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Post by DE Sinclair on Jul 29, 2015 13:02:41 GMT -5
This is out of the blue but if I understand the concept of the US dollar, if it were truly worth anything, I could take all my dollars to Fort Knox and get the gold that it's worth? Cause all a dollar is an IOU from the federal government saying they'll pay me back in gold for this silly paper thing they gave me instead? And if the dollar isn't worth anything why are we still using it and not paying for items in gold coins like some sword and sorcery movie? you can take your dollars to APMEX and trade them for gold. You can do that at any jewelry store. I've been married more than long enough to know that. |
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Post by adamwarlock2099 on Jul 29, 2015 13:06:54 GMT -5
Well, even gold is only worth anything because we believe it is. If it weren't valued for being pretty and rare, it's just soft, shiny metal. Having said that, I have a masters degree, and I consider myself a reasonably smart guy, but I simply cannot understand why any economy or currency works and doesn't collapse in on itself. But, as long as it works... Not an economist either, but my understanding is that it works because the government says the currency has value, and the public believes what the government is telling them. Beyond that, the government made laws that says it has value for all transactions, public or private. So basically, it works because Uncle Sam says it does. If the public, en masse, ever loses faith in it's value, or the government collapses, then it will be worthless. At that point you'll need to start guarding your cans of tuna fish from the hungry mobs. Not an economist either, but my understanding is that it works because the government says the currency has value, and the public believes what the government is telling them. Beyond that, the government made laws that says it has value for all transactions, public or private. So basically, it works because Uncle Sam says it does. If the public, en masse, ever loses faith in it's value, or the government collapses, then it will be worthless. At that point you'll need to start guarding your cans of tuna fish from the hungry mobs. Your cans of tuna will be worth a hell of a lot more then gold at that point. So will car parts. Refined oil. Pretty much anything other than a marginally useful shiny metal. So really if we stopped, as citizens, trading money for goods and services, for trading goods and services for other goods and services, we would see the worthlessness of the US dollar? Because as you say, food is always a commodity, because it's necessary to our survival. It really is supply and demand. And gold isn't in demand like it was at one time, when it was used as currency? If companies paid in canned goods to their employees, they could write on a piece of paper "pick up your can goods for your work today at so-and-so place" and it would be an equivalent of the dollar, because without that note form your employer you can't get your canned goods? |
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Post by impulse on Jul 29, 2015 13:10:10 GMT -5
Not an economist either, but my understanding is that it works because the government says the currency has value, and the public believes what the government is telling them. Beyond that, the government made laws that says it has value for all transactions, public or private. So basically, it works because Uncle Sam says it does. I should clarify - I do know that is the reason it works, but I don't understand how that is possibly enough. Does that make sense? |
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Post by Roquefort Raider on Jul 29, 2015 13:27:07 GMT -5
Not an economist either, but my understanding is that it works because the government says the currency has value, and the public believes what the government is telling them. Beyond that, the government made laws that says it has value for all transactions, public or private. So basically, it works because Uncle Sam says it does. If the public, en masse, ever loses faith in it's value, or the government collapses, then it will be worthless. At that point you'll need to start guarding your cans of tuna fish from the hungry mobs. Your cans of tuna will be worth a hell of a lot more then gold at that point. So will car parts. Refined oil. Pretty much anything other than a marginally useful shiny metal. So really if we stopped, as citizens, trading money for goods and services, for trading goods and services for other goods and services, we would see the worthlessness of the US dollar? Because as you say, food is always a commodity, because it's necessary to our survival. It really is supply and demand. And gold isn't in demand like it was at one time, when it was used as currency? If companies paid in canned goods to their employees, they could write on a piece of paper "pick up your can goods for your work today at so-and-so place" and it would be an equivalent of the dollar, because without that note form your employer you can't get your canned goods? Yes, but it would be a very impractical system because not all food items are equivalent. We couldn't substitute the dollar by the can of tuna, say, because because people providing valuable services would be given tons and tons of cans of tuna (perhaps in excess of all the tuna in the world) and would have a hard time using it all, since there's only so much tuna you can eat yourself and that trading it away for some more goods and services is a hassle. "Imaginary" currency is just a virtual can of tuna, which can be transformed into pretty much anything and is therefore much more convenient. Furthermore, it is easily convertible in numbers in a computer somewhere, without any need to actually stash the corresponding dollar bills anywhere. As we saw in the movie It's a wonderful life, a bank does not have all its money in a safe somewhere; most of that money is immobilized elsewhere in the form of mortgages and the like. Cans of tuna would not afford such versatility; they would have to be kept in reserve somewhere. Money works because of the social contract, because we collectively decide that it represents a certain quantity of work exchangeable for a defined quantity of goods and services. It's actually quite a good thing, because it allows us to use currency that does not exist yet (the interest we owe on our collective mortgages, for example) to fund more purchases, thus stimulating production and creating work. This would not be possible, or at least would be made far more difficult, in a barter economy. |
