Mastodawn

The thing about the concept of a very rich man ‘losing’ $200bn is that if this sum can be ‘lost’ rather than spent, transferred, or stolen, it really calls into question its existence in the first place, and from there you start to wonder about the reality of large sums of money at all.

That is one of the qualities of money, that small amounts are extremely tangible (that $20 in your wallet, those coins in the tray with your keys), but the larger the quantity the more intangible and subject to weird philosophical ideas it is

All the economists insist that yes, the ‘household budget’ metaphor for national economies is wrong. Countries don’t have to save for the future in the same way you or I do because they can print money, and ‘savings’ are for countries are really also opportunities lost.

But what the ‘household’ metaphor reveals is that most people struggle to conceptualise money in the large scale, because it really is less and less real the more of it you try to think about

$200bn held in a market is the kind of sum that is exactly as real as the value of a poker hand before the call; I might think my three aces are great, and so do my opponents think their flushes and full houses are pretty good!

So long as we all hold our cards, we can all be rich in our claims for the pot. Who wants to trade a derivative for my three aces and get some leverage on my hand?

Public transport illustrates the difference.

When you or I catch the train we pay a fare, say a couple of dollars. That sum is absolute, policed by special guards, and if I don’t have it, the gate squawks red and I can’t get to work. But systems as wholes rarely depend on fare box takings, the best ones least of all.

Instead the relationship for the public transport network is to the State and city as an organic economy; maybe it depends on a subsidy, or a share of future development near stations, or special taxes levied on specific firms (or a mix!). Whatever, the sums are very very large, and are negotiated politically, and it’s far more important that everyone have confidence the network will exist in the future

So there’s another paradox: for these small sums like a train fare, the value is set and the argument for paying is moral—why should I fare evade when everyone else has to pay?—while for the big sums on which the whole system depends, the rights and wrongs are negotiable and the sums, as any rail contractor knows, are fictive

AND it isn’t a coincidence, I think, that the basis of people’s confidence in cryptocurrency either lies in slippery ethics (the bad faith of convincing the next sucker of the absolute value of a coin) or in the obscurantism of extremely large numbers (the good faith of trusting very large sums, or hashes, or computing times, or some other number with a power factor).

Mark Deasy 🍉Jan 2, 2023

@liamvhogan here's the best explainer on money I have found so far. A pity our own RBA lacks the empathy to explain in plain, accessible English how the system works.

Only 14 pages ... :-)

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf

nev Jan 2, 2023

@liamvhogan > systems as wholes rarely depend on fare box takings

*laughs in #TTC *

@nev yeah look North America as a continent provides a lot of lessons in how not to fund public transport systems

@nev mind you! Toronto’s system also provided the Spadina Bus Song so who’s to say if it’s good or bad etc.

la_panique Jan 2, 2023

@liamvhogan @nev Imagine how upset I was to move here and find out it was a streetcar!

Yes, *that* dawn person Jan 2, 2023

@liamvhogan @nev The last day of service for the Spadina Bus 77B was July 26, 1997. https://transittoronto.ca/bus/routes/77-spadina-1948.shtml

I too enjoyed shuffling with the demons.

77 Spadina (1948-1997) - Transit Toronto - Surface Route Histories

Justified Ancient of Moomin Jan 2, 2023

@nev @liamvhogan Hong Kong’s MTR makes money from a combination of real estate holdings and farebox revenue. TfL until the pandemic did quite well with a very high farebox recovery ratio. But those are outliers and notably, depend on a combination of wealthy users and high density cities to achieve that, and still need lots of government funding to handle capital projects

I'm Rime Jan 2, 2023

From my perspective small amounts are most tangible because that is where the heaviest and strictest enforcement lies - fundamentally fares act to justify making decisions about who can and can't use the service, children and the penniless are the intended target here.

With NSW's Opal cards, they can track you through it better than tickets anyway, so I don't see why we should pay fare while we are still tracked.

I'm Rime Jan 2, 2023

consider the same for well, rent, and food.

Adam Jan 1, 2023

@liamvhogan fun thing to do is go on my “money isn’t real” rant to people who think they are very smart. They’ll always assume you mean “printing money is a way to have more money” and start on the inflation lecture.

Ali Jan 1, 2023

@Kels_316 @liamvhogan is that the "money is only real because we all agree it's real" rant?

Adam Jan 1, 2023

@grissallia @liamvhogan that’s the general gist, combined with “governments can create money any time they need it. They chose to do so for the things they want (like submarines), and not for the things they don’t (like social projects)”

@grissallia @Kels_316 this argument does not work on landlords, electricity companies, subcontractors, etc.

Ali Jan 1, 2023

@liamvhogan @Kels_316 Maybe I just haven't approached it the right way with my landlord...

"You have a house that you don't need that's appreciating in value. We're helping to keep the value from depreciating by living in it and keeping it clean, and the lawns mowed. I think that's a fair deal, without money needing to change hands."

Conormcelvaney Jan 1, 2023

@liamvhogan this is so true, I sometimes think that the reason it works is because of this.

I can spend hours thinking about it and it all makes sense in my head, but at soon as I write it down.... Gone

Ross Greensill Jan 1, 2023

@liamvhogan I have often wondered when is enough is enough. When does "I want more" stop. I am certainly not rich and basically live week to week with rent over 60% of our pensioner income. But at the end of the day ... We don't want for anything. Some weeks it is not easy but ce la vie.

Cảm ơn Jan 1, 2023

@liamvhogan whether it was 200b or 20b of actual accessible $$ there’s a lot more useful things that could have been done with the money.

BigRB Jan 2, 2023

I’m not sure the analogy holds. The $200bn was lost in the same way as if I bought a plastic bucket from you for $20 while everyone else buys the same bucket from Bunnings for $5. Now I have "lost" $15.

In the case you are referring to, the rich man owns a tonne of buckets that people have been paying $20 for (the other bucket-holders ). Now, all of a sudden, nobody is paying $20 for a bucket anymore and so he, and the other owners of buckets, has/have "lost" money.

@bigrb ahh, but see that’s why it’s so clear when it’s reduced to easily comprehensible sums and commodities—when it’s buckets and twenties, it’s easy to see the money was imaginary. Far less so when it’s many many zeroes and a huge number of complex holdings and promises and contingent loan arrangements

BigRB Jan 2, 2023

@liamvhogan A good point well made.

@bigrb it’s a thing that constantly surprises me about money. We can only really get it in the form of metaphor (the household metaphor, or think Marx and his textile-shirts, or fin bros and their equations representing trades) and those metaphors slip when the numbers are large; macroeconomics at some point ceases to be about money and turns into a study of the behaviour of the State

BigRB Jan 2, 2023

@liamvhogan I have long believed that economics has nothing to do with money.

The world makes more sense to me when I frame economics as the psychology of value exchange and money is just the most frequently deployed tool for managing those exchanges.

Tips for Overcomers Jan 2, 2023

@liamvhogan
Those big amounts are not actually real money.

They’re “value”, calculated by multiplying a big number (the number of shares of a company owned by someone) by the most recent price that someone paid for a much smaller number of those shares.

The owner of all those shares could never convert all those shares into real money, at least not quickly.

That’s why when a big company is bought, most of the payment is made in shares, not in actual money.

Does that help?