Perhaps problematic but there's a much more important point. We shouldn't determine for others what is and what isn't money....that's no different than gov't decreeing by fiat what is and isn't money....and we detest when others in power do it....should apply to all including ourselves. We have to allow the people to determine for themselves what they accept as a medium of exchange. Maybe the squirrel feces is dried and non perishable. But worrying about that is besides the point....the point being that people need to be free to determine for themselves what works for them, be it dried feces, green sand, or whatever....that's up to them to decide. You and I may not be okay with it, so for us it won't be money but we should not try to impose or decree (as if by fiat) that some things be used or not as money for others. And just so you are aware, the red squirrel feces suggestion is as much for effect as it is to make a serious point....of course I know that it would be a problematic medium of exchange but the point was that money isn't just what most people think it is. .
Agree with all the rest. But I don't believe that money (legal tender) in a country is imposed by decree... It's forced upon the population through taxation.
Even if you pay no taxes (legally or not), don't you still have to use the currency the gov't tells you is legal tender money to pay for virtually everything else you buy in the country you live in? After all, hypothetically, a gov't could state that they want taxes to be paid in silver or gold clumps / blobs. So, taxation is a side issue....payment of taxes is not necessarily the reason behind the why gov'ts issue notes and coinage that is deemed money by that gov't. It (taxation) might be a reason, of course, but certainly not the only or even the main reason they create a legal tender that it's citizens must use as money. .
I I'll give you a practical example. I lived in the Middle East for a few years and over there in many countries there is no GST or income tax. Most of the national currencies in those countries are hard pegged to the USD and as such have a fixed exchange rate among them. At all effects, this makes the USD the real money in the ME, despite a number of specific official currencies. For effect of the above, multiple currencies circulate happily together. I used to travel a lot and I've done it many times without the currency of the destination country. Anybody would gladly accept the currency of another country or the USD without too much fuss, also for very small transactions. Business also accept payments in non official currencies, sometimes also in other currencies non pegged to the USD (e.g. Euro). when you have to pay taxes on your profits, accepting non legal tender money exposes you to currency fluctuation and uncertainty on the amount of money you will actually pay to the government out of your profits. On my first couple of years there, my main money was the USD. I was paid in USD for my work and my bank account was in USD. But my official currency was the Dirham... I couldn't care less, I was holding a few bills and coins here and there just because received as spare change (yes, it was normal to pay in one currency and receive change in the same or in a different currency) Edit: obviously I'm not the one who discovered that "taxes drive money". It's one of the fundamental pillars of the Modern Money Theory of Warren Mosler; I have simply experienced what he describes myself. See also this post for further reading: http://neweconomicperspectives.org/2011/07/mmp-blog-8-taxes-drive-money.html
for now USD is money the rest is a pegged crap USD dies and gues what remains?! Right, gold and silver.
Yes, of course in some countries, currencies from other countries are treated as money. That still doesn't negate in any way my argument that the creation of money by a governing body (historically) is not only or primarily for the collection of taxes. History shows us that money was around before taxation. Logic tells us that when a country imposes a tax, there has to be a form of money already in existence in order to pay that tax imposed. In fact, the earliest monies were commodity monies - I have seen references to ancient Babylon some 4000+ years ago. In later eras, an accepted money was mainly established by a governing body for the facilitation of the payment of debts, public and private. Besides, if taxes wouldn't be collected by a governing body, a gov't that issues a people's money can still benefit from doing that. A fiat money still serves the purpose of money. Money can be collected for breaking laws, for currency conversion, and possibly for a whole slew of other reasons that has nothing to do with taxation. I am not one of those people who believes guns and taxation are evil. I am one who believes that guns and taxation can be used by evil people to do harm to others or can be used by righteous people to do good for society. The gun and the tax are not the problem. I am fully in support of the ownership by worthy and sensible people of guns and the collection of legit and sensible taxes by a governing body. .
Not necessarily. Fiat digital currencies or even a form of a crypto-currency could replace the USD. If and when the USD dies, other commodities besides silver and gold might be the favored new money. Personally, the notion of silver functioning as money once again is quite appetizing to me but what I like and what the ruling elite want may be two very different things. I like polished silver....it's shiny! .
This is the most stupid thing i have read Some body please smack this guy on the head with a paddle stick I could drain my spaghetti with this commentary REDBACK
Yes, I didn't say that. Money is not created by the government in order to impose taxes. I said the opposite, indeed: taxes are imposed by governments to force people to adopt their money. Of course. But if the government allows people to pay taxes with their own issued legal tender or the money already in existence, and both forms of money are similarly good for paying taxes, people will not be pushed to switch to the legal tender as the only money and as a result either the legal tender will go out of circulation or there will be two circulating currencies. True. But MMT economists say that this is not good enough to force a currency onto the entire population. Not everybody breaks the law and needs to pay fines; when this happen, actual money can be converted into official currency to pay the fine. Conversely, everybody is subject to taxation and the amount of taxation is substantial when compared to earnings. Sure. Taxation is a very effective tool for rebalancing economic power across population if used properly.
