Dan Coleman: “Of course that sounds absurd, but only because using the term “money” presupposes that it is a medium of exchange.”

And that “presupposition” is absurd, leads to massive errors in economic reasoning. Trade never occurs because people value things equally. Trade occurs because that which is received is valued more than that which is given away in exchange. Hence why I get the Nobel Prize and have made the biggest contribution to economic science of all time, so far.

Dan Coleman: “Speaking in terms of praxeology, it so happens that some things on a free market will be valued by actors insofar as they can be exchanged for something else. Hence, a medium of exchange; hence, money.”

Everything which has subjective value will be valued by actors insofar as they can be exchanged for everything else. That’s part of another Nobel point; everything which has value is in a sense “money”. Money, properly defined, is *just* the thing which is most commonly traded for in exchange. Yup, it’s even simpler than marginal utility, but the implications are far more revolutionary and profound. Sure, “convenience”, “liquidity” are aspects of subjective value.

Dan Coleman: “If milk was generally accepted as the medium of exchange in a given society, your “absurd” sentence makes perfect sense.”

There is no “medium” of exchange. There’s just exchange. That’s my irrefutable Nobel Prize point. The conception of “money” makes no sense at all otherwise, explains nothing about why people at certain points of time are holding money, and others are holding things other than money.

Dan Coleman: “There is fraud with the government intervention, of course, because the government has taken media of exchange and replaced it with their own paper tokens — and forced the population to accept them as legal tender (at gunpoint).”

That’s theft, not fraud. Paper tokens can still have subjective value. How do you pretend to analyze a fiat currency collapse? With some business cycle myth that claims it’s inevitable? Or with economic science that observes a massive change in subjective valuation of something from one moment in time compared to another moment in time?

Dan Coleman: “They’ve hijacked a market process that used physical commodities and can now “create” wealth out of nothing.”

Be careful about confusing the economic analysis of events. Wealth is always created out of nothing, is determined by non-constant subjective value. Thus a more accurate description is government compels a transfer of wealth to itself. It’s robbery, plain and simple. But if you steal someone’s jewels, that act of theft doesn’t cause the jewels to lose subjective value. No doubt that rage against theft caused the stagnation of economic science for the last 140 years, as government runs the “money machines”. Mises was a titan of epistemology (as he had to be, to make his brilliant points against socialism), but there haven’t been any breakthrough advances in economics since Menger. How do you price actions like promises? People trade things for promises all the time. Markets for risk exist.

Dan Coleman: “Without intervention, the production of additional “money” requires increasing the physical good in question, a business that was no more profitable in the long run than any other.”

False. Money does not have to be a physical good. Subjective value is not limited to physical goods. You’re just causing the stagnation of economic understanding by claiming money must be a physical good. It could be a physical good. It could be something other than a physical good. Gold may have less volatility than credit, but that doesn’t mean credit isn’t currently the “money” which is the most commonly traded thing in exchange. And past volatility says nothing about future volatility.

Dan Coleman: “People may still benefit from each exchange that they have, but it is woefully negligent as an economist to ignore how they would act otherwise, which certainly shows how much poorer we are due to interference.”

People “may”? No, people *must*, by definition of trade, in every single instance. Of course people would act differently if fiat currency wasn’t forced into existence by government. But that’s no excuse for creating myths like the Austrian Business Cycle Theory. Unfortunately, the whole of economic science cannot be in violation of the law of trade, and wherever exchange occurs, the theory needs to be rechecked from the foundational ground up. It’s not like it would take more than a few weeks to go through the entire field and say this is proven true, that is proven false, by testing it against the law of trade. Most of the claimed economic knowledge is anything but. But you need to wipe away the fog of errors to see further, to see more clearly. That means money as a “medium” of exchange is out. Money as the most commonly traded thing in exchange is in.

You can also try understanding why people act in spite of interference. My theory, no theory is the wrong word, my demonstration is applicable to all exchange, not just “gold money”. It’s silly for anyone to maintain a dropped $100 fiat currency note would sit on the ground and not be picked up by anyone, which is what current Austrian Theory comes off as maintaining. Better to describe what happens in reality.

