Pondering imaginary money

[fbhjr]

At lunch yesterday as I walked around the industrial park with the other
engineers, we were talking about the imaginary nature of money. How it
doesn’t really exist and the whole economy just keeps going because
everyone pretends it does.
Money isn’t value. Money only has value because people want it. Things
have value, ideas have value and work has value. How that gets translated
into money, and how often the value is not really reflected in the money
was strange to all of us having the discussion.
So, I was very surprised last night to get home and hear that about 3 hours
after we had that conversation some guy typed a B instead of an M and that
was enough to drop the value of one of the country’s biggest corporations
by 50%.
One guy. One letter. Billions of dollars.
Why? Because he said he wanted to sell Billions of shares when he meant
Millions. The computers that run the economy said “if he’s selling off
Billions, it can’t be worth much!” and the price went down. The imagined
value of the company changed.
Once they sorted out the problem, the price came back because no one else
could imagine that the value was so low.

The disparity between value and money can and has been terminal.
Back in the 1930’s my grandfather was the town doctor in a little town in
northern Vermont. It was the depression. No one had money in a very
literal way. So, my grandfather would accept chickens and other trade from
the farmers who needed medical care. For a while, this worked out. My
grandfather could feed himself and family, and the folks in town got
medical care.
But, my grandfather needed an operation. It was a big enough one that it
had to be done in a hospital. The hospitals big enough would not take
chickens as payment.
My grandfather died only 3 years older then I am now. (Yes, there is a lot
more to the story, but not relevant to this discussion.)

Does that mean chickens have no value?
No. But, they didn’t have a tradable value. To use them you need a
chicken coop, chicken feed and someone to take care of the chickens and
collect the eggs.
Money requires none of those even if you can’t eat it. (And, who would
want to? It is disgusting.)
So, in many ways, chickens have more value then money under the right
conditions. But, only under those conditions.

I think a lot of the value concept is lost in the modern economy. Money is
considered value instead of a tradable medium for value. And, that can
lead to these drops in the market like yesterday because people aren’t
trading on real value, only on imaginary value. That’s why the stock came
back up so fast as there was real value there and it showed. But, the
computers don’t understand the real value concept and almost crashed the
whole system because of it.

I’ve been pondering a lot about how I add value to the system. It’s tough
when my job is to come up with ideas. How do you measure that?
A good chicken makes eggs. I you can measure the ideas and see if they
work. But, that takes a lot of other steps in the process. And, it can be
hard to say where it goes wrong if it does.
Don’t know. Hope I’ve got enough eggs that will hatch.

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Comments

[palusbuteo.livejournal.com]

A similar vein of thinking came to me fairly recently, but before this 'information entry glitch' came around.

I get Direct Deposit from my paycheck to my checking account. When I get my paystub on friday, I only hap-hazardly look at it most of the time, as I know I've put in my 40 hours and I know I'll have made so much money (not enough as we're now 1 full year under a 12.5% paycut but anyway) - But to think how I "mindlessly" have this particular amount added to my account via computers and numbers...It's money that does not technically exist.

I remember in HS how we had a discussion on a "paper-money-less" economy, as I think at the time, Australia was looking to get rid of all "hard" currency and only go with digital and credit money. My argument against that, and what I still hold true in some ways today, is that having actual, physical money in my pocket/wallet helps me to control my spending/saving, as I only have so much in my pocket in a certain amount of time. I do use my card as a credit card for various purchases and situation (like when I just don't have enough cash on-hand but have plenty in my account)

But anyway, it really kind of frightens me in ways when I think about how "fake" all of this digital money and credit it. How many exchanges and interactions, trading and 'changing hands' occurs in a single minute I'm sure is just staggering, yet with one simple error, it can cause a near total collapse..Again.

On a slightly different tangent, the whole concept of paper money in our country is I think interesting. Paul Revere is credited for printing the first versions of paper money (in the US) from an engraved copper plate - from what I remember being told it was money bring printed to issue to the Militia and Continental soldiers, which I find somewhat ironic - As other politicians revolted at the idea of introducing paper currency, as they felt it perpetuates the issue with "fake money", pretending or putting "value" on a piece of paper with ink on it, worth far less than the value it is supposed to represent.

That whole "nothing like cold, hard cash" ideal certainly remains palatable today.

What is really intriguing (to me certainly) is the image is on the back-side of the famous "Boston Massacre" engraving he did not too long before the paper money. Because this otherwise 'unimportant' sheet of copper had images of currency on it, the plate had to be preserved and from what I know, is kept under lock and key in Massachusetts archives.

When I was in Portland, I got a Taylor $1 coin (from Voodoo Donut, of all places) I thought it was some kind of "free donut" Token or something until I got a chance to look closely at the coin - You have talked before how you used to use Gold $1 coins for PS games, but how noone was circulating them because people kept them as they were so rare, nevermind not being able to recognize them as 'legal tender' - I think the same thing happened with the Kennedy Half-Dollar coin, and $2 bill.

[palusbuteo.livejournal.com]

Oh, yeah, and the "What Is My Value" question....

As an Artist, that is proabably the most important and most difficult question, as, how does my art bring value to anything? How is it important, does it even need to be "important", and what is the definition of "important"?

One of the philosophies I'm trying to keep in mind as I try to move forward with my "Plan" is a quote from medieval artist, Cennino Cennini, "As the old saying goes, Good Work, Good Pay"

when people say "do what you love and the money will follow", it is very hard for me to not sneer back bitterly, because as much as I love doing the Art, that does not directly translate to "paying rent" or insurance or anything else. Just like the Chickens analogy...It can only pay for certain things, and at that, it's a gamble.

One mans trash

[evrgreen.livejournal.com]

is another man's gold - and vica-versa.
After being an advocate of the stock-system/wall street for many years, I've become very distrusting of it - even before our recent economic meltdown from "toxic mortgages" and conflict of interest credit default swaps. This most recent craziness is just the icing on the cake. Supposedly back in the 90s when we had a massive sell-off, and again in 2000, there were supposedly "Safety valves" put in place so that if trading anomalies caused the market to lose more than 5% of its value from the start of the day that all trading would be stopped - so that cooler heads could investigate and control the "lowering of the water" - if indeed it had to continue to reduce in value. Much was made of these instruments being used >10 years ago, yet now it seems these things are no longer in effect? Grounds for still more SEC investigations, to me!

[cissa.livejournal.com]

I can see the value (heh) of some kind of currency. It would ease bartering. Like, if I had apples and wanted bacon, and you had bacon but wanted a basket- well, it's not obvious how we could make that work. And what if the basket maker wanted a new roof on his house, and not apples or even bacon? Etc. In these cases, some sort of currency- but, one based on actual stuff (and I include work in "stuff") is helpful, even though the "float" is potentially a problem (money not being itself useful unless/until you trade it for something; it's kind of a dead spot in the economy until then).

Personally, I think the problem lies with capitalism, especially unchecked capitalism. The reason as I see it for these crashes is that money became untethered to ANYTHING useful at all. There is also the problem that capitalism required growth for success (I think necessarily, but am not 100% sure of that), which first absorbs the "float" and then starts creating imaginary goods and services to bolster the growth- OR requiring that the people getting the growth steal ever more of the goods and services of others to finance this, both of which I think we're seeing today. Plus: unchecked growth is, in nature, cancerous; we live in a finite world, and at the day's end everyone needs to eat, to be protected from the elements, etc.- so no matter what fantasies are being spun- it still really DOES come down to the finite physical.