Steve,
Money is a contract. The asset is necessarily backed by a debt. Even gold backed currencies are a reciept for the gold, not the actual gold.
Actual gold, as well as bitcoin, are commodities. The value is presumably inherent to the token.
The origin of money is as a medium of exchange, a system of accounting, as societies grew too large to keep track of one's promises and obligations to other members. Which then became fungible.
As a medium, it is a public utility, like roads. Its functionality is in its fungibility, so we own it like we own the section of road we are using, or the air and water flowing through our bodies.
A medium is dynamic, as it circulates, while a store is static. Blood is a medium, while fat is a store. Roads are a medium and parking lots are a store. The hallway is a medium, while the hall closet is a store. They are not as interchangeable as economics presumes.
Since we think of it as a commodity and try saving it, this requires that similar amounts of debt have to be generated.
One way is squeezing the money flowing through the regular economy, causing it to run on debt, which draws that saved money back into circulation.
The consequence is a centripetal effect, as positive feedback draws the asset to the center, while negative feedback pushes the debt to the edges. Since money and banking serve as the value circulation mechanism of society, this is somewhat analogous to the heart telling the hands and feet they don't need so much blood and should work harder for what they do get. Which has gone on since the dawn of civilization, as the Ancients used debt jubilees as a circuit breaker, to reset this process.
The other primary method of generating debt is having the government as debtor of last resort. The elephant in the room is the capital markets could not function, without the government siphoning up trillions in surplus investment money.
This goes back to the New Deal, since that is where the Federal debt first started to grow. Not only was Roosevelt putting unemployed labor back to work, but unemployed capital, as well.
A further example of this is that Volcker could not have cured stagflation with higher interest rates, since that reduced the flow of money to those willing to borrow and grow the economy and thus the need for money, while rewarding those sitting on piles of excess cash. It was Reaganomics.
The only difference between the Fed selling debt it bought to create the money, then retiring it, and the Treasury issuing new debt, is this borrowed money was then used in ways the private sector never would, like military spending, but which gave the private sector more work to do.
The bloated military and the endless wars are a way to make it go away, so more can be borrowed. Which explains the total lack of strategic vision and no one getting court marshalled.
Money is an economic lubricant, not a fuel. So pouring enormous amounts of extra money into an economy that is otherwise being shut down, will prove to be a disaster.
Government, as the executive and regulatory function of the social organism, originated as private endeavors, which became institutionalized as hereditary monarchies, yet as this private form of government proved inadequate, it evolved over time into government as a public function. Now banking is having its own, "Let them eat cake" moment and the pitchforks are gathering.
Not that government and banking can be one. Like the head and heart, they serve vastly different functions. Basically the printing of money can't serve political ends.
We need to tax out the excess, not borrow it. Not only would that regulate the flow, but would make people find other forms of saving. There isn't the investment potential to individually save the amounts necessary, but we do save for many of the same reasons, so the concept of the commons will have to be revived. Store value in a strong community and healthy environment, not just treat them as resources to mine.
The irony of our individualistic ethos is the resulting atomized culture is more easily manipulated by institutional authorities and mediated by a parasitic financial system. Networks, organic, social, economic, matter as much as the nodes inhabiting them. They can't be quantitized, atomized, digitized, monetized and sterilized, or they die, along with the inhabitants. Flow.
We are that dichotomy of the anarchies of desire and the tyrannies of judgement. The heart and the head.
Not all desires are healthy, nor are all decisions wise.
Trial and error.