Showing how much poorer we are due to interference is exactly what I’ve been doing with this thread and the other trade thread. Every act of trade by definition creates profit for both parties to the exchange. Compeling transferance of wealth through violence does not create profit for both parties. The compelled lose, *at the expense* of those who employ violence. So how much less wealthy is society through time because of violence? What would living standards, what would health care, what would life spans, be like, if there wasn’t the massive violent compulsion and violent “intellectual property” protectionism of the last decades and centuries? To even begin to answer that question you must start at the foundation that trade is mutually *profitable*, in the economic sense of the word profit (no revenues minuses expenses bs at all). The division of labor exists because it’s “fun”?

Hi RogerM,

Yes I have noticed that you often refer to Reisman and think that he has a lot of good ideas. I do not know much I am afraid, about his ideas.

I do know, though, that he is an Austrian economist and believes in the Austrian business cycle theory, but that alone does not exclude that he also might believe that increased hoarding is a bad thing.

For he writes that “(2) Deflation is a decrease in the quantity of money and/or volume of spending in the economic system,” notice the last sentence “or volume of spending in the economic system”. What he is relating to in this last sentence is increased hoarding (increased demand for money).

In other words, Reisman defines deflation as a decrease in the quantity of money and/or an increase in demand for money.

Falling prices because of increased production he does not define as deflation as he writes:

“(1) Falling prices caused by increases in production and supply are not deflation.”

If I keep reading as you have recommended I will, for example, find this:

“I will now elaborate on my first proposition, i.e., that falling prices caused by increases in production and supply are not deflation. Such falling prices are not deflation, because they result neither in a reduction in the average nominal rate of profit on capital in the economic system nor in any generally greater difficulty in repaying debts, which are two essential symptoms of any genuine deflation. In a genuine deflation, profits are sharply reduced, perhaps even wiped out altogether, and, at the same time, debt repayment becomes so difficult that widespread insolvencies and bankruptcies occur. Neither of these phenomena occur as the result of falling prices under a 100-percent-reserve gold standard.”

What he is saying here is that in a genuine deflation, (as he defines it which is decrease in the quantity of money and/or an increase in demand for money):

“profits are sharply reduced, perhaps even wiped out altogether, and, at the same time, debt repayment becomes so difficult that widespread insolvencies and bankruptcies occur. Neither of these phenomena occur as the result of falling prices under a 100-percent-reserve gold standard.”

He obviously sees an increase in demand for money as a bad thing. He does not believe that there will be any “problem” with that under a 100% gold reserve money standard as he believes that there will be increases in the supply of gold money:

“(3) A 100-percent-reserve gold standard is the best possible guarantee against deflation thus understood, because once new and additional gold money comes into existence, it does not, for all practical purposes, go out of existence. Instead, its quantity tends continually to increase, at a modest rate. Moreover, its modest rate of increase serves to avoid situations of an artificially induced decline in the demand for money for holding, which then set the stage for a sudden need to rebuild cash holdings later on, with an ensuing contraction of spending.”

The interpretation must be, I believe and as I have said, that Reisman sees increases in demand for money as a bad thing. This in sharp contrast with what Rothbard believed.

Best regards

Björn Lundahl

Bjorn: “For he writes that “(2) Deflation is a decrease in the quantity of money and/or volume of spending in the economic system,” notice the last sentence “or volume of spending in the economic system”. What he is relating to in this last sentence is increased hoarding (increased demand for money).”

I searched for “hoarding” in the PDF version of Capitalism and found that about half of the instances refer to hoarding of goods because people fear further price increases. The other half he uses the term “hoarding” to respond to the error of Keynesians that saving is hoarding (see page 691).

Then on page 692 he has a section on “The Hoarding doctrine as an instance of the fallacy of composition” where he shows that while individuals can hoard, the macro economy can not.

On 693 he writes “The fact that ‘hoarding’, or, more correctly, the desire to increase cash holdings, operates to reduce savings no less than consumption, does not mean that it is an evil or should be prevented in any way. What the attempt to hold more cash does succeed in doing is to increase the buying power of the stock of money, whatever the stock of money may be…To say the same thing in somewhat different words, it operates to increase the so-called quick ratios of corporations and all other businesses and to place them and everyone else in a financially stronger position, in which their cash reserves stand in a higher ratio to their current liabilities, and in which, therefore, the general state of financial solvency is better assured.”

I stumbled upon something that might have prompted Alex’s questions about time preference and interest rates: Reisman writes on page 837 “That cash hoarding does serve in the long run to raise the rate of profit provides an answer to the pretended fear of the Keynesians that in a free economy the rate of profit will be too low to make investment worthwhile and will thus lead to a limitless rise is ‘liquidity preference’–viz., cash hoarding. The answer is that if the rate of profit ever were too low to make investment worthwhile and thus did resort in cash hoarding, the effect of such cash hoarding, as we have just seen, would be to restore the rate of profit to a point high enough to make investment worthwhile.”

