Saturday, August 17, 2013

Money is a Means of Exchange

We must understand what money is. There are a lot of myths and misconceptions about money that  limit opportunity for  each of us and keep hard working Americans poor.

[caption id="attachment_134" align="alignright" width="300"]Who wants to trade a chicken? Swiped from Kristen Taylor Who wants to trade a chicken? Swiped from Kristen Taylor[/caption]

Once upon a time all economic activity between people was by barter. You maybe had chickens and someone came by with great cooking pots and you wanted to trade chickens for a cooking pot. Well, maybe the cooking pot entrepreneur did not want chickens- this made trading value for value, difficult.

Along came some government entity who created a money system. Their ulterior motive was to cream off some to pay for government bureaucrats and a military.. but lets just stick with the theme of money here.

Money is an easy means by which to exchange value. If you had chickens- you could accept this money in exchange and when the pot maker came by, you could pay him money and get your pot.

Money therefore made trade much easier. You just had to carry this money around and protect it from thieves. Today, dollars are created by spreadsheets. Dollar are represented by credit cards and PayPal accounts… all kinds of ways… but money still serves only one purpose- as a means of exchanging value for value. .

Any other critical points about money to understand here? yes.

We need to understand fixed exchange rates, like a gold standards as compared to a  fiat money like the American Dollar today. This is the source of intense confusion and manipulation in the economy and in the political sphere. It is super important to understand  the implications.    We discuss the gold standard here.

When we understand that we are under fiat money rather than a gold standard, and when we understand that this is a good thing for the 98% then we can see that Money is not a commodity. We can not run out of money. That is discussed when we talk about the implications of  living with a fiat currency.

I can sense screaming out there that it is irresponsible to say government has no bounds on its spending. Yes, it has those bounds placed on it by the people’s elected officials and the people they put in charge of government functions. We are talking common sense here. We can walk out into traffic, but our own common sense stops us. Same with government spending. There are no limits on what we can do with money, except what we determine makes common sense for America.

The wikipedia has interesting information on money. Check it out.  It is essential for you and I to understand the concept of money- what it is and what it is used for.  The term and concept get abused by people with ulterior motives that like to create misconceptions across America. We will do battle with the myth makers later, but that future debate depends on a clear understanding of the concept of money.

If you have a question, please raise it. If you want to help clarify a point here or reference other information please add a comment below.

And, again, feel free to add to the debate here. We will be happy to share real questions and concerns. We, however, will not tolerate polemics, or illogic or personal attacks. Come armed with facts, logic and opinion and you are welcome.

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