Your original premiss was that money is only directly related to energy. This is simply not so. Like I stated before, money is the byproduct of interest gained on investments, which do not necessarily only involve energy. Every economist would agree with me on this.
No. Not
only related to energy. This is what I wrote in reply #308:
"The fundamental basis of all wealth and prosperity is energy, in combination with the innovative and efficient uses of that energy."I've already stated that when money is not associated with energy, and it's efficient use, we can have an economic collapse, although there is always some leeway. An economic collapse does not occur until there is a serious disassociation between energy, its efficient use, and money. Before that happens there are usually adjustments that take place such as a major devaluation of the currency and/or inflation, which might prevent the collapse.
The point I'm making is that the purpose of money is to facilitate the exchange of goods and services, and that all goods and services require energy for their production and existence.
Second, although energy may have a part with the value of money, it is not the sole factor in it's value. Such things as brand value (of countries), cost of living (which is not only related to energy), etc. also have an effect. The manipulation of currency is another factor that effects value.
Lets look at diamonds as an example. They are essentially worthless. Although it does require large amounts of energy to mine of diamond, then cut it and transport (actually since they are so small, the cost of transport if really zero), that value of the energy needed is still only a small amount of the final selling price. The reason we pay so much for diamonds is because DeBeers has convinced us they are worth a lot, even though there are more diamonds on the market right now then what we could use. So here, the money used to purchase these things are mainly a result of marketing.
No. You've misunderstood the situation. Whatever the price of the product, and whatever your reason for buying it, the money you use to buy the product represents energy, and the person or company that receives the money has the choice of using it in a productive way, which must involve the expenditure of energy. An unproductive use of money, which doesn't involve the use of energy, would be placing the money under your bed or in a safe. If everyone did that, the economy would collapse. But, as I've said, there is a certain degree of flexibility, so a few people sticking their saving under the bed, or in a safe, is not going to cause an economic collapse.
Third, you say that whenever we veer from allowing money to only be directly related to energy, we have a recession, which implies that when we only allow money to be represented by energy we are fine. However, there have been panics in the past cause by a drastic change in the cost of energy.
That reinforces my point. There is very good reason for a panic due to an increase in the cost of energy because energy is so essential for our existence in a modern society. Without energy supplies we'd all be back to a hunter-gatherer lifestyle. Just a few years ago, there was a major concern about 'peak oil'. At the then present consumption, it became apparent that in a few decades there could become a world-wide shortage of gasoline, as reserves diminished, and as China and India began to dramatically increase the production of cars.
When energy becomes scarce, the price rises, and living standards fall, unless the energy can be used in a more efficient way to compensate for the smaller, available amount, which is always happening to some degree in the sense that light bulbs and car engines, and so on, have become more efficient over time.
However, the scare about peak oil has disappeared because of increased reserves of natural gas and the transfer of that scare to another scare about CO2 levels, which will drive the innovation towards capturing the almost unlimited energy from the sun.
Last, your comments on the watch and "useful" products also show a pretty juvenile understanding of innovation. Cross innovation happens all of the time, and often no one is able to predict where one innovation will come from and what other industry it will effect. By restricting investments in certain "non-useful" industries, you will be robbing future generations of innovations.
Again, you've misunderstood my point. I'm not against innovation at all, and I'm not advocating restriction. I began posting along these lines because I was in agreement with John Camp's view that successful entrepreneurs who have gained their wealth through clever, efficient, and innovative production of products and/or services, should not be able to pass on their entire wealth to their offspring without an inheritance tax, because their offspring are quite likely to waste such wealth by feeding their egos with expensive watches, and just splashing money on anything that takes their fancy just because they can.
I'm against the waste of resources. The expensive watches I've referred to are not innovative devices. They serve no more purpose, as a timepiece, than a watch costing 1,000th of the price. They are just food for the ego and a symbol of exclusivity.
Perhaps the owner of that watch company is so driven by making the bast watch, a drive that would not be present in him in any other industry, he develops a much more accurate way to manufacture very tiny gears. This would be of use in many other industries as well. It may not be a digital innovation, like you seem to be only interested in, but even computers have moving parts controlled by tiny gears.
Who knows, and that's the point, no one really knows where an innovation will come from.
You've missed the point again. I have no objection to someone manufacturing a very intricate, mechanical watch which is unique in design. What I object to the total foolishness of someone paying a thousand times the cost of the production of the watch, for the sake of creating a sense of exclusivity, and showing off to others that they are so wealthy they can spend as much on a watch as most people spend on their homes.
If the first digital cameras, which were not even as expensive as some of the Richard Mille watches, had remained expensive and exclusive, the degree of technical innovation, which has been amazing during the past 15 years or so, would never have occurred.
