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The Truth is out: Money is Just an IOU

posted by LaminatorX on Tuesday March 25 2014, @03:25AM   Printer-friendly

Anonymous Coward writes:

"http://www.theguardian.com/commentisfree/2014/mar/ 18/truth-money-iou-bank-of-england-austerity

Back in the 1930s, Henry Ford is supposed to have remarked that it was a good thing that most Americans didn't know how banking really works, because if they did, 'there'd be a revolution before tomorrow morning.'

Last week, something remarkable happened. The Bank of England let the cat out of the bag. In a paper called "Money Creation in the Modern Economy", co-authored by three economists from the Bank's Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong, and that the kind of populist, heterodox positions more ordinarily associated with groups such as Occupy Wall Street are correct. In doing so, they have effectively thrown the entire theoretical basis for austerity out of the window."

 
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  • (Score: 1) by urza9814 on Tuesday March 25 2014, @05:22PM

    by urza9814 (3954) on Tuesday March 25 2014, @05:22PM (#21074) Journal
    Money is more like a color. A dollar bill isn't money, it's currency; money is merely the number printed on that bill. Money is not a product. Currency can be, but money is an abstract concept. It's entirely possible for money to lose all value -- such as situations where inflation becomes so rampant people start desperately burning the currency itself as fuel. Sure, the currency still has value -- it can provide heat -- but nobody cares what the number on it is. A one dollar bill burns as well as a hundred. Even if you've got a billion dollars in the bank, the paper that balance is written on could be worth more than the balance itself. Products don't lose value like that. Even currency doesn't lose value like that -- a Roman coin is still worth something even without the Roman Empire. An obsolete, even broken computer can still be sold as scrap. Money itself can't do that.

  • (Score: 0) by Anonymous Coward on Tuesday March 25 2014, @06:32PM

    by Anonymous Coward on Tuesday March 25 2014, @06:32PM (#21108)

    > Products don't lose value like that.

    Yes, they do. It happens often, and frankly as a visitor of this site you should have seen it happen a thousand times by now. Value is complicated to measure and that's why it's tempting to think of it as 'faith-based', but it doesn't actually work that way. If it did we wouldn't be able to have this discussion right now.