When Reisman writes “Moreover, its modest rate of increase serves to avoid situations of an artificially induced decline in the demand for money for holding, which then set the stage for a sudden need to rebuild cash holdings later on, with an ensuing contraction of spending,” maybe the emphasis should be placed on “an artificially induced decline” which then causes a “sudden need to rebuild cash holdings.” The rebuilding of cash holdings is correcting the distortions of the artificial decline. But Reisman doesn’t see this as bad, because above he writes that it restores the profit margin and encourages people to invest again.

RogerM,

I will not make any more statements about Reisman’s ideas regarding hoarding as I have read only a few sentences about them.

I believe that I have given Alex the correct answers concerning the pure time preferences theory of interest, as I think it to be true that he does not seem to see the difference between productivity as a value judgment and pure physical productivity (mechanical).

If Alex himself thinks that I have given him the correct answers is, of course, another story.

Regards

Björn

Sasha Radeta: “Claiming that money is a medium of exchange does not presuppose that people value things equally.”

It presupposes people value money *only* as a medium of exchange, which is absurd, which is “F” “A” “L” “S” “E”. Why would anybody accept money in trade if it was only a “medium” of exchange? It would be a “hot potato” to be instantly traded for something else that wasn’t money. Trade occurs because that which is received is valued more than that which is given away. If you were really just trading for a “medium of exchange” you would never hold money long term, bury it in the backyard, hide it under the mattress, or put it in a bank vault.

Sasha Radeta: “Quite the contrary – sellers place a higher value on money they receive compared to their own goods, simply because they place a higher value on consumption of goods other than their own (one person cannot produce everything he needs and he cannot efficiently fulfill those needs through barter… that’s why he values some widely accepted medium of exchange).”

Good, it’s amazing, truly, just how much garbage is out there as claimed economic theory. Add consumption to that list. Trade is not “consumption”. Not everything which is traded for is “consumed” afterwards, and certainly not consumed at the moment of trade.

Sasha Radeta: “The fact that I hold some sugar, flour, oil, sauerkraut, etc., in my possession does not deny the fact that money is my medium of exchange, by which I can easily exchange my goods for some other goods I desire to consumer — either now or later.”

Money is just another good, that happens to be the most commonly exchanged thing in trade. How many times do I have to repeat myself? If money is a medium, then nobody wants money except just as a medium, which means nobody would accept money in the first place. It would be completely pointless to have money. It’s no wonder Austrians (and well I guess everyone else too) are clueless as to why fiat currency is picked up off the ground and voluntarily exchanged for other things in trade.

Sasha Radeta: “I may hold these items for my future consumption or even for some barter — but these items are not universally accepted goods that I could use for purchases of other goods — i.e. money.”

Money isn’t “universally” accepted either. Money isn’t involved in every trade. The only one who is employing universal economic law is me, as I’m talking about trade, which includes all things which are exchanged, even the non physical.

Sasha Radeta: “When it comes to RTR’s statement that money does not have to be a physical good, it only shows that economics is seldom thought at our schools. Money is always a physical good that is high in value-to-weight ratio (hence transportable), durable, relatively difficult to inflate or counterfeit…”

Lol, what’s higher in value-to-weight ratio than credit promises? That sounds like something out of a communist handbook: “money is always a physical good that is high in value-to-weight ratio …” How do you explain then the number of transactions that occur with no physical good traded? Some whacko conspiracy theory about invisible men with guns forcing them to?

Sasha Radeta: “Austrian business cycle theory is a wonderful piece of tautology, in which people’s subjective valuation always emerge, by restoring the true interest rate or time preference (investment/consumption proportions and price differentials between stages of production). Unfortunately, it is far beyond RTR’s cognitive capabilities.”

You can demonstrate proof and they bury their heads in the sand. Sash Radeta ain’t the sharpest knife in the drawer around here by far, but wow, if that’s the best left holding up the Austrian Business Cycle Theory it makes one wonder if Rothbard was nothing but a hack all along.

“Peoples subjective valuations always emerge”? What is this, Snow White and the Seven Dwarves?

“by restoring the true interest rate or time preference”? The magic land fairy tale of the Austrian Business Cycle Theory is “O” “V” “E” “R”, thanks to me. Deal with it.

