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You are quite right about my rudeness!<br />
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Let me tell you at least where this comes from.<br />
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Knowing how money functions, I am completely aghast about the complete ignorance about the potential of money. I see people launching wars. I see people do the most extreme atrocities toward each other. And that while I see that this is completely unnecessary!<br />
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I see, though, where it comes from.<br />
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Economically speaking it comes from The Labor Theory of Value, and the tremendous way it has spread all over the world in the form of Socialism, Marxism and Communism.<br />
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I see that people do not get one simple thing. Namely, that division of production and exchange is the only source of survival and even wealth of all of us! The days of the hunter/gatherer are really over!<br />
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You said you understand now that we are never paid for the work we do. We are only paid for the results of our production we offer against money. This, and <i>only this</i> gives money its buying power.<br />
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And it is the buying power of money, and <i>only </i>the buying power of money all our lives depend on.<br />
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Now consider this. If you produce for money, you might be motivated by self-interest, but your actions are for the benefit of others. Therefore, money has the potential to unite all of mankind.<br />
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Moreover, through specialization in production, Mr. A becomes better and better in producing X, and Mr. B becomes better and better in producing Y. Which means, that for Mr. A, according to my definition, X gets less and less value. But since Mr. B does not specialize in X, but in Y, the value of X remains high for Mr. B. But for Mr. B Y will have a lower and lower value, because he is specialized in B.<br />
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Therefore, Mr. A destroys for himself the value of X, but it remains high for Mr. B. And Mr. B destroys the value of Y for himself, but it remains high for Mr. A. Therefore, if they make an exchange of X against Y, they both give up something of lesser value to themselves for something of greater value to themselves. They provide each other with the value they could not produce for themselves, because, so I assume, their specialization takes all of their attention and energy. You cannot be specialized in everything you need for your survival.<br />
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If this happens with thousands of products and thousands of specializations, the world as we see it emerges. Just look at all the stuff you undoubtedly have. Virtually nothing you have made yourself. They are the result of specialization and division of production. Therefore, through this system of division of production and exchange, we all take care of each other motivated by our self-interest.<br />
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And, if you <i>really and fully realize </i>that this is <i>the one and only source of the survival of us all, </i>you will see every fellow human being as a potential contributor to your own life.<br />
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So, if I then see somebody like you who does not show to see the principle of what I am trying to tell, it makes me literally <i>furious! </i>How can it be, that you didn't get it? How can you make such extremely <i>stupid </i>remarks, even attacking what I said, 'not seeing the gold' as you said, while I had made perfectly clear, and, you admit it even above, that you had understood my point? Namely, that we are never paid for the work we do, but only for the work we make unnecessary for others?<br />
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Doesn't that imply, once understood, that this terrible thing that is introduced into our world, Marxism, that has killed literally hundreds of <i>millions </i>of people, and which causes at present the hardship of a quarter of the world population (I speak of China and the Chinese citizens) has been completely unmasked as, to use MJ. DeMarco's words, as hyperreality'?<br />
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<i>How can that not be gold?</i><br />
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Thát was it, what made me <i>furious </i>about your remarks!<br />
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To dismiss something that can defuse the biggest mistake of humanity, as 'not seeing the gold?'.<br />
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In the meantime, I have understood, that my reaction to you was highly inappropriate!<br />
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Therefore I apologize!<br />
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After all, I realized, you did me a great favor by showing your lack of understanding. At least you <i>communicated </i>it to me! Because if there is <i>one </i>person who says it, there will be 20 to 30 who will have the same lack of understanding, but just keep silent.<br />
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It did me realize one thing.<br />
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This forum <i>is not the place </i>for me to explain value and money. Not that nobody is interested. But simply because I <i>have to address </i>those things that popped up in your mind, and explain more completely, and more calmly how much you underestimate even this simple example and all that it implies.<br />
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It is <i>my task </i>to explain these things, and not for you to think those things through, and find out for yourself all the nuances. It became clear to me, that it took me decades to see those nuances. The biggest obstacle to this was to free myself from the Labor Theory of Value, because it was deep embedded in me. And, so I realize, it has to be deep into the minds of others.<br />
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There is also the problem, that if something looks very simple and pure common sense, people usually do not realize how much struggle it might have taken the person to arrive at that clarity. As such it is similar to the following. To multiply two very huge prime numbers to calculate the product is peanuts for any computer to do. But being given the product, and then trying to figure out the two huge prime numbers that, when multiplied, result in the given number given, can takes even the most powerful computer we have many times the lifetime of the universe!<br />
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This is why such things as Aristotle's logic which was the very start of Western culture, and was as important as the discovery of fire, Copernicus's description of our solar system, which was the start of real astronomy, Newton's laws, which was the start of physics,, Darwin's evolution theory, which was the start of real biology, Popper's revolutionary solution of the Induction problem, which was the start of modern science, Rothbard's principle of Justice (which not many know of as yet) which is the start of a science of Justice, and, yes, my definition of value, which is the start of a genuine science of economics, are so difficult to come up with!<br />
