Written by Davian Views
[Part 1 was published yesterday, you can read it here]
So, the human mind worked tirelessly on the arms race. You needed warriors to defend your settlements, or you would be robbed or enslaved, usually both, and so more and more resources were employed, just to stay where you were.
The more successful MICE would have enough booty to allow their people to trade between each other and as their merchant class developed, they found it easy to trade, as the threat of invasion was enough for the surrounding tribes to offer low prices, and pay for protection by tribute and taxation.
As history wound its way through time and space, the most popular form of money was Gold and Silver for all the reasons precious metals have been a store of value and medium of exchange for the last five thousand years.
The utility of money brought with it a set of problems, based largely on its buying power. Money has been described as the root of all evil, which seems a bit harsh, because having money allows people to eat, rather than starve, so how can that be evil?
In many ways money and power are the same thing, and a less contentious saying is: “Power corrupts and absolute power corrupts absolutely.” The balance between power and respect illustrates the point nicely because the more power you have, the less important respect is as a factor in getting what you want. So, more power equals less respect, and this is easy to observe in everyday life.
Back when Gold and Silver were money, how did the nature of the currency alter? The most obvious is that in a very short period of time, the main bulk of precious metals was held by the ruling elites, be they religious or monarch in nature, the church and state in early times were very close, as most things required the blessing of the local agent of the prominent god in order for them to be allowed to happen.
This gathering of power into larger and larger groups created empires. These empires generally lasted between tens and hundreds of years, they all demonstrate the same tendency to rot and decay as the power corrupted the ruling elite, eroding the ownership of the citizenry and undermining their support of the status quo. Species tend to have a longer lifespan than empires, that generally runs into millions of years.
This clumping behaviour is the transfer of wealth from the poor to the rich, misquoted by Ronald Reagan as “Trickle Down Economics”. The more apt phrase would be “Gush Up Economics”.
The farming of money started with money lenders. The British were good at farming money, they would lend to small farmers who needed the money to buy seeds etc, and then demand repayment of the loan before the harvest. As the farmer could not repay, the lender would take the farm instead of, or as well as, the money. Large amounts of land were acquired in this way, thanks to the prevailing laws being written by the friends of the money lenders.
The farmers now had the opportunity to work as tenant farmers, which enabled them to start to pay interest on the money they still owed as well as rent on the farm they used to own. This rule of law did not endear the money lenders to the farmers.
The hunting of money was referred to as trading. This then became a lawful activity, also regulated by the rule of law. The old adage that “It is not what you do but the way that you do it,” encapsulates what we now call “Fair Trade”. In terms of balance, on one side you can have a trade where the seller sells a product to a customer who enjoys a benefit surplus in terms of the currency used, from the utility of the purchase. This is a wealth creating transaction chain.
On the other side you can have a trade where the seller sells a product to a customer who enjoys a benefit deficit in terms of the currency used, from the utility of the purchase. This is a wealth destroying transaction chain, in that the customer has benefit deficit, that is deducted from the balance sheet of the economy as a whole.
Using Gross Domestic Product as a measure of economic performance ignores the difference between wealth creation and wealth destruction and is just a total of transactions. This is a wholly unbusinesslike form of accounting, in that it fails to tell you whether you are creating wealth or destroying wealth.
Genghis Khan was one of the MICE who came up with the idea of central banking. His approach was nice and simple. If you had and gold or jewels, you gave them to him. He would store these valuables in the treasury and give you an IOU in the form of a piece of paper with writing on it. Failure to comply would result in a visit from the compliance officer resulting in confiscation and death. This behaviour caused people to have what we in the twenty first century call “issues”; not only the bits of paper, but property issues, mortality issues, justice issues, et al. In the present day, there are no problems at all, only issues!
For my sins I spent just under twenty years working as a croupier, dealing and inspecting table games such as Black Jack and Roulette. Not being a sportsman like most of my work mates (Newspeak = Professional Team Member Colleagues), I would follow the stock market rather than the football results. This lead me to an as yet unsolved conundrum, namely when is a game not a game? My best attempt at an answer is: “When the participants get serious.”
Rudyard Kipling referred to Domination for Power as the “Great Game”. If you say to a football fan, when their team has lost; “Never mind it is only a game.” The football fan will not feel comforted and happy again!! The result for me is that Gambling, Investing, and Speculation are all so similar to games, the wisdom learnt from running games is applicable in many activities that are loathe to be called games, and like to be referred to as a serious endeavour e.g. Economics.
We now come to modern currencies, which finally took off in a huge way in 1971 thanks to the MICE needing more money for “Peace Keeping” work. This combined with advances in computers and the internet, has freed money from any link at all to the real challenges faced by the inhabitants of planet earth.
There is no need to lug heavy chests of Booty around the world, modern fiat currencies can be transferred virtually anywhere (as long as that anywhere is virtual) in an instant at the click of a mouse. Why you would build a mouse that clicked instead of squeaked is as mysterious as having created a virtual anywhere in the first place.
[To be continued tomorrow with Part 3]