How To Make Money (How Money is created in the economy)

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How To Make Money SyPy September 2016 Photo by Ondrej Supitar Follow @chewxy on Twitter

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WHAT WOULD THE WORLD LOOK LIKE IF THERE WERE NO BANKS? The Question Photo by Tim Evans Follow @chewxy on Twitter

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WAR The Surprising Answer Follow @chewxy on Twitter

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LET'S TALK ABOUT BANKS Common Conception •  Banks store value •  Banks were invented for safekeeping of money •  Banks are thieves Reality •  Banks create value •  The first bank was created to create credit* •  Banks aid in allocation of capital Follow @chewxy on Twitter *The τραπεζίται were pretty much the first bankers Photo by Dave Meier

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WHAT IS MONEY? The Underlying Question Follow @chewxy on Twitter

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LET'S SIMULATE To Understand Money Follow @chewxy on Twitter The Sims Plumbob is a copyright and trademark of EA Games

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Very Elementary Simulation •  No dynamic changing of interest rates •  No dynamic/reactionary behaviour •  Single-lifetime simulation. Follow @chewxy on Twitter

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Very Elementary Simulation Follow @chewxy on Twitter Real Growth

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Very Elementary Simulation Follow @chewxy on Twitter Boom/Bust Cycle

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Very Elementary Simulation Follow @chewxy on Twitter Stagflation (0 growth, prices keep inflating*) * Price ceiling was created for computational purposes Different run of the simulation from the previous

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Very Elementary Simulation Follow @chewxy on Twitter Slow growth owing to investments Detbt not allowed in this run

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Very Elementary Simulation •  No dynamic changing of interest rates •  No dynamic/reactionary behaviour •  Single-lifetime simulation. •  Enough to show basic concepts and really macro behaviours like cycles •  Main Takeaway: Growth is powered by debt •  Growth also powered by investments, but no debt means fewer investment opportunities Follow @chewxy on Twitter

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Unrest Every Century •  1920s – The Great Depression è Hitler* •  1840s – The End of Class; Civil War brewing •  1780s – Louis XVI beheaded Follow @chewxy on Twitter * Godwin's Law invoked

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Unrest Every Century •  1920s – The Great Depression è Hitler* •  1840s – The End of Class; Civil War brewing •  1780s – Louis XVI beheaded •  See also: works of Peter Turchin; maybe also Santa Fe Institute people Follow @chewxy on Twitter * Godwin's Law invoked

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Debt is Not Bad •  Poorly managed debt is •  No debt means no growth* •  No growth is historically responded with civil unrest† *other than intrinsic growth like population growth rate † this simplistically settles the question of "is growth a moral thing to strive towards?" Follow @chewxy on Twitter

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On Institutions •  Institutions are one of the most fundamental human technology •  Agglomeration happens on all levels of existence •  Finance companies? Technically they make things more fluid, but can screw things up too. Follow @chewxy on Twitter

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DOES IT MAKE SENSE TO MOVE ONE'S ENTIRE NETWORTH TO BITCOIN? Corollary Question Follow @chewxy on Twitter Photo by Craig Dennis

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DOES IT MAKE SENSE TO MOVE ONE'S ENTIRE NETWORTH TO GOLD? Follow @chewxy on Twitter

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TIME FOR A FOUNDATION? Worth Considering Follow @chewxy Hari Seldon on Twitter