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For me, to have arrived at my definition of value is not just the result of my own 'brilliance', but it is the result of the work of many thinkers since Aristotle, all of whom have uncovered part of it. This includes even Marx, because in his argument of exploitation of the Proletariat by the Bourgeoisie there was one very interesting insight, without which I would have never arrived at my definition of value!<br />
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Once you understand each of the above principles, (i.e. Aristotle's logc, Newton's laws, Darwin's evolution etc) , one is astounded by the fact that such simple principles can be so powerful! For example, how if you <i>really </i>understand Darwin's evolution, that you see how God is a vastly inferior explanation for the diversity of life.<br />
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In my case, once people understand that every fellow human being is a potential contributor to the lives of every other human being. That is, if only people would understand how society is <i>the thing all of our lives depend on. </i>And that society can only function, and create not only the survival of everybody, but even the wealth of the very rich, all social conflicts will stop, and we can all have a standard of living only the present billionaires can enjoy!<br />
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That is what is at stake!<br />
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I do not care whether I am seen as intelligent or not. To be honest, I rather live in complete anonimity, and spend all my time figuring things out. And, in fact, I have done this basically my entire life. I have used my knowledge and understaning of money not to become rich as MJ. Demarco did. In fact, I didn't know how to do that. What I <i>did know </i>is how I could, by just working for 2 hours a week, earn enough money to get everything I need. (But barely! That is wy I call myself a Sidewalker!) I could reduce my indenture time to just 2 hours a week, and the rest was free time. I find this enough. And, to be <i>really honest, </i>I have understood the essence of intelligence, through my investigations of computer languages.<br />
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Did you know, that it is possible to make a computer program, consisting of just <i>three lines of code, </i>which can generate <i>all bit patterns?</i><br />
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Or, let me say this in ordinary words. One can make a computer program, consisting of just three lines of code that can generate <i>all information patterns that can exist, </i>as long as you let it run long enough. Or, in laymen's terms, you can make a computer program consisting of just three lines of code that will generate anything and everything people will ever think of!<br />
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<i>Just three lines of code!</i><br />
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Now, put a selector on this computer program, and you have a computer program that can solve <i>all </i>problems, as long as you let it run long enough. This is what artificial intelligence, the technology that is now emerging, makes possible.<br />
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Such a computer program can simulate evolution. And since evolution itself is a form of intelligence, you then have created an intelligent computer. And that from a computer program consisting of just three lines of code and a selector!<br />
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This, by the way, explains how from very simple beginnings we ourselves could emerge. These 'three lines of code' can be found in Eukaryotic cells, at work in the form of chemical processes. This is the basic principle behind all forms of existence that move from simple to complex.<br />
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In other words, intelligence as such is a pretty <i>primitive </i>phenomenon! Therefore I do not care a hoot about being considered intelligent, or care at all about the intelligence of others. When I hear somebody say how intelligent he is, it sounds to me as stupid as hearing a cheetah bragging about how fast he is!<br />
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Intelligence is our nature. Just like running fast is the nature of a cheetah. Basically, <i>all </i>Cheetahs are fast. And <i>all </i>human beings are intelligent. The only difference is, that using intelligence takes effort. And many people avoid that.<br />
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Whether you use your intelligence, and what you <i>do </i>with it. That is important!<br />
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In any case, I have overestimated my own ability to explain things simple, even if they are simple for me. To <i>really </i>explain value and money requires at least a book. I see now that there is no way around this. And thanks to you I have now understood this.<br />
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In any case, I am going to leave this forum. I shall put in a new article what I have written already, but I do not expect others to see the nuances directly anymore.<br />
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I have done quite some work leading up to my current understanding. I have published a book on Amazon Kindle, with the title: 'The Six Foundations of Money'. I am not satisfied with that book, because only <i>after </i>having written that book, I understand, in a huge brainwave the point I have already explained. Namely that we are never paid for our labor time. We are not even paid for labor as such. We are paid for production. And that does not only arise out of our labor, but also out of our use of natural forces in the form of tools, our command over life through farming, and through mining. This is something Marx totally overlooked!<br />
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In any case, my book, published on Amazon, is close! It shows a description of the distinction between utility and value. It shows exactly what money is and how it functions. So it contains many very important insights about utility, value and money, how they interact, and how money solves a host of problems of barter.<br />
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And, to answer your question about the difference between money and currency. <i>There is no difference! </i>My book: 'The Six Foundations of Money' explains that fully, because it at least explains what money is and how it functions.<br />
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Here is the link:<br />
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<a href="https://www.amazon.com/dp/B09DGS7X9N/?tag=tff-amazonparser-20" target="_blank" class="link link--external" rel="nofollow ugc noopener">Amazon.com: The Six Foundations of Money: If You Really Understand Money, You Can See Far More Ways To Get It. eBook : Swart, Konrad: Kindle Store</a><br />
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So, I shall post here what I already have written, and then devote my time to a more thorough explanation.
