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Wednesday, 30 September 2015 00:00

The Central Banker's Definition of Money is Obviously Wrong, And That's Not Taking Into Consideration Veritaseum Technology Featured

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The BOE has a drastically contradictor statement in its lesson on Money in the modern day. Go 2:09 marker

If the 20 pound note use to be able to demand 20 pounds worth of gold from the Bank of England, but can now demand only 0.0017 pounds of gold, and not even directly from the BOE, but on the open spot market - then it would be safe to say that the 20 pound note has not held its value. This is particularly true relative to gold, as it was originally priced. According to the author, the BOE is not doing its job because the 20 pound note is no longer worth 20 pounds. Money is not an IOU, money is a proxy for labor. Only a bank, whose livelihood is dependant upon loans and lending is would claom that money is a loan, debt or IOU vs a present time proxy for labor. 

If you go to the beginning of the video, the author defines money as an advaned form of an IOU (ex. debt or loan). He uses the example of a farmer who would only be able to consume the produce that he would produce (this is a key work, produce as in production as a result of labor on inventory) on his land. If he met a fisherman that would not have a catch until autumn that would want to consume berries in the present (ie summer). The BOE rep states that the fisherman would give the famer an IOU in the form of a banknote, and the farmer would take that promise to pay in the future in exchange for berries now.

I say nonsense. What the fisherman gave the farmer was a proxy for his labor of attempting to grow his own berries on his or someone else's land. The fisherman could always endeavor to grow berries or pick berriers in the wild himself. That time and energy spend (labor) would be better spent by the fisherman in gathering fish, so the fisherman gives the farmer a proxy (token) of his labor in exchange for goods and services. This proxy  ahs to have the faith of all involved that it is at least as good as the labor it represents. This is where the value lies. 

As the Bank of England (and most bankers) would have you believe, the fisherman could never, ever search for his own berries - nor grow his own berriers. Berries, at least in the UK, do not grow without debt!

The smartest people in the room have a vastly antiquated and dramatically outdated definition of money. A good start is the Veritsaseum article: Veritaseum Breaks the Definintion of Money, Inhibits Seigniorage, with Asset Backed Bitcoin, to wit:


Veritaseum will be announcing asset-backed bitcoins after the end of our token sale. These are bitcoins that will have both the full value and capability of bitcoins that actually ride along the bitcoin blockchain plus the additional attribute of being backed by a variety of real world commodity assets. This essentially inflation-proofs the coin (more so than the possibly deflationary effect of limited supply) and in addition it puts a hard floor on the value of the coin - setting it aside from bitcoins not modified by Veritaseum.

The Accepted Defintions of Money

According to Wikipedia:

Money is any item or verifiable record that is generally accepted as payment for goods and servicesand repayment of debts in a particular country or socio-economic context.[1][2][3] The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, sometimes, a standard of deferred payment.[4][5] Any item or verifiable record that fulfills these functions can be considered money.

Money is historically an emergent market phenomenon establishing a commodity money, but nearly all contemporary money systems are based on fiat money.[4] Fiat money, like any check or note of debt, is without intrinsic use value as a physical commodity. It derives its value by being declared by a government to be legal tender; that is, it must be accepted as a form of payment within the boundaries of the country, for "all debts, public and private".[6] Such laws in practice cause fiat money to acquire the value of any of the goods and services that it may be traded for within the nation that issues it.

Commodity money, whose value comes from a commodity of which it is made consists of other things that have utility value in and of themselves in addition to the value attribuated to their use as money. Examples of such include goldsilvercoppersaltcocoa beans, oil and barley. These items historically ran into practical barriers as the global economy expanded - through limitations in storage, transport and rancity - basically techological barriers. As such they were overtaken by representative money. 20 US Gold note

According to Wikipedia, representative money is defined as:

    • 0px 12px no-repeat !important;">A claim on a commodity, for example gold certificates or silver certificates. In this sense it may be called "commodity-backed money". 0px 12px no-repeat !important;">Any type of money that has face value greater than its value as material substance. Used in this sense,fiat money is a type of representative money.

Unfortunaely, as fiat took hold, the former defintion of representative money failed to hold sway - the result of which has been rampant seignorage. Seigniorage is the action of exchanging sovereign-issued securities for freshly printed money by a central bank. This is in essence, borrowing real money and paying with "created" money - or basically not needing to repay at all. These actions are not without consequences. Monetary seigniorage is an action which takes this theme a step further, wherein the sovereign entity relies on seignorage as an active revenue stream through regular and routine debt monetization (printing new money to repay old money to meet budgetary targets. The use (or misuse) of these newly printed notes can exacerbate the inherent problems of rampant monetization. For many developed nations, seignorage is relied upon as a regular revenue source, despite the fact it has wrecked the economies of smaller nations.

In the next article on this topic, we will cover and discover the new and much more accurate defintion of money in a modern age.

Read 2362 times Last modified on Wednesday, 30 September 2015 14:38
Reggie Middleton

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