re: “What is money? Money is trust, someone said recently.” that’s close, though there’s an oversight.

We’ve No Money in circulation. It is, barring the rare exception, All Currency, and, laughably, clipped Coinage–truly, tokens.

Currency is, certainly, ‘Trust’. Or, rather, a blinkered belief in a torturous Confidence-Game.

The point that Winnie draws out: “He tells us, for example, that money is nothing more than a representative of labor, either physical or mental. Extrapolation tells us that debt then is a claim against future labor (productivity).” –One I agree with, should put in stark relief the Grand Fraud of any entity emmitting money-substitutes ‘from thin air’..

see: http://www.constitution.org/uslaw/coinage1792.txt
Dollars or Units DOLLARS OR UNITS–each to be of the value of

a Spanish milled dollar as the same is now

current, and to contain three hundred and

seventy-one grains and four sixteenth parts

of a grain of pure, or four hundred and

sixteen grains of standard silver.

note: one grain= 1/437.5 ounce
http://chestofbooks.com/finance/banking/Banking-Credits-And-Finance/Denominations-Weight-And-Fineness-Of-The-Coins-Of-Fee-Unit.html

for further..

I would suggest anyone with interest in economics should read the theories of one of Barry’s better posters, Eclectic, on the old Big Picture site. He tells us, for example, that money is nothing more than a representative of labor, either physical or mental. Extrapolation tells us that debt then is a claim against future labor (productivity).

In my mind, the monetarist has it exactly backwards, attempting to alter psychology with monetary policy, rather than having psychology drive monetary policy – it takes so great of overreach to change psychology that the seeds of the next bubble cannot be mopped up fast enough to prevent a repetition.

Can every share of Apple be worth $94? No. If everyone tries to sell them at once, very few shares will actually be sold for that price, and some people may end up not being able to sell them for any price. The same is true with real estate, commodities, and all assets.

So over time (via a positive feedback loop I guess), we build these huge bubbles that are 90% air and 10% substance. Thus when the overconfidence disappears in a rush of fear, all the imaginary asset values disappear in a flash – gone to money heaven from whence they came.

Money and debt supports this process, but I think the real driver is psychology / overconfidence.

As they say, easy come easy go.

Nice piece, you make many cogent points. Hopefully it will be widely read and fully contemplated.

At the very minimum, you do well by remembering Minsky. His insights, too oft overlooked, or, worse, scorned, offer the missing piece to many puzzles.

And, contra this: “Robert Shiller asserted that no bubbles occurred until the introduction of newspapers.”, thoughtful pamphlets like yours would do well to keep the ‘yeastiness’ to a minimum.
~~

Winnie,

nice point re: the foundational holes, to be observed, in the works of the ‘Eonomagicians’.