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</blockquote>Here is the rest.<br />
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<h3 class="bbHeading"><a class="u-anchorTarget" name="-value"></a>Value​<a class="hoverLink" href="#-value" title="Permanent link"></a></h3>But, indeed, I have made enough claims. Let me now begin in earnest!<br />
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Here is my description of value.<br />
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To begin with, value is dependent on the individual, but it is not subjective! Value is not an ordinal quantity, as Ludwig von Mises asserted.<br />
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I want to do it step by step. I explain it by a method I learned from Eugen von Böhm-Bawerk, which consists of first starting simple, and then adding more and more to it. The first step is not (yet) realistic. But by adding to it, it gradually becomes consistent with reality. So, if I begin, do not just jump immediately to some exceptions. First, follow the general line.<br />
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Imagine an individual, who wants to accomplish something, anything. Something that, for now, I assume, does not yet exist. Now, the time this individual needs to accomplish that result he imagines is the amount of value that result has for this individual.<br />
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Time is measurable. Therefore value, defined in this way is measurable. However, since there are huge differences in the amounts of time different individuals need to accomplish the same result, value depends on the individual. In most cases, it depends on how fast an individual is capable of realizing what he imagines, whatever it is.<br />
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That what he imagines can be a good, a service, but it can also be that some dictator wants a very powerful bomb to destroy a neighboring country with just this one bomb. So, my definition of value does not only apply to production or building something. It is also possible to apply it to destruction.<br />
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Now, let me apply my definition to the simplest example I could find. It is a very simple example, which nevertheless shows the most important aspects of value. It takes a teeny weeny little arithmetic. So don't be put off by that.<br />
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Imagine two farmers. Let us call then Charles and Bob. Both can make cheese, and both can make butter. But there is a difference in how fast they can produce either cheese or butter.<br />
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To be precise, Charles can make, in one day, one kilo of cheese. But to make one kilo of butter would take him, say, 5 days. Bob on the other hand needs, say, 10 days to make one kilo of butter, and he needs a whopping 20 days to make one kilo of cheese.<br />
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Now my last assumption.<br />
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Suppose Charles wants one kilo of butter, and Bob wants one kilo of cheese.<br />
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According to my definition of value, the value one kilo of cheese has to Charles is equal to one day of production time, and the value one kilo of butter has to him is equal to 5 days. And the value one kilo of cheese has to Bob is equal to 10 days of his production time, while one kilo of cheese has a value to Bob equal to 20 days.<br />
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Now, if Charles produces the kilo of butter he wants by himself, he needs 5 days of his production time. And if Bob produces the kilo of cheese he wants by himself, he needs 20 days of his production time.<br />
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But now imagine they strike a deal. Charles produces the kilo of cheese Bob wants, and in return Bob produces the kilo of butter Charles wants. Assuming they meet after one month, Charles has spent one day producing 1 kilo of cheese, which has therefore a value to him equal to one day of his production time. And Bob has spent 10 days producing 1 kilo of butter which has a value to him equal to 10 days of his production time.<br />
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Charles now gives up the kilo of cheese he has made for Bob, and Bob returns the favor and gives his kilo of butter to Charles.<br />
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In this exchange, Charles gives up something that has a value to him equal to one day of his production time, the kilo of cheese he produced. But he gets something back that has a value to him equal to 5 days of his production time. Therefore, thanks to his deal he has obtained an advantage of 4 days of avoided production time!<br />
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Likewise, Bob gives up the kilo of butter which has a value to him equal to 10 days of his production time. But he gets something in return that has a value to him equal to 20 days of his production time. Therefore, thanks to this very same deal he has obtained an advantage of 10 days of avoided production time!<br />
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Notice several things here.<br />
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To begin with, the kilo of cheese has, according to my definition of value, a value to Charles equal to one day. But, even though this kilo is produced by Charles, it still has a value to Bob equal to 20 days! Because that is the amount of production time he would have needed to produce that kilo of cheese by himself. So, it does not matter to Bob that it took Charles just one day to produce that one kilo of cheese. Its value will still be 20 days to him!<br />
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Likewise, the fact that Bob needed 10 days to produce the one kilo of butter for Charles does not mean that the amount of value Charles receives in the form of one kilo of butter is 10 days. Nope. the (gross) amount of production time he receives in the form of this one kilo of butter is just 5 days!<br />
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This shows, that in exchange the actual amounts of production time parties who exchange with each other to benefit from each other does not play any role whatsoever!<br />
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The amount of labor time you spend to produce goods or create services for others is not equal to the amount of value those others receive from you!<br />
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Economically speaking, labor does not produce value!<br />
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Your expertise and your productivity creates value to others! Indeed, only the results count! Your tools and machines make you more productive, and therefore you can deliver more value to others! By making it unnecessary for others to spend lots of time to produce goods and services they are not good at producing, you deliver value without creating value. In fact, you are doing the exact opposite! Through specialization you are destroying value!<br />
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If you realize this, then you also realize that the foundation of our entire Scripted society is totally and utterly wrong!<br />
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To be precise, the reward Charles gets from Bob by exchanging his cheese depends only on the amount of production time he is able to avoid! That it took Bob 10 days to produce that kilo of butter was totally unimportant to Charles. His benefit just consists of the amount of production time Charles is able to avoid through that exchange. And that is 4 days.<br />
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Also, it is, to Bob, totally irrelevant that Charles could produce this one kilo of cheese in just one day. When he received the cheese, he got something that has a value to him equal to 20 days! And his net advantage is 20 days minus 10 days = 10 days of avoided production time.<br />
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Also, notice the following.<br />
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Charles needs one day to produce 1 kilo of cheese, while Bob needs 20 days for that. Therefore Charles is 20x more productive in making cheese than Bob is. No surprise here.<br />
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But Charles also needs only 5 days to produce 1 kilo of butter, while Bob needs 10 days for that. Therefore Charles is 2x more productive in making butter than in making cheese!<br />