Paul Edwards: “Money would still be a present good regardless of the fact that credit transactions would take place all the time.”

All sorts of goods are “present” goods. Milk is a present good. Gold is a present good. Credit is a present good. Reputation is a present good. Celebrity is a present good.

Paul Edwards: “Well, time preference is the fact that people necessarily value something more today than they value it a year from today.”

You mean like a 5 year old bottle of Scotch tends to be more valuable than a 20 year old bottle of Scotch? Whoops, there goes the “necessarily”.

Paul Edwards: “Why this is important in the context of analyzing money is that it shows us that all present goods, including the most marketable one – money – are necessarily more marketable (are valued more highly) than corresponding present claims to such goods in the future – the interest rate proves this.”

False. If that was true for all people, nobody would save. Nobody would invest. By definition of the act of saving, one values it more in the future than in the present. If you choose to eat your dessert after your vegetables you value eating your dessert after eating your vegetable more than you value eating your dessert before your vegetables. It’s amazing all the stuff I’m *proving* false with a clear understanding of trade, isn’t it? That’s why I’m the best, EVER, so far.

Paul Edwards: “Take for instance ten ounces of gold. If you were to lend it out, you might expect to get in consideration of interest and time preference, 11 ounces back in a year or two. Therefore ten ounces today is worth 11 in the future.”

If that were true, put options (the right, but not the responsibility, to sell something in the future for the present price) would never have positive value. You might choose to sell a $500,000 house a year ago, and rent, expecting to repurchase that same house for $250,000 two years from now. The same expectations, individual subjective valuations, can exist for gold. Ten ounces of gold today can be worth more than 12 ounces of gold next year.

Paul Edwards: “The corollary to this fact is also that an ounce of gold is more marketable today than a claim to an ounce two years from today.”

Add up the subjective value of futures and derivatives contracts as expressed in the most recent trade prices.

Paul Edwards: “Credit cannot ever emerge on the free market as money.”

It already has. Anything whatsoever that has subjective value can emerge as the most commonly exchanged thing in trade.

Paul Edwards: “You will borrow money from a bank, and pay money to the house seller, but the seller is taking money, and the bank is lending money. In the end, it is money – the present good – which is the medium of exchange. It is not credit.”

How is someone trading for a house with no money down and only the promise of future money payments? How is someone trading for present money with only the promise of future money payments? No matter how you slice it, credit has subjective value, promises have subjective value.

Paul Edwards: “Without knowing this concept, you can’t follow Mises’s money regression theorem. And if you don’t understand that, you can’t understand why money must be a present good.”

As soon as the Austrians started talking about money, I said “BS”. As soon as the Chicago School started talking about money, I said “BS”.

Paul Edwards: “Most marketable means generally valued by the most people. In the context of money, it means that people will accept it just for its value as a medium of exchange: for indirect monetary exchange, to sell later for what they really want.”

If it only has value as a medium of exchange, why bother with the “middle good”? See? That’s why labeling money a “medium” of exchange is false. You’ve just admitted people don’t “really want” money, and that is in direct contradiction with the law of trade. The error was subtle, but gargantuan. But hey, that’s why I get the Nobel Prize trophy case, right?

Paul Edwards: “But people do not and cannot use homes and condos as media of exchange.”

It takes two to tango, and there are (at least) two things involved in every trade. It would be absurd for two people to trade in the present differing amounts of the same thing, as in one person trading 5 gold pieces for 10 gold pieces.

Paul Edwards: “The way you know that a good is more marketable than others is when the market will accept that good for the purpose of indirect exchange”

False. “Indirect” exchange would be hampering the profit which must be occurring from for all parties from every voluntary transaction. If it’s “indirect”, it means “you don’t want it”.

Paul Edwards: “But what are the units we pay in with these credit cards? In the U.S, they are dollars. What units of currency is it that is written on the good or service you wish to buy? In the states, it is “dollar”. You pay in dollars.”

You pay in promises to pay dollars when you swipe a plastic card.

Paul Edwards: “The merchant does not care if you borrowed the dollars from a credit card company, the bank, or your mother. It wants dollars, and that in fact is what gets transferred very quickly to his bank account. It is not a credit transaction from the merchant’s perspective. To him, he is getting paid essentially in cash.”

False. The merchant is paying a percentage transaction fee to credit merchants. He very much cares about the form of payment.

