@KarenHudes Updating my followers

22 Aug
@KarenHudes
Updating my followers: https://s3.amazonaws.com/khudes/Twitter8.22.16.pdf

Karen Hudes August 22, 2013 ·

Hi Karen,

Will you post the following on your wall so that people not versed in your jargon will understand it in their terms? Thank you in advance.

“Let’s introduce some definitions into this so that the jargon of spot and futures trading being used can be translated into what a person not familiar with the jargon can understand.

Contango–the state of affairs that exists when a buyer of something today believes that its value today is less than the value it will have in the future.

Backwardation–the state of affairs that exists when a buyer of something today believes that its value today is greater than the value it will have in the future.

Money–something that we use to account for the relationship between the value of two different things, and the medium, or thing we exchange between each other instead of the goods or services being traded. Money can be paper currency. It can be simply a ledger entry in bank accounts, that we exchange via paper checks, debit cards, credit cards, wire transfers, and debt instruments like promissory notes. Money can also be a physical commodity like gold or silver. Even then, the rights to the actual physical commodity–“specie”–are usually traded with wire transfers between bank accounts, and sometimes backed up by paper contracts.

When we use “contango” and “backwardation” in describing the current and future value perceptions of money, “contango” can mean that a given amount of money in a bank account or in your mattress today will pay for more goods or services in the future, i.e., tomorrow, next week, next month, or next year. For example, a gallon of gasoline costs $4.00 today, and the anticipated price next week is $3.80. “Backwardation” of the money in our account would be when the cost of gasoline today is $3.80 and $4.00 anticipated next week.

What I’m referring to here is the usefulness of the money as an accurate perception of the values of today and in the future, not the value of the gasoline. This is important, because the issue here is not the value or price of the gasoline but the perceived usefulness of the money we are using as a stable or unstable, (either rising or falling) unit of account for exchanges of commodities like bread, gasoline, milk, laundry soap, and the rest, for services, and for the ability to pay off debt (the legally enforceable promise to pay money in the future). For the average person, money has to have a relationship in his mind between the unit of account, say a dollar ($), and the goods and services that are bought and sold using the money as a medium of exchange, otherwise it is not perceived as useful. The strength, or certainty of that relationship is along a line with zero (0) in the middle and negative and positive values on either end out to infinity. When a reasonable certainty exists in the minds of the general public that the value of a dollar unit will increase in value over time, we can call deflation–contango.

When the reasonable certainty exists that it will decrease in value over time, we can call that inflation– backwardation.”

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For the rest of the day I am working on the DCTV teleprompters for tomorrow’s programs. This is just to update my followers

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