by
Mervyn King
51
Good and Evil: In Money We Trust
0
terms
2
notes
82
The blunt truth, however, is that the implicit intergenerational cooperation that represents the best outcome is supported by trust, not money. If the younger generation decides not to support the elder, the existence of tokens will make no difference. And if the older generation has invested in, say, housing, they too could renege on the implicit intergenerational transfer by 'consuming' the value of their housing capital by selling it to foreigners or a minority of the wealthy, leaving the young unable to afford to buy the housing stock. [...]
on a thought experiment in which the younger generation saves in the form of "tokens" and uses that in its retirement
The blunt truth, however, is that the implicit intergenerational cooperation that represents the best outcome is supported by trust, not money. If the younger generation decides not to support the elder, the existence of tokens will make no difference. And if the older generation has invested in, say, housing, they too could renege on the implicit intergenerational transfer by 'consuming' the value of their housing capital by selling it to foreigners or a minority of the wealthy, leaving the young unable to afford to buy the housing stock. [...]
on a thought experiment in which the younger generation saves in the form of "tokens" and uses that in its retirement
84
[...] Money is not principally a means of buying 'stuff' but a way of coping with an uncertain future. We do not know which new goods and services will exist in the future, nor what their relative prices will be. There is no auction mechanism today that will allow us to discover that. Maintaining a reserve of purcashing power denominated in a monetary unit reduces the risk from placing one's eggs in the basket containing only contracts that can be written today. [...]
[...] Money is not principally a means of buying 'stuff' but a way of coping with an uncertain future. We do not know which new goods and services will exist in the future, nor what their relative prices will be. There is no auction mechanism today that will allow us to discover that. Maintaining a reserve of purcashing power denominated in a monetary unit reduces the risk from placing one's eggs in the basket containing only contracts that can be written today. [...]