Thursday, August 28, 2014

Looking at the foundations of money

My copy of Money and the Early Greek Mind: Homer, Philosophy, Tragedy arrived the other day; I'll be looking for insights into the information transfer picture. In the meantime, here's a nice discussion. I like the way one of the properties of money is described there "[money] facilitates transitive relations between objects".

This makes some sense of the evolution of money [what I say here isn't novel] -- one way to facilitate transitive relations between objects is to choose one of those objects and look at all of the relationships between every other object and that object. This happens when e.g. cigarettes become a form of currency in POW camps or prisons (or high school). Everything gains a price in cigarettes and the relative value of e.g. chocolate and bacon can be related to each other via cigarettes.

Money becomes money when it loses its own intrinsic value and becomes only valuable for its ability to facilitate these transitive relations -- a medium of communicating information.

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Also, try to avoid the use of dollar signs as they interfere with my setup of mathjax. I left it set up that way because I think this is funny for an economics blog. You can use € or £ instead.