Rant 565 / The End Of Time Happened Yesterday Morning When I Had To Change My Clock's Batteries

I was somewhat mistaken. Cash is the physical form of currency, and most currencies are a form of fiat money. Early forms of paper money were a kind of I.O.U.s, like the jiaozi that the Song Dynasty used. But today's money serves a somewhat different purpose, depending on which economic theory you're siding with.

Among the more commonly accepted theories, money is believed to be created by fractional-reserve banking.

First, you place money in a bank's savings account. Second, the bank lends money out to some guy. This lent money supposedly comes from your savings account, but in the bank's records your money is still in your account and that dude is going to return the money plus interest.

Hence, money is magically created and introduced into the economy by the act of lending out money. This money would disappear from the world when the guy returns his loan but that would take several years. By then, more people would have borrowed much more money (home loans, startup businesses, etc) and therefore induce a cycle of magic money. This will continue as long as the banks continue to give out loans and people keep on making profits and depositing even more money into their savings accounts.


In a less orthodox theory that's been gaining popularity in modern times, Chartalism states that money is created when the government spends more than it makes. More money is then minted and given out to buy stuff like some sort of IOU, which is then taken back when the seller pays his taxes.


Ok let's go on to a slightly different track.

What I'm interested in at the moment is the SGD. The Singapore Dollar is 100% backed by "international assets". I wasn't able to find out exactly what these assets are but a 2009 article mentioned that Singapore has US$174 billion in reserve. A quick search in the MAS website gave me the info that in the year 2008, the last year in the list, there were only S$22 billion in circulation. However,

1) the exchange value of the total amount of SGD out there is almost unrelated to the amount of assets backing the currency,

2) and the total amount of SGD is not only in the form of cash (only 2-3% of all USD in existence is in cash).


I think I can say that the value of the Sing dollar is what the MAS says it is. It has no value other than the numbers those guys at the MAS state. Hence, there is a phenomenon known as the money illusion. This happens when some dude thinks that the number on the bill he's holding shows the actual value of the piece of paper.

人世间钱为何物?

This is money:

- a medium of exchange
- a unit of account (ie a standard of measure of value of goods and services)
- a store of value
- a standard of deferred payment (ie the unit used to define the value of a debt)

I believe it can be rephrased to "Money is an artificial means of imposing a numerical value to everything."

Money in the form of cash is a token made by governments. It's no different from those found in boxes of Monopoly except it's used in real life because governments and banks only accept legal tenders.












Half the above rant could probably be cancelled out.













My Twitter account got hijacked. I don't know how it was done, but I hope it was not because someone found out my Hotmail password, which is linked to the Twitter account. Anyway it began some months before, even preceding my more recent change of Hotmail password, so I am not so worried about my email. Merely changed the Twitter password. Hopefully this is the end of it.













Planning to get a Kinect? Well, think again. XD

Some day someone's going to claim that his girlfriend got pregnant because she played hentai games on the 360 and hence it's a virgin birth. The game was just so realistic!