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Could someone prove the following 3 things to me?

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posted on Sep, 12 2009 @ 09:52 PM
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I've been searching the web and I cannot find hard proof for the following 3 statements that most people take as indisputable truth. Could someone provide the proof that at least two of them are indisputable?

(1) The entire sum of all bank account balances equals the sum of tangible cash-notes available within that bank
(2) The regular $100 bill has value

and if 2 is true:

(3) The objective measures used to prove that the $100 bill has value are valid and true

The suspicion I have is that all 3 operate on soft proof and social assumption for convenience. However I'd like to be proven wrong.




posted on Sep, 12 2009 @ 10:09 PM
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Originally posted by HighEye
I've been searching the web and I cannot find hard proof for the following 3 statements that most people take as indisputable truth. Could someone provide the proof that at least two of them are indisputable?

(1) The entire sum of all bank account balances equals the sum of tangible cash-notes available within that bank
(2) The regular $100 bill has value

and if 2 is true:

(3) The objective measures used to prove that the $100 bill has value are valid and true

The suspicion I have is that all 3 operate on soft proof and social assumption for convenience. However I'd like to be proven wrong.


I'm not really clear on what you are asking here but let's take a look a (1). Money in circulation is defined to be currency held by the public plus money in accounts in banks. There are some other measures in the US designated as

M0: Physical cash (about 700 billion to 800 billion)
M1: M0 and deposits in checking or other demand accounts and instruments directly exchangeable for currency like traveler's checks. ($1.35 trillion)
M2: M1 plus savings accounts, money market accounts, and certificates of deposit with balances of $100,000 or less. ($6.9 trillion)
M3: M2 plus but also foreign bank deposits denominated in American currency, CDs greater than $100,000, institutional money market mutual funds, and repurchase agreements. ($11 trillion)

So the answer would be no, the deposits do not have to be held in currency by the bank.

As for your second question, the value of the $100 bill is really its purchasing power -- the physical paper bill has no value, unlike a gold coin.

As for your third question is confusing. The valid and objective measure of the value of $100 bill is to buy something with it.



posted on Sep, 12 2009 @ 10:18 PM
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Thanks for the response. That's what I thought the logical answer would be, and the purchasing power of something is subjective and not measurable. For instance, I can paint something and sell it on the street for $100 or $10,000, it's up to me (hence not objective).

Therefore I'd like to follow up with:

(4) If the actual note has no value, then where (or from who) does the $100 note derive it's value from?



posted on Sep, 12 2009 @ 10:28 PM
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Originally posted by HighEye

(4) If the actual note has no value, then where (or from who) does the $100 note derive it's value from?


From it's purchasing power or what people believe it can buy. This is what is often referred to as fiat currency. A currency has value because a government accepts tax payments in that currency and it is accepted as "tender" that can be used to buy goods and services. A fiat currency can lose it's value if the government that give it legitimacy dissovles (Reichmarks or Confederate dollars) or if the people no longer accept it as tender (consider this article
231 million per cent inflation: Zimbabwe dumps currency


The latest stark illustration of the once-vibrant economy's collapse came hours before acting Finance Minister Patrick Chinamasa announced that Zimbabweans can now legally use foreign currencies alongside the Zimbabwe dollar.




[edit on 12-9-2009 by metamagic]



posted on Sep, 12 2009 @ 10:29 PM
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reply to post by HighEye
 


That one is easy... It's value is derived from the faith the people put in it to buy stuff.



posted on Sep, 13 2009 @ 12:07 AM
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Your whole predisposition of the question is irrelevant.

Value is based upon what an Individual will give you for said item. In your case you are asking whether or not a piece of paper has actual value.

I have a question for you. Let us say a bank robber goes in to ask for a loan. The robber sits down with the manager and states he will give him his signature for a loan of 250,000 dollars cash. He uses persuasion to make the manager give him the loan and walks out with the cash. Has the manager or bank lost any money? Has the country lost any money? The answer is no. Why?

Because the FDIC will replace all the money with fresh new fake valuables called US dollars. Which have no actual value.

We are this close to the edge.

edit for pretext and verbiage

[edit on 9/13/2009 by endisnighe]



posted on Sep, 13 2009 @ 12:15 AM
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reply to post by endisnighe
 


You know, this raises an interesting point... Since the FDIC just replaced the "stolen" money, did not the robber by proxy just print the money s/he stole, thus injecting more artificial money into the system?

[edit on 9-13-2009 by rogerstigers]



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