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What is Money?

Le Baron said:
The driving of the currency by what Wikipedia states is what I disagree with. The currency is driven to acceptance only by the tax liability. From there this makes it the accepted monetary unit even if you dodge taxes.

Those are indeed correct. coins and paper are just representation and for easy payment for small purchases (unless one happens to be a dealer with a suitcase of money!). In essence that commodity money isn't the nature and source of money.
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I understand the tax obligation for US citizens and resident foreign investors. I also understand that many other countries do the same. But what about countries with territorial based systems, so-called tax havens like Panama? Since Panamanians (and Panama-based legal entities) are not required to pay tax on foreign domestic gains, what is their motivation to invest in US dollars versus some other currency? In these cases, aren't we then back to some form of the "full faith and credit" argument for perceived value?
 
Hook said:
I understand the tax obligation for US citizens and resident foreign investors. I also understand that many other countries do the same. But what about countries with territorial based systems, so-called tax havens like Panama? Since Panamanians (and Panama-based legal entities) are not required to pay tax on foreign domestic gains, what is their motivation to invest in US dollars versus some other currency? In these cases, aren't we then back to some form of the "full faith and credit" argument for perceived value?
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Their motivation is that the dollar is secure and iron clad whether or not that minority pays taxes. It is accepted because of everyone else (hundreds of millions of people) complying with the tax liability and is secured by the U.S.'s power of not defaulting. Who wouldn't want to hold that in any form?!
 
Le Baron said:
That's why I referred to it as a collector's item. The same way someone buys an antique or something from the 'Franklin Mint'. Any government with a fiat currency issue power in the top rung (Dollar, Pound, Euro, Yen, Renminbi) has no problem maintaining it's 'value'. The problem a lot of people have, especially those who fancy themselves 'investors' and money jugglers, is that they only think of money as 'wealth' or 'wealth store'. In any case we've seen that cryptocurrencies are volatile and far more so than anything maintained by sovereign government.

The Bitcoin thing is odd to me. Let people do what they want with it if they're so inclined, but the reasons you list are antithetical to how money is used to maintain an economy. Lack of single authority control over a currency in this scenario is crazy; severe limits on issue is like money supply control ideas. Fiat issue currency's power comes from that. What you go on to say I can agree with, they are collector's items. Not a means for generating the public purpose. Everything in which things like Bitcoin operate exists is created and maintained by fiat money systems.

As such it is a payment system or like 'holding a token' merely like using PayPal.
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I appreciate what you are saying, but I am still not understanding why pegging Bitcoin to fiat currencies is a problem for its future development. How does anything in this world have perceived value (beyond its utilitarian use) if it is not pegged to fiat currency? I am not suggesting crypto as a replacement for fiat currency. I see it currently more, as you said, as a value store. But there are a couple of hundred thousand Bitcoin transactions taking place every day. Do you believe it is unreasonable to think that more organizations will accept it for payment over time?
 
Hook said:
I understand the tax obligation for US citizens and resident foreign investors. I also understand that many other countries do the same. But what about countries with territorial based systems, so-called tax havens like Panama? Since Panamanians (and Panama-based legal entities) are not required to pay tax on foreign domestic gains, what is their motivation to invest in US dollars versus some other currency? In these cases, aren't we then back to some form of the "full faith and credit" argument for perceived value?
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Not sure I understand that. If I need £’s to pay my tax in £’s, but people like Rishi Sunak put their earring in say, Panama to avoid paying tax, how is Panama investing in £’s?
 
