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The real problem is to reason in the Austrian/gold-bug frame that "money is a thing".


And, just as shoveling 1 megawatt into a TV results in a TV that don't work so good, shoveling hundreds of billions into an economy that cannot or does not usefully, e.g., Housing bubbles, use the money results in an economy that don't work so good.

However, the illusion that money is a thing seems to be psychologically necessary in order for a fiat money system to work. Because, if people think that fiat money is not a real thing they will think it's worthless and destroy the fiat part of the fiat money system.

Most people only want to take "money" - whatever it is - down to the local shop and exchange it for a can of beans.  If they can do that they don't care if it is "backed" by gold or fried rat tails.  Economic policies based on "Money is a thing" are only psychologically necessary IFF the Economics one brings to the game is based on "money is a thing."  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Oct 21st, 2010 at 12:44:53 PM EST
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