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So, although Charles is better, that is, more productive in producing both cheese and butter, both benefit from this exchange. That Bob benefits from Charles is no surprise, because Charles is the more productive of the two. But that Charles can benefit from Bob, while Charles is better in producing butter than Bob is a huge surprise!<br />
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Notice also something else that is very strange. The advantage of Charles is just 4 days of avoided production time, while the advantage of Bob is 10 days. If you think about this, you might come to a shocking realization.<br />
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Charles, the more productive of the two, has the smallest advantage. He has the smallest advantage exactly because he is the more productive of the two!<br />
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This shows a general principle. In a free market, the least productive and competent people benefit the most! They benefit the most exactly because they are less competent and productive!<br />
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You might think that this example is not new. You might think that this is just Ricardo's principle of Comparative Cost/Value. But you would be mistaken!<br />
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Ricardo formulated his principle in terms of the amounts of butter and cheese produced by two countries. He started with man-hours, and then looked at how much two countries could produce from a given amount of man-hours available, and how specialization means that given a certain amount of man-hours, both parties could have more through exchange. But, by doing so, he had no clear picture what was going on. His principle of comparative cost/value has only been considered a numerical curiosity. But to me it is one of the two foundations of my vision on value and money!<br />
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My example is different! I start with how productive the two parties are, and look at how much time each needs to arrive at a certain result. In other words, I have described a reverse problem.<br />
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Ricardo, fully entrenched in The Labor Theory of Value, started with man-hours and derived this apparently same surprising result. But he hadn't understood what he had found, because he was blinded by The Labor Theory of Value. He therefore did not realize, that his principle basically refuted the entire Labor Theory of Value.<br />
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My example makes clear what is going on. This is because I start with production capability and look at how much time individuals need to arrive at certain results. I even cast it into the very definition of value! And that is a huge difference!<br />
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Within mathematics there was, at the end of the 18th century, a problem with elliptical integrals. A scientist, if I remember well, it was Abel, worked for 20 years on a problem involving these mathematical constructs, and he progressed very slowly. And then there was a newcomer, who considered inverse functions, and he produced all the results of this other mathematician in just two weeks! And after that he produced in the next year far more results than this other mathematician could ever get with his approach!<br />
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My point is: that inverting problems can have huge consequences!<br />
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I have inverted Ricardo's example. And therefore I have now succeeded to describe, in principle, where the advantages of barter come from!<br />
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Look again at this example. Neither one is rewarded for the actual amounts of time they needed to produce what the other wanted. In other words, in this exchange, neither one was rewarded for the actual amount of labor or production time they had needed to produce what the other wanted.<br />
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This proves my assertion, that we are never rewarded for the actual amount of time we spend producing goods and services. We are only rewarded for the amount of time we make unnecessary for others to have what they want.<br />
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The strange thing is that Adam Smith, in his Wealth of Nations, and in his very definition of value, mentioned the the value delivered in exchanges is indeed the amount of labor time the other would not need to spend. His mistake was that he thought that the amount of labor spent is equal to the amount of labor the other would avoid. Adam Smith did not take differences in productivity, and therefore specialization into account.<br />
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That was the big mistake of Adam Smith!<br />
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Through becoming better in a limited number of things. That is, by becoming more productive through our training, we make what we want to offer to others less valuable for ourselves! Or, to say it more bluntly, if we train in different things, we are training ourselves in destroying the value the things we specialize in to have for us. But, although we destroy the value for ourselves, exactly because we specialize, the value is not destroyed for others, who are not specialized in that what we are specialized in.<br />
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If this point is not clear. Suppose Bob, the butter maker, invents a method whereby he can now produce the one kilo of butter in, say, 6 days instead of 10. If he then exchanges one kilo of butter in exchange for one kilo of cheese produced by Charles, his benefit becomes 20 - 6 = 14 days. So, through specialization, Bob has destroyed some of the value a kilo of butter has to him. And, as a result, he receives a greater benefit from his exchange with Charles.<br />
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This is how society creates the survival of us all!!<br />
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Just look around in your room at everything you have. Imagine that you would need all of it by yourself. How much time would it take you to produce your smartphone by yourself? A hundred thousand years maybe? Maybe a million years? That is the value your smartphone has to you! But thanks to being specialized in just a few things, you obtain the money you need to buy the smartphone in maybe one or two months, if not much sooner!<br />
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If you really get all this, you are now prepared for the second part: my explanation of money!<br />
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I shall continue with that tomorrow if there is nothing else that will ask for my attention. But for now, I leave it at this.<br />
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<h3 class="bbHeading"><a class="u-anchorTarget" name="-continuation-of-value-and-money"></a>Continuation of Value and Money​<a class="hoverLink" href="#-continuation-of-value-and-money" title="Permanent link"></a></h3>One person has protested my description of value. He protested, because since Charles needs only one day to make 1 kilo of cheese, while Bob needed 10 days to make 1 kilo of butter, Charles has to wait for 9 days, after having made his kilo of cheese before he can make the exchange. Therefore, this person asserted, my whole argument is moot.<br />
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To answer this response. We are dealing with continuous production here. But his objection can be answered more fully, if one considers money.<br />
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But even without it I can show that it is not a real objection. Since we are talking about continuous production, after a period of 10 days Charles can make an exchange of 1 kilo cheese against 1 kilo of butter. If he needs 10 days to consume this butter, he only needs to work 1 day after 9 days to produce a kilo of cheese. In the meantime, Bob has made the 1 kilo of butter for Charles.<br />
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If this deal did not exist, Charles would need 5 days to produce the 1 kilo of butter by himself. So, thanks to this <i>continuous supply </i>of butter by Bob, each 10 days, Charles has 9 days off instead of 5 days off.<br />
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Also, Charles can use the full 10 days to produce 10 kilos of cheese, and serve 10 people like Bob, all of whom are then able to avoid 10 days of production time. This, if Charles consumes 10 kilos of butter in 10 days, and all those Bobs consume 1 kilo of cheese in 10 days.<br />
