From Economicae, ©2008 EconomicsInteractive.com:
What money is may seem obvious, but how would you respond if asked how much money you have? You could count only the cash in your purse or pocket. More likely, you would extend this to "money" held in checking accounts or savings accounts. You might include the total value of any U.S. Savings Bonds or corporate stocks or bonds you own. But why stop there? Most of your possessions are worth money. How about the values of your other assets---a car, clothes, books, a ping-pong table, or other things you own. Just how much money do you have? Ambiguities in this question arise from failure to differentiate between wealth and money.
I think that's about right: Ambiguities arise because of the failure to differentiate between wealth and money.
MoE is money. MoA is financial wealth. All MoE is MoA, but not all MoA is MoE.
Come to think of it, I find it confusing to think of financial wealth as "money". It doesn't simplify anything. Lowest Common Denominator, money is what we spend. What we earn, and what we spend.
2 comments:
"MoE is money. MoA is financial wealth. All MoE is MoA, but not all MoA is MoE."
Yes, I like that
MoA is dependent on there being some MoE. There is no MoA in a barter economy (not that there have ever been extensive barter economies) We only price things in some medium of exchange. The price tells me how many dollars I need to get something. It also states the minimum I want to part with something but that can vary day to day depending on my needs.
Something I thought about recently; When I price something I cant necessarily get that much MoE for it, I dont have control of my income, only my price. If I have enough MoE I can get most anything at any price.
MoE rules!!
This seems to go against one of my earlier statements where I said I agreed with Sumner that MoA is our money. I agree that MoA currently is our money but it SHOULD NOT be. This is not a healthy relationship in my view.
This backwardness runs the risk of prices outrunning the amount of money to meet them.
Greg, I can't think of a good analogy. Maybe tennis, knocking the ball back and forth. We read each other's stuff, prune some, restate the rest, bat the ball back and do it again. A gradual refinement of the idea.
My line that you quoted above came after I read your post, especially this: Banks, financial institutions and the very rich deal with assets that trade as money like...
The rest of us simply receive MOE each week or month and use this to purchase goods, services or some of those fancy MOA things from the other economy. The MOA side of the economy competes for our MOE.
"When I price something I cant necessarily get that much MoE for it, I dont have control of my income, only my price. If I have enough MoE I can get most anything at any price."
Yes!! Cost is the most significant of all of economic forces. Cost sets the limits.
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