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A Revolution in Money

dealbook.nytimes.com

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Re: A Revolution in Money

#31

Post by gus_massa »

edanm wrote: post #22
wdewind wrote: post #21

Earlier quoted context omitted.

> That's not true everywhere. I'm not sure if it's US-only behaviour, but in other countries, the majority don't use credit cards for debt - just as a convenient payment mechanism. Sorry to pull an HN special on you, but do you have any kind of source for that? I've never heard it, though I have heard that debit card usage is much higher in Europe.

No reason to apologise for asking for a source :) Always legitimate. Unfortunately, I don't have one. I do live in Israel though and I can tell you that here, at least, most credit cards are used like debit cards (as I understand them). We do technically buy on credit, but pay up at the end of every month. We do have one thing which, afaik, doesn't exist in the US, which is that we can "split up" a payment when payin…

It’s very similar here in Argentina, but we usually have a different plastic piece to use as debit card and as credit card.

Re: A Revolution in Money

#32

Post by bubbleRefuge »

jdimov wrote: post #23

What all of this discussion is severely lacking is an understanding of how money actually works and how it is created. In a modern economy, money is created by commercial banks every time a bank makes a loan. So the questions in this article are a bit off. E.g.: "What happens when you no longer need a bank to provide capital? Where will people store money in the future?" These questions are off-target, because it's n…

Agreed. Upvote. And those banks get their legitimacy from the federal reserve system which provides a stable interbank payments system as well as deposit insurance. Also, money is created when the federal government spends more than it taxes.

You are right in pointing out that there is a lack of understanding of what modern money is and where it comes from. For better or worse, its a creature of the state. This article touches on some of it : http://dailyreckoning.com/the-real-reason-the-u-s-dollar-has...

Re: A Revolution in Money

#33

Post by gus_massa »

> We are going to have individually issued currencies. We already have corporations issuing currency: frequent-flier miles, although people don’t see them as that from a legal perspective.

Imagine that A issue A-coins and send them to B, then B sends the A-coins to C, C send them to D and D sends the A-coins to you. But a few days later you discover that A was a fake account of a scammer, or A goes bankrupt, or A an all his family died in a car accident and he was renting his house, or ... Then the A-coins are worthless and you are screwed.

A few years ago, here in Argentina each province (state) issued it’s own money, and paid all the public employed with that money. It was technically a bond, but it looked as money and was used like money. The more successful case was the Patacón http://en.wikipedia.org/wiki/Patac%C3%B3n_(bond) . But in all the other provinces, after a time it was very difficult to exchange the bond to real money (pesos or dollars) or products, and in that case you get only the 70% of the face value. (Now they have been absorbed.)

I don’t trust in the money of the province, and I really will not trust in the money issued by Joe Doe.

Re: A Revolution in Money

#34

Post by wdewind »

QuantumChaos wrote: post #7
wdewind wrote: post #4

Earlier quoted context omitted.

On the other hand... The 2 to 3% drag needs to be corrected for increased liquidity, which is difficult to do. People don't use credit cards because they are convenient, people use credit cards because they do not have the extra money, which drives compounded economic growth. If bitcoin succeeds, credit mechanisms will be built on top of it, and they'll behave almost identically to credit cards, including have fraud.…

There is no logical relation between credit vs debit cards, and fraud. You could have a bitcoin based account with a borrowing limit, which could only make payments to registered identities (equivalent of merchants), creating a credit card-like account. And when you say that merchants find credit cards acceptable in spite of fraud, that doesn't imply that fraud isn't a huge drain on the economy, it just means that cr…

Can you explain the scheme in which a user would be authenticated and authorized under a credit-card-like-account that would not be open to the kind of fraud we see on credit cards currently?

And you're right, what implies that fraud isn't a huge drain on the economy is that it comes from massively increased liquidity. Fraud is a biproduct of increased liquidity. I don't know how many times I have to scream this in this thread. If you aren't addressing the increased liquidity offered by cards you are missing a massive part of the equation.

Re: A Revolution in Money

#35

Post by yaddayadda »

evli wrote: post #30

While I would enjoy living in such a world. Changes like this often take a very long time. Have you used a self checkout machine lately?

I have a love/hate relationship with the darn things. While I try to avoid them, I had to use one just a couple days ago. So, to answer your question, a couple of days ago. But I know lot's of people who love them and when present I see them being used by others with high frequency.

Other than it being loosely related to the technology of money and shopping, what does your question have to do with, "A Revolution in Money"? Specifically, what does the recency of an individual's interaction with a self-checkout machine have to do with the article?

Re: A Revolution in Money

#36

Post by lingben »

jdimov wrote: post #23

What all of this discussion is severely lacking is an understanding of how money actually works and how it is created. In a modern economy, money is created by commercial banks every time a bank makes a loan. So the questions in this article are a bit off. E.g.: "What happens when you no longer need a bank to provide capital? Where will people store money in the future?" These questions are off-target, because it's n…

What this discussion lacks is a basic understanding of economics. It baffles me every time!

