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Re: shuttle disaster

Ron Johnson wrote:
On Sat, 2003-02-08 at 15:12, David P James wrote:

Ron Johnson wrote:

On Sat, 2003-02-08 at 12:18, David P James wrote:


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 aptly
put 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.

Au contrere (contraire?), bonds are *secured* debt (say, by that factory
that was built from the proceeds of the bond sale), and stock cer-
tificates confer partial ownership, and, thus, if the corporation
were to be liquidated, the holder of the stock certificate(s) would
get an appropriate % of the net assets.

Contraire is correct :)

That's true in one sense but not in others. It's true for a bond only if the issuer fails to meet their obligations. But if they do meet their obligations then you can't just take your bond back to the corporation that issued it and demand it be redeemed before it matures nor can you in most cases sell your stock back to the corporation. So it really depends on your point of view as to whether unredeemable assets are "backed" by anything.

David P. James
4th Year Economics Student
Queen's University
Kingston, Ontario

The bureaucratic mentality is the only constant in the universe.
-Dr. Leonard McCoy, Star Trek IV

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