by Keith Weiner, Monetary Metals:
One idea—let’s call it common sense physics—is that a force is pushing you outward into the door. If you picture the center of the circle that the car is making in its turn, there is an apparent radial force on you. The direction of this force is outward. It is called centrifugal force.
Or suppose you fill a jar with water and mixed soil sediments. You put it into a machine that spins it rapidly, with the lid facing inwards toward the center. After the machine spins for a while, you stop it and remove the jar. The heavier particles are at the bottom of the jar. Above them are the slightly less heavy, and so on, to the lightest. The water is at the top. This experiment confirms the idea. Something apparently pushes the heaviest particles farthest out from the center. Centrifugal force.
In any group of people who have not studied physics, this view is entirely uncontroversial. Indeed nearly everyone who hasn’t studied physics would agree with what we wrote above.
However, if you go to a group of people who have taken a college-level physics class, you would get the opposite reaction. The above view is wrong. And not a single one (who received a passing grade) would defend it.
Any first-year university student in physics would draw the circle and the radius. But he would add an additional concept—velocity. The velocity of the object is tangential to the circle. There is a force pulling the object. That is, there is a radial force, but its direction is inward—centripetal force. The object does not fall into the center, because its velocity is tangential. The net result is that the path is a circle.
One can devise experiments that illustrate problems in common sense physics. For example, tie a string with an embedded force gauge to a small weight. Spin it in a horizontal circle. The gauge shows tension on the string. The string being, well, a string, cannot push the weight outwards. Tension is a force pulling inward.
One can devise experiments to focus on a case where the common sense physics predicts one outcome and physics physics predicts the opposite outcome. Let’s go back to the weight spinning around the circle held by the string. What happens if you could cut the string at a precise moment? Using high speed photography, you could see what happens in the moment when the string separates.
Common sense physics predicts that the weight will fly out from the center of the circle, that is, radially. Physics physics predicts it will fly off on a tangent. We won’t make you wait until next week to resolve this cliff-hanger: the weight flies off tangentially. Here is a video showing this.
Physics is a science. Its observations are facts, and its theories about the world are black and white. They are not debatable (confining our discussion to Newtonian mechanics).
In physics, there is no room for opinion. Common sense physics is wrong. Physics physics is correct. It is not a matter of agreeing with physics, of course, but of understanding it. Thus the group of people who haven’t studied it, simply don’t understand it. They believe in a view which seems to make sense but which is just wrong. Those who have studied it know the truth.
You may be wondering where this is going. No, Monetary Metals is not angling for a job making videos to teach physics to students. We will stay in our money swim lane. There is an analogy between physics and money. Let’s look at common sense monics and physics monics (yes, we’re coining the term monics to refer to monetary science, just to make the next bit easier to read).
Common Sense Monics
Common sense physics begins with an observation. It does not look for other observations, but instead leaps to an apparent explanation. It never identifies the cause or even grasps the mechanism. So does common sense monics. Common sense physics says you feel a force on your left shoulder, something must be pushing you outward into the car. It does not ask if the car is pushing you inward.
Common sense monics begins with its own apparent observation. People are buying and selling everything in exchange for either printed pieces of paper, or electronic credits that are redeemable only for bits of paper. As the common sense physics concludes the driver’s body is pushing outward on the car door, the common sense monics concludes that these bits of paper are money. As physics physics calls centrifugal force an apparent force, so should physics monics call this paper apparent money.
Common sense physics does not look to experiments, does not ask what force could act at a distance (which Einstein, by the way, called “spooky”). The apparent force is enough. There’s nothing to see here, move along folks.
It is the same with common sense monics. People are trading paper dollars (or pounds, euros, yuan, etc.) for food, cars, houses, and iPhones. Apparently these pieces of paper are money. ‘Nuff said.
Physics physics says let’s put the weight on a string, spin it, and cut it. Let’s see what happens. The weight does indeed fly off—tangentially.
Physics monics should say let’s look at this apparent money, this paper, and ask what if the issuer is cut off. Will the paper continue to circulate indefinitely as money Will it retain its identity as money? Or will it fly off in a brief arc ending with impact into terra firma? If the latter, on what does its value depend? People do not value the apparent money for any attribute it possesses, but for something about the issuer…
That’s an interesting line of inquiry (and yes, we are aware of one instance where a fiat currency continued to circulate post the collapse of the central bank, at least for a while). Is money something owed by one party to another, or is money the thing paid to resolve that debt?
If money is the latter, if it is not something owed, then its value (and hence circulation) does not depend on the solvency of any party. Conversely, if the issuer’s collapse means the collapse of the apparent money, does that not make a case that apparent money is not actual money?