Hook said:
I appreciate what you are saying, but I am still not understanding why pegging Bitcoin to fiat currencies is a problem for its future development. How does anything in this world have perceived value (beyond its utilitarian use) if it is not pegged to fiat currency? I am not suggesting crypto as a replacement for fiat currency. I see it currently more, as you said, as a value store. But there are a couple of hundred thousand Bitcoin transactions taking place every day. Do you believe it is unreasonable to think that more organizations will accept it for payment over time?
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When you peg a currency you depend on the currency you peg to, which also dictates it. Apparently the Bitcoiners are opposed to the Dollar because it is an evil fiat currency with their entire raison d'etre being to be the opposite sort of thing. In any case it does nothing for them. It's not really pegged because Bitcoin isn't like an actual currency, it has no use value beyond small transactions between small commerce people. And of course crooks doing bigger secret business. Hoping they can transform some of this into actual money.
People who do these crypto transactions - and I see it in how they talk about it - have in the final instance an eye on how many Dollars they can get out of it, not Bitcoins. So it's like Paypal. The inward feed relies on guaranteed money.
 
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Le Baron said:
Their motivation is that the dollar is secure and iron clad whether or not that minority pays taxes. It is accepted because of everyone else (hundreds of millions of people) complying with the tax liability and is secured by the U.S.'s power of not defaulting. Who wouldn't want to hold that in any form?!
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Understood, and thank you for agreeing with my point that the US dollar's value, at least for those who live (or are incorporated in) a tax haven, is a function of nothing more than a promise by the US government. Nothing directly to do with tax in that limited scenario, but I take your point that even those people and legal entities in Panama, Thailand, Paraguay (and I assume others) rely indirectly on the tax obligation of others to maintain the value of fiat currencies.
 
Hook said:
and thank you for agreeing with my point that the US dollar's value, at least for those who live (or are incorporated in) a tax haven, is a function of nothing more than a promise by the US government. Nothing directly to do with tax in that limited scenario
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Just a clarification though... It isn't a simple 'promise' of value, it is that everyone else around you (apart from that minority) needs the same thing you do in order to pay the tax, so you'll take it from anyone. Not the government just 'promises' something apart from the promise to redeem that particular currency. Without that the value isn't there, no matter what.
 
ks.234 said:
Not sure I understand that. If I need £’s to pay my tax in £’s, but people like Rishi Sunak put their earring in say, Panama to avoid paying tax, how is Panama investing in £’s?
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You or others can correct me if I am not understanding your question, but here’s my over-simplified take.

Let’s say Rishi has an investment account in Panama where he holds British pounds. He believes that the exchange rate going forward will favor the dollar, so he sells pounds and buys dollars. Let’s say he was right, but now he thinks the opposite will be true going forward. He sells dollars and buys pounds. The end result is he has more dollars than he used to, but his individual tax obligation on that gain is zero.

Most countries hold foreign currency in their central banks as a reserve, but countries can not tax other countries for doing so. A country can however try to gain trade advantage over others by devaluing their currency, thus making it easier to export.
 
ks.234 said:
What is Money? Where does it come from? How is it valued. Who does it belong to?

PS, David Graeber pretty much demolished the idea that money comes from barter in his book Debt, the First 5000 Years
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P.S.
Unless you're American and Chicago based apparently.
P.S. Money is the stuff 90% of us don't have enough of and therefore can't buy the things wot make us think we are happy.

Next question.
 
Rockmeister said:
P.S.
Unless you're American and Chicago based apparently.
P.S. Money is the stuff 90% of us don't have enough of and therefore can't buy the things wot make us think we are happy.

Next question.
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Gosh. 10% have all the money and 90% are unhappy. Unfortunate, but remember, there is no alternative
 
The answer to the question is easy. It is the paper notes and metal discs issued by the bank. The difficult bit is what is the value of money and why is it so high.
 
Dozey said:
The answer to the question is easy. It is the paper notes and metal discs issued by the bank. The difficult bit is what is the value of money and why is it so high.
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Look further up. The paper notes and the metal discs is not the answer. Value is also touched upon.
 
It is the answer. It might not he the one you are looking for, but blame the ambiguity in the question.
 
Dozey said:
It is the answer. It might not he the one you are looking for, but blame the ambiguity in the question.
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It's not the answer, though I agree the question invites many answers and views. The thread is about unravelling this.
 
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