Fake Money?

This article published in Vox is not very insightful (as most articles in Vox are mostly partisan political parroting), but it does raise lots of questions for the layperson to contemplate. First off, all fiat currency money is fake until it’s made real, which means until you trade currency for real assets, it’s only worth the paper it’s printed on. Value is not in money, it’s in the positive returns that an asset delivers over time. That return can be in additional currency, time, or energy.

Money Has Never Felt More Fake

Some excerpts:

“Money feels cold and mathematical and outside the realm of fuzzy human relationships. It isn’t,” he wrote. “Money is a made-up thing, a shared fiction. Money is fundamentally, unalterably social.”

Yes. As stated above. Money is actually stored time. The more money you have the more time you’ve stored up. But it doesn’t extend your time on earth, it only allows you to trade it for more free time within that uncertain lifetime we all have.

GameStop has come to epitomize an era of meme investing, where ordinary investors are piling into stocks and cryptocurrencies and digital assets not necessarily because they believe in the underlying value of the thing they’re buying (though some do) but instead because it just seems like a thing to do. Dogecoin or NFTs or stock in theater chain AMC get popular online or in their social circles, and they turn around and think, why not?

Yes, the psychological nature of fiat money means that psychology can drive the prices of goods and services. This is especially true with speculation based on the greater fool theory of value.

Value is ultimately a story, one we tell to ourselves and to others. In the United States, we’ve convinced ourselves of the story of the dollar, which is backed by the full force of the US government. But it’s ultimately just a piece of paper. Cryptocurrencies and NFTs and AMC all come with their own stories, which, admittedly, can be on the kooky side.

Well, yes, it’s a story, but whether that story is truth or fiction is borne out by subsequent experience. Value is a function of a positive stream of desired “goods,” much like a bond delivers coupon payments (i.e, interest) every quarter. If the bond fails, well then, the story was fiction.

There’s more to the current money landscape than dogecoin and meme stocks that makes the whole thing seem a little fake. The stock market soared during much of 2020 and 2021, even during the depths of the pandemic, making it hard not to wonder what the whole thing is for. The federal government was able to deliver a lot of money through monetary and fiscal relief to keep the markets — and regular people — afloat.

Yes, money printed by the Fed to monetize excess government borrowing is fake unless it is converted to real value through the conversion of time and energy into real goods and services. Paying people not to work is converting money into fake value that will evaporate in time.

“If it’s just a dot-com bubble, it sucks for the people who invested,” says Hilary Allen, a law professor at American University who specializes in financial regulation. “But if it’s 2008, then we’re all screwed, even those of us who aren’t investing, and that’s not fair. It really depends on who’s getting into this and how integrated it’s getting with the rest of the financial system.”

Well, Prof. Allen doesn’t quite get it. In the early 20th century, market meltdowns bankrupted speculators and financiers and the rich who saw their assets devalued. That is no longer the case as just about everyone has a stake in financial assets through their pensions, real estate, and income flows. We’re all “invested” and it is true today that those most hurt today are those without asset portfolios. The Fed protects the asset rich today. It’s why when Mr. Market eventually ends this game, there will be nowhere to hide except far off the grid. Maybe that’s why the tech billionaires want to colonize outer space? Good luck.

A Cloud Revolution?

The following links to an interesting book review on an optimistic view of the future that technology will bring through greater human connection, less toil, and more time to be human rather than an economic unit of production and consumption. Interesting reading, with some worthy insights.

Book Review: Mark Mills’s ‘The Cloud Revolution’

Excerpt on the true value of money, which is time.

Mills refers to “time” as “the most precious of all commodities.” This is important not because some or many readers haven’t heard it, but because of what it modernly discredits. So many who should know better follow the Federal Reserve with great intensity as though the central bank’s relative willingness to “loosen” or “tighten” credit will be of economic importance. No, such a view is mindless. Credit is produced. We borrow money for what it can be exchanged for. Real resources. After which, per Mills time is yet again “the most precious of all commodities.” Yes it is, and the Fed can’t produce even an extra second. Not only will automation and robots author levels of growth that will astound us for their bounty, but they’ll also finally put to bed a “Fed” narrative that never made sense, but that refuses to die. Credit on offer because of production (meaning the only kind of credit) is set to astound us in terms of its abundance, and central bankers will logically have nothing to do with it. The Fed can neither shrink us nor elevate us. This has always been the case.

Time is Money?

And this quote leads into the logic of tuka, where sharing human creativity becomes the priority demand on our time. Sharing creativity helps us to reach the highest levels of human self-actualization as we no longer toil in mind-numbing “work.”

The bet here is that the next “economy” in the U.S. will be called “The Entertainment Economy.” Mills seems to agree as he spends a lot of time closer to book’s end on the extraordinarily happy truth that the “entire arc of technological progress has been to decrease the share of economies (and the share of people’s time) devoted to ‘essential’ tasks.” He then spends quite a bit more time on the rise of entertainment “work” (think videogaming, among other forms) that past generations could never have reasonably contemplated. 

www.tukaglobal.com

Crony Crapitalism at its Worst

A brief look at the Citicorp case and court rulings from Matt Taibbi’s TK News on Substack:

Meet Jed Rakoff, the Judge Who Exposed the “Rigged Game”

“We have mass incarceration for the poor, and it’s totally hands-off for the rich, and that’s pretty hard to stomach.” Justice Jed Rakoff on his new book, and his famous challenge to the system

“Heads we win, tails you lose,” is not capitalism!