Posts tagged with: money

Blog author: jcarter
posted by on Thursday, June 12, 2014

MoneyRoll

Note: This is the latest entry in the Acton blog series, “What Christians Should Know About Economics.” For other entries in the series see this post.

The Term: Money

What it Means: In economics, money is a broad term that refers to any financial instrument that can fulfill the functions of money (more on that in a moment).

There are three basic ways to exchange goods and services: gifting (e.g., I give you a banana, expecting nothing in return); barter (e.g., I give you a banana, in exchange you give me an apple); by using money (e.g., I give you a banana, in exchange you give me $1). Money was invented (and reinvented in every culture) because it makes exchanges easier than the barter system.

What Money Is: Money is a shared belief system used to simplify exchanges of goods and services. To be used as money people have to share a belief that the item —whether paper, gold, rocks, etc. — can perform three main functions: be a store of value, be used as a unit of account, and serve as a medium of exchange.

In the next section we’ll examine these functions. For now, here are two examples of how money serves as a shared belief system:
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Blog author: jcarter
posted by on Thursday, April 10, 2014

bitcoin-wallBitcoin is dead, long live Bitcoin.

A few weeks ago the IRS killed off any chance that Bitcoin could become a mainstream currency. That’s probably for the best since it clears the way for it to become something much more important: the world’s first completely open financial network.

Timothy B. Lee has a superb article explaining why this could be transformative. Lee highlights one particularly helpful innovation:

One obvious application is international money transfers. Companies like Western Union and Moneygram can charge as much as 8 percent to transfer cash from one country to another, and transfers can take as long as 3 days to complete. In contrast, Bitcoin transactions only take about 30 minutes to clear, and Bitcoin transaction fees could be a lot less than 8 percent.

An “alternative to Western Union” doesn’t sound revolutionary, does it? Now look at this graphic produced by The Daily Mail which shows how much money is being sent by migrants to their families back home.
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Blog author: jcarter
posted by on Wednesday, April 2, 2014

money-and-justice-scales“If a society regards governmental manipulation of money as the antidote to economic challenges,” writes Acton research director Samuel Gregg at Public Discourse, “a type of poison will work its way through the body politic, undermining justice and the common good.”

Money: it’s on everyone’s mind sometimes. In recent years, however, many have suggested there are some fundamental problems with the way money presently functions in our economies.

No one is seriously denying money’s unique ability to serve simultaneously as a medium of exchange, a measure and store of value, and a means of calculation. Yet deep reservations about the current workings of the world’s monetary systems, both foreign and domestic, have been expressed by people ranging from Senator Rand Paul (who is fiercely critical of the Federal Reserve), to Pope Francis (who has denounced what he calls “the cult of money”) and France’s François Hollande (who once described “big finance” as his “greatest adversary”).

Read more . . .

Blog author: jcarter
posted by on Thursday, March 27, 2014

bitcoin“For federal tax purposes, virtual currency is treated as property.”

With those ten words, the IRS has made it more difficult — if not impossible — for bitcoin and other virtual currencies from gaining widespread, mainstream acceptance as a currency for commercial transactions. Because they are now treated as property, virtual currencies are considered, like stocks, bonds, and other investment property, as capital assets and will be subject to capital gains tax.

But why does this hinder bitcoins use a currency? The answer is fungibility: Bitcoins are no longer completely fungible.
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Blog author: jcarter
posted by on Tuesday, March 25, 2014

wallet-lockWhen bank robber Willie Sutton was asked why he robbed banks, he is (mis)quoted as having said, “Because that’s where the money is.” Turns out that is also why there is more street crime in poorer neighborhoods: because that’s where the cash is. Or at least it’s where the case was.

It has been long recognized that cash plays a critical role in fueling street crime due to its liquidity and transactional anonymity. In poor neighborhoods — where street offenses are concentrated — a significant source of circulating cash stemmed from public assistance or welfare payments. But starting in the 1990s that changed, as the Federal government gradually phased out paper welfare checks in favor of electronic debit cards (the Electronic Benefit Transfer [EBT] program).

A team of researchers studied the effects of this change in Missouri and found that it was directly responsible for a hefty 10 percent drop in the overall crime rate:
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Blog author: jcarter
posted by on Wednesday, March 5, 2014

bitcoin-deadLast year I wrote a series of blog posts about what Christians should know about Bitcoin. In response, one astute reader pointed out an odd juxtaposition: my conclusion seemed to imply that Christians should avoid Bitcoin “at all cost” and yet the Acton Institute accepts donations in Bitcoin. “I really want to know the rationale behind this,” he said.

Well, the rationale is easy enough to explain: Not everyone at Acton agrees with me. Like other nerds who have an interest in the intersection of economics, liberty, and technology, many of us at Acton disagree about the merits of Bitcoin. (I’d offer to place a gentleman’s wager on the future of the crypto-currency, but they’d want to bet using Bitcoin. Either way – whether it increased in value or went defunct – I’d end up the loser.)

