Jon wrote:
It's weird I know, but I don't think anyone knows what money actually is!
Its a printed piece of paper, some pretty with a serial number and the monarchs head affixed a token if you like. In itself it means nothing but when you have a suggestible population they can be led to believe the notes actually have value.
Reality is is that without the suggestible notion that they are actually worth something promoting confidence in the system they are simply worth the value of the paper they are printed upon.
Many years ago (getting on for a 100 years now) there was strict legislation which limited the number of banknotes in circulation to roughly the value of the gold kept in the vaults, this kept a lid on inflation but restricted growth as per restricting the money supply.
In the 1930's the so called gold standard was removed giving the banks the licence to print whatever they want and every year since more has been printed into circulation. Highly inflationary in itself unless you can manage the growth which goes with it, indeed which has to come with it. More and more tokens of promises to pay need more and more bodies working their fingers to the bone creating the growth and consuming the output.
Maintaining the growth comes with other social problems as we are now seeing. They should build houses to accommodate the extra people in the Country but they don't, that of course leads to bubbles which in turn lead to huge economic uncertainty when they burst.
The question people should really be asking is how long can this go on for. This is uncharted territory, no one has been here before, the debt figures are huge and get larger every year.