Inducing and Exploiting the Growth of the Intrinsic Value
It has been said that the scarcity of that which is used as medium of payment keeps its value high. But this is based on the fact that people consider it valuable and desirable. And what direct survival value does gold have?
It’s called intrinsic value: the value of the thing for what it is in itself, not the value of something else that the thing represents.
Look at gold again: can you eat it? How useful is it, how many uses it has in everyday’s life? How many actual uses where it performs better than something else?
And it was even more so around stone age. So the people’s consideration of its value has changed in time despite its very low intrinsic value. How come?
Things do not just happen, remember? Things are caused by individuals.
To achieve monopolistic control over a medium of payment one has to own as much of it as possible in the first place. Then one can do something to induce people to increase their consideration of its intrinsic value.
This happened during the first millennium before Christ: the priestly class achieved a status of intermediaries with the gods, and thanks to this privileged position accumulated vast amounts of gold, among other goods, without having to give much of anything tangible in exchange. Then used this privileged position to increasingly foster in the populace the idea that gold had intrinsic value.
To begin with, one exploits this situation with the initial theft: if what one owns has increased its intrinsic value in the eye of people, one’s purchasing power has increased accordingly; if one has not produced and given in exchange for it a corresponding amount of product/purchasing power, one has stolen purchasing power from others.
Inducing and Exploiting the Growth of the Intrinsic Value, 2
(If those things were actually valuable, if the growth of their value were genuine, it would be different; consider for instance those things that elevate the intangible side of people and culture, such as art: these too are very important survival factors. So imagine a beautiful song whose value grows as its success expands: that would be a fair exchange as more and more people enjoy it. The theft is when there is no actual value.)
Let’s take Example Island: there live 100 people, and each of them produces 1 unit of wheat. This makes 100 units of wheat for 100 people: each individual owns a purchasing power of 1 unit of wheat, and each individual owns 1% of the total existing purchasing power. Then 1 individual owns a pebble beach with 1,000 pebbles in it, and finds a way to induce people to consider that 1 pebble is worth 1 unit of wheat. Now, according to the considerations of people, there exist 1,100 units of purchasing power: 100 units of wheat and 1,000 of pebbles. 99 people still own 1 unit (in wheat) of purchasing power, but now it represents 0.09% of the total existing purchasing power. 1 individual owns 1 unit (in wheat) plus 1,000 units (in pebbles), which amounts to 91% of the total existing purchasing power. 99 people now are the property of 1 individual.
Whatever the form of money or medium of payment or substitute for actual valuable product, who is the owner of its purchasing power the moment it gets born? THAT is THE question. That is not only the foundation on which the initial fraud is built, but the best possible foundation for all the ensuing frauds as well.
Because that initial fraud is just the beginning. Once one has the monopoly of an infertile medium of payment one goes along exploiting the situation by lending it at interest. Lending at interest an infertile medium of payment is suppressive because the loans will have to be repaid in the same medium of payment, and since it is infertile, where could the debtors ever take the additional units needed to pay the interest?
Inducing and Exploiting the Growth of the Intrinsic Value, 3
Back to Example Island: Farmer A loans farmer B 1 unit of wheat at an interest of 10%; farmer B grows the wheat and that 1 unit produces say 5 units of wheat; farmer B returns farmer A 1.1 units of wheat, and still has 3.9 units of wheat left. Pebble beach owner loans farmer C 10 pebbles at an interest of 10%; farmer C will have to return 11 pebbles: where is he going to find that extra pebble? Earn it by dealing with other people? This merely defers the problem. Let’s look at the whole scene: pebble beach owner loans to 99 people 10 pebbles each, which amounts to 990 pebbles loaned, at an interest of 10%, which amounts to 99 pebbles of interest. How are these 99 people going to scrape together those additional 99 pebbles, since they do not exist in the hands of them all in the first place, and all those that exist are in the beach owned by the pebble beach owner?