Money! Currency Makes the World Go Round But Productivity Creates True Wealth!
A layman's explanation of economics and the dawning of a new age.
Julian Hochgesang Unsplash
My simple layman’s view on money
Today, we are dealing with rapidly rising inflation. The far-right has a simple explanation, Inflation is the result of the coronavirus stimulus, that went directly to the people rather than to corporations and institutions. This is inevitably followed by ”There is no such thing as free money”.
What is money? It is an instrument of exchange that is used for the sake of its greater convenience than bartering. In the act of bartering, it is transparent that what is being bartered is what a man produces and that productivity combined with resources is the true source of wealth. If there is nothing to barter, there is no need for money. Resouces are the capital. The original capital resource, before money was invented, is the earth and its natural resources.
Fiat currency is monetary currency, which is the flow of money. The United States federal government regulates the currency as a function of one of the enumerated powers of the federal government, The power “to coin money” and “regulate the value thereof”.
It makes perfect sense that regulating the coinage of money is a power of the central government because the value of money would be extremely volatile if there were many competing authorities.
Today there is a lot of talk about cyber-currency being a decentralized system and therefore better, and yet its value is always rated in dollars. I am not going to get into that, except to say that cyber currency is functioning more like a casino-not like a currency.
Below is a very long video, about two hours, delivering a lot of information at a hypnotic pace about crypto :
There is also never-ending talk about the dollar being replaced as the global currency, another subject I will not go into except to say that it will always be the case no matter what currency is the global standard because it is human nature to want to dethrone power.
Nor am I going to debate the gold standard vs fiat currency. Fiat currency is what we have, rubles not with standing, and my thoughts are in the context of what is.
So inflation means that the purchasing power of an individual dollar decreases as prices increase. However when there is a stimulus released into the economy the number of dollars flowing through the system increases. The purchasing power of a single dollar is less but a greater number of dollars circulating increases the overall flow of purchasing power within the economy and what goes around comes around except when currency is taken out of the system and stashed away some place where it no longer flows- or else it flows to a different channel.
Since the source of wealth is productivity it matters how much of that increased currency flowing through the system is invested in productivity. That is the reasoning behind investing in corporations rather than people but we have seen that that sort of reasoning has not panned out as executive pay has skyrocketed into the stratosphere in unequal proportion to that of the workers.
We exchange money either for natural resources or something produced, and even natural resources require productivity to make them available for use. The workers are the producers and good management makes a significant difference as well but without workers, there would be no one for management to manage except robots, and eventually, AI will take over management leaving an unemployed managerial class. Corporate executives need not worry, they will be well taken care of through stock ownership in companies completely run by AI.
When they say, there is no such thing as free money”, it means that in exchange there is no such thing as something for nothing. However, it is not a simple matter to determine the exact nature of exchange within a complex and evolving system. One could say, that the currency deposited among the people during a time of crisis is a payback for the past currency dumps into the top of the economy to subsidize large corporations “for the public good”, in which the public has been treated as investors who do not share in the profits, as if the public were robots requiring no pay, only maintenance, such as workforce housing and food stamps.
A crisis may not be something that is sought after but one of the advantages of accumulating wealth is to have the resources to deal with a crisis. After the fact, detractors can point to the stimulus and say “There! That’s the cause of inflation !” without factoring in the alternative. What would have been the economic cost of not stimulating the current of the economy at a time when an external factor was calling much of the economy to a halt?
Money is a system of exchange in which currency must be exchanged for wealth. If we did not have a need or desire for the objects and services of exchange, there would be no need for a system of exchange. At the core of all wealth is productivity even when it is abstracted several times over in financial instruments. Even a passive income is a result of someone working.
We are at a new point in history when so much of our productivity is being taken over by machines, that it raises a new question: What is work in relation to human beings? If human beings did not need to work to make a living, would they still need to work for other reasons?
Well, yes, of course!
Wilhelm Reich said that human well-being rests on two things- love and work. He did not say money. He said work, by which is meant meaningful engagement, which comes from within. This is a meaning emergent from the Great Resignation. The stillness of the crisis caused by corona stopped the productive activity of the working masses and then they could hear themselves and what they wanted and they didn’t want to stop listening. Let the music keep on playing. We have become captivated by our inner pied piper. We are tired of following your orders. We are guided by the heavens now and there is a different order of work to be done.
What is it?
Full Stop.
Silence becomes consilience.
Also published on Mediums Financial Independence / Retire Early
If everyone refused to interact with anyone, could an economy exist? No. An economy requires SOME DEGREE of interaction and cooperation. Solutions also require some degree of interaction and cooperation. A critical component of an economy is cooperation. It may be a minimal degree of cooperation, but there must be some basic level of cooperation. This degree of cooperation may seem trivial, because we think nothing of going anywhere we want, and buying anything we want as long as we have the money. My point is that an economy must have some degree of acceptance of the "system" and cooperation to engage in the system. If the economic system needs to be modified, the general public must understand and agree to the benefit to themselves. If the argument is that the monetary system needs to be changed to achieve a "greater good," most people don't care about achieving a "greater good." They care about themselves. So, how will the general public be convinced to change their behavior? I will ALWAYS go back to the issue of behavior. Behavior is what drives everything. We need to appeal to people to behave well. We need to make it honorable to behave well. On the issue of cryptocurrency, it is used by criminals and organized crime, and organized crime isn't concerned with the "greater good." They are concerned with consolidating power to abuse, misuse and exploit others. So, cryptocurrency is not achieving the goal of empowering the general public. And as a person who has had cryptocurrency stolen from me, I know there is no control system in place or recourse to get my money back. I'm very much in favor of economic practices and behavior that make the world a better place. There needs to be "messaging" that everyone understands. Like, "We are all on a sinking ship, and if everyone doesn't start bailing water, then we are all going down."