Paul Edwards: “Actually a debit card is not a credit card. Using it is definitely a cash transaction. The promise you are talking about is quite like the promise that the cash dollars you hand over are not counterfeit.”

Or like the promise that the “gold” you hand over is not counterfeit? Or like the Picasso being auctioned by the auction house is not counterfeit? Or that the diamond you are purchasing is really of a certain “grade” and “quality”?

Paul Edwards: “Money is what the market chooses as a universal media of exchange.”

There is no such thing as a “universal” media of exchange, unless it’s strictly limited to subjective value. Money is just the (doesn’t have to be “one” thing either, or one “class”, like a multitude of “precious metals”) most commonly exchanged thing of subjective value in trade.

rtr,

“All sorts of goods are “present” goods. Milk is a present good. Gold is a present good. Credit is a present good. Reputation is a present good. Celebrity is a present good.”

Well, I’ll not dispute with you the question of the nature of credit. But I will say that while gold and milk are both present goods, only one of the two have the physical characteristics needed to become money. Not every present good has a chance at being money; and in the end, only one commodity can and will emerge as money.

“You mean like a 5 year old bottle of Scotch tends to be more valuable than a 20 year old bottle of Scotch? Whoops, there goes the “necessarily”.”

This is a common misunderstanding of time preference. The 5 and the 20 year old bottles of scotch are not the same good, so they are not comparable. The way to think about it so you grasp it is this: a 5 year old bottle of scotch is worth more today than a 5 year old bottle of scotch if it is delivered 5 years from now, is worth today. Does that help?

“False. If that was true for all people, nobody would save. Nobody would invest. By definition of the act of saving, one values it more in the future than in the present. If you choose to eat your dessert after your vegetables you value eating your dessert after eating your vegetable more than you value eating your dessert before your vegetables. It’s amazing all the stuff I’m *proving* false with a clear understanding of trade, isn’t it? That’s why I’m the best, EVER, so far.”

You are very impressive. However, you would be an even greater giant if you were to stand on the shoulders of other giants such as Mises and Rothbard from time to time. Have you ever noticed that those who save and invest today’s resources, without exception, expect to be paid in the future with both principle and interest or profit? I’m saying, without exception. People save, but only if the borrowers, or the investment shows some promise of paying a return on this savings and investment. I think the scotch example also answers the veggies/dessert question.

“If that were true, put options (the right, but not the responsibility, to sell something in the future for the present price) would never have positive value. You might choose to sell a $500,000 house a year ago, and rent, expecting to repurchase that same house for $250,000 two years from now. The same expectations, individual subjective valuations, can exist for gold. Ten ounces of gold today can be worth more than 12 ounces of gold next year.”

Sure, but this is accounting for peoples expectations and speculations that there will either be an excessive supply of the good, or a depression in the demand for the good in the future, severely depressing its price at that time. The purchasing power of the money commodity can be influenced by similar considerations, although the nature of the commodity chosen as money tends to be far less under such influences. The increase in the supply of gold in the market, for instance, if it were money in a free market, is fairly steady and is fairly small in comparison to its present supply. And the increasing uses of gold and demand for it can be accounted for by speculators and these influences flattened out. But nevertheless, all things being equal, people prefer a thing that they desire more now than later, as Riesman puts it, because desiring a thing means to want it sooner than later.

Paul Edwards: “The corollary to this fact is also that an ounce of gold is more marketable today than a claim to an ounce two years from today.”

“Add up the subjective value of futures and derivatives contracts as expressed in the most recent trade prices.”

There is lots of speculation about how ravaged the US dollar, the world’s reserve currency, may be in the future and how much the world market will dump the dollar in preference for gold as a safer haven for their cash holdings, as the fed inflates the dollar into the ground. This is not related to time preference. It is an artifact mainly of the uncertainty the federal reserve and the banking industry has injected into the world markets via vast amounts of monetary inflation of the US dollar, again, the world’s reserve currency.

Paul Edwards: “Credit cannot ever emerge on the free market as money.”

“It already has. Anything whatsoever that has subjective value can emerge as the most commonly exchanged thing in trade.”

Credit did not emerge as money on any free market. It was the outcome of coercive state interference with a gold commodity money via the state favored banking industry and central banking. It is a mistake to confuse today’s markets with free markets. They are vastly different.

Paul Edwards: “You will borrow money from a bank, and pay money to the house seller, but the seller is taking money, and the bank is lending money. In the end, it is money – the present good – which is the medium of exchange. It is not credit.”

