spudit on March 01, 2011, 11:50:26 am
i am mostly lurking this week in hopes some signal may emerge from the noise. It could happen.

This did happen at least according to the author of The Reluctant Admiral, a biography of Isoroku Yamamoto. After the war a major Japanese steel company gave his widow several tons of good grade steel because she was hurting and the Navy was having trouble caring for all the widows and orphans. Call it a gesture of respect and safely under the radar and table.

Naturally, the author said, they didn't deliver it, drop it in the front yard. She was given ownership of it in the warehouse, they sold it for her and passed on the cash. Damned decent and all that.

The book is in storage so I can't double check it but perhaps Sandy, to whom Google is his bitch, can find a reference? Considering Japanese culture, its respect for the Admiral and conditions at the time, it easily could have happened.

If so, iron was used as money in a modern ecconomy not so long ago.
« Last Edit: March 01, 2011, 06:56:09 pm by spudit »
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macsnafu on March 01, 2011, 11:54:39 am
What is the business I envision? The First Iron Monger Bank of America. It's perfect. Though you cannot eat iron either, at least you can build cool stuff with it. Iron is the most recycled material on earth. As pointed out on this forum, it does not rust, if stored right, is easily recognized (by its magnetism), is divisible and fungible. Usable coins would be bit unwieldy (see previously posted photo of Yak stone money), but the bank could simply print and distribute certificates denominated in pounds of iron. (I think scrap iron is currently trading in the 80 per pound range.)

And with plenty of iron, there should be no problem with "liquidity".  Hoo-ha!   :P
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Brugle on March 01, 2011, 11:56:45 am
several tons of good grade steel ... they sold it for her and passed on the cash.
...
If so, iron was used as money in a modern ecconomy not so long ago.

Obviously not, by your own words.  The steel was exchanged for money.

spudit on March 01, 2011, 12:21:15 pm
More noise than signal again.

Was it Plato who said all conversations are based on definitions?

Some of the voices on my radio blather on about buying gold as a hedge against the unknown. Too often it is not shiny coins they sell but pieces of paper worth one (1) ounce in a bank back East somewhere. People buy them, why escapes me when a million dollars worth of shiny coins would easily fit in a shoe box, but they do. Me, i like shiny things and have been known to bring them home to my nest.

It's all through TPB and EFT, if it walks and quacks like a duck it is a duck.

A twenty dollar bill is the same as some gram scale piece of gold, today anyway. It is a sheet of plywood, lunch for 2, a bottle of bourbon, an unspeakable act between consenting adults in a scuzzy back alley.

Money, poor innocent greenbacks, is all those things because it can be converted back and forth unless used up in the process.

In the anecdote, respect became steel, steel became Yen, Yen became food for the family.

And not directly in my own words, I attributed it to a book not on hand, author unremembered but the book is real and in any large library.

Message ends
« Last Edit: March 01, 2011, 06:41:30 pm by spudit »
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terry_freeman on March 01, 2011, 12:53:22 pm
The trouble with those "twenty dollar notes" is that, with the passage of time, they lose value. My parents recall a time when twenty dollars was serious money; they could see a movie for a nickel, two for a dime.

Today, typical prices for movies are $7 to $20, depending on the venue.

Other prices have risen accordingly.

Within my own memory, my folks bought a home for $17,000 in 1964 or thereabouts. It sold for over six times that price in 1990 or thereabouts. This was in Pittsburgh, where the real estate market is a lot more tame than in, for example, parts of California.

Cars in the 60s could be had for about $2000. Now, $25k (and up) would be more typical.

Inflation does not merely cause prices to rise; it distorts economic decisions in numerous ways. Two examples of such distortion include the dot com bubble and the housing bubble. Another effect is that people save less. If inflation is going to steal the value of your dollars, it seems to make sense to spend now, rather than saving for the future.

Prudent people save in a mix of ways - including paper and shiny, durable stuff. Those who bought shiny silver and gold coins have seen marked nominal gains in the value of their savings. Meanwhile, that stack of paper is declining in value; it buys fewer loaves of bread or gallons of gasoline than before.


Apollo-Soyuz on March 01, 2011, 03:48:27 pm

What is the business I envision? The First Iron Monger Bank of America. It's perfect. Though you cannot eat iron either, at least you can build cool stuff with it. Iron is the most recycled material on earth. As pointed out on this forum, it does not rust, if stored right, is easily recognized (by its magnetism), is divisible and fungible. Usable coins would be bit unwieldy (see previously posted photo of Yak stone money), but the bank could simply print and distribute certificates denominated in pounds of iron. (I think scrap iron is currently trading in the 80 per pound range.)


A few months ago I was getting 6 cents USD per pound of heavy cast iron at the scrapyard. This is an outstanding price for scrap.

My favorite scrap is brake drums and brake rotors.  They're easy to stack in the pick-up truck and easy to carry and toss into the scrap pile. All we need to do is stamp the weight onto the ready-made coin, add a assayer's stamp and embed a RFID tag for easy inventory (just like many casino poker chips!)

