Take a thousand dollars. In cash. Bury it in the backyard. Leave it for a week. Come back and dig it up. What’s happened to it? Most likely, not much.
Has it done you any good? not really. What about for others? no.
Take another thousand dollars. In cash. You have an hour to spend it. On whatever you want.
Then that thousand dollars has to get spent again. In the following hour. And again. And again.
What happens after 5 hours? That thousand dollars has been spent 5 times. It’s gone round through different hands, been exchanged for different goods and services. It’s fragmented and probably ended up in some faraway places. But it’s been spent. It’s been used.
A thousand dollars has been multiplied by 5.
All sorts of people have got a touch on it.
Circulation gives money it’s power and value.
March 7, 2007 at 8:30 pm
That’s because paper money has no value whatsoever except as a medium of exchange. You can’t eat it, wear it, or do anything useful with it.
March 7, 2007 at 8:34 pm
On a completely other matter, I’d really like your opinion of the Chromosphere now that it can be played on a browser.
March 8, 2007 at 12:57 am
Interesting food for thought.
March 8, 2007 at 4:01 am
True, I was once told “Money is like manure, it does no good unless you spread it around”. I have lived by that saying ever since!
March 8, 2007 at 4:50 am
Agreed. The old-timer conception of money is to hoard it or save it up in a cookie jar under the bed or whatever. But essentially, it’s useless if you are not doing anything with it. The least you can do is to deposit it into a high-interest savings account. That way, the money is actually doing something, like compounding itself.
March 8, 2007 at 5:41 am
You just blew my mind!
Seriously!
March 8, 2007 at 1:13 pm
Spread it around. You just made me feel better about my spending habits.
March 8, 2007 at 3:23 pm
Money has feng shui just as a room does. Don’t let the energy get stagnant. K
March 8, 2007 at 4:08 pm
Thanks. Haven’t thought of that way. Now you make me think.
March 8, 2007 at 11:10 pm
There’s an interesting bit called the multiplier in economics.
Money comes from loans from the banking system. Now the amount that can be loaned out by a bank is regulated by each nation’s central bank (which also prints / creates money).
The central bank (CB) sets a ratio which decides that for every $x in cash that the bank has, it can lend say $xy where y is greater than 1.
When you take a loan from a bank and pay someone, that someone deposits it in his bank. His bank then has extra cash and can loan out a multiple of that extra cash.
Suppose you take a loan of $100.
You pay me $50.
I deposit the $10 in my bank and spend $40. Since the ratio (cash-deposit ratio) is 10, my bank can now lend $100 to someone else.
And so on and so forth. This is the multiplier at work.
Which is why spending money is a good thing.
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