“How is someone trading for a house with no money down and only the promise of future money payments? How is someone trading for present money with only the promise of future money payments? No matter how you slice it, credit has subjective value, promises have subjective value.”

I’m not disputing that credit is subjectively valued. I’m just saying credit isn’t money. People subjectively value horses and donkeys as well as mortgages and credit. And yet, horses and donkeys also are not money.

Paul Edwards: “Without knowing this concept, you can’t follow Mises’s money regression theorem. And if you don’t understand that, you can’t understand why money must be a present good.”

“As soon as the Austrians started talking about money, I said “BS”. As soon as the Chicago School started talking about money, I said “BS”.

I see. You are very impressive indeed. You will probably write a tome – or have you already – to rival and render obsolete both Human Action and Man Economy and State. I salute you in advance.

Paul Edwards: “Most marketable means generally valued by the most people. In the context of money, it means that people will accept it just for its value as a medium of exchange: for indirect monetary exchange, to sell later for what they really want.”

“If it only has value as a medium of exchange, why bother with the “middle good”? See? That’s why labeling money a “medium” of exchange is false. You’ve just admitted people don’t “really want” money, and that is in direct contradiction with the law of trade. The error was subtle, but gargantuan. But hey, that’s why I get the Nobel Prize trophy case, right?”

Yes. You deserve the Nobel Prize indeed. Is it really your contention that there is no such thing as money as described by Mises? If you are saying this, then the rest of your argument makes more sense, in that it is clear from where your confusion is rooted.

Paul Edwards: “But people do not and cannot use homes and condos as media of exchange.”

“It takes two to tango, and there are (at least) two things involved in every trade. It would be absurd for two people to trade in the present differing amounts of the same thing, as in one person trading 5 gold pieces for 10 gold pieces.”

I do not see the connection between my comment, and your response.

Paul Edwards: “The way you know that a good is more marketable than others is when the market will accept that good for the purpose of indirect exchange”

“False. “Indirect” exchange would be hampering the profit which must be occurring from for all parties from every voluntary transaction. If it’s “indirect”, it means “you don’t want it”.”

Your comments are getting further and further out there, dude. I think it is time for you to be nominated for that nobel prize.

Paul Edwards: “But what are the units we pay in with these credit cards? In the U.S, they are dollars. What units of currency is it that is written on the good or service you wish to buy? In the states, it is “dollar”. You pay in dollars.”

“You pay in promises to pay dollars when you swipe a plastic card.”

Correct. Wow. These promises are that the dollars will be deposited the next business day. It’s not a loan to you. It’s a cash transaction limited in swiftness of technology and banking hours.

Paul Edwards: “The merchant does not care if you borrowed the dollars from a credit card company, the bank, or your mother. It wants dollars, and that in fact is what gets transferred very quickly to his bank account. It is not a credit transaction from the merchant’s perspective. To him, he is getting paid essentially in cash.”

“False. The merchant is paying a percentage transaction fee to credit merchants. He very much cares about the form of payment.”

His whole business is founded on paying a series of fees to get a product or service in the hands of a paying customer. His goal is to pay less in total fees than he charges his customers. That is how he turns a profit. Paying a fee to a credit card company is just another cost of doing business. He still gets paid in cashy money – dollars – when you swipe that card.

Paul Edwards: “Actually a debit card is not a credit card. Using it is definitely a cash transaction. The promise you are talking about is quite like the promise that the cash dollars you hand over are not counterfeit.”

“Or like the promise that the “gold” you hand over is not counterfeit? Or like the Picasso being auctioned by the auction house is not counterfeit? Or that the diamond you are purchasing is really of a certain “grade” and “quality”?”

Yup.

Paul Edwards: “Money is what the market chooses as a universal media of exchange.”

“There is no such thing as a “universal” media of exchange, unless it’s strictly limited to subjective value. Money is just the (doesn’t have to be “one” thing either, or one “class”, like a multitude of “precious metals”) most commonly exchanged thing of subjective value in trade.”

Your definition of money is next to useless. For every exchange there are two commodities involved, usually, one of those commodities is money. Money is used because barter is too cumbersome. People suffer too often from a lack of a coincidence of wants in barter. A monetary economy overcomes this. When people can participate in indirect exchange through some medium of exchange, they can take money for what they sell today, safe in the knowledge that there is a general demand for this money so that they can buy with it what they want tomorrow.

