Investopedia

http://www.investopedia.com/

This Money Delusions site is about removing delusions about money … what it is … how it works … how people are deluded about it.

Investopedia is a source of information on money and finance … an authoritative encyclopedia so-to-speak.

It turns out that Investopedia, by describing “what is” rather than “what should be” becomes an excellent platform for the process of removing delusions. What better place to begin removing delusions about money than with the “keeper of the delusions”.

The style of this site is to begin with copies of articles and essays and present them complete and with full attribution. I peel off lots of the gook, but I leave the meat. I then annotate the work “in-line”. This removes any chance of my misstating what they are writing … I show you what they are writing. It removes any chance of my taking something out of context … I show you their context. But it does open me to attack for plagiarism.

If you think I’m plagiarizing your work, just let me know. I’ll address the issue with you. Otherwise, I know of no better or fairer way to approach this controversial subject.

The “proper” MOE process

The “proper” Medium of Exchange (MOE) process, first and foremost “guarantees” perfect balance between supply and demand for money … i.e. zero inflation of the money itself. Since this is the nature of every trade, that is easy.

The process “certifies” (i.e. documents) new trading promises .. transparently for all to see … no anonymity. That creates the money, first as a ledger entry. Later it may be exchanged for cash or currency … and back.

This money then circulates anonymously in trade as the most common object in every simple barter exchange. It loses all identity with the trader creating it. All money in the process is the same, be it record, currency, or coin.

The process then monitors in-process trading promises for performance … transparently. On delivery, the money created is returned and destroyed. On default, that orphaned money is reclaimed immediately when detected through interest collection of like amount.

To do this fairly requires actuarial techniques. The process is very similar to the operation of a Mutual Insurance Fund … but no money is to be made on investment income. There are no reserves … so there is nothing to invest.

Regardless of the operation, the relation: INFLATION = DEFAULT – INTEREST = zero must be observed perpetually.