Bitcoins and gold standard dollars -- was Re: Anyone want to make a housecall?

Tod Hansmann at
Sun Jun 2 21:23:38 MDT 2013

On 6/2/2013 9:10 PM, S. Dale Morrey wrote:
> Cash serves (in my mind) a specific purpose.  It's sole purpose is to
> facilitate exchange between parties, for instance I can pay taxes with it
> and buy gas for my car, groceries to feed my family etc.  It doesn't matter
> if that cash is dollars, euros or clamshells if I can spend it directly
> then it's cash.  However it's the spending that gives it value.  Holding
> onto it forever does nothing but cost money.
> If it pays interest it doesn't meet the definition, it falls more into
> longer term storage of purchasing power even if the length of storage is 1
> month or 1 year.  Savings accounts and Certificates of Deposit, which bear
> interest above inflation fall into this category.  Checking accounts are
> essentially cash.
The only points I'm going to make in this entire conversation relate to 
your definitions or whatever this is here.

- The value of a thing is never static and never attributed to a given 
entity.  The value of something in a specific context /might/ be, but 
it's not likely.  This applies to anything you might call currency, 
money, assets, or whatever.
- Wealth is not some mystical number you derive about your holdings.  
Wealth is the ability to create value for other parties. If you have a 
mountain of gold but can do nothing with it, it is not wealth.  If you 
can make some shiny clothes with it somehow, this still isn't wealth.  
It only becomes wealth when it drives a transaction.
- Cash is just an abstraction, because we got to a point in civilization 
where it was cumbersome to deal in chickens or rice or whatever the 
other guy was dealing in.  It saves transactions required to convert my 
assets into something I can trade for your assets.  The fact that we 
argue about it is actually kind of an example of how we do not 
understand it.
- Finally, remember that you can not buy a stick of butter for the same 
prices at 10 different places, even if its from the same dairy.  This 
has nothing to do with the value of butter or investments or anything.

My philosophy surrounding these facts is fairly simple.  In the end, 
every transaction we make, even elongated over an investment period, 
needs to create value (intrinsic or on an account balance or otherwise) 
for both parties involved, or it is devaluing something. That's really 
the only end-all be-all to economics.  If someone feels they're getting 
screwed, eventually we all are.  If everyone feels they came out ahead, 
eventually we all will.

-Tod Hansmann

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