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Post by Slam_Bradley on Jul 29, 2015 13:27:38 GMT -5
Not an economist either, but my understanding is that it works because the government says the currency has value, and the public believes what the government is telling them. Beyond that, the government made laws that says it has value for all transactions, public or private. So basically, it works because Uncle Sam says it does. If the public, en masse, ever loses faith in it's value, or the government collapses, then it will be worthless. At that point you'll need to start guarding your cans of tuna fish from the hungry mobs. Your cans of tuna will be worth a hell of a lot more then gold at that point. So will car parts. Refined oil. Pretty much anything other than a marginally useful shiny metal. So really if we stopped, as citizens, trading money for goods and services, for trading goods and services for other goods and services, we would see the worthlessness of the US dollar? Because as you say, food is always a commodity, because it's necessary to our survival. It really is supply and demand. And gold isn't in demand like it was at one time, when it was used as currency? If companies paid in canned goods to their employees, they could write on a piece of paper "pick up your can goods for your work today at so-and-so place" and it would be an equivalent of the dollar, because without that note form your employer you can't get your canned goods? How are we going to stop? Everyone needs the goods and services that we pay for with money. Money is the ultimate fungible commodity. Essentially what it is is a means of bartering our work for other people's work or work-product. It wasn't that long ago that we had what you described in your last couple of sentences. Workers were paid in company scrip rather than money and it had to be redeemed at the company store for items the company brought in at the price the company set. While there were some positives to the system, mostly it was horribly exploitative. |
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Post by DE Sinclair on Jul 29, 2015 14:22:46 GMT -5
Not an economist either, but my understanding is that it works because the government says the currency has value, and the public believes what the government is telling them. Beyond that, the government made laws that says it has value for all transactions, public or private. So basically, it works because Uncle Sam says it does. I should clarify - I do know that is the reason it works, but I don't understand how that is possibly enough. Does that make sense? Agreed that it's a precarious system. Many times all over the world the faith in a country's government has failed, inflation skyrockets, and citizens end up trying to trade a wheelbarrow full of cash for a loaf of bread. It really is kind of amazing that it works as a system at all. |
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Post by Deleted on Jul 29, 2015 14:23:22 GMT -5
An economy of trade in kind (i.e. goods for goods) is impractical in today's society. DO you really want to carry a cow to market to trade it for seeds or feed or tools? The transition from kind to money/credit economy happened over several stages, throughout the period we call the ancient/medieval world. First a standard value for certain goods was established, i.e. how many eggs do you need to trade for a plow, for horseshoes, for whatever good you happen to need, so that each transaction did not need to be haggled, which occurred when a distinct merchant profession was emerging. People who conducted trade over long distances as their primary form of making a living rather than out of necessity as a side job to their farming or animal husbandry. Part of the growing specialization allowed as civilization developed. In the medieval period most of this commerce was conducted at fairs that occurred regularly in different locales. Once the values of goods was established in relationship with each other, a substitute value was implemented in the form of credit instruments-usually money but also letters of credit, bills, etc. based on the currency in use in whatever land the fair was conducted. Some currency's (such as the gold floren (from Florence) or the French dinar) had more acceptance internationally at different times because of the strength of the government or the merchant family backing it. The idea of a set value is a convenience allowing more trade to occur. The idea of an agreed upon substitute value (i.e. money) even more so. Credit instruments of any sort rely on both parties to accept it. Money/currency is simply a government backed credit instrument. Other credit instruments include checks, credit cards, bitcoin, etc. none of which have any inherent value except for their ability to facilitate the exchange of goods and services, especially over long distances. (The preceding was cribbed/embedded in my memory and was part of my master's thesis on the development of banking instruments and the contributions of the Templars, Italian merchant families, and others to the development of said instruments. Anyone suffering form insomnia is welcome to request a copy to use as a sleep aid.)  -M |
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Post by DE Sinclair on Jul 29, 2015 14:33:45 GMT -5
On a somewhat related subject, my daughter received a $5 dollar bill that looked strange when she cashed her paycheck. I took a look at it and realized it was a silver certificate dating from the 1950's. It says "5 dollars in silver payable to the bearer on demand" on the bill, though I don't know that anyone actually did that in practice.  |
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Post by Deleted on Jul 29, 2015 14:34:27 GMT -5
I have a doctors appointment on the 10th. I plan on asking why I'm so lazy while I'm there. I slept 12 hours last night. I an get up and get to work when I have to, but if I don't have to it's a struggle to just get out of bed. I crawl out of bed about 10am and it doesn't matter if I went to bed at 10pm or 3am.
