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September 30 Written by Reggie Middleton font size FEATURED

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The Central Banker's

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Blog Definition of Money is
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Obviously Wrong, And That's
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The BOE has a drastically contradictor statement in its lesson on Money in the modern
day. Go 2:09 marker
If the 20 pound note use to be able to demand 20 pounds worth of gold from the
Bank of England, but can now demand only 0.0017 pounds of gold, and not even
directly from the BOE, but on the open spot market - then it would be safe to say
that the 20 pound note has not held its value. This is particularly true relative to gold,
as it was originally priced. According to the author, the BOE is not doing its job
because the 20 pound note is no longer worth 20 pounds. Money is not an IOU,
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 money is a proxy for labor. Only a bank, whose livelihood is dependant upon loans and
lending is would claom that money is a loan, debt or IOU vs a present time proxy for
labor.

If you go to the beginning of the video, the author defines money as an advaned form
of an IOU (ex. debt or loan). He uses the example of a farmer who would only be able
to consume the produce that he would produce (this is a key work, produce as in
production as a result of labor on inventory) on his land. If he met a fisherman that
would not have a catch until autumn that would want to consume berries in the
present (ie summer). The BOE rep states that the fisherman would give the famer an
IOU in the form of a banknote, and the farmer would take that promise to pay in the
future in exchange for berries now.

I say nonsense. What the fisherman gave the farmer was a proxy for his labor of
attempting to grow his own berries on his or someone else's land. The fisherman
could always endeavor to grow berries or pick berriers in the wild himself. That time
and energy spend (labor) would be better spent by the fisherman in gathering fish, so
the fisherman gives the farmer a proxy (token) of his labor in exchange for goods and
services. This proxy ahs to have the faith of all involved that it is at least as good as
the labor it represents. This is where the value lies.

As the Bank of England (and most bankers) would have you believe, the fisherman
could never, ever search for his own berries - nor grow his own berriers. Berries, at
least in the UK, do not grow without debt!

The smartest people in the room have a vastly antiquated and dramatically outdated
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definition of money. A good start is the Veritsaseum article: Veritaseum Breaks the
Definintion of Money, Inhibits Seigniorage, with Asset Backed Bitcoin, to wit:
Veritaseum will be announcing asset-backed bitcoins after the end of our token
sale. These are bitcoins that will have both the full value and capability of bitcoins
that actually ride along the bitcoin blockchain plus the additional attribute of being
backed by a variety of real world commodity assets. This essentially inflation-
proofs the coin (more so than the possibly deflationary effect of limited supply)
and in addition it puts a hard floor on the value of the coin - setting it aside from
bitcoins not modified by Veritaseum.
The Accepted Defintions of Money
According to Wikipedia:
Money is any item or verifiable record that is generally accepted as payment for goods
and servicesand repayment of debts in a particular country or socio-economic
context.[1][2][3] The main functions of money are distinguished as: a medium of
exchange; a unit of account; a store of value; and, sometimes, a standard of deferred
payment.[4][5] Any item or verifiable record that fulfills these functions can be considered
money.
Money is historically an emergent market phenomenon establishing a commodity
money, but nearly all contemporary money systems are based on fiat money.[4] Fiat
money, like any check or note of debt, is without intrinsic use value as a physical
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 commodity. It derives its value by being declared by a government to be legal tender;
that is, it must be accepted as a form of payment within the boundaries of the country,
for "all debts, public and private".[6] Such laws in practice cause fiat money to acquire
the value of any of the goods and services that it may be traded for within the nation
that issues it.

Commodity money, whose value comes from a commodity of which it is made

consists of other things that have utility value in and of themselves in addition to
the value attribuated to their use as money. Examples of such
include gold, silver, copper, salt, cocoa beans, oil and barley. These items
historically ran into practical barriers as the global economy expanded - through
limitations in storage, transport and rancity - basically techological barriers. As
such they were overtaken by representative money.

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 According to Wikipedia, representative money is defined as:

http://veritaseum.com/templates/gk_simplicity/images/style1/typography/bullet1.png)
0px 12px no-repeat !important;">A claim on a commodity, for example gold
certificates or silver certificates. In this sense it may be called "commodity-backed
money".

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 http://veritaseum.com/templates/gk_simplicity/images/style1/typography/bullet1.png) 0px
12px no-repeat !important;">Any type of money that has face value greater than its value
as material substance. Used in this sense,fiat money is a type of representative money.

Unfortunaely, as fiat took hold, the former defintion of representative money failed
to hold sway - the result of which has been rampant seignorage. Seigniorage is
the action of exchanging sovereign-issued securities for freshly printed money
by a central bank. This is in essence, borrowing real money and paying with
"created" money - or basically not needing to repay at all. These actions are not
without consequences. Monetary seigniorage is an action which takes this theme a
step further, wherein the sovereign entity relies on seignorage as an active
revenue stream through regular and routine debt monetization (printing new
money to repay old money to meet budgetary targets. The use (or misuse) of
these newly printed notes can exacerbate the inherent problems of rampant
monetization. For many developed nations, seignorage is relied upon as a regular
revenue source, despite the fact it has wrecked the economies of smaller nations.

In the next article on this topic, we will cover and discover the new and much more
accurate defintion of money in a modern age.

Last modified onWednesday, 30 September 2015 14:38

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