We Don't Know What Money Is Anymore

I don't know what money is.  This blog is proof.  Much of it talks about what I think money should be but the remainder is trying to figure out what it is.  Not the trite answer:  Medium of Exchange.  That is what money does, its function, not what it is.

Money is a figment of the imagination.  Even if we hold a dollar bill in our hand.  It is a physical thing on one hand (joke here) but on the other it is the symbol of a conceptual unit of value.  Like a letter or a number.

I am not dumb.  I went to college, was a career naval officer operating and even designing complex supply systems involving money and material components of the integrated mission function of the Navy.

I should be able to understand what money is, how it operates.  I feel bad that I do not.  However, I don't feel as bad relative to everyone else because I think that even the brightest among us do not understand it.  Some do.  When I find those that I think understand it there are others that I think also understand it from a different point of view.  However I am not sure if it is a different point of view of the same thing or they are looking at two different things.

Whatever the problem the objective is to reduce its complexity to simplicity.  Money is a tough problem!

If I don't know what money and I have some above average intelligence and experience to understand it then we are all in trouble.  Even if I was less than average intelligence I have applied myself to understanding the problem with a great amount of study that might compensate for a lack of intelligence.  I am an Ironman triathlete and if I can't go fast at least I can make up what I do not have in speed with endurance to go the distance before the deadline.

I have money, I spend money.  Thinking about that this morning I asked myself what kind of money do I have and spend?

I like cash.  I still like cash.  I used to spend it more thinking that the credit card should just be for large purchases.  It seemed moral right.  Maybe because I wasted less of the clerk's time at the check out counter (as well as those behind me) than those ahead of me that spent so much time making out a check or using a credit card.  I began to use the credit card for smaller and smaller purchase amounts.  My current level decision point?  Maybe 4 or 5 dollars.  I would be embarrassed to buy a candy bar with it.  That seems to have some association of what a lower class of person would do...buy a candy bar on credit. ..I should examine my own prejudices.

So, what kind of money do I spend?  What kind of money is it.  The basic question: What kind of thing is this thing (what is the Parent Class of this thing) is the fundamental analysis question that builds the conceptual Parent/Child structure in an Object Oriented System.

What kind of money in the money supply do I spend?  There are three categories of money in the total money supply:  M0, M1 and M2.  There used to be a category called M3.  I don't know if I ever spend any of that or could spend it today even if the Federal Reserve Bank no longer reports the amount of money in this category although the category itself exists in both concept and some degree of reality.  All money exists in some association to reality and liquidity.  The degree ranges from the closest to a form of "real" readily accepted money to the fringe reality of near money, which is a misnomer because it is not near to "real money" but far from it: money as financial paper with value anywhere from being no risk (as good as M2 at least) to total risk of being worthless or in fact worthless because the holder failed to insure it for its face value.   In that case something worthless is worth something.  That is another story.

If I do not give the clerk one of these forms of money they will not sell me the candy bar.  I think that is a factual statement unless we go into barter for my watch.   I might be able to give a promise to pay that must ultimately result in an exchange for M0, M1, M2 money somewhere down the time line.  The time line being my line of credit.  Eventually the store must be paid and M0, M1, M2 is the only way to settle the debt.  The other way is to pay a debt to society or pay the debt in general terms like a penalty to my credit rating or good name. Maybe the clerk would accept a credit default swap if i had it insured?

What kind of money do I spend?

I spend M2 money.

How do I do it?

(to be continued by my explanation after I think about it for awhile...this is a nice day to do something better)