Hi everyone and welcome to Finance and Fury! Today we’re going to look at our current monetary system; what is considered money, and also the future of our monetary system.

Today’s episode will be a fairly quick episode, and will be an introduction to a series of Furious Friday episodes that we’ll be doing over the coming weeks.

Our current monetary system is actually debt-based fiat currency. This means that every dollar that you have is a debt obligation by a central bank to eventually repay.

This is pretty important to look at, because unfortunately this won’t last forever. It’s only been around for 40 years, and we can already see the signs of this system struggling to keep up with the never-ending ability to create ‘money’ out of thin air.  

Money is created with 1s and 0s – for every $1 there is a debt obligation to the central bank to repay this. Every dollar that you have is backed by some form of debt, whether it be debt created from a commercial bank (fractal banking reserve) or when it is issued and bonds are created and traded in exchange.

The three functions of money

  1. Store of value – can I hold on to the money and spend it at a later date knowing that it will hold its value until tomorrow, next week, or even next year?
  2. Unit of account – You can think of money as a yardstick; the device we use to measure value in economic transactions.
  3. Medium of exchange – Is widely accepted as a method of payment

Major characteristics of money

These vary between options and are why some forms of currency are adopted preferably over others.

  1. Durability – Will it last? Can it be stored easily?
    • Technically cash durability isn’t as good as gold – Pablo Escobar and his money eating rats
  2. Portability – can you carry it around easily? Gold bars are pretty heavy.
  3. Divisibility – Similar to unit of account where you can break the units down into smaller levels
  4. Uniformity – is every unit the same?
    • Can it be debased/devalued?
    • Coins are not immune
  5. Limited Supply
    • Counterfeiting
    • Who is creating it? Gold is better than fiat currency from this perspective
  6. Acceptability
    • Barter is hard
    • Fiat became easier and became a legal tender by decree

The combination of all of these characteristics + how we value it = what we adopt as money. This comes back to a thing called ‘subjective value’. Do we think we will be able to use it in the future? (Money riots of the past)

Money may take a physical form, as in coins and notes, or may exist as a written or electronic account. It may have intrinsic value (commodity money), be legally exchangeable for something with intrinsic value (representative money), or only have nominal value (fiat money).

The Mesopotamian civilization developed a large-scale economy based on commodity money. The shekel was the unit of weight and currency, first recorded c. 3000 BC, referring to a specific weight of barley, and equivalent amounts of silver, bronze, copper etc. The Babylonians and their neighbouring city states later developed the earliest system of economics as we think of it today, in terms of rules on debt, legal contracts and law codes relating to business practices and private property. Money was not only an emergence; it was a necessity.

 

Money can be a number of things

  1. Cows, sheep, grain – used in barter economy
  2. Shells – Ancient China, Africa, and India
  3. Golden coins – Goldsmith bankers
  4. Paper with gold/silk backing it
  5. Debt based Fiat 

Some of the things we’ll be looking at in the upcoming episodes;

  1. The way we currently do it (debt-based fiat) and inflationary targets
  2. Bitcoin, and also crypto currency in general
  3. Gold – the old school way
  4. What will happen once the debt bubble breaks, and the rise of SDRs (Special Drawing Rights) which I believe will be a form of global reserve currency in the future. They have been around since 1969, and are used as a global currency reserve, but you can’t own them – only the IMF can! This is going to be a VERY interesting topic so stay tuned!

Furious Friday: Market Update

Furious Fridays Market Update Today’s episode is a Market Update and we look at a few of the factors that affect our market. We will discuss why these things matter, and why we are in the state we are in! In this episode we discuss: Consumer confidence – Look at the...

Say What Wednesdays: High Roller; Start Investing with $1,000

Say What Wednesdays High Roller; Start Investing with $1,000 Welcome to Finance & Fury, the Say What Wednesday edition, where we answer your personal finance questions each week. Today’s question comes from Tara; “Hi Finance & Fury, love the show! I was...

Is water investment the petroleum of the 21st century?

Welcome to Finance and Fury, the Furious Friday edition. Episode today about a trend over the past decade and moving forward – is water the new petroleum? A few episodes ago – went through what is more valuable – a TV or water – depends on your perception and what is...

All that glitters: How precious metals, like Gold and Silver work as alternative investments, and how they fit into an investment portfolio.

Episode 34 All that glitters: How precious metals, like Gold and Silver, work as alternative investments, and how they fit into an investment portfolio. Welcome to Finance & Fury. Today we’ll be running through some alternative assets – precious metals, like Gold...

Say What Wednesday: Baby on Board! The Ultimate Guide to Maternity Leave

Welcome to Say What Wednesdays, where every week we answer questions from you guys, the listeners. This week the question comes from Mary; “Hey guys, love the show. Just wondering about what entitlements, I can receive if I go on maternity leave? I’m currently...

How do coercive Government policies turn competitive markets into monopolistic competition into government-granted monopolies?

Welcome to Finance and Fury, The Furious Friday Edition Today – Run through SDG Goal 17 – Sneaky side to the SDGs along with the method of creating global monopolies – part 1 of two – today 17, next week 12 – they go hand in hand SDG17: “seeks to strengthen...

How to avoid getting further into debt and get spending habits back in line

Welcome to Finance and Fury. Credit cards and pay day lenders are on the rise, as some of those out of work are becoming strapped for cash. Today, we look at this further but also look at some alternative strategies to avoid the debt traps. We’ll also look at how to...

How to start taking investment actions today for a better you tomorrow.

Welcome to Finance and Fury. What is important when it comes to investing? Or which is the more important – what you know or what you do? Sometimes the more you know – the harder it is to invest – information overload – can be a curse of knowledge – if you knew...

Coffee, dominos and the basics when understanding how the real economy functions

Welcome to Finance and Fury. Today - Understanding domino effects within an economy – This episode is aimed to help think more about orders of effect and consequences from actions – Talked about this in last FF ep – this episode is a bit of a lighter episode – been...

How accurate are economic statistics and do they really matter in our daily lives?

Welcome to Finance and Fury, the Furious Friday edition. Today we’re look at if economic data really means anything. I was thinking – and do any of these numbers really matters to you? Or even to me? Think about this – talk about a lot of the metrics – GDP, Inflation,...

Pin It on Pinterest

Share This