Paul Edwards: “The 5 and the 20 year old bottles of scotch are not the same good, so they are not comparable. The way to think about it so you grasp it is this: a 5 year old bottle of scotch is worth more today than a 5 year old bottle of scotch if it is delivered 5 years from now, is worth today.”

You are correct that they are different goods. I realized that after reading my post.

Paul Edwards: “Have you ever noticed that those who save and invest today’s resources, without exception, expect to be paid in the future with both principle and interest or profit?”

True. You save because your savings are worth more in the future then they are worth in the present. Seven years of feast followed by seven years of famine.

Paul Edwards: “People save, but only if the borrowers, or the investment shows some promise of paying a return on this savings and investment. I think the scotch example also answers the veggies/dessert question.”

People will save even if there are no borrowers, for instance as insurance for a rainy day. That act itself is profitable with no interest being paid by another. The scotch example does not answer the veggies/dessert example. You are free to eat your vegetables first or free to eat your dessert first. That’s a time preference choice which shows eating your dessert in the future after eating your vegetables in the present is more profitable than the reverse.

Paul Edwards: “The increase in the supply of gold in the market, for instance, if it were money in a free market, is fairly steady and is fairly small in comparison to its present supply.”

Sure, and that’s likely a big part of the reason people subjectively value gold as a store of subjective value.

Paul Edwards: “But nevertheless, all things being equal, people prefer a thing that they desire more now than later, as Riesman puts it, because desiring a thing means to want it sooner than later.”

Sure, all action occurs in the present. Becoming conscious of desiring in the future, man sets aside in the present. Imagining more, or better use, in the future, man employs in the present.

Paul Edwards: “Credit did not emerge as money on any free market. It was the outcome of coercive state interference with a gold commodity money via the state favored banking industry and central banking.”

In every single instance where credit is voluntarily offered and credit is voluntarily traded for is an instance of credit emerging on the free market.

Paul Edwards: “Is it really your contention that there is no such thing as money as described by Mises?”

It is my contention that money is not a medium of exchange. It is my contention that money is simply the most commonly exchanged thing(s) in trade. It’s also my contention that defining money as a “medium” of exchange has led to gargantuan errors in economic reasoning throughout the field of economics.

Paul Edwards: “These promises are that the dollars will be deposited the next business day. It’s not a loan to you. It’s a cash transaction limited in swiftness of technology and banking hours.”

It’s a short-term loan. But it’s still a loan.

Paul Edwards: “Paying a fee to a credit card company is just another cost of doing business. He still gets paid in cashy money – dollars – when you swipe that card.”

The merchant gets less than if the customer had actually traded cash dollars directly to the merchant instead of swiping the card and trading the promises of future cash dollars being deposited to his account. The reputation and routine of the transaction is of such a high quality that it’s generally considered “as good as” cash, even though technically, it’s the promise of future cash. Again, as we both agreed, there are fraud risks faced by the merchant and the credit company, just as there are fraud risks for any good being traded for.

Paul Edwards: “Your definition of money is next to useless. For every exchange there are two commodities involved, usually, one of those commodities is money. Money is used because barter is too cumbersome.”

Defining money as a medium of exchange is false. Barter is not “too cumbersome”. There are general merchants like Wal Mart, malls, marketplaces, grocery stores, where are a variety of goods are bought and sold. It’s been the way for centuries through many different forms of particular “money”. People by definition profit by the act of trading completely unrelated this for that things, because that’s what they want. Money, as the most commonly exchanged thing in trade, a common store of value, helps measure how much of this for how much of that. But the profit cannot ever be precisely objectively measured, because by definition of trading money for a good you are profiting from that action. The good is worth more than the money traded away in exchange.

Paul Edwards: “People suffer too often from a lack of a coincidence of wants in barter. A monetary economy overcomes this.”

Absolutely true.

Paul Edwards: “When people can participate in indirect exchange through some medium of exchange, they can take money for what they sell today, safe in the knowledge that there is a general demand for this money so that they can buy with it what they want tomorrow.”

There is no possible example of an indirect exchange. All exchange is done with the purpose of receiving something of more value than that which is given away. Of course that creates incentives to produce and gather what others want. The only thing which occurs in reality is direct exchange of this for that. Money is not a medium of exchange either. The rest of that paragraph is absolutely correct though. But because you leave out the word “trade” you miss the profting which is occuring in every exchange. You also neglect that “money” is not the only good which is valued because of “general demand”. All goods are subjectively valued which are in “general demand”.

