Money does not initiate Economic activity, in all cases, it is an intermediary token or rain check

“Money is created in advance of us creating real stuff to buy”
I think this is the potential source of some confusion, money does not initiate Economic activity in all cases it is an intermediary token or rain check which has profound effects on social relations and commerce between individuals and nations but is a mere Idea and can be anything we imagine it to be.
Energy, on the other hand, is something which can be harnessed and accessed in the complete absence of Money or debt.We are limited by Physical Resources and Natural Boundaries, Money and Debt are only limiting by choice or as Aristotle put it.
“Money was intended to be used in exchange, but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of all modes of getting wealth this is the most unnatural”
Book I, 1258b.4
Nomisma (Greek: νόμισμα) was the ancient Greek word for “money” and is derived from nomos (νόμος) “anything assigned, a usage, custom, law, ordinance”.[1]
“….but money has become by convention a sort of representative of demand; this is why it has the name ‘money’ (nomisma)-because it exists not by nature but by law (nomos) and it is in our power to change it and make it useless.” Aristotle, Nicomachean Ethics [1133b 1].[2]
In modern Greek, the word nomisma means “currency”,[3] It is also a term used by numismatists when referring to the pieces of money or coin in the plural nomismata an example of which is the Aes rude of Numa Pompilius (the 2nd King of Rome).[4]
I think that what the EROI Cliff shows us is that we can make sensible energy investment choices and achieve a steady state Political Economy of Abundance, the main restraints are actually psychological and status based for which I recommend close study of the Pigou Dalton Principle.
https://en.wikipedia.org/wiki/Pigou%E2%80%93Dalton_principle
https://www.ophi.org.uk/wp-content/uploads/Dalton-1920.pdf
If you dig into Pigou and Dalton their insight is that Status and Hierarchy and maintaining peoples illusions as to their place in the social pecking order are rather more important to getting a consensus to distribution of the wealth of the society than are levels of income or disposable income and therefore absolute levels of taxation Quite apart from the fact that Taxation has nothing to do with Spending of necessity it is though a convenient political myth.
To Wit
Beardsley Ruml.
http://letthemconfectsweeterlies.blogspot.se/2017/05/taxation-for-revenue-is-obsolete.html
Hi Rob,
When I first read this, I had not realised this was a re-blog and then after reading the full piece I posted a more detailed comment on Tim Morgans Blog.
If we take your Last Sentence that “We” are in a severe state of overshoot. I would argue that “We” are not all in this together. The current Debt Based money system is very much a Them and Us dynamic and the Myths of Scarcity are very important to support the idea of Debt and the owners and controllers of the Debt through Interest (Usury).
Whilst Fractional Reserve banking has had some purpose in the overall banking mythology, under FIAT money systems including those notionally based upon Gold stories explaining Fractional Reserve Banking have been lacking in real exemplars, charitably they are always honoured more in the breach than the observance.
To move to an Energy-Based system of priorities rather than a debt based money system of priorities in Political Economy. An analysis of Both systems needs to be clearly based on an agreed understanding of how each would operate in the model we adopt to represent our understanding of each system.
Tim does look at stripping out Borrowed money for consumption from the Total US Debt increase, but the problem with Debt Based money is that All money even that earned and then spent on consumption is Borrowed into existence, the problem with Debt Based money is the Usury and the uncreated money when the money is borrowed into existence and not so much the privilege of seigniorage accruing to the creator of the deposit.
Another question regarding who can achieve prosperity is part of this prioritisation question, Tim posits a re-distribution scenario where the Rich are somehow sacrificing their Hard won riches to the Less well off, I think that Helmuth Kreutz shows quite well that unearned interest accruing to the wealthy is the process by which most differential wealth leading to huge inequality stems from, this is a derivation of the Exorbitant privilege on Monetary hegemony and the biggest obstacle to Energy-Based metrics of political economy are the social control aspects of the current debt based system.
”The monetary and financial system of an economy are part of the socio-politico-economic control mechanism used by every state to connect the economy with the polity and society. This neural network provides the administrative means to collect taxes, direct investment, provide public goods, trade. The money measures provide a crude but serviceable basis for the accounting system which in turn, along with the codification of commercial law and financial regulation are the basis for economic evaluation and the measurement of trust and fiduciary responsibility among the economic agents. A central feature of a control mechanism is that it is designed to influence process. Dynamics is its natural domain. Equilibrium is not the prime concern, the ability to control the direction of motion is what counts.
Money and financial institutions provide the command and control system of a modern society. The study of the mechanism, how they are formed, how they are controlled and manipulated and how their influence is measured in terms of social, political, and economic purpose pose questions, not in pure economics, not even in a narrow political economy, but in the broad compass of a political economy set in the context of society. ”
Martin Shubik
Here is a blog of my more detailed comment on Tims Blog, I intend to give it some more serious thought for a few days and jot down a note of the further questions which occur to me.
http://letthemconfectsweeterlies.blogspot.se/2017/09/energy-economics-miixing-debt-apples.html
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  1. The benefit of a fractional reserve system is that it makes credit abundant by borrowing from the future so we can enjoy something today rather than waiting until we have saved enough surplus.
    The problem with a fractional reserve system is that it requires infinite growth which is not possible on a finite planet.
    Another potential problem, which you appear to be focussed on, is that with inadequate taxation and social policies a fractional reserve system can result in a wealth inequality gap that causes social unrest. This problem is magnified with low interest rates as we have seen over the last decade.
    Economic growth is an interesting topic because almost everyone wants it, but very few people understand why it is important, nor why it cannot continue.
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    1. Hi Rob,
      The Debt based money system needs growth not to collapse, the reason for this is that only the principal debt is created and not the interest, if More debt is not taken on as debts fall due there is not enough money in the system to pay the interest. Bernard Leitaer explains the way it works in his parable of the 11th round.
      http://www.lietaer.com/2010/09/the-story-of-the-11th-round/
      I will read your essay properly later, I am familiar with Bartlett’s famous lecture and the Exponential Function.
      Carol Quigley understood the distinction evidenced in this quote from Tragedy and Hope.
      ”Thus, clearly, money and goods are not the same thing but are, on the contrary,
      exactly opposite things. Most confusion in economic thinking arises from a failure to
      recognize this fact. Goods are wealth which you have, while money is a claim on wealth which you do not have. Thus goods are an asset; money is a debt. If goods are wealth; money is not wealth, or negative wealth, or even anti-wealth. They always behave in opposite ways, just as they usually move in opposite directions. If the value of one goes up, the value of the other goes down, and in the same proportion.”
      Quigley Tragedy and hope.
      On the question of Growth, What is Growth? GDP growth, Growth in National Well being etc. Energy Returned on Energy Invested is a hugely important measure in pursuing it I think any Borrowings from the old Debt based money system should be resisted.
      an energy Based Monetary Unit, free of Usury.
      Introduction to Technocracy – 1933

