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bermuDa · 02-09-2004, 08:57 PM

yep, the barter system works well within small groups and communities, but once you get a large society going, the economy cannot be sustained by trading goods. A form of currency must be produced and an abstract value must be assigned to it. Once we have money, our economy can diversify.

The real trouble with money started when we stopped backing it with something of real value. Every bit of currency used to be backed by an amount of a precious metal. When the Gold standard was rescinded in the mid-20th century, monetary policy went to hell. Now the federal reserve is free to print as much cash as they want, driving the value of money up (deflation) or down (inflation). The value of money has an inverse relation to the supply of money.

That's why movies used to cost a nickel, and now they're almost 10 dollars. There is no "real" value of money anymore. All the gold in fort knox has been loaned out to people who then sold it. We the people have put our faith in government's stability, and we show that by believing them when they tell us how much those bits of paper and metal in our pockets are worth.

02-09-2004, 08:57 PM	#11 (permalink)
bermuDa don't ignore this--> Location: CA	yep, the barter system works well within small groups and communities, but once you get a large society going, the economy cannot be sustained by trading goods. A form of currency must be produced and an abstract value must be assigned to it. Once we have money, our economy can diversify. The real trouble with money started when we stopped backing it with something of real value. Every bit of currency used to be backed by an amount of a precious metal. When the Gold standard was rescinded in the mid-20th century, monetary policy went to hell. Now the federal reserve is free to print as much cash as they want, driving the value of money up (deflation) or down (inflation). The value of money has an inverse relation to the supply of money. That's why movies used to cost a nickel, and now they're almost 10 dollars. There is no "real" value of money anymore. All the gold in fort knox has been loaned out to people who then sold it. We the people have put our faith in government's stability, and we show that by believing them when they tell us how much those bits of paper and metal in our pockets are worth. __________________ I am the very model of a moderator gentleman.