Money
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Money has value established by social convention and law, not nature. It serves as a measure of value and medium of indirect exchange. Throughout history, there has been an ongoing debate over whether money should be controlled privately or publicly directed for the common good. Modern debates focus on issues like whether money should be backed by gold, the role of private banks in money creation, and the power of central banks.
![Trade Circuit: Tobacco for Woolen textilesSTEPSBlue stickman exports woolen textiles for foreign currency (cowry shells). He trades woolen foreign currency for tobacco.He then imports tobacco, selling it for domestic currency.He purchases more woolen textiles with domestic currency, in order to export…. [go to step 1]](https://image.slidesharecdn.com/money-110926121739-phpapp01/85/Money-41-320.jpg)
Money
- 1. Money
- 2. What is money?“Money (nomisma) by itself is but a mere device. It has value only by law (nomos) and not by nature.”Aristotle defined money as the measure of value.
- 4. John Kenneth GalbraithFamous Quotes:"The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled. With something so important, a deeper mystery seems only decent.”"Under capitalism, man exploits man. Under communism, it's just the opposite."(1908 – 2006)
- 5. MoneyNomisma (law, or binding custom = nomos); doesn’t appear until 400BC in Herodutus; doesn’t appear again until 400 years later.. This word nomisma doesn’t appear in ancient Greek texts. Concept of nomisma is suppressed! Introduced by democratic Greek polis. Battle emerges, traced back to Aristotle’s timeWill money be controlled by private groups, or whether it is controlled by public institutions (government); latter gives you at least the chance that money control will be directed for the common good.
- 6. Greenbacks were not a promise to pay something else; not borrowed from banks; did not create a debt or interest payments; government had power to determine where it entered circulation.Are we removing a concept from language? The concept of money? Money is NOT credit. General Butler: “Greenback is a certificate of value” (not debt). Money is an abstract legal power; a power of government or society (not a promise to pay; does not represent gold, silver, etc.) Aristotle: “money exists not by nature but by law”Locke and Franklin: money as a pledge for wealth, rather than wealth itself.Del Mar: money is defined by law: function to pay debts and taxes.AMI: abstract social power embodied in law, as an unconditional means of payment.
- 7. If gold is made money, then those who have the gold control the money supply! Removing monetary power from society!There is a monetary power deriving from society, whether you admit it or not**. Fed is a 4th branch of government already, but out of control. Must be recognized as such!Nationalize Federal Reserve.
- 8. Adam Smith: mis-defines money. Aristotle, Plato, Bishop Berkeley, etc. Defined money (40 years before Smith); Benjamin Franklin wrote a book on money, as well as Locke!Smith introduces mythology of money into economics (from which it has not recovered). Must come up with a good, basic definition of money! Smith defines money as gold and silver (without any regard to the mark on the coin!) Reg
- 9. 90% of mortgages backed by US government!“Poor people have cheated us!”- Wall St.1980-2008 steady decline in interest rates: constant boom in bond markets, stock markets. Lower interest rates lower standard of living! Does NOT re-channel investments into productive activities; asset price inflationEuropean central bank – says its illegal for governments to “monetize their debts”! Greek crisis, etc. Labor squeeze. Latvia- public sector wages falling 30%!! ½ schools closed down; doctors told to emigrate; all of Europe being sold the same system! Governments that do not cut their budgets, below 60% of GDP, will be fined! Why? NOT ENOUGH MONEY!!! ? Can’t pay both people and banks!Debt peonage: (most banks in Sweden?)
- 10. Few domestic banks in Latvia, Lithuania, etc. Foreign banks control. Government should supply banks (100% reserve) with money. Government “postal savings banks”- function like savings banks used to in the US. Government creates credit. **Financial system was criminalized in the US during the 1980s** Banks don’t supply productive capital; that’s the function of stock market and venture capitalParasitic capitalism
- 11. When increase in debt exceeds increase of capital gains; the point at which things are insolvency…Not a cycle! (as in Schumpeter’s), but a ratcheting effect, ratchets up and up and up…What has recovered? Not the economy, but a new power elite! The recipients of the bailout! AIG, $2 trillion cash for trash swap with commercial banks, etc.Give away = largest transfer since the railroad land grab by barons in 19th century
- 12. Parasites…Lower american wage standards by 30% or else banks won’t survive in present form!!! Obama and republicans keep debt in place way beyond ability to pay- save the banks!Iceland, Latvia, Lithuania, etc. How far can you reduce living standards before labor fights back?Banks are parasitic- extract, siphon off hosts nourishment; but you must also numb the host- e.g. a chemical, that immediately deadens nerves; enzyme released into the brain, so that host thinks parasite is part of it!
- 13. Japan and Germany: equity against ownership?? Banks interests and customers coincided! McCarthy argues that mafia needed in Japan to fight communists! Needed Japan dependent upon US.
- 14. Market exchange between independent producersProducer AProducer BProducer C
- 15. Market Context between organizationsWithin firm A(non-market context)Within firm B (non-market context)
- 18. Inequality
- 41. Trade Circuit: Tobacco for Woolen textilesSTEPSBlue stickman exports woolen textiles for foreign currency (cowry shells). He trades woolen foreign currency for tobacco.He then imports tobacco, selling it for domestic currency.He purchases more woolen textiles with domestic currency, in order to export…. [go to step 1]
- 42. Bills of Exchange and Payment at a DistanceBill of exchange
- 43. CIRCULAR FLOW: MONEY AS MEDIUM OF INDIRECT EXCHANGEA$$$$SPICESUGARBCGRAIN$$
- 44. MONEY AS MEDIUM OF INDIRECT EXCHANGEA$$$$SPICESUGARBGRAINC$$
- 49. CIRCULAR FLOW: MONEY AS MEDIUM OF INDIRECT EXCHANGE
- 50. Debt as medium of indirect, but asymmetrical exchangeSUGARSUGARBCAIOUSPICESPICE
- 51. Debt as medium of indirect, but asymmetrical exchangeSUGARSUGARBCA$ IOULending $10Lending $100
Editor's Notes
- #4: Jean Cartelier, CJE (1991: 259).