      discussions — of ‘value,’ of fluctuating prices, of the gold standard, of changing interest rates, of items of pecuniary wealth which are at the same time items of debt — are
      merely discussions looking toward a readjustment of the factors which prevent them
      The problem of analysing political choices against the metric of a Monetary measure is the Money as a Thing is most certainly a Variable and as any good technologist, scientist or metrologist will tell you a unit of measurement has to be clearly defined and fixed.
      The dollar. He notes that it is a variable. Why anyone should attempt, on this earth, to use a
      variable as a measuring rod is so utterly absurd that he dismisses any serious
      consideration of its use in his study of what should be done.
      He also considers ‘price’ and ‘value’ and the fine- spun theories of philosophers and
      economists who have attempted to surround these terms with the semblance of meaning.
      These terms, like the monetary unit, may have had meaning to men in the past but they
      mean nothing whatsoever to the modern technologist. The standard of measurement is
      not relevant to the things measured; and the measuring rod and the things, measured as if
      they were stable, are all variables.
      http://letthemconfectsweeterlies.blogspot.se/2017/08/conquestofdough-squaring-energy-food.html
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      1. I understand the issues you raise but I do not understand the point you are trying to make. If you want to continue the conversation please restate your point in one sentence.
        Money does not initiate Economic activity, in all cases, it is an intermediary token or rain check which has profound effects on social relations and commerce between individuals and nations, but money is a mere Idea and can be anything we imagine it to be.
        I made a longer Comment awaiting moderation on your Essay post you linked to earlier.

6 thoughts on “Money does not initiate Economic activity, in all cases, it is an intermediary token or rain check

  1. Reblogged this on RogersLongHairBlog and commented:

    #SamizdisSamizdat #BrexitRebeliion #ConquestofDough #Web3BeattheBanStick

    Three Main Actors Moon of Alabama branded them FUKUS ( Very Droll ) In Order of the Acronym
    http://www.moonofalabama.org/2018/04/fukus-strikes-syria-who-won.html
    France ( Macron )
    UK (MAY)

    US ( Trump )
    All are leaders with a questionable Mandate, Trumps is strongest arguably but May and Macron remain Establishment Choices. May the DUP supported Own goal Merchant and Macron the Man from Nowhere who the Slog cruelly characterises as a Mother Fucker.

    Trump is talking about re looking at TPP, May is obviously Back Tracking on Brexit and Macron is facing challenges to his *Liberalisation reforms )

    May and Trump are facing electoral tests Mid Terms in US and Local Elections for MAy.

    In Short, all have challenging domestic agendas.

    The biggies are not domestic agendas but International Ones.

    If the Security Council meeting the main advocates supporting the action were The Netherlands, and Sweden both have been pushing the Syria Bashing.

    Sweden has the oldest Central Bank and The Netherlands is, of Course, the beginnings of the modern worlds Capitalist system. The Colonialö/Imperialist International Banking Project runs strongly through this whole thing.

    Israel has been fairly quiet I have news feeds from Jewish Chronicle and Haaretz the Israeli News Paper they have been observing keenly but apart from the Domestic Anti Semitism Schtick in Uk and of course the Israeli Strikes on Iranian Targets, Israel has a very Low profile here, in fact barely garner a mention? Staying in Shadows pulling Strings, BiBi is a class operator in the black arts of arm Twisting, he was as a younger man much more dashing and charming he has morphed into a rather unattractive slimeball but I must admit I found the Younger Netanyahu very convincing, not so now.
    He has his hand up Trumps back though, all public appearances of the two together show this to be so.

    We can usefully distinguish between events, and Characters as well as Domestic and International Dynamics.

    Russia, Turkey, Saudi, Iran.

    Here is Gets Very Complicated indeed.

    3 players are steeped in the intrigues of Petro Dollar Hegemony and Turkey was a key creation of the Post WW1 treaties which brought in the age of Oil and FIAT/GoldStandard and the Fed (The Gold Standard was a FIAT system under the shining exterior, I will not go into that here But Zarlenga’s Lost Science of Money goes into it in depth)

    Gas PipeLines Involve all of them.and in that respect we have to bring Ukraine into the Picture as well.

    Israel is also a player with the Gas question in respect of the Leviathan fields and other fields in the Eastern Medetaranian this also brings Egypt into the picture. Of Course, Libya and Iraq come into the question from PetroDollar and Energy aspects of the question and lead back to General Wesley Walker.

    123

    As of April 2014, German mainstream media continue to ignore the peaceful weekly Monday demonstrations in now over 34 German cities – defaming them ludicrously as “new right-wing movement”,
    #GilletsJuene

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