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The whole point of my example is <i>to show principles! </i>I have <i>not anywhere </i>suggested that this is a real scenario!<br />
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For a full explanation of all my points, I suggest, order a book from me. I have written two books for sale now. One with the title: ‘The Value of Money’, and the other with the title: ‘The Six Foundations of Money’. I have published this last book on Amazon Kindle. Although that book does not contain the big point I am making here, which is that we are <i>never </i>paid for hours of labor we <i>perform, </i>but we are paid for production time we make unnecessary for others to get what they want. As such it is therefore a full refutation of The Labor Theory of Value, which is the foundation of the existence of both the Sidewalk and the Slowlane.<br />
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<h3 class="bbHeading"><a class="u-anchorTarget" name="-money"></a>Money​<a class="hoverLink" href="#-money" title="Permanent link"></a></h3>So, let me now continue with this explanation. Let us turn our attention to money!<br />
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The question now is: what is money? And how is it connected to my example of Charles and Bob?<br />
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To introduce this, I will first extend the story of Charles and Bob by introducing money. Then show what happens, and which problems are solved by it. Among them, by the way, this synchronization problem above.<br />
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So, what happens if Charles and Bob do not exchange butter and cheese directly, but use money as an indirect medium of exchange? And why should they?<br />
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Let me, before I go on, return to my definition of value. Let me change it slightly.<br />
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The value that anything that exists has for any individual, is the total time that individual would have needed to realize that anything.<br />
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And now that I have given this definition, I want to give another definition that goes with it.<br />
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<i>The cost </i>of any result an individual imagines, but which does not yet exists, or which exists but he does not own or has a right to have access to, is <i>the total time he would need, or would have needed </i>to realize that result <i>without the help of anybody else!</i><br />
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Notice that this second definition contains two new things. <i>Ownership </i>and <i>access!</i> I return to the significance of these later.<br />
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What I now want to point out, is that my definition of value contains a huge problem. <i>Value, as I define it, depends on the individual!</i><br />
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Hadn’t I asserted, that this dependence on the individual basically means that this is the basic flaw of the whole Austrian approach to economics? Ludwig von Mises defines value as: ‘the importance acting man attaches to ultimate ends’. (Human Action, Page 96 Human Action, Third Revised Edition. Contemporary Books Inc. Chicago.)<br />
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However, my definition, although it is different, seems to suffer from the same problem. In my definition, value is measurable, but it depends on the individual also! And if that is the case, my critique that demolished the Austrian school of economics applies to my approach to economics too!<br />
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How to fix this?<br />
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My solution is in principle this. I want to introduce a definition of a new kind of money, which I call <i>perfect money, </i>which has the same value <i>for every individual, </i>even though value <i>always </i>depends on the individual.<br />
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But, you might ask: if value depends on the individual, how can this even be possible?<br />
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My solution is: I introduce a kind of money that has <i>an infinite </i>value <i>for everybody!</i><br />
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I shall now introduce a form of money, a substance if you like that can be divided into enough parts so that it can be used as a coin, but whereby every part has an infinite value <i>to everybody.</i> I call this <i>Perfect Money.</i><br />
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This kind of money cannot exist. But whenever something is even just <i>an approximation </i>of this ideal of Perfect Money, it can function as money, because it then has <i>somewhat </i>the property of Perfect Money.<br />
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So, theoretically speaking, what might be Perfect Money?<br />
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Suppose the earth has been struck by a comet of a substance that has formed by some complicated astronomical process. Say, this substance is formed when two black holes and a sun simultaneously collide with each other, resulting in a very complicated kind of explosion whereby many materials are formed that would never form by any other process. Suppose this extremely rare event has occurred only once. Let us also assume that only one rock of all these rocks consists of a unique substance that <i>nobody </i>would <i>ever </i>succeed in producing in a laboratory.<br />
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For example, it is a substance consisting of atoms with an atomic number of 628, and an atomic weight of 30642, say. This is a purely imaginary material. But suppose it exists.<br />
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Let us assume that this material can be subdivided so much, that it can consist even of separate atoms, but it is chemically completely inert. Except that it can form into a solid. Moreover, the amount of this material that is left over after it has hit the earth is about ten times the total amount of gold we have ever dug up. In other words, this rock that fell to the earth is <i>the only such rock that can ever exist!</i><br />
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The material looks ugly, therefore it cannot be used as jewelry. The conductivity of this material is so-so, therefore it cannot be used in any electronic device. Its binding is too weak, therefore …. I can go on and on and on. The point is, this material cannot be used <i>in anything and for anything practical! </i>It is, technologically speaking, a totally useless material<i>!</i><br />
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Let us give this material a name. I choose a name from Star Trek Deep Space Nine. A name I got from the Ferengi. Let us call it Latinum.<br />
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Now let us look at this material from heaven, this Latinum. Let us cut off a little bit of this Latinum comet. Say one gram, and you receive it. Now ask yourself, given my definition of value. What is <i>the value </i>this gram of Latinum has to you?<br />
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Just apply my definition.<br />
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Since you cannot produce this Latinum yourself, because it is the result of an extreme astronomical process, this gram of Latinum has <i>an infinite </i>value to you! Not only to you, but it has an infinite value <i>to everybody! </i>That is, if you apply <i>my </i>definition of value to it!<br />
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If you <i>don’t </i>have <i>any </i>Latinum, you cannot produce it. Therefore, again, abstractly speaking, <i>the cost </i>of this gram of Latinum to you <i>is also infinite!</i><br />
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This applies to everybody.<br />
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This imaginary material has two properties for everybody.<br />
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<ul>
<li data-xf-list-type="ul">It is <i>completely useless!</i></li>
<li data-xf-list-type="ul">It has <i>an infinite value!</i></li>
</ul>If money is totally useless, but it has an infinite value, then people <i>want </i>it to <i>spend </i>it.<br />
