I took the following from Wikipedia:
Fiat money is money that has value only because of government regulation or law. The term derives from the Latin fiat, meaning “let it be done”, as such money is established by government decree. Where fiat money is used as currency, the term fiat currency is used.
As a result, Fiat currency (such as the US Dollar) has no “intrinsic value”. An alien landing on earth would not value our dollars more than they would value our toilet paper (unless the dollars make for better toilet paper). We get the following cycle of causation:
Basing our economy on the faith of others is a bit scary… To this I say:
Additionally, the notion of Fiat money has led to many thoughts on the cause of inflation. Reading through the Wikipedia’s article on inflation it seems that the consensus theory is inflation happens when the increase in money supply out-paces the increases in value of the economy (a definition for economists argue about). Since we have a Federal reserve controlling the money supply we often blame them for inflation.
I’ll stop talking about money soon, but one last thing. There is the theory of the “price/wage” spiral where workers demand bigger wages to counter decreased purchasing power, the increased wages get folded into the cost of goods/services leading to another decrease in purchasing power and the cycle repeats. This is diagramed as:
Perhaps this diagram is oversimplified, but there does feel as if there is a grain of truth. To summarize, fiat money has the following characteristics:
- value is sustained by collective belief (and collapses under disbelief)
- value is controlled in the short term by manipulating the supply of money
- feedback loops may cause shocks in value
Now make the following substitutions of one word for another:
PREEMPTIVE APOLOGY: I will take this way too far. The bullet points above become:
- love is sustained by collective belief (and collapses under disbelief)
- love is controlled in the short-term by manipulating the supply of affection
- feedback loops may cause shocks in the [value of] love
Recall what a “wage” is and what a “price” is. A worker’s wage is how much money they get over a fixed time. If we insist on replacing the word “money” with the word “affection” then a lover’s wage is the amount of “affection” they get over a fixed time. Similarly the price of a good/service becomes the amount of affection is takes to gain the benefits of love from another. Upon making these substitutions we get the following loop:
Perhaps this is oversimplified, but it feels as if there is a grain of truth here. I’m not too interested in the accuracy of these thoughts, they are just spontaneous musings. What’s more interesting is the afterthought. I started this post by defining “Fiat money”, and stating that it “has no intrinsic value”, i.e. the value is only there because the populace believes it exists. Now apply this to a loving relationship:
… This may seem scary. To this I say:
do not be scared.