Money is a reasonable way to track favours, but it's also a reasonable standard exchange medium, it's also a reasonable representation of value, etc. But for all explanations you can also find reasons why it's not, e.g., it's not a favour because a favour is a one-to-one relationship, while money you can get from one person and use it to get something from another person. (No need to counter argue here, you don't need to convince me. I just wanted to present an example of why the idea of "money=favour" is not perfect as well.)

E.g. money is token of favour FROM <government> TO <current-bearer-of-token>.

Your general point about looking at things in more than one way is sound.

Using that example can you understand the confusion and explain more in detail? Thanks.

I guess I am thinking of money as being a token of favour against a third party (<government>) not involved in the transaction, and moreover being a token for a favour that will never be invoked.

edit: From this perspective it seems reasonable to ask "what difference does it make what the third-party is?" and "if the favour is never to be invoked, why think of it as a favour at all?".

edit 2: the "favour" and the "value" here are quite different ideas, if that part is confusing.

The world does not owe you a debt or favor just because you possess that money. I don't owe you a debt, such that I have to give you anything for that money if I choose not to; and nobody else does either. Viewing money as a debt owed, is a very incorrect way to look at it.

To prove the point, try walking up to someone and telling them that you have a piece of government paper in your pocket that represents a claim on their shoes, and since they owe you a debt you demand they give you their shoes (or really anything else for that matter) right now. See what happens.

> Money is a piece of token that represents favor or debt the world owns to you, or at least, anyone who takes money as payment

I think perhaps that line might be better stated as something like:

"Money is a piece of token that represents favor or debt the <backer-of-money> owes you."

E.g. <backer-of-money> might be a bank or government. E.g. fiat currency.

If someone accepts my money in payment, that is not because money is some "debt-upon-the-world" that I can transfer to an arbitrary person, and force them to repay, rather, they perceive that a token of the <backer-of-money>'s debt has value, and they are willing to exchange some good or service so that the <backer-of-money> is now in their debt.

Perhaps a more general way of looking at it is that money is a token that one believes has value because one believes that others believe the token has value, and are willing to accept it in exchange for other things of value (which may or may not be other forms of money, or goods/services with "actual" value).

Yet another way of looking at it is that money is part of a system that influences a group of individuals in society to behave in a certain way. From this perspective you could ask things like:

1. are the collective actions of society a desirable outcome? 2. is this an efficient way to achieve the current outcome? 3. what other kinds of systems might produce different outcomes? 4. pragmatically, what other kinds of systems are reachable given that we're operating within the context of the current system?

But my last line still applies to all money.

That's why when someone mentions the phrase "intrinsic value", they are not seeing the core truth of money.

It's interesting that money is misunderstood by so many people while representing the fundamental fabric of human society.

There is no intrinsic value to anything in this universe, not one that applies to every single organism.

For humans and most life forms, the closest thing that I can think of is food/water/(oxygen for aerobic organism), force of violence, pleasure and time.

Today, most money aren't even in physical circulation. Most of the gold in the world sits in some cold dark vault.

It's literally a video game and the funny thing is, we have enough food and water for everyone in the world already.

'Gold as money' is still very much in circulation. Even as it sits in CB vaults.

At the moment money is a rather contorted and easily manipulable proxy for deservingness though which is the cause of a lot, if not the majority, of the world's troubles.

There's no technical reason though why we couldn't for example determine deservingness through interpersonal distribution of value; like PageRank but for people.

There's nothing in the phrase "Money is a piece of token that represents favor or debt the world owns to you" which specifies either fiat or specie currency.

There have absolutely been government-issued specie currencies through history. Virtually all have also seen tremendous devaluation. Look up the 94% devaluation (and corresponding inflation) of the silver Roman denarius.

It is not like fiat currencies in the sense of 'faith' that the scarcity will continue however.

Right now we have some incentives that work to keep fiat currencies scarce, but those forces are not the same as what keeps gold scarce.

Gold has not lost any value in the last century by comparison.

Gold has plenty of issues, confidence as a store of value is not one of them. By comparison, the global economy is filled constantly with stories, from one country or another, of fiat being demolished through constant inflation / aggressive devaluation.

Countries can drown their citizens via all sorts of schemes involving debt (ala Japan and the Yen), that then become currency devaluation schemes (QE) to debase that debt and chop down the standard of living of its citizens as a stealth move to pay for that debt. Such a thing inherently can't happen with gold.

The Euro zone for example is in the middle of seeing its citizens standards of living chopped down via QE, to debase the vast debt that has been choking off the growth potential of much of Europe since 2007 (the European economy has seen zero net GDP growth since roughly 2007). How many Euro zone citizens understand what the ECB is doing to them exactly? Do they realize that what they're about to suffer, is what Americans went through from 2002 to 2014 as the Fed debased the dollar to try to avoid multiple recessions, leading to a substantial decline in the US standard of living?

If the ECB drops the value of the Euro by 1/3 via QE, that substantially reduces in real terms the standard of living of anyone living on that currency. Gold shields against that abuse.

Sure, in the long run, gold holds its value, though it doesn't perform nearly as well as stock markets, or real estate. In the long run, a predictable 2% annual inflation erodes the value of savings, which is why people participating in the dollar economy tend to put their money in bank accounts paying interest rather than burying their cash in vaults,

But it's economically illiterate to pretend that gold price crashes haven't been a far more serious wealth destroyer over the last couple of years than the relatively stable and predictable inflation in developed countries, despite all the predictions that QE was going to make the sky fall in.

Not in that artificial timeframe, but surly in many other periods:

* it lost over 65% of its value between 1933 and 1970.

* it lost over 82% of its value between 1980 and 2000.

* it lost about 29% of its value the last two years.

(http://www.macrotrends.net/1333/historical-gold-prices-100-y...)

Gold is a highly speculative asset.

Alternatively, you could invert the graph to say that USD is a highly speculative asset - relative to gold :)