No one on HN would stand it for one second if a group of gardeners suddenly popped up and only with their knowledge and mastery of agriculture and botany decided to teach all the engineers and programmers a thing or two!

But by some miraculous logic, programmers and engineers are now pretending like they can replace wholesale the system that economics is built on and has mastered over hundreds of years of theory and practice.

ps money is not created by commercial banks but by the Fed through their ability to either buy or sell treasuries issued by the government but maybe that's splitting hairs

Re: A Revolution in Money

#37

Post by pocoloco »

lingben wrote: post #36
jdimov wrote: post #23

What all of this discussion is severely lacking is an understanding of how money actually works and how it is created. In a modern economy, money is created by commercial banks every time a bank makes a loan. So the questions in this article are a bit off. E.g.: "What happens when you no longer need a bank to provide capital? Where will people store money in the future?" These questions are off-target, because it's n…

What this discussion lacks is a basic understanding of economics. It baffles me every time! No one on HN would stand it for one second if a group of gardeners suddenly popped up and only with their knowledge and mastery of agriculture and botany decided to teach all the engineers and programmers a thing or two! But by some miraculous logic, programmers and engineers are now pretending like they can replace wholesale…

David Graeber from the Guardian writes that:

When banks make loans, they create money. This is because money is really just an IOU.

And that the paper:

...co-authored by three economists from the Bank's Monetary Analysis Directorate, they stated outright that most common assumptions of how banking works are simply wrong.

The truth is out: money is just an IOU, and the banks are rolling in it http://www.theguardian.com/commentisfree/2014/mar/18/truth-m...

The Bank of England Paper: Money creation in the modern economy http://www.bankofengland.co.uk/publications/Documents/quarte...

Edit: added more text to second quote.

Re: A Revolution in Money

#38

Post by bubbleRefuge »

lingben wrote: post #36
jdimov wrote: post #23

What all of this discussion is severely lacking is an understanding of how money actually works and how it is created. In a modern economy, money is created by commercial banks every time a bank makes a loan. So the questions in this article are a bit off. E.g.: "What happens when you no longer need a bank to provide capital? Where will people store money in the future?" These questions are off-target, because it's n…

What this discussion lacks is a basic understanding of economics. It baffles me every time! No one on HN would stand it for one second if a group of gardeners suddenly popped up and only with their knowledge and mastery of agriculture and botany decided to teach all the engineers and programmers a thing or two! But by some miraculous logic, programmers and engineers are now pretending like they can replace wholesale…

It depends on what your definition of money is. Banks do create money in the sense that bank deposits are money. He is correct in saying that loans create new bank deposits.

Re: A Revolution in Money

#39

Post by dllthomas »

lingben wrote: post #36
jdimov wrote: post #23

What all of this discussion is severely lacking is an understanding of how money actually works and how it is created. In a modern economy, money is created by commercial banks every time a bank makes a loan. So the questions in this article are a bit off. E.g.: "What happens when you no longer need a bank to provide capital? Where will people store money in the future?" These questions are off-target, because it's n…

What this discussion lacks is a basic understanding of economics. It baffles me every time! No one on HN would stand it for one second if a group of gardeners suddenly popped up and only with their knowledge and mastery of agriculture and botany decided to teach all the engineers and programmers a thing or two! But by some miraculous logic, programmers and engineers are now pretending like they can replace wholesale…

"ps money is not created by commercial banks but by the Fed through their ability to either buy or sell treasuries issued by the government but maybe that's splitting hairs"

That's using an overly-restrictive definition of money (M0, or "monetary base") that doesn't mean very much in terms of how the economy works. Banks do not create new dollar bills, but they do create new "dollars on deposit at a bank" which I can spend very nearly like a dollar bill (sometimes quite a bit more conveniently) by writing you a check or setting up a wire transfer. This is what many people are paid in, and pay their rent and grocery bills in, and considering it "not money" is wrong. Economists include this in M1, which is a slightly broader measure of the money supply. There are still broader measures.

Re: A Revolution in Money

#40

Post by funkydallas »

jdimov wrote: post #23

What all of this discussion is severely lacking is an understanding of how money actually works and how it is created. In a modern economy, money is created by commercial banks every time a bank makes a loan. So the questions in this article are a bit off. E.g.: "What happens when you no longer need a bank to provide capital? Where will people store money in the future?" These questions are off-target, because it's n…

"What happens when you no longer need a bank to provide capital?"

In times of computers we basically do not need money anymore. As a result we do not need banks.

Why? - There was a time no money existed. People bartered items. e.g you create cups, because that`s your passion and the only thing you can do. Well, you can not eat them. You go to a marketplace to get things you need.

How do you get them? - You label each cup you created with a need. Let`s say 1 cup OFFER is labeled with the NEED of 1kg Apples.

You do not even have to leave your stand to get 1kg Apples, because there is a salesman running around looking for someone who offers apples. The Apple man don`t need cups but a board and so on...

In times of computers and robots the logistics to find the right combination of OFFERS and NEEDS should be no problem.

This kind of trading might even be faster than bitcoin. Just because there is no money in between your offers and needs.

It would also change the mindset of what do I really want to offer and what do I like and need.

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