Our current economic situation isn't dire at all. Personally, I do not really feel the pinch. But it is there. Cash has no value actually. What happens is that cash denotes a value, and it is actually a representation of what someone else owes you. When you use that cash on something else, you eventually owe someone else, but in return, you obtain something of practical value. The cycle continues. Another thing is this, salaries are often in cash. So your monthly salary denotes the effort and labour you put in. And what your boss owes you with, you spend it on something else and obtain yet again, material wealth.

That cash you spent, in turn becomes the salary of another sector. And it goes on and on and on and on and on. So have you ever wondered where the extra cash comes from?? From what I've learnt superficially, the extra cash comes from promissory notes. And these notes are from the government to the banks, guaranteeing the bank that they will pay the bank the noted amount of money on the promissory notes. Then suddenly, there's extra cash. The extra cash, are passed out as loans. Remember that there's interest in loans as well. So where's the extra money supposed to come from as interest to pay back the bank? More promissory notes. The cycle continues. And I suppose, this grand illusion of an era of good economic outlook takes hold from the extra cash coming in. 

From my own perspective, what gives these cash the value, is the fact that it keeps moving. If the cash isn't stagnant, I don't really see a reason for it to face depreciation. When cash flow suddenly stops. Depreciation kicks in. Because the cash has suddnely no more value. When you accumulate something too much, it becomes valueless. Let's say, you've got a ton of tissue paper. And the rest of the world population has one ton of tissue paper per person. It becomes valueless. But if only you've got that one ton of tissue paper, and the rest of the world has none. That ton of tissue paper you hold, holds it's own weight more than just in gold. Cash in the same context loses it's value, because suddenly everyone has a huge pile of it.

And the common perception about cash losing it's value is that, people hold on to it rather than letting it go. When the cash flow stops, or slows down, it becomes a vicious cycle of inflation. When there's no cash in transaction, there's too many available on hand. Prices shoot up, salaries drop, and jobs are lost. Suddenly there's a lot of cash with lesser value, and most of it, are couped up, not being transacted. And it continues.

So the government suddenly puts in more cash, to hope to get people to spend more. I think the general idea is to get cash moving around again. Moreover, it seems like an attempt to jumpstart the economy again. Personally, I think it's more of to pump in the money as investment, so that cash will start moving somehow, then the cycle will hopefully take a turn for the reverse. And become a positive upturn for the economy.

I think I'll post the physics part tomorow.

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