Gold and silver, for example, are not completely useless. Gold can be used because it is, chemically speaking, the least reactive material and a good conductor of electricity. That is why it is used in electronics. Likewise, silver is ideal for wiring, because when it rusts, the rust also conducts electricity. This is not the case with copper.<br />
When money cannot be used in anything, but it also has infinite value, there is only one way to get it. And that is by offering goods and services in exchange. The only reason you would want it is because <i>others </i>offer goods and services in excnange. So, if money is both totally useless but has an infinite value, nobody can produce money directly. Nobody can therefore use his production of money to get goods and services from others without contributing anything. Or, said simpler, if nobody can make money directly, nobody can <i>steal </i>goods and services from others. That is, by the way, why I hate our present banking systems so much! They have legally condoned forms of mass-theft!<br />
If nobody can make money directly, all can only get it by offering goods and services. In other words, everybody can only get it by contributing to its buying powers. Everybody can only get it by contributing to society!<br />
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All forms of money ever invented contained the basic flaw, that some people could increase the total amount in circulation. This applies to gold, silver, and even to all cryptocurrencies. Their quantitiers in circulation can all be increased. But the more difficult this is, the greater its value, and the better it is suitable as a money. Only if people begin to use some huge collection of NFT (Non-Fungible Tokens) as an indirect medium of exchange, as a money, you might have something very close to Perfect Money.<br />
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Also, if money is totally useless, people only want it to get goods and services in exchange for it. Therefore, paradoxically, all who want money only want it to get rid of it! Because you would only want to have money for buying goods and services, that is, get rid of it at some future date! Therefore, there is <i>never </i>a so-called <i>hoarding problem </i>with money. Either the owner of those who inherit from them will definitely spend it at some future date!<br />
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This implies, that all this scary talk of bankers about deflation, and that that is supposed to be a terrible thing, is just scaring tactics so that people keep condoning their mass-stealing!<br />
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Theoretically speaking, even if this material, this Latinum does not exist, it shows one thing. It is possible to imagine something that has no utility whatsoever, but has an infinite value! And this example alone shows that <i>all economic theories that are built on a definition of value that contains utility as one of its components are wrong!</i><br />
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In Austrian economics, <i>value </i>is supposed to arise whenever something has <i>both </i>utility <i>and </i>is scarce. Latinum, however, has only one of these two properties. Latinum is scarce but has <i>no utility whatsoever! </i>Therefore, even imagining Latinum shows that utility is not a necessary property for something to have value. It seems that scarcity is enough for something to have value.<br />
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Now let us imagine, that people decided to split up this comet into just as many little pieces of equal size as there are people in the world, and to give everybody such a piece. They calculated, that if they do that, everybody in the world will receive ten grams of Latinum. All would then receive something that is completely useless, but the value it will have is infinite. All people in the world would then be in the possession of something that has an equal value to everybody.<br />
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This is <i>one step </i>in overcoming the problem that value depends on the individual. But let us continue, and let us now return to Charles and Bob.<br />
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Both Charles and Bob now have ten grams of Latinum which they can use as money.<br />
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How?<br />
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Charles produces one kilo of cheese in one day. Bob hears about it, and goes to Charles and offers him one gram of Latinum for this kilo of cheese. Charles agrees, and the exchange is made. Now Bob has one kilo of cheese and 9 grams of useless Latinum left, and Charles now has 11 grams of this useless Latinum.<br />
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This raises a question. Why would Charles accept this deal? After all, the gram of Latinum he receives from Bob is completely useless to him! How did Bob convince Charles to give up one kilo of cheese against one gram of useless Latinum? Maybe he did promise something else?<br />
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And, indeed, that is what Bob did! Both Charles and Bob have understood how they benefit from each other through exchange. Both Charles and Bob know, that if they make cheese and butter for each other, they can avoid production times! When Bob offered one gram of Latinum for one kilo of cheese, he also made a promise. He promised Charles that he is working on a kilo of butter, and that it would be ready after 9 days. When the butter is ready, so he promised, Charles could receive one kilo of butter in exchange for one gram of Latinum.<br />
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And there you have it! Money is introduced! Thanks to the existence of Latinum, both no longer need to make direct exchanges. Also, even in this stage, using an indirect medium of exchange like Latinum solved the timing problem!<br />
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But not only that. Suppose that <i>all </i>people begin to offer and accept Latinum as an indirect medium of exchange. Many other problems of barter would then be solved!<br />
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To begin with, the timing problem. But there are other problems using Latinum as money solves. There is, for example, the ‘coincidence of needs’ problem. It might be, that Bob offers just butter in exchange for Latinum. But Charles does not want any butter. He wants a loaf of bread! But, alas, if Bob makes a loaf of bread for Charles, he needs 30 days to do that, while he needs 20 days to make one kilo of cheese!<br />
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Fortunately for Bob, there is Bruno. Bruno accepts one kilo of butter in exchange for one loaf of bread. Now Bob goes to Bruno first, exchanges his butter for bread, and <i>then </i>goes to Charles to exchange this loaf of bread against the kilo of cheese he wants.<br />
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Notice that this takes a further exchange. Also, Bob does not want the bread for his own consumption. He wants the bread to get a kilo of cheese from Charles. Therefore, the bread functions as a kind of money.<br />
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But it can be worse! Bruno does not want butter either! Now Bob has first to find somebody who is willing to exchange one kilo of butter against something Bruno wants. Then he gets the loaf of bread from Bruno, and <i>only then </i>he can go to Charles to exchange the bread against one kilo of cheese.<br />
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But there are more complications! Suppose Bruno demands <i>two </i>kilos of butter for one loaf of bread. Now Bob needs 20 hours to produce enough butter to meet the demand of Bruno. But that is the same amount of time he needs to make his own cheese! In that case, direct exchange no longer makes sense. Moreover, Bob must find out that this is a problem.<br />
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In other words, with barter we must not only consider which goods or services, but also in what quantities. This is another problem that money solves, because definite quantities of goods or services are exchanged against just one kind of quantity: <i>money.</i><br />
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Barter has even more problems that money solves. In barter, all participants need to know <i>exactly </i>what everybody <i>wants </i>and <i>can produce, and in which quantities! </i>Only then they can calculate whether exchanges lead to reductions in production time. Also, the more goods and services are exchanged, the more exchanges will be potentially needed. Exchanges that also take time! And that would defeat the whole purpose of exchanges.<br />