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Post by Deleted on Jul 29, 2015 14:39:59 GMT -5
Back on currency, civilization has used a standard measure of trade for thousands of years. Barter used to be much more common, but in pretty much every ancient city we know of today, they also had a form of currency. An old bronze coin may be made out of metal and not paper, but simply because they hadn't developed a way to mass produce paper currency. I'm pretty sure the values assigned those coins was not related to the value of raw bronze scrap. And barter was common as recently as the 1800's in America. Out west during the gold rush prospectors would pay in gold dust for their wares. It didn't benefit the prospectors any, but the boom town merchants made a killing. Back before refrigerators were common salt was far more valuable, and there was a time a mans wealth was measured in spice rather than gold or currency. Barrels of black peppercorn was the nest egg of nobles.
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Post by Deleted on Jul 29, 2015 14:48:35 GMT -5
On a somewhat related subject, my daughter received a $5 dollar bill that looked strange when she cashed her paycheck. I took a look at it and realized it was a silver certificate dating from the 1950's. It says "5 dollars in silver payable to the bearer on demand" on the bill, though I don't know that anyone actually did that in practice. Cool. I haven't come across one of those -- a $1 bill, I'm pretty sure, rather than a $5 -- since the '80s, I'm pretty sure. I'd forgotten all about that one till I came across it in a book I'd stuck it in back then. Which I of course now couldn't put my hands on if my life depended on it. |
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Post by Slam_Bradley on Jul 29, 2015 14:52:25 GMT -5
On a somewhat related subject, my daughter received a $5 dollar bill that looked strange when she cashed her paycheck. I took a look at it and realized it was a silver certificate dating from the 1950's. It says "5 dollars in silver payable to the bearer on demand" on the bill, though I don't know that anyone actually did that in practice. I don't think that anyone did either. They are marginally collectible and are worth a bit more than face value but not a lot for most of them from 1934 until they were discontinued. The fives and tens are a bit more uncommon than the singles. But they're mostly just an oddity. |
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Post by Deleted on Jul 29, 2015 14:54:24 GMT -5
I found a silver note in change a while back. Mine's a $1. Also collectible are notes with a star in the serial number, they represent a reprint of a note that was destroyed during manufacture.
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Post by Deleted on Jul 29, 2015 15:03:47 GMT -5
I have a doctors appointment on the 10th. I plan on asking why I'm so lazy while I'm there. I slept 12 hours last night. I an get up and get to work when I have to, but if I don't have to it's a struggle to just get out of bed. I crawl out of bed about 10am and it doesn't matter if I went to bed at 10pm or 3am. Ask the same for me if you will. Every single morning before work I wake up shortly before my alarm setting of 6:35 a.m., then can't bear to drag myself out of bed till just before 7. Which probably doesn't sound all that drastic, but I have never done that before. Of course, I've also never been recuperating from surgery &/or operating on Seroquel. I mean, hell, it's just 20 minutes. No reason I shouldn't be able to navigate around on the same schedule I did for years up till about 5 weeks ago. As it is, I leave myself just enough time to make a frappucino, feed the cats, catch 10-15 minutes of whatever horror movie I'm watching on Netflix, shower, dress & make it to work. One of these days I know one of my post-6:35 a.m. cat naps is going to take me up to the brink (if not beyond) of the farthest I can push showering, etc. & still make it to work around 8:15. (The target time is actually 8, but I never used to make that anyway. Heck, my co-worker is usually later than I am.) *sigh* |
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Post by Deleted on Jul 29, 2015 15:07:57 GMT -5
I found a silver note in change a while back. Mine's a $1. Also collectible are notes with a star in the serial number, they represent a reprint of a note that was destroyed during manufacture. Yep. I've long known they were collectible, but for some reason I never looked into why till I worked at a collectibles store here from 2004-2006. Along with sports cards, NASCAR stuff, Beanie Babies, Barbies & even a smattering of comics, etc., we also carried coins & currency. |
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