This section mainly takes about the value of money. It is very hard for me to read. One of the reasons is the vocabulary very complicated; another reasons is the lack of knowledge of cohesive meaning throughout the writing. Fortunately, I understand it after lots of attempts. There are two values of the money. One is gold-backed currency, which uses gold to measure its value. Another is the “Greenback” money which is a fiat money without any measurement of its actual value. This the one we use today, the dollars. Back in the 1890s, there was a strong distrust towards bankers and government. This was the beginning of "greenbacks", a fiat currency issued to help pay for Civil War expenses and were blessed as legal tender. At first, the government can issue fiat money without limits. Therefore, the value of Greenback need people's consent on its values. For example, the US government issues dollar bill, which is trustworthy globally.
People trust US government issues valuable currency, which can be used in the trade. People were assured that the bill that they got can be exchanged with an equivalent one with the same value. Then the author introduces us the idea of quantity and quality embedded in the value of the fiat currency. For the issuance and supply of currency, consumers tends to desire more quantity currency since this gives them more purchasing power, but when the currency devaluates, they will prefer qualitative currency where it supports rising value. In somehow, he also explains the metaphor “barrels” used in describing the value of money in someone’s writing.
Ch.12 Free Market Money in a Pop Iconomy
John talks about how money can become part of the popular culture in 1960s when the post World War II made the dollar bill the most prevalent in everyone's daily experience.
The author talks about Andy Warhol and how he created his paintings and drawings of dollar bills the same year as Milton Friedman first published Capitalism and Freedom, the seminal book that framed the rationale for our current free market economy. Friedman's theory was that an economy operating free of government control would raise everyone's standard of living.
Chapter 3: I agree with you that the book is hard to read, and I cannot totally what it says after read twice. But I think the main idea in this book is that author want to tell us, money is not that important in our life, and it has not that much power as most people think.
ReplyDeleteChap3: I am glad you talk about how hard to read the book is! I tried my best to resist the urge to complain about the reading. It is interesting to learn about historical content behind how US dollar bill got accepted globally. It almost looks like a investment class.
ReplyDeletechapter 3: i totally agree that the vocabulary of the book is very complicated. I think the supply and demand of money is exactly like what we learned in economics. If the supply exceeds the demand, the value of money goes down.
ReplyDeletechapter 12: I don't know if the economy will be better without government's control because it is very easy for people with millions in cash to manipulate the market without government's supervision.
It definitely makes sense how a change in value of would influence consumer's desire for more quantitative or qualitative currency. One of the chapters I reviewed also featured someone who drew dollar bills, similar to how Andy Warhol did.
ReplyDeletechapter 3:It's very interesting to understand about the creation of currency. I guess the notion of money actually carries no realistic value in comparison with gold. However, the authority of government instills the papers with the exchange value. I wonder if the government loses its power, what will happen during that time?
ReplyDeletechapter 12: I doubt Friedman's theory really holds true when the government loses control of the society. In fact, the money carries no value by that time. I think it exactly contradicts the point brought up in Chapter 3. A stable government ensures the foundation for exchange activities. Without government to back up, the currency is very likely to be abandoned.
Ch. 3: The chapter I read (Ch.2) was very similar to yours. Both of our chapters talk about the value of money and comparing it to a standard value. Money is more powerful probably than ever before in recorded human history. The more money you have, he more power you have. I think it's important to have gold just in case the US economy fails, the dollar would mean nothing to the rest of the world. Whereas, gold is highly valuable throughout the world regardless.
ReplyDeleteCh..12: I don't believe a free market void of any government control would increase the standard of living (depending on your definition of standard). Businesses are in the business of making money. Period. If it's all about money, that can lead to a lot of corruption by big business and neglect for the environment, by using the cheapest products which may be harmful to nature.
I think government control is very necessary...The visible hand and the invisible hand are both important to make the market operate regularly. If there is no government intervention, things will out of control if monopolies spread in every industry.
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ReplyDeleteloll Thank you and your partner's effort in summarizing this hard chapter for us.
Chapter 12:
Your summary is so concise and straight to the point. I was assigned to read chapter 12 as well and I was trying to make my summary longer by inserting quotes.
The value of money dies not exist in a absolute definition, it depends by personal opportunity cost. Everythin is an investment. An item for 5 dollars can be more expensive than one for 1 million
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