Monday, 19 September 2011

A thing for me

In the real world around you, there are only so many things available. In the pretend world of money, there are an unlimited number of claims to those real things.

If we could somehow scrape together a comprehensive list of all the things in the world that anyone could possibly buy, add up the total value of them all, we'd establish that a very large amount of money would be required for all those things to be bought.

But not as big a number as the total of all the claims (money) already in the world. (And there's still plenty more money coming from where that all came from!)

How can all these claims for stuff spread out across the account holdings of people around the world (not even considering the additional claims that are coming into the system all the time) provide all of those claim-holders with the stuff they will wish to purchase at some point in the future (why else would they hold the claims, rather than spend them on something right now?), given there are already so many more claims than goods available?

What if you suddenly came to realise that your current savings are not really worth what they say they are? Because, clearly, we can't all buy what we think we can today. There is too much money and not enough stuff.

You understand this at some level as of today, if you didn't consciously know before. But what if everyone else realises too? Will you beat them to spend your money on stuff, before all the stuff runs out and your money no longer buys you anything? Not at today's kind of prices anyway.

No more claims for me, a thing for me please!

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