Reality, it was once said, is all the stuff that, when you stop believing in it, doesn’t go away. That’s as good a definition as any, considering that defining reality is essentially impossible. To define is to limit: to say that “an X is this and not that.” It is inherently exclusionary…but what can we legitimately “exclude” from reality? Even fantasies of things that are not and can never be have some role in it. After all, fantasies, like ideas of any other kind, have an existence of sorts in some people’s minds. That’s real enough for many purposes, including claims of plagiarism and copyright infringement.
That having been said, have a gander at this story:
As part of his trend of tweeting confusing takes and meme posts about currency, Tesla CEO Elon Musk took to Twitter and seemingly suggested that money isn’t real.
“Goods & services are the real economy, any form of money is simply the accounting thereof,” Musk said in a tweet on Saturday.
(The publication, Futurism.com, might not make that article widely available. If you’d like to read the whole thing, let me know and I’ll send you my saved copy.)
Let’s pass for them moment over that opening claim that Musk has “suggested that money isn’t real,” a statement Musk did not make. The article’s author, whose name is given as Tony Tran, proceeds to pour sarcasm and intimations of inconsistency on Musk, one of the most accomplished men alive today. On what grounds? Because Musk has speculated, as many wealthy persons have, in various cryptocurrencies, some more briefly than others. That makes them, in Tran’s words, “an asset class that one can invest in… and also manipulate with a single tweet.”
Just what is Tran trying to imply with that last? You be the judge.
Item 1: Money as a concept is real. A money is “a medium of exchange and a store of value.” Indeed, it doesn’t matter whether the “money” under discussion has any intrinsic value, as long as those who use it believe they can “store value” by acquiring and saving it.
Item 2: Musk is absolutely correct that “Goods and services are the real economy.” No one, upon being told that he was being sentenced to live out his life alone on an isolated desert island, would bring money of any kind with him. Money’s sole practical importance is its exchangeability for goods and services. Just as “we buy drills, but we really want holes,” we acquire money, but – Scrooge McDuck excepted – we don’t do so for its inherent properties; we do so in the expectation that we’ll be able to exchange it for goods and services at a later time.
Item 3: Musk’s observation, which was probably read by many thousands, comes at a strikingly appropriate time. The Federal Reserve Bank, in complying with the borrowing demands of the U.S. Treasury, has recently created about $4 trillion in new currency and credit. That will cause the devaluation of all the dollars already in existence, including any you or I earn, save, or spend. Because a greatly increased volume of dollars will be “chasing” a largely unchanged supply of goods and services, each dollar’s purchasing power will be reduced to a fraction of its previous level. Consumers will experience this reduction as a rise in the prices of goods and services. This is called inflation.
Elon Musk knows this. You’d better know it, too.
A lot of people have become fliply dismissive of the federal debt. We’re beginning to see the return of the old canard that “we owe it to ourselves.” Nothing could be further from the truth. There are persons and organizations, including several governments, that hold U.S. Treasury Bills: promissory notes issued by the United States Treasury. It is to them, and not to any of the rest of us, that the federal debt is owed. The rest of us, as taxpayers, are the debtors whose wallets will be hoovered to pay that debt…if it’s ever paid and not simply repudiated. In the meantime, we’ll all be affected by the decline of the dollar’s purchasing power.
Musk is in a position that enables him to speculate: i.e., to place bets, long or short term, on alternatives to the dollar without taking a big risk. Has he “called in” some of those bets? He has. What’s wrong with that? Isn’t it his money, and no one else’s, that he’s betting with? So why should he consider his bets to be permanent commitments?
That’s reality, Mr. Tran. That’s what’s going on in consequence of ever-accelerating federal borrowing and spending. And that’s why a lot of smart people like Elon Musk – tell us all, please: what accomplishments can you put up against his? – are on the lookout for alternative currencies that might prove stabler than the ever-weakening fiat dollar.
Personally, I prefer the precious metals: gold and silver. But the alternative currencies have something to say for themselves, especially as regards ease of convertibility. The competition among them, and with the dollar and the precious metals, is a decentralized investigation into what works best as money: an inherently educational process from which many – not just those currently speculating in the alternatives – could eventually benefit. As economist Brian Loasby has written:
The argument for competition rests on the belief that people are likely to be wrong…. In the end, the case against an authoritarian system of resource allocation rests on the same principle as the case against an authoritarian structure in any discipline: part of the case…is that no person or body of persons is fit to be trusted with such power; the (other) part…is that no one person or group of persons can say for sure what new knowledge tomorrow will bring. Competition is a proper response to ignorance. [Loasby, Choice, Complexity, and Ignorance]
Tweeted any wisdoms of your own lately, Mr. Tran?