09 January 2011

Two people can use the same dollar at the same time

Leverage is the ability for debt to multiply the quantity of money by making money something that allows for non-rival employment, a form of non-rival 'consumption' as applied to a durable good. Two people cannot use the same washing machine at the same time but two people can use the same dollar at the same time through the device of banking debt and banking credit. It is not money as the store of value that makes it so interesting, it's that money is a medium of exchange that can store the value through an accounting device called debt which allows the same dollar bill to get spent simultaneously by different owners on different things. 
Whenever credit can be transfered it becomes money. A producer could sell a good and buy money in exchange or he could grant credit. Two things can now happen: (1) The creditor could sell the credit to a thrid party to buy money; or (2) the debtor could sell money and transfer the debt to a third party. When credit or debt could be bought and sold for money, the debt and credit itself becomes money. 
Money is a thing that allows for non-exclusive employment/consumption while preserving the institution of private property. Debt is concurrent velocity. As a medium of exchange money is first bought when the producer sells a product, and then sold when, as a consumer, he buys a product. 
It is precisely for money's ability easily to be bought and then sold by the same person that makes it so effective as a medium of exchange and as a store of value. 

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