Money. We all love it. But do you actually know what money is? What is its value? What are the policies that govern the monetary system?

The monetary system is the most misunderstood and taken for granted. Never the less, understanding the monetary system is critical to understanding why our lives are the way they are.

Unfortunately, economics is usually viewed as one very difficult to understand and boring topic. Lots of math, a lot of charts… who cares about that? Right?

Actually, no. The complexity behind the monetary system is because we take it for granted and don’t care to look deeper into it.

There are some things that you need to understand about money like, where does it come from? How does it get its value? What is inflation?

How does money come to be?

The United States government decides that it needs money. So it calls the national reserve bank and requests the amount. The Federal Reserve Bank buys the amount requested in US bonds.

The government creates some treasury bonds and values those bonds in the sum of the amount requested and sends them to the Federal Reserve Bank.

The bank then prints money-notes in the value of the requested amount and exchanges them for the bonds. Once the government places that money-notes into a bank account, it actually becomes tender money.

In reality, this transaction happens electronically on a computer. No paper is used at all, nothing is printed. Only records of the values are stored. Yes, including the money itself.

In the USA only 3% of the currency is actually available in real money. The rest is stored in credit forms.

One important note is that the government bonds are actually a form of debt. Once issued they mean that the government owes the Federal Reserve Bank an X amount. An in return, the FRB just issues a record that an X amount is now available for the US government in a commercial bank account.

By low, the commercial bank has to keep a 10% of the deposit as reserve. The value may vary from time to time. The amount left, the 90% is called an excessive deposit.

If someone takes a loan in the amount of the money created from that specific bank and puts it into their own account in another bank. That other bank has to keep 90% of the money as an excessive reserve and can keep it in circulation.

What gives those notes their value?

Money takes its value from other money that already exists. New money steals value from the existing money supply. Now that new money is available for the public, money value starts diminishing and loses some of its purchasing power. This is usually known as Inflation.

What is Inflation?

The monetary system in essentially inflationary. Creating money without increasing market’s goods and services will always cause inflation and cause the currency to lose some of its value. There’s always an inverse relation between the amount of money in circulation and the purchasing power of that currency.

Since money comes from debt as we said earlier, usually, the more money there is, the more debt there is.

Money can only come from loans and debts. If everyone was able to pay off their debts including the government, there won’t be any money in circulation.

Money comes with an extra tax… “Interest”. Since all the money comes from banks in the form of loans and has to be returned with an interest, this means that only the original amount that was put in circulation is available to return. But what about the interest?

For example. If the Federal Reserve Bank issues 10 Billion and places them into one or multiple commercial banks. And people take the money from banks in the form of loans and have to return that money with interest. Where would the extra money – the interest – come from?

Nowhere. The amount of money owed to the banks will always exceed the amount of money available. This is why inflation is a constant in most economies.

Did you find this interesting? Let me hear your thoughts.

World Languages


Language as a definition is “A set of spoken, written, or signed words and the way we combine them to communicate a meaning.”

Perhaps we should change that definition to include “Using complex grammar” to really distinguish human language from animal languages especially that a lot of animals are capable – when taught – to sign away their feelings or needs.

A language is not necessarily spoken, written or signed. For example if I want to find a bathroom in Sweden or Thailand and really had to pee, people would still understand me even if I spoke a totally different language.

Language is important for expressing our thoughts and communicating them to other people’s brains, and actually to our own consciousness. When you see something new, you have to ask “What is this?” because otherwise you wouldn’t have a way of communicating it to other people or even to your own memory.

We humans have nearly 7,000 languages. But no matter how they sound we can break down their structure into three building blocks:

  1. Phonemes: Very short distinctive sound units. Different languages vary considerably in the number of phonemes they have in their systems. The total phonemic inventory in languages varies from as few as 11 in Rotokas and Pirahã to as many as 141 in !Xũ. Some languages use a different subset of phonemes like such as Arabic which doesn’t have the /p/ constant.
  2. Morphemes: The smallest unit that carry a meaning. These morphemes are words or parts of words [a prefix or a suffix].
  3. Grammar: The system of rules that enable us to communicate with and understand others. If you didn't know those rules you wouldn't be able to communicate your thoughts to others and you wouldn't understand what others are talking about. You can still understand the things they're saying but it wouldn't make much sense to you.

