Ron Johnson wrote:
On Sat, 2003-02-08 at 12:18, David P James wrote:Travis Crump wrote:
People and corporations produce their own money every day as well; have you ever written a check? Try coming up with a difference between checks, iou's, deeds, stock certificates, bonds, etc. and government produced money that isn't circular, ie "the first set isn't money because it is not government backed" Have you ever gone to a fair or arcade where you have to buy 'tokens' to pay for the games/rides? What are the tokens if they aren't money?I'll give you a difference: liquidity. There are also differing degrees of transferability and risk associated with all the forms of assets that you've listed. I can't just use the tokens anywhere; they are probably only redeemable at that particular arcade, though I might be able to sell them to another arcade-goer at par or at a discount.
David, You're missing the point, which is that "money", when it has no intrinsic value (or backed by that which has intrinsic value, for example, precious metals), become only, as another on the thread aptlyput it, "a means of keeping score", and is based on faith.
Granted that money is a special form of asset because of its other roles as a unit of account and medium of exchange but in terms of having no intrinsic value it's not really alone as bonds, stock certificates, checks or arcade tokens don't have any intrinsic value either, and aren't generally backed by anything that has intrinsic value (except maybe the tokens, which are backed by a promise of a real "service"). The "difference" is that all the above (except the tokens) are backed by a promise of money, which, as we have determined, has no intrinsic value, so, in that sense, they're all issued and acquired based on the same faith of the financial system's stability plus some faith in the stability of the debtor.
-- David P. James 4th Year Economics Student Queen's University Kingston, Ontario http://members.rogers.com/dpjames/ The bureaucratic mentality is the only constant in the universe. -Dr. Leonard McCoy, Star Trek IV