From Goods to Money

The media of payment evolve in time from goods to reference goods to what is generically called money. At this stage, we may call money any media of payment that are not directly products, the goods or reference goods that bear the direct real value. The reason for the evolution is that what we call money – suppose it’s coins – has the following additional qualities:

Ø  Medium of Exchange

Money is a better medium of exchange than goods: A has a fish and wants two eggs, B has two eggs but does not want any fishes; A has to find a C who wants the fish in exchange for something that B will accept in exchange for the eggs. Complicated, isn’t it? Better sketch it out. And that’s but the simpler case. Instead, anyone will accept money in exchange.

Ø  Unit of Account

When it comes to measuring, group cooperation has a requisite: the unit of measure, so that what A meant yesterday over here and what B will mean tomorrow over there are easily comparable; just as language, this uniformity is an agreement, and as such it is the basis on which it becomes possible to cooperate. It’s far more practical when all fishes, eggs, houses, cows, sheep, and wheat can all be compared through the same unit of measure.

Ø  Divisible

While a cow or a house can hardly be partitioned, money can have any number of suitable multiples and submultiples.

From Goods to Money, 2

Ø  Fungible (Interchangeable)

The fact that a chicken leg is not the same as a chicken breast makes partitioning a chicken nearly useless; on the other hand, all money units, multiples and submultiples are equal to one another.

Ø  Portable

Goes without saying that in order to ease flows of people and products money has to handle more easily than goods. And money, unlike goods, can be freely designed accordingly.

Ø  Durable

Food rots. Money as an object is designed to endure, so our purchasing power does not require to be cared for to prevent it from vanishing.

Ø  Store of Value

But money ought to be designed to endure not only as an object. Suppose money was made of asbestos: before the discovery that asbestos is carcinogenic its value was high, afterwards it dropped to zero, while that money as an object did not change.

Have we the right to preserve through time the hard−earned fruits of our work, and particularly have we the right to protect them from suppression? Yes, but we must carefully evaluate how, in order not to fall back into suppression through an importance shift from real value to parasitism.
Real products perish, and require resources in order to counteract it; if money does not perish, it becomes a more desirable store of value than real products. This can induce the artificial growth of the value of money compared to real value, as seen before in inducing the growth of the intrinsic value. This increases the power of those who have money compared to those who produce real value. And this incentivises capitalism: lending money at interest, creditor profiting while dumping the business risk on the debtor, maliciously triggering the debtor’s bankruptcy, and financial speculation to the detriment of production of real value. In other words, the risk is incentivising suppressive parasitism to the detriment of what has real value, of those who produce it, and of the community.

The fact that money can be what is called store of value does not depend only on its durability as an object, but also and even more on its durability as something else. To define what that something else is means defining what gives value to money. Or to anything, for that matter.

From Goods to Money, 3

Does anything have any value where there is nobody? There is not such a thing as an intrinsic value, in actual fact: things do not have value for themselves, however potentially valuable they can be, until someone considers they have. Value is a consideration. Considerations are made by individuals. And life and history show that individuals happen to change their minds or not, for a number of reasons.

So when we say that a given money or a given good does have intrinsic value, we are saying that it is us who consider it has. We may consider it because it actually has a direct use for survival such as food, or because it is useful in some less direct way, and we may have been induced to such consideration by someone having personal profit. Anyway, any money or good is a store of value to the degree we consider it will continue in the future to be acknowledged and accepted as having value, whether intrinsic or not, and thus purchasing power, which will be in turn the result of considerations, and all these considerations as such may be subject to change in time.

This said, while all money has more or less all the other additional qualities above, not all types of money are equal with regards to having the so−called intrinsic value, to being store of value. On the contrary this is the important aspect to look more deeply into now.