On Wed, 1 Oct 2008 08:42:53 -0700 (PDT), wrote:

On Oct 1, 9:03 am, wrote:
expectations. Whomever is holding the paper when the music stops loses,
but "the economy" didn't lose, in the above example, 200K, and no one
"created" money, it simply changed hands.

Nothing to disagree with in everything you wrote, except that the
classic definition of money is what you want to call "cash". Maybe you
want "Real Money" to mean actual value, but this too is vacuous as
there is only the present perceived value, which can wildly fluctuate.

http://www.investopedia.com/articles.../03/061303.asp

http://economics.about.com/cs/studen...es/f/money.htm

Since your examples were in USD, here's another: Suppose there are
100,000 USD in existence, and the government hires you to build a
bridge. At the end it pays you 1,000 USD, but since it didn't have it
before, it simply printed it. Now there are 101,000 USD in existence.
Voila, money was created. Now all of that 101,000 USD can take part in
all your scenario.

No, that's cash/currency - U S D ollars, which _can be_ money, but it
isn't "money" simply because it exists. And the "classic" definition of
"money" is not "cash." The common-speech definition of "money" in the
US is "cash" in that if you go into your bank and say, "I'd like 100
dollars of money from my account," they will assume you mean "cash" in
the form of US currency, not a bearer credit instrument payable at X
exchange rate in Hong Kong Dollars, but both are "money." For example,
I could take a picture of Lefty Kreh, put "100" in each corner and if
you'd exchange it for 100USD, it would be "money" to you, but unless you
could find someone else who equally valued it to exchange it for milk,
bread, a fly line, or whatever you felt was worth 100LK, which was worth
100USD to you, it would not be "money" in a commercial/economy sense.

TC,
R

HTH,

Jon.