So, people wouldn't adopt a money were it not for taxation? Where's the good evidence for that claim? And I hope you don't tell me to read this and that book...please use your own words and arguments and references I can view online without having to purchase someone else's books. Thank you. The money already in existence doesn't necessarily NOT have to be legal tender created by the governing body....these are not mutually exclusive. A governing body can create a legal tender that the people would accept without the imposition of taxation. The creation of a money by the governing body could very easily be a great convenience for the people. People today are very easily swayed by convenience. Did you know that the earliest notes (money) issued by the U.S. gov't was largely created in order to pay salaries of soldiers? Think about United States Notes ("greenbacks", issued by the U.S. Treasury and not to be confused with today's Fed. Res. notes). This was fiat money created by the U.S. government and accepted by people not because of taxation but because it was the best form of money at the time. People will accept a governing body's money not necessarily because of taxation but because it is the best form of money at the time in the view of most people. If a gov't created a form of money that people trusted and liked and made payments of debt convenient, there'd be no reason for the people to wait to be taxed in order to accept that form of money. .
People would eventually freely choose a form of money, but not necessarily the one decided by the government unless the government enforces it by violence or taxation. This is what the MMT economists say and it's just a theory, not a universal truth. However, as I said before, I believe it can be true because of my personal experience. I'm not trying to convince anyone that they are right, I'm just making aware the other interested members of this forum that there is such a theory and that in my opinion it is worth some reading time. If you are interested, just google it and you'll find plenty of information about it; if you think it's utter BS and want to dismiss it without even taking a look at it, don't waste your time. Anyway, after all I'll provide a link to save you some time: http://www.epicoalition.org/docs/Pavlina_2007.pdf This is one of the "mandatory reading" from the moslereconomics.com website. There is a lot of stuff to read there and it's for free. Possible in theory but unlikely. I already said before that circulation of more than one currency is possible if both can be used for the same purpose and they are all equally good. Otherwise Gresham's law kicks in and only the worst of the bunch stays in circulation. The government, the king, or tptb, always wants the exclusivity of money creation and wants to make sure that only one currency circulates in his reign because through money manipulation he can influence population behavior and set economic policies. Throughout history - even during metal standards -, governments have never resisted the temptation to debase money for one reason or another (always to their benefit, though), so I would argue that money imposed by the government is never to be trusted and, if people were given a possibility, they would choose something that is not under control of the rulers. Oh yes! The first US paper bill issued by the government and not backed by gold! One of the shiniest examples of bad money. It was clearly not the best money around as the US dollar was fully redeemable for gold and at parity of value nobody, unless completely crazy, would have accepted that toilet paper in place of a bill fully redeemable for gold (which was money at that time in US. Gold and nothing else!). Unfortunately I don't think that soldiers during the civil war had too much say on which kind of note they would receive for their services. Since it was legal tender, though, it was widely accepted and most probably immediately used to pay off taxes while the gold backed US dollar was hoarded (yes, there was taxation and people used greenbacks to pay taxes).
Yes, that's fiat money! Magic money. Edit: I'm not endorsing MMT as a whole here. Only when they say that taxes drive money. Other things like: government deficit = net private savings.... Not so much convinced.
Well me thinks China will get the opportunity , but if they take it or not will be the question. In this modern day China is far better placed to control things compared to the USA. After all the USD fluctuates a lot and they only have 350,000,000 people and a murderous military machine to back their $. China on the other hand has a very firm grasp on their currency and 1,400,000,000 people to back up their military machine. I may be a bit biased as we have many Chinese folk living in NZ and have a great respect for their culture and their contribution to our country. If we did not have the Chinese influence in NZ particularly down south here we would be decades behind in the infrastructure we have. Another thing i feel China has going for it is their open totalitarian attitude, sure the USA does the same things BUT THEY LIE ABOUT IT and try to convince us the are out to help us AS THEY LINE US UP FOR DETENTION. This "devil you know" attitude that we continue to espouse with the dictators in the USA is old and needs rectifying.
1,400 people with pop guns is no match for 35 people with machine guns. Don't shoot the messenger...I'm just breaking the news for you and I'm probably as much anti U.S. war mongering as you. .
From an investment point of view Gold is moving toward the monetary system not away form it. Printed digits (US dollars) are having a diminishing effect in there effectiveness with manipulations requiring exponentially more over time.
