downgrade of our debt was primarily the gridlock in DC. If you read the S&P summary, it points to various economic reasons, but almost all of them have their roots in fiscal policy - or a lack of same.
a very good question;
Roosevelt signed executive orders his first week in office (easily searched for) that
declared it a crime to ‘hoard’ gold, or privately own it, and asked Americans to turn in their gold. (most didn’t)
Paper currency, bills up to that point said right in them ‘redeemable, or pay to the bearer on demand in gold or lawful money’, and afterwards they didn’t.
Roosevelt also signed orders at this same time declaring a banking emergency which amounted to the fed gov’t going completely bankrupt for good to the intnat’l banking cartel, who became it’s creditors. Since then, US citizens have pretty much had the status of collateral for this bankruptcy, since our future wealth production was all the fed gov’t had to put up. in a nut shell, this is why, as long as things remain the same, we will always be in debt; our currency isn’t real money; it’s beyond fiat currency because it’s debt bearing fiat currency, while that introduced by Ceasar was cheap copper, bronze, and it was created for the public that didn’t have gold to have currency to trade with. the fed reserve notes that we have now are like a cancer. a dollar now represents a debt, and not any value, quite the opposite. this is very ‘twilight zone’ sounding, i know, and it is. it’s really black magic being worked on us. If you look at a dollar ‘bill’, it reads like an IOU, or a restaurant bill. (Note means IOU in a legal dictionary). the creditor is at the top (the fed), and the signature of the secretary of the dept. of the Treasury is at the bottom, acknowledging the debt, the IOU.
the problem is, that it’s an IOU for nothing…An IOU for another IOU at best. Go into a bank and ask them what this note is an IOU for and see how fast you get ushered out.
the American public will always be in debt for this reason too: when the fed prints FRNs they are owed, with interest back to the fed. where can the interest mathematically come from? the bankers know math. they know it’s a debt that can never be paid back when they make the ‘loan’.
So this really explains why Congress just runs up a black hole of debt without blinking.
because non of it is real. FRNs are not even monopoly money, or play money.
whether the nat’l debt is $1 or 20 trillion, we will have to continue slaving, and going to work in order to hand over our labor, time, and ingenuity, (which is really what wealth amounts to) to the bankers and their corporate allies (including central gov’t) forever,
or we can say ‘no, this isn’t my debt, thank you very much.’
A common misconception (which I’m not necessarily accusing you of having) is that national debts represent what each nation owes to the rest of the world.
But it’s just government debt, and much of the US national debt is owed to US citizens and corporations. About 52%.
According to the same cite, around 30% of the national debt is in the form of federal or private pension funds. So one consequence of printing (and devaluing) dollars is lots of Americans would find their retirement funds would drop substantially in value (in real terms).
If no one bought your bonds, and any bank in the world realizes that you can’t give out four billion hugs, they did not advance you any hug-notes, if indeed that’s all you could have used to buy your island.
So either the original owner got chumped and you’re starving because you can’t pay for anything because of inflation (besides the fact that, unless you decide to uselessly print more hug-notes, you have no more),
Or you’re starving and have no island, and are actually even more delusional, and psychotically consider yourself a prince, which is one thing, and then of an island you don’t even own, because the original owner wasn’t such a chump, and you’re actually stuck with your run-down apartment in a sketchy part of town,
And reduced to giving thousands of hugs an hour just to get by. And then your hugs start to become less-quality even as intrinsic worth and your little economy collapses further.
I’m not sure if that last bit is analogous to inflation, or muddies the issues. I half-meant it as a consequence.
And the apocryphal story goes that someone took their eyes off their wheelbarrow full of cash for a moment and when they turned around they found the cash dumped on the road and the wheelbarrow stolen.
We went through a period of hyperinflation here in Israel for a couple of years in the 1980’s, when I was just a kid. I think that’s the reason I rarely keep cash around - I still have the nagging feeling that it will only be worth half as much next week.