Opinions are still divided, but the evidence that Bitcoin is doomed to failure piles up almost every day. Over the 8 month span from October 2010 to June 2011, the market value of Bitcoins skyrocketed 9667-fold from a value of $0.06 to $29. Later, when I wrote my series last April, a single Bitcoin was worth less than $100. Today, it is worth $660, and that’s after falling from a high of $1,100 in November 2013. A currency that can fluctuate from $0.06 to $1,110 in a three-year period is not a currency – it’s a speculative bubble.

Of course, we Bitcoin doomsayers have been waiting for the bubble to pop for some time now. We also tend to think that every new drop is a sign of it’s impending doom. Fellow naysayer Jonathan Last is sure, this time, that the end of Bitcoin is near:
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Blog author: jballor
posted by on Thursday, January 2, 2014

I certainly like where Dr. Calder ends up, but I’m not quite so sure about the argumentation he uses to get there. This short video is worth checking out: “Breaking the Power of Money” (HT: ESN blog).

Breaking the Power of Money – Dr. Lendol Calder from InterVarsity twentyonehundred on Vimeo.

Is it because students have unconsciously divinized money that they can’t bring themselves to tear a dollar bill in half? Or is there an implicit bias against the seemingly purposeless destruction of value? Perhaps they need some convincing that destroying dollar bills is an exercise in good stewardship.

Money is something powerful, that’s for sure. And the love of it is the source of all kinds of evil. So the challenge is to keep our loves for temporal goods, including money, ordinate. As Calder puts it, we do that not by destroying money, but by putting it to responsible use. Maybe that’s “profaning” money in the sense that we are taking away the purported and idolatrous divinity we ascribe to it. But maybe that’s also by “redeeming” money for godly use.

Blog author: dlohmeyer
posted by on Tuesday, December 3, 2013

Acton Now Accepts BitcoinOver the course of 2013 we’ve enabled new methods of giving including Dwolla and PayPal.  Additionally, recurring monthly donations are now possible via PayPal and credit card.

This week we’re introducing the ability to donate with Bitcoin, the popular digital currency.  Learn more about Bitcoin at Bitcoins.com or by reading Joe Carter’s posts (part 1, part 2, and part 3) here at the PowerBlog.  The option of donating anonymously with Bitcoin is also possible.

Click here to donate to Acton with Bitcoin.

Blog author: jballor
posted by on Thursday, September 19, 2013
BRITAIN BOXING

Floyd “Money” Mayweather

Over at Think Christian today, I explore the connection between higher education as a means to greater earning power in “The myth of lucrative college majors.” I argue that “the size of a paycheck is not the only factor worth considering,” and go on to detail what a paycheck does and does not represent.

By looking at the earnings of various majors, it becomes apparent that we have a need for more engineers of various kinds. But apart from specific market signals, I echo, in large part, the conclusion of Paul Heyne, who wrote that the success of the market in increasing affluence and getting us the things we want ought to impel us “to think more carefully about what we want.”

The reality of today is that we have a developed economy to the extent that we have unprecedented levels of specialization. You can make a living, even if it isn’t a particularly lucrative one, doing almost anything imaginable. This is in marked contrast to previous eras, where the realities of class, technological innovation, and knowledge were such that only a few careers options were possible. Consider, for instance, the case of the early modern executioner.

One way of showing the incredible levels of specialization made possible today would be to simply observe the many, many things you can major in at a college these days. My working hypothesis is that if you have to add the word “studies” after something, then it probably isn’t a real major. But more seriously, the level of specialized education available today is simply breathtaking. And that doesn’t even begin to address the question of whether higher education is necessary at all.

In the TC piece I point to the example of undefeated boxer and high school dropout Floyd Mayweather Jr., who enjoyed a record breaking payout this past weekend. Mayweather is exceptional, certainly, as he would be the first to tell you. But there are plenty of more mundane examples of crafts and trades, as well as innovators and entrepreneurs, who found success without going to college.

Like all things, there are better and worse reasons to go to college and to choose a particular major. To simply increase your future earnings isn’t a particularly good motivation. And if all you care about is making money, then college may not be the best choice anyway, although as Michael Lewis puts it, “If you’re a certain kind of kid who doesn’t actually know anything about anything, Wall Street is still a great place to go.”

That said, all this comes from someone who majored in English at Michigan State University and then spent more than a decade pursuing theology at the graduate level. So I may be precisely the wrong sort of person to ask about lucrative career choices. As I often remind my wife, she married the wrong kind of doctor.

Blog author: jballor
posted by on Friday, August 23, 2013

I ran across this video yesterday (courtesy of ESA), which I thought presented some interesting challenges and issues:

The video was presented on Upworthy as an example of something “all white people could do to make the world a better place,” that is, use their white privilege to address injustices.

A number of economists, including Milton Friedman and Thomas Sowell, have written about the power of the market economy to overcome racism and discrimination, to put people into relationships on the basis of economic decision-making rather than skin color. As Friedman contended,

the preserves of discrimination in any society are the areas that are most monopolistic in character, whereas discrimination against groups of particular color or religion is least in those areas where there is the greatest freedom of competition.

But as a conversation I had with some others about the video also illustrates, there are times when (at least in the short run interests of the firm), something like profiling can seem to make some economic sense. The successful passing of one bad check can really hurt a store’s margins. Practically speaking the stores often take a complete loss.
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