Comment by ToucanLoucan | Hacker News Reader

Comment by ToucanLoucan | Hacker News Reader

Parent Full thread

> I've always been in awe at the (absolutely crazy if you ask me) concept of money. The fact that we accept to give up possessions or time in exchange for the promise that anyone in the future will provide something equivalent because we just show some token/proof (which in itself are intrinsically valueless: sticks, stones, minerals, papers, now bits...).

No offense intended, but I think the way you're explaining this is a little overly silly. Value credit was a natural evolution from the barter system and it makes perfect sense. If you wanna run down to the 7/11 for a slushie, do you want to bring a $10 bill, or a live chicken? I definitely vote $10 bill, especially because there's a non zero chance the cashier wouldn't want a chicken anyway, even if it's technically worth enough to trade for a slushie. Money just streamlines this whole process and makes even exchange for goods infinitely more efficient for all parties involved, and I think that's why virtually every organized society we've found evidence of has some type of currency, going back thousands of years.

Now, that's not to say I don't agree that the monetary system as it exists is borderline a crime against humanity. Capitalism and it's various knock-on effects, starting plus or minus with colonialism depending how you want to slice it, is, I think, the most horrific thing we've done to each other in our entire history as a species. But I don't think that's an indictment of money strictly speaking.

That's the thing here. We're so used at the concept of money that you described that it's very hard to reconcile with what money really is.

You can take any introductory banking system course and it will tell the same story. (I recommend Economics of Money and Banking by Perry G Mehrling)

It's not really a finished exchange.

Money represent a debt.

It's a one sided exchange against the promise of the completion of the other side of the exchange in the future (by someone else in this case).

It's like the amount in your bank account is not really money. It's a debt from the bank: the promise that it will deliver this amount as cash if you ask. (M1)

And money is so liquid that we never think about it that way. Except during hyperinflation periods. And bank account are so solid that we think about them as cash. Except during bank runs.

As a side note, the theory that barter really meaningfully took place is being challenged as there is no real evidence of this.

Looking at the fine print of bank accounts, I would assume they completely absolve themselves of responsibility after a catastrophic event (call it C-Day). Or maybe they defer to FDIC insurance which guarantees I will have at least $250,000 after C-Day.

That said, as a consumer, I have no comprehension of how that would actually work. Do I get my guaranteed money 7 days after C-Day or 6 months after C-Day?

If an EMP blitzes my bank's electronic hard-drive records, is it my responsibility to prove I had X dollars in the account? If so, how? I can easily print a statement, but a statement clearly easily be forged. If it's the bank's responsibility, is there any guarantee they maintain physical and up-to-date records? Is there any regulation mandating they keep such records?

What happens if hyperinflation occurs and the 250,000 guaranteed by the FDIC is enough to buy a week's worth of groceries?

There's a lot of unknown variables and potential fragility in the system.

In other complex realms like software engineering, we get evidence that those complex systems really only have the budget to build the "happy path" and lawyers fight the cases when customers get damaged by the "unhappy paths."

It seems like our monetary system is on the happy path and very few times have the unhappy paths been tested.

Reply on news.ycombinator.com