Monday, December 22, 2008

Money equals debt

I see a lot of people on various blogs complaining about a "debt based money system" so I just had to say this:

All money is debt.

Money is something that's valuable because other people will give you something for it and no other reason - which is to say debt. Money can't be anything else, because it's used to represent and account for two people making an exchange with a timing difference. During the gap the person who gave up his stuff first has the money - representing the debt the other owes him. When 7 billion people get involved it gets a lot more complicated but the underlying equivalence remains: money = debt. There's no point in getting upset about it; it's just the way it is.

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