Do you ever get a weird feeling when you reflect that money isn't actually 'real'?

[iloveeverykindofcat]

Okay, I know its 'real' in the sense of how it functions, but do you ever reflect how strange it is that we do all this work, make all these exchanges, do all this saving of something that doesn't actually exist? People I've mentioned this to IRL don't seem to share this feeling that its actually a very strange system - maybe I'm not explaining myself very well. But the money in my bank account, for example. Its just a number. I go to work in order to make the number go up, and almost everything else I do makes it go down. If someone went into the system and added a few zeros to it, my life would change beyond recognition...yet it doesn't actually exist? What is it?

Of course. Without a currency you are tied to your farm apart from taking surplus to local markets to trade for stuff you need.

That's how life was before currency. You grew as much as you could, hoped for decent harvests, hoped to store food to last through to the next harvest, and starved to death in bad years.

Currency changes everything. If you get a really good crop and you sell at a good price you can bury coins to use in bad times to buy food. The coins won't rot.

Just coming back onto this thread to say that what you are all talking about is economics. So if you think your DC would be interested in these questions get them to think about studying it. (Especially your daughters -we need more female economists)

Yes I've always had this thought, it's also like if you had a billion in your bank account but were abducted by Aliens it wouldn't help you at all because it's meaningless to them.

Yes, this always goes through my head when immensely rich people die. When they spent all/most/much of their lives built on being able to have whatever they wanted, whenever they wanted, as well as all the kudos and worldwide fame that went with it.

But, even though they can afford the best medical professionals, equipment and treatments, they still will eventually die - and they'll then have less money than the homeless person living in a shop doorway who's just been given a quid for a drink by a kind passer-by.

To be fair, I think we may be conflating two separate issues on this thread.

Of course some kind of central transaction system is essential in modern life, so that you can (hopefully) buy what you need without having to find somebody not only selling what you need but who also needs what you have to offer for every single transaction.

However, as I understand it from the OP, it's not just the central deferred 'trust' that currency requires, but the fact that it mostly isn't backed by anything at all. In the old days, even though your small share of a gold ingot never moved a millimetre from its shelf in a bank vault, you were still constantly transferring ownership by way of promissory notes that did relate directly to the gold. If you bought something valuable enough from one person, they would have had every entitlement to go to the bank and take what was now their gold ingot - or at least ask the bank to take it from your shelf and put it on to theirs.

Nowadays, the promise itself IS the currency, which is madness when you think about it. A bank is authorised to lend you something that only comes into existence because you have asked to 'borrow' it and the bank has enough faith in you that you can and will 'repay' it to them - that will never not blow my mind.

For me money is just numbers

It is a maths exercise

At one point in my life I had mortgages of 7 figures and was asked if I worried about owing such a large amount. To me it was just a big number with a minus sign infront

'statr meachonaisma'?!

I used to work in a bank years ago, and got rather used to seeing several millions of pounds-worth of notes lying around on the floor of the strong room. It is just paper. You can't eat it - although I dare say you could set fire to it to keep yourself warm.

To be totally honest, if the world went to shit and everyone was scrabbling to survive, the most useful thing to have would be a weapon. At least with that I could prevent anyone trying to relieve me of my four cans of tomatoes.

It wasn’t that recently, though — didn’t the UK finally come off the gold standard in the late 1930s?

What blows my mind is how banks can lend the same bit of money out to multiple people. And charge interest on it.

If everyone who had given the bank money asked for it back at once (a bank run) they wouldn't have enough. So where does the extra come from? It's like they fabricate it out of thin air.

'statr meachonaisma'?!

State mechanisms, presumably.

It wasn’t that recently, though — didn’t the UK finally come off the gold standard in the late 1930s?

No, I wasn't meaning 'the old days' as in when most of us alive today were around, but in terms of modern human civilisation.

What blows my mind is how banks can lend the same bit of money out to multiple people. And charge interest on it.

That's what they used to do, once they realised that they could get away with it. I suppose a bit like how some people trade these days, where they sell something for a profit that they don't yet have, or indeed ever see - whether at a major level on the stock market or selling stuff on eBay for more than the Amazon price and then ordering it from Amazon to be sent direct to your buyer (I never understand how people swing that, but they do).

Nowadays, they don't even have to have the funds at all to 'lend' them to one, two, ten, a hundred customers: the very act of your borrowing money from them entitles them to create the 'debt' out of thin air, which you then have to pay them back using real money.

Fair enough, @WeBuiltThisBuffetOnSausageRoll — maybe I’m jaundiced from teaching undergraduates who think the 90s were pretty much the Early Cretaceous Era.

That's why banks are so heavily regulated.

But where does the money come from - when they put it in my account. And why does this not lead to hyper inflation like printing money would?

It’s just numbers until someone wants the physical stuff

I am, lucky enough, to be have been saving like a fiend these last few years with a view to retirement in a couple of years. So I can make up my occupational pension and to bridge me to my state pension. I move money from my salary to wherever it might better work. I recently thought, I am losing sight of money being real. It's just numbers, not what could I do with it to make me happier now. Maybe that's not what you mean, but I think I need to have a rethink.

But where does the money come from - when they put it in my account. And why does this not lead to hyper inflation like printing money would?

I presume that's why only banks and similar organisations are allowed to create the money - and I guess they have restrictions as to how much they can create into the economy and/or strict rules that they have to follow to justify it.

If any of us could just create the money to buy whatever we wanted, the whole system would crash instantly! They're careful as to how much new money can be fed into the system, but it is one of the causes for inflation - albeit not normally hyper. Quantative easing is just another term for theft from everybody, as it makes all of our money that bit less valuable; but like so many things, when governments do it, that somehow makes it OK.

Thanks for the recommendation of the book, The Moneyless Man.

This thread is ever so interesting.