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There is the further complication, that Charles might need only half a kilo of butter, while Bob wants one kilo of cheese. As you can see, there are a lot of problems with barter!<br />
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<i>Money </i>solves <i>all of these problems!</i><br />
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Fortunately, in this imagined world there is such a thing as Latinum. After a short time, <i>everybody </i>sees the benefits of indirect exchange. <i>Everybody </i>sees that he can have either goods and services a lot sooner through making exchanges than by producing everything he needs by himself. Everybody sees in Latinum a way to get what they want, because more and more people become aware that there are more and more people being prepared to offer goods and services for money. This persuades more and more people to offer their production results for money, which …<br />
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This is an example of a positive feedback loop. An effect becomes its own cause.<br />
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The more people are beginning to use this Latinum as an indirect medium of exchange, the more people are prepared to use this Latinum as their preferred indirect medium of exchange. People accept this useless Latinum as money, because they see that money accept this useless Latinum as money. Latinum can be exchanged for ever more goods and services in ever greater quantities. Latinum gets an ever growing <i>buying power!</i><br />
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And <i>that </i>is, what we all want money to have!<br />
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Notice several things here.<br />
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<i>The value </i>of Latinum is infinite. But <i>the buying power </i>of Latinum depends on how much people are willing and able to offer for it. In fact, the buying power will, in the (not so) long run settle so that the amount of Latinum people are willing to offer for any particular good is also the amount of goods and services people can produce in the meantime. That is, supply and demand will adapt to each other. The speed with which people can get their hands on Latinum through selling the results of their production will become, on average, be equal to the speed with which they will produce goods and services in exchange for Latinum. How this happens exactly requires a more thorough analysis. Let me just say that this is a phenomenon accepted by many economists. It even has a name. It is called ‘the law of supply and demand’.<br />
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I have mentioned the commensurability problem earlier. This is the problem that, economically speaking, you cannot tell how much of an economic quantity there is in such different things like eggs and houses. You cannot say that, economically speaking, a house is 400,000 dozens of eggs. You can buy a house for so much Latinum, and a dozen of eggs for a much smaller amount of Latinum. Or, conversely, with a certain amount of Latinum you might be able to buy <i>either </i>400,000 dozens of eggs <i>or </i>a house. Since a house is a totally different thing than a dozen of eggs, ‘buying power’ is a wrong term. You must speak of <i>buying powers! </i>For each different good or service, and for each different quantity you need a different amount of Latinum.<br />
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But you can turn this around, and say that it is <i>the gram of Latinum itself </i>that becomes the measuring unit with which we can express economic magnitudes!<br />
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<h3 class="bbHeading"><a class="u-anchorTarget" name="-selling-and-buying"></a>Selling and Buying​<a class="hoverLink" href="#-selling-and-buying" title="Permanent link"></a></h3>In barter exchanges there exists only one type of action: <i>exchange.</i><br />
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Money replaces this one simple action with two, called <i>selling </i>and <i>buying. </i>If you offer something others want in exchange for money, you are <i>selling. </i>If you exchange money for something <i>you </i>want, you are <i>buying. </i>Where originally there was just one transaction, there are now two.<br />
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Charles must first <i>sell</i> his kilo of cheese against one gram of Latinum. Since this gram of Latinum is completely useless, at that moment he is not yet compensated. Only <i>after </i>he has exchanged the gram of Latinum against one kilo of butter, he has what <i>he</i> wants: the kilo of butter. <i>Only then </i>he has succeeded to reduce his total production time from 5 days to one day.<br />
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It might seem that replacing one action with two complicated things. But this is just apparent.<br />
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To see this, consider a similar problem. That of producing dictionaries between several languages.<br />
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If you want to be able to translate English into German and back again, you need two dictionaries. One from English to German, and one from German to English. If you want to translate between three languages, say, English, German and French, you need six dictionaries: English → French, French → English, English → German, German → English and French → German, German → French. If you want to translate between ten languages, you need 90 dictionaries; one from each of the ten languages to the nine others, which is 10x9 = 90 dictionaries.<br />
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But suppose we agree to use an in-between language, and <i>indirect </i>translations. We agree to always first translate from any language to this in-between language, say Esperanto. And then from Esperanto to any of the other languages.<br />
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With two languages this complicates things, because you need a dictionary from each of the two languages to Esperanto, and back again. That is 2x2 = 4 dictionaries. But if you have 10 languages, you need 10 x = 20 dictionaries, which is a lot less than 90 dictionaries.<br />
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This simplification also occurs with money. If there are, say, 20 products in a community people exchange against each other, there are 20 x 19 = 380 different kinds of <i>direct </i>exchanges that must be possible. It is even worse if all require two steps. In that case there are 20 x 19 x 18 = 6840 max! But if you use money, this total number of exchanges is reduced to just 40, namely 20 sales and 20 kinds of buying.<br />
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Money has another thing that makes it superior to barter. With barter, you need to know four things.<br />
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<ul>
<li data-xf-list-type="ul">Who wants what.</li>
<li data-xf-list-type="ul">In what quantities.</li>
<li data-xf-list-type="ul">What is he offering in return.</li>
<li data-xf-list-type="ul">Can he be trusted.</li>
</ul>These four conditions imply, that people can only use barter if they know each other quite well. And <i>that </i>can only be done in a closed community where there are strict social rules where everybody abides to, or at least can be made accountable, whenever he deviates.<br />
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This implies a common ideological basis. Or a common religion or some other social construct. A construct all people must abide to, and therefore must place above themselves. Such a community has very little personal freedom, up to no freedom at all!<br />
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With money, you need to know only two things.<br />
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<ul>
<li data-xf-list-type="ul">Whether there are people willing and able to give you money for what you produce.</li>
<li data-xf-list-type="ul">What you can get from others for the money you can get in this way.</li>
</ul>Accountability can be assured by laws that put sanctions on everybody who tries to deceive others by not delivering what has been promised. Compensation can then also just be demanded in the form of money.<br />
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You don’t have to know <i>anything personal </i>about the sellers, apart from what they offer, and for how much money.<br />
