Posts Tagged ‘money


Money as a construct


1. Money doesn’t actually exist
2. Government issue bonds for sale base on a promise to buy these back at a given amount on a given date.
3. Government gets money for bonds and spends it to create revenue
4. The promise to pay is then called government debt
5. Governments can issue more bonds to cover this debt or they can use revenue.
6. Issuing bonds to cover existing debt increases debt
7. The largest buyers of bonds are banks which are allowed to operate on a fractional reserve system.
8. Fractional reserve means that for every dollar they spend on bonds they can issue 10 times (or another multiplier) that amount in currency and charge interest on the loan.

quick summary:
Year 1. government sells $1 to a bank with the promise to pay $2 in 2 years time, government debt is then $2 dollars. Bank can then lend $20 to you today.

year 3. Government doesn’t have $2, sells $4 to bank with promise to pay $8 in two years. Government debt is now $8 and bank can lend you $160.

year 5. Government doesn’t have $8, sells $16 to bank with promise to pay $32 in two years time. Government debt is now $32 and bank can lend you $640.

(Did anyone catch the rice chessboard thing about expontial growth?)

obviously this doesn’t quite work exponentially but the growth coefficient means that debt will increase over time as will the ability of the banks to leverage and sell you debt.

Some companies such as hedge funds releverage this debt – financial crisis in 2008 where a single dollar was sometimes leveraged up to 1000 times.

of course the whole thing is a house of cards where the only guarantee is the assumption that natural capital (the worlds resources) is infinite and productivity (the labor of the working class) will increase in efficiency over time. Both of which assumptions are false.

the myth is perpetuated because, as you see, it makes the banks very very very rich.



straight to the pointy end,
life is planetary.
The millennial aims to consume it, and
replace the real with a digital representation,
Which reality is within our grasp.

We’ve talked about value,
of the mercentalisation of everything.
Use the biotope to create waste
to destroy habitat and ecology,
in the hope of more success.

Discussions of goal state.
Growth must.
As we eat the planet,
maintenance costs are already more,
than the future can afford.

Distraction the paramour,
enamoured with our multicellular entanglement,
we view the destruction with amusement.
Life as information,
hardens to the screams.


Value II

The valuation of goods is based on rarity, as perceived through an anthropomorphic veil.

True value, can only be represented as the energetic costs of their production.

The work required to extract and consume minerals is worthless unless repeatable. I will make reference to a greater wisdom than mine:

Only when the last tree has died and the last river been poisoned and the last fish been caught will we realise we cannot eat money

We are caught in a logical fallacy, a religious belief that the means of production represent value, when in fact they largely represent destruction of real value, in the consumption of life itself.


Theconversation II

Evening, you are of course correct that the market, in itself, is simply an efficient medium by which to exchange, the work done by increasing entropy.

Money, the medium of exchange, is now digital, existing as a construct. So what will you tell your child when they ask where monies come from? Is it like the milk from the store, does money come from banks?

As the medium of exchange, every transaction phases through money. Money is work, an expression of the ability to do work. Work is energy. The entire capitalistic venture is built upon the ability to make a transaction to exchange energy.

The market however, does not judge the value of a thing, based on the amount of energy consumed. The value of the thing, is dependent on demand, the want for a thing, the expectation that a thing can gain you a profit. Therefore the actual exchange of money is not a pure exchange of energy.

So money, in a non-fiat world, becomes a representation of the willingness to pay for a thing that has consumed energy. It in no way represents the potential energy of the thing itself.

In such a way has bitcoin gained value, it consumes a prodigious amount of energy and yet has no physical potential to do work. Bitcoin is postmodern money in a false economy. Based on short term demand and the assumption that the energetic economy can continue infinitely within a finite world.