That’s why people specialize in the division of labor and produce surpluses beyond what they themselves are going to use because their surplus is in “general demand”, whether that surplus is the manufacture of “money” or the production of any other good or service whatsoever. It’s absurd to call money a medium of exchange (and false) without also calling every individual’s surplus production of other goods and services for trade a medium of exchange. Thus, not only is calling money a medium of exchange false, but it wouldn’t be uniquely applicable either.

Sasha Radeta: “I only stated some facts that stem from the fact that the goal of every trade is the present or future consumption!”

That’s wrong moron. Land isn’t consumed. Music isn’t consumed. Words and ideas aren’t consumed. You don’t know what you are talking about as usual. But what an idiot that completely ignores the reason action occurs, to profit, to increase utility. Your statement “the goal of every trade is the present or future consumption” shows utter indifference between the present and the future.

Sasha Radeta: “That’s why money is accepted as a medium of exchange — it can serve as a store of value by which we can postpone the finalization of desired exchanges.”

Money is accepted *in* exchange.

Sasha Radeta: “Selling sauerkraut not only provides me with a generally accepted medium of exchange”

Selling it for money means you trade it for money you retard. That’s an exchange, ONE THING FOR ANOTHER. Calling one the “medium” is idiotic. You prefer one or the other if you exchange for it.

Sasha Radeta: “I can also hold the gold and get those grapes at a later date, when they become ripe (I can’t believe I have to explain the basic functions of money to a human being – o tempora, o mores!)”

You can hold anything of subjective value to a later date for the purpose of holding subjective value, not just one item you call “money” dummy. People invest in art, in coins, buidlings, etc. Your basic functions are not unique to gold or money stupid. People save grain in case of famine too.

Sasha Radeta: “By the way, I never said that people take money “only” as a medium of exchange”

Then money isn’t the medium of exchange, idiot, by definition of other subjectively valued purposes, moron.

Sasha Radeta: “(first of all, money as physical good always has its basic practical purpose, like in jewelry or industry).”

Your Marxist “use-value” artificially alleged a priori defined purposes are tiresome.

Sasha Radeta: “”Medium of exchange” is the basic function of money that makes it generally accepted”

And that’s unique from every single other good or service which is traded how …. MORON? Everything which is traded is accepted, and not just generally. If nobody wants it, it doesn’t get traded. And lot’s of things are “generally accepted” too, like food and labor.

Sasha Radeta: “but since it allows the postponement of desired exchanges,”

What an utterly absurd contraciction, an exchange to postpone exchange … Try thinking stupid. Not to mention, *waiting* to exchange has the effect of delaying exchange to the future.

Sasha Radeta: “RTR’s insane comments about “medium of exchange” show that anti-Austrian “brains” are incapable of applying the factor of time in the basic economic analysis. That’s why RTR is stuck in the economics of present goods (he never got beyond the high-school “economics”). He doesn’t understand that people can exchange present goods for future goods even at the present time and that money serves as a medium of exchange in those transactions (whether in forms of the interest-yielding loans that are aimed for future consumption — or in the form of purchases of capital and production-factors that will become present goods at the future date)”

wtf are blabbering about moron? Seriosuly, why don’t you take your mental pollution to another thread. I don’t have time to dissect new paragraphs of your garbage.

Sasha Radeta: “Since the factor of time forms…satisfies higher demand and we have no malinvestments.”

Talking to your delusional self?

Sasha Radeta: “people’s consumption of present goods did not go down (they just switched to imported goods)”

Oh how convenient. It’s another magical fairy tale world from which the imports are made. @@

Really, the ABCT coffin is nailed in my posts above. I’m not copying and pasting, or constructing new examples from scratch, for you anymore. All you do is spew unproved tiresome garbage and ignore things which are proved to you. Have fun talking to yourself or others.

RTR is eager to call someone a “moron,” but that still does not hide his severe mental retardation and lack of any common sense when it comes to economics.

He said: “That’s wrong moron. Land isn’t consumed. Music isn’t consumed. Words and ideas aren’t consumed.”

Since RTR is incapable of applying the factor of time and he is oblivious to the exchanges of present for future goods (with money as their medium of exchange), Austrian business cycle or any basic economics leads him to an incredible amount of frustration. That’s why he could not use single coherent argument and he keeps blabbing about “fairytales.” It is sad to see him so deranged and angry.