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This makes <i>privacy </i>possible!<br />
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And that makes <i>independent thinking </i>possible. Because in a barter economy everybody must be 'on his toes' not to offend others, because of the threat of excommunication. But as soon as money is part of society, people can become so rich, just by contributing a lot in a short amount of time, that they can collect so much money they can live from it for the rest of their lives. And then they can do whatever they want, <i>including </i>thinking.<br />
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Thinking differently from everybody else is no longer a threat. As long as you just pay others for everything you need and want, they don't care a hoot about who you are or how you think. There can then be people who think totally different, and develop theories that are considered completely outlandish, without needing to fight for those ideas.<br />
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That is how geniuses can even exist! And that is why MJ. DeMarco can spread his ideas to us. He understood at a fairly young age that money means the elimination of indenture time, and the creation of free time.<br />
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Money is therefore the real origin of science, and the tremendously impressive technologies we now have. Quantum mechanics, for example, is the basis of our computers, smartphones etc. And that while Quantum Mechanics, as a theory, is, logically speaking, utterly insane. Our GPS system depends on General Relativity, <i>another </i>insane theory!<br />
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Without money these things would not be possible!<br />
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It is therefore no surprise that Ancient Greece, the first culture that used coined money extensively, was the first country wherein science could develop!<br />
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If you have money, you can just look at what there is on offer. And there are <i>many people </i>who are offering <i>lots of things </i>for money. You can ‘choose your pick’.<br />
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This brings me on the subject of freedom.<br />
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What is freedom?<br />
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Your freedom is <i>your </i>ability to transform <i>your </i>imagination into <i>your reality. </i>That is, your actual experience.<br />
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Do you imagine living in a bigger house? Is that your wish? Look at how much money you have. Is it enough to buy the house? Then you can transform that wish into your reality.<br />
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In general, you can look at what you can get in exchange for others for your money. You can see what you can buy. You can therefore see which of your wishes you can transform into an actual experience.<br />
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The more money you have, and the more people there are who offer the things you wish for in exchange for money, and the lower the amounts of more they are willing to accept, the greater your freedom!<br />
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And <i>that </i>means that <i>the buying power of your money is your freedom!</i><br />
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It is like Dostoyevsky once said: money is minted freedom!<br />
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There are many more aspects of money I am not willing to explain here. Too much work, and too little reward (namely <i>no reward!) </i>I mention a few, though.<br />
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Money solves the problem of how to define economic quantities. If you combine money with the bookkeeping device called the balance sheet, by looking at what happens if companies not only sell to consumers but also to each other, you can see what a healthy economy, one free from taxation looks like. One can then see how, <i>exactly, </i>taxation destroys freedom. Applying the balance idea is also a first step towards showing how fractional reserve banking, the system of money that exists everywhere now, causes ever bigger economic instabilities.<br />
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If you <i>really </i>understand money, you can see that virtually all people are robbed from the result of their contribution to others, the money they earned by their productivity, by two means. <i>Taxation </i>and <i>fractional reserve banking.<br />
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Taxation </i>works like this.<br />
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I can promise to give you <i>everything </i>you want. Just give me your money, and I <i>buy </i>it for you! That is how taxation works, with a vengeance, because <i>if you don’t, ….</i><br />
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And fractional reserve banking works like this.<br />
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Come to me, the Banker says. Whatever you wish to buy, I can give you the money so that you can buy it immediately. I just <i>type </i>the money you want into your bank account. (That is, create it out of nothing.) However, I am obliged to ask you the money back in the future, because I must eliminate this debt. Otherwise, I cause inflation, and that is not good for the economy. However, I must live also. Therefore, as compensation for this service, I must ask you to give me more than what I have given you. This extra money is then for me because I must be compensated for the fact that I have been stealing from everybody in your name. And I must not get caught!<br />
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So, citizens are robbed in two ways. One way is through the threat of violence. This is the governmental way, and it creates sidewalkers. And the other way is through temptation. Since all the money that is created through borrowing and lending is mainly used by companies buying and selling to each other, and therefore consists of investing, this is the ultimate basis of the Slowlane.<br />
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Therefore, governments create sidewalkers. And banks create slowlaners.<br />
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A few closing remarks about money.<br />
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Since societies are only beneficial to their members because of division of production and exchange, and with Perfect Money all contribute to it, and nobody can use money itself to steal, <i>Perfect Money can make all politics completely unndecessary!</i><br />
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I calll a society based on only Perfect Money a Catallactic society. Money then replaces all voting. People who have earned lots of money can only have achieved that, if they have provided others with ways to get what they want faster. That is, through contributing to the lives of others. All who have paid for his products or his services have basically voted on him and his actions. Therefore now he has a lot of money, and he can vote on others who contribute to his life. In this way we are all voting on each other. We are all 'politicians' so to speak. But this is not a democracy! This is because those who have contributed the most to the most have earned the greatest voting power, that is, the power to do what he wants in their own interest. Therefore, in a Catallactic society there is no political power. There is only economcal power. And those who have been the greatest contributors to the lives of others, have the greatest amount of economic power. They are the one's who can set up the largest businesses, and risk their own money doing so. And when they do that, they are basically the replacers of the Big, and mostly corrupt Politicians that are now our 'leaders' chosen through democratic means.<br />
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And look what that does! You can have a genius like Trump be the leader of the USA, with the result that America florishes. But you can also have this utterly corrupt and demented fool as Biden become president of the USA, with the all too predictable that he makes a mess of it that is so huge, that nobody would ever have thought this possible a year ago!<br />
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I shall be a short while available to react to comments, if they come. But after this I shall be gone very soon.<br />
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For now. <i>Bye!</i></div>