Plane on March 01, 2011, 05:46:30 pm
http://www.coinnews.net/2008/05/09/house-passes-bill-for-steel-cent-and-nickel-4085/


Almost happened .

There was a Steel Nickel issued during WWII , every coin colector has one.

spudit on March 01, 2011, 07:03:24 pm
One thought on metallic money. Ideally it should be something not commonly alloyed. Even simple standard cast iron is 3% carbon plus a few other ingredients. Some of the more sophisticated or corrosion resistant steels have over a dozen ingredients. It's complicated stuff, for instance marine and foodservice stainless is nonmagnetic.
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SandySandfort on March 01, 2011, 07:05:12 pm
http://www.coinnews.net/2008/05/09/house-passes-bill-for-steel-cent-and-nickel-4085/


Almost happened .

There was a Steel Nickel issued during WWII , every coin colector has one.

And African natives used iron spearheads as money. So really, these guy should be able to make--pardon the pun--a mint with an iron bank. Yet somehow, in spite of all the deniers' protestations about how iron would make a great monetary metal, I really doubt it could win the hearts and minds (and pocketbooks) of the people.

J Thomas on March 02, 2011, 06:20:55 am

Inflation does not merely cause prices to rise; it distorts economic decisions in numerous ways. Two examples of such distortion include the dot com bubble and the housing bubble. Another effect is that people save less. If inflation is going to steal the value of your dollars, it seems to make sense to spend now, rather than saving for the future.

This will be a little long, sorry about that.

Beginning economics books used to have a concept called the "multiplier". It went like this: Suppose the government spends an extra dollar. The person who performed some sale or service to the government then spends the dollar for something he wants, and the person who gets the dollar spends it, and so on. They estimated that the single dollar would be spent about 4 times during the year.

They had a theory that sometimes the people with money don't spend it fast enough to get jobs for everybody. If people are out of work and broke because the people who have money simply don't want to buy enough, those people could be put to work. They can mine more iron ore, and make more steel, and make more cars, and buy the cars, and nobody loses. If they make five extra cars and buy four of them for themselves and the government gets one, and then the government collects 25% taxes on their extra income, nobody is worse off.

The government spends an extra dollar, the dollar circulates, the government gets the dollar back in taxes, everybody involved gets the chance to work and spend, it's all good.

Of course that doesn't always work. It can't work unless consumers don't want to spend enough to keep everybody employed. When there is some limiting resource that keeps people from producing more, then more money only drives up prices. It is sometimes argued that the "nobody is worse off" claim is never ever true.

But the idea illustrates the point that money has a "velocity", there's a rate that it gets exchanged. If the speed that money changes hands increases when nothing else changes, the money will be worth less.

When there are poor people who spend their money as fast as they get it, the money can move fast. If you get your monthly paycheck and spend it all within a month, that's a velocity of 12 times a year. If you get paid every 2 weeks that's 24 times a year. If you put it in the bank and the bank lends it to somebody who spends it this month, that's 12 times a year too. But the bank usually can't find that many good debtors.... If you invest the money this month, it still passes through your hands quickly.

It's kind of like a game of hot potato -- the faster you get the money out of your hands, the less you get burned. But the faster people spend money on average, the hotter the potato gets....

The faster you move your money into something that isn't money, the less you personally are affected by inflation. In the worst case, the money inflates so fast that people buy anything they can hoping to barter it, because a cuckoo clock today that you don't want and nobody much wants will be worth more tomorrow than the money you spent on it. And of course if everybody is franticly spending their money, the multiplier goes up and up.

When the multipllier goes up, the poor government spends one extra dollar and it causes more than a dollar's worth of inflation. Ouch.

And think of the poor bankers! In good times they can take your dollar and lend out four dollars to excellent credit risks. In bad times they can't find a secure sucker to borrow their own dollar, and their stock in trade becomes steadily more worthless. Can you spare a tear for them?

Quote
Prudent people save in a mix of ways - including paper and shiny, durable stuff. Those who bought shiny silver and gold coins have seen marked nominal gains in the value of their savings. Meanwhile, that stack of paper is declining in value; it buys fewer loaves of bread or gallons of gasoline than before.

Paper money is not an investment and not something to save, unless you are a collector. It is a hot potato. Its function is to be spent.

Keeping paper money is like riding around on the subway all day, trying to get your business done there. Or worse, that simile is not pungent enough. The subway is designed to get you from place to place, not to be camped out in, but you don't actively lose by spending your time there. Maybe if they charged you by the minute, then it would be more like holding onto money.

Gold is more of an investment than a currency. If you are selling something and you get a choice between being paid in paper and paid in gold, which do you prefer? Gold, probably. If you're sure it isn't false. But if you are buying something and you get a choice between paying with paper and paying with gold, which do you choose? Definitely paper.

The more you want to hold onto your currency, the less it's money and the more it's an investment.

spudit on March 02, 2011, 11:06:29 am
Damned nice post on money, we forget sometimes it's more than mattress stuffing.

