[FoRK] inflation / deflation; small point on currencies vs. money

Russell Turpin russell.turpin at gmail.com
Sun Sep 27 11:19:45 PDT 2009

On Sun, Sep 27, 2009 at 8:52 AM, Jeff Bone <jbone at place.org> wrote:
> ... it's worth noting that *all* currencies and moneys (read:  arbitrary
> stores of value) have a faith-based component. Even if you agree to give
> me some quantity of atoms with 79 or 47 protons in exchange for some other
> good, there are only two reasons I might have for agreeing to the trade.
> Either I have a direct, utilitarian application for that quantity of those
> metals (unlikely) *or* --- if I'm using it merely as a storage mechanism
> for value --- its use as such is dependent on my belief that somebody else
> will accept it in turn for some other good...

In the case of money, this doesn't require any faith at all. What
counts as money is a social fact. Of course, people speculate on how
the value of various currencies will change in the future, both
relative to each other and relative to other assets. But there is no
faith in the expectation that tomorrow the US dollar will be used as a
medium of exchange, used by the US Treasury to pay interest on bonds,
taken by the IRS as payment for taxes, manipulated by the Federal
Reserve in all the ways and for all the purposes discussed in this and
related threads, accepted by mortgage holders and other creditors for
payment of those debts, and by stores for payment for food, fuel, and
drink. That assumes, of course, the continuance of a variety of social
practices. It does NOT require that everyone -- and perhaps not even a
majority -- of those who participate in those practices to recognize
or understand that fact. I've known quite a few people who could wax
long on why the US dollar wasn't "really" money, using various
arguments they have practiced for decades, all the while working for
US dollars and paying their bills in US dollars.

Every society has its structures and practices, giving rise to facts
that are as important in the lives of its members as the laws of
physics or the facts of biology. These change, and how they change is
tied to changing beliefs, but it's not the case they change just by
people mistakenly thinking there is no there there about social facts.
Joseph Alois Ratzinger is the Pope. That is unfortunate for the world.
It is a fact nonetheless, and it is no less a fact because the
religion he believes is a fantasy.

Which means, I think, that I'm mostly not disagreeing with Jeff. ;-)

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