Just as the structure of the language starts small, so does how we learn language. We start very young.

The word “infant” comes from the Latin term “Infas”: not-speaking. But as early as 4 months those infants can actually recognize differences in speech and start to read lips, matching mouth movements with their corresponding sounds like "ah", "ee", "ooo". And even at this age, you have to watch what you say in front of these kids because this also marks the beginning of the receptive language - The ability to understand what's being said both to, and about us.

Soon that receptive language blooms to accommodate productive language, when instead of just understanding other people, babies start developing the ability to produce words. Of course that takes a while. But in the meantime, they get a lot of practice babbling.

Beginning at about 4 months, stage of speech development in which the infant spontaneously utters various sounds at first unrelated to the household language. You may hear words familiar to you like "baba”,"dada" or "mama". However, babbling is not an imitation of adult speech. In fact, it typically includes sounds from many languages and a stranger couldn't tell if a kid was Arabic, Italian or American just by the sound of their babbling. Similarly, deaf babies will watch their parents signing and start babbling with their hands.

By about 10 months, that babbling morphs into something that starts to make sense, and “mama” probably really means Mama.

Now without exposure to other languages, a child will lose the ability to both hear and create particular tones and sounds that aren't part of their own household language. By the time of their first birthday, most kids will be entering the one word stage of language development.

The one-word stage starts between the ages of 1 to 2, during which the child speaks mostly in single words. They now know that sounds carry specific meanings, and can connect the sound teddy to that furry toy they have.

By around 18 months, their capacity for learning new words jumps from about 1 word a week to 1 a day, and by the time they're 2 years old, they're probably speaking in 2-word statements.

Telegraphic speech: In early stages, a child speaks like a telegram – “Go Car” – using mostly nouns and verbs. They sound like clumsy texts or old school telegrams. “Want juice”, “I want”. That kind of stuff. These little sentences make sense and follow the rules of their language’s syntax. For example, an English-speaking child will put an adjective before a noun – Black cat –, while an Arabic speaker will reverse that – قطة سوداء–. From there, the average kid is soon uttering longer phrases and complete sentences.

Some people argue that kids learn to speak by associating words with meanings largely through reinforcement. For example, if a baby says “mmm” and their mother gives them milk that child will find the milk and the attention rewarding and will eventually work their way to saying “Milk”.

Some others argue that all languages are similar consisting of nouns, verbs and adjectives, and humans are born with an innate ability to acquire language, and even a genetic predisposition to learn grammatical rules. Meaning that we're hard wired to speaking language from day 1.

Research and studies of other species have given us a sense that some of it is innate, while the role of learning and exposure is also important.

Some diseases like Aphasia and other brain injuries remind us how thinking and language are both separate and intricately entwined. For instance if we didn’t speak any language how are we going to think? And because language often helps frame your ideas; your thinking might actually be influenced by which language you’re using.

Words of Wisdom by Steven Wright

Some words of wisdom by Steven Wright

  • All those who believe in psychokinesis raise my hand.
  • The early bird gets the worm, but the second mouse gets the cheese.
  • I almost had a psychic girlfriend but she left me before we met.
  • OK, so what's the speed of dark?
  • How do you tell when you're out of invisible ink?
  • If everything seems to be going well, you have obviously overlooked something.
  • Support bacteria - they're the only culture some people have.
  • When everything is coming your way, you're in the wrong lane.
  • Ambition is a poor excuse for not having enough sense to be lazy.
  • Hard work pays off in the future. Laziness pays off now.
  • Everyone has a photographic memory. Some just don't have film.
  • Shin: a device for finding furniture in the dark.
  • Many people quit looking for work when they find a job.
  • I intend to live forever - so far, so good.
  • Join the Army, meet interesting people, kill them. Continue reading