I have set myself to living a compact lifestyle which makes some very desirable forms of saving difiicult, that is saving wealth in the form of nonmonetary assets, consumable or not.  

Let me clarify, say the store has a huge markdown sale on bulky stuff I need and use and would buy anyway. I could use a pickup truck load, can afford it, but have no place to store it. Many people could fill a basement, garage, pantry. I have to pick and choose what I can stash away, dense in value and size stuff, batteries and ammo maybe, sure. Toilet paper not so much.

The one thing cash has going for it is density of value, 200 C notes in a one inch stack, $20,000 fragile inflation prone hot potato bucks to an inch. It's hard to beat though far from perfect.

just some thoughts from a different perspective.

Back to lurking.
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quadibloc on March 02, 2011, 03:00:26 pm
Yet somehow, in spite of all the deniers' protestations about how iron would make a great monetary metal, I really doubt it could win the hearts and minds (and pocketbooks) of the people.
Ancient Sparta made their money from iron - because it was so bulky and heavy for its value, this was intended to prevent people from trying to make a lot of money, and keep them focused on being prepared for war rather than on soft luxuries.

So that's at least one example of using iron for money that shows it was intentionally chosen because it was bad for that purpose.

terry_freeman on March 02, 2011, 03:02:45 pm

Inflation does not merely cause prices to rise; it distorts economic decisions in numerous ways. Two examples of such distortion include the dot com bubble and the housing bubble. Another effect is that people save less. If inflation is going to steal the value of your dollars, it seems to make sense to spend now, rather than saving for the future.

This will be a little long, sorry about that.

Beginning economics books used to have a concept called the "multiplier".

Beginning economics books often have a lot of fallacies, and the "economic multiplier" is one of the most egregious.

People who do rigorous studies of this "government multiplier" have found that the value approximates unity, and is often on the low side of that value.

I leave for you to work out the consequences of a multiplier less than unity, with your typical excruciatingly tedious verbiage.

Or we can just borrow from Ross Perot: Hear that sucking sound? That's the government sucking the productivity out of the economy.

sams on March 02, 2011, 03:17:32 pm

Inflation does not merely cause prices to rise; it distorts economic decisions in numerous ways. Two examples of such distortion include the dot com bubble and the housing bubble. Another effect is that people save less. If inflation is going to steal the value of your dollars, it seems to make sense to spend now, rather than saving for the future.

This will be a little long, sorry about that.

Beginning economics books used to have a concept called the "multiplier".

Beginning economics books often have a lot of fallacies, and the "economic multiplier" is one of the most egregious.

People who do rigorous studies of this "government multiplier" have found that the value approximates unity, and is often on the low side of that value.

I leave for you to work out the consequences of a multiplier less than unity, with your typical excruciatingly tedious verbiage.

Or we can just borrow from Ross Perot: Hear that sucking sound? That's the government sucking the productivity out of the economy.


Let me help you => Second of Thermodinamics : There ain't such a thing has a 100% efficient thermal engine, there WILL ALWAYS BE LOSSES.

Government creates losses on extracting the money from the economy, thus the ''multiplier'' will always be inferior to 1.

Then you can say ''but bussines invest and get returns'' and I would agree, especially since why should we assume that the government goons have ''investment spirits'' and the rest are a bunch of inactive vegetables ?

The best ''edge'' against inflation is income producing investment, in a true free market buying houses to lend would be a simple one.

J Thomas on March 02, 2011, 03:26:31 pm

Inflation does not merely cause prices to rise; it distorts economic decisions in numerous ways. Two examples of such distortion include the dot com bubble and the housing bubble. Another effect is that people save less. If inflation is going to steal the value of your dollars, it seems to make sense to spend now, rather than saving for the future.

This will be a little long, sorry about that.

Beginning economics books used to have a concept called the "multiplier".

Beginning economics books often have a lot of fallacies, and the "economic multiplier" is one of the most egregious.

People who do rigorous studies of this "government multiplier" have found that the value approximates unity, and is often on the low side of that value.

Well, there's a lot of reason to believe that those people tend to be wrong, within the meaning of the term.

However, if we take it farther there's a sense that you're right. There was an implication that sometimes -- sometimes -- people with money don't spend enough to hire people who need money, so that production will go up from government spending. It would be very hard to argue that this is always true, and much more plausible that it's always false.

So when it's false (and surely almost everybody will agree that it can be false some of the time), government spends money, productivity does not go up, and the multiplier takes effect anyway. If each dollar in government spending is then spent 4 more times that year, each dollar in government spending results in 5 dollars that would otherwise not be spent, chasing the same amount of goods and services that would otherwise be produced.

So while the multiplier definitely exists. some people should argue that sometimes it can be a good thing (more stuff produced that would otherwise not exist, people having the chance to work when their labor would otherwise be lost forever, etc) and other times a bad thing. And other people can argue that it is always a bad thing.

Different from saying that the multiplier does not exist or has a value around 1.

HTH

 

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