11 August 2012

Money 101 (Part II): The Origin, Power Source & Challenge To The System

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Where did Money come from?
Money started as an experiment to the barter system. Bartering is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as currency. The barter system had issues as people sought items that exceeded needs and entered into the territory of wants. Problems arose when the items or services that one person had for exchange were not accepted, wanted or needed by the entity that held their item(s) of interest. In lieu of this, multiparty negotiations were attempted with little success. Soon thereafter an experiment with money, or what is understood to be currency, was created.

By the time the money experiment was found to have flaws, it had already spread so fast and so far that the suggestion of removing money for a new experiment was vehemently discarded. For example, in the construction of a house, the foundation is the most important piece. The foundation should be solid; impenetrable if possible. If you start to build-up and realize that the foundation is cracked, the sound action is to tear down and rebuild the foundation.

In a world of money, where the pursuit of profits often trump beneficial instincts, the economical road most taken is to patch the foundation – and keep building. The cracked foundation was never solved and in time, the stresses on a weak foundation begin to show throughout the house. The cracked foundation of the money house was never fixed. One day, the house will fall.

Here are 2 simple equations illustrating the steps that led to the use of money as currency:
10 Chickens = 5 Liters of Goats Milk
5 Liters of Goats Milk = 1 Sack of Potatoes
10 Chickens = 1 Sack of Potatoes
This bartering process encountered obstacles when [1] you only held a portion of the equation.

    If I had only 5 chickens for bartering, 5 chickens would often not equate to ½ a sack of potatoes, nor could it get me 2.5 Liters of milk.

The bartering process ceased to function when [2] your wants did not align with those of another.

    If I wanted 5 Liters of goats milk but the milk man did not want (my) chickens and neither did the potato man, then I would be left holding chickens with an appetite for milk.

To solve the problem a neutral unit was added. 10 Chickens = 1 unit of currency 1 Sack of Potatoes = 1 unit of currency 5 Liters of Goats = 1 unit of currency The rationale behind this addition to the equation is simple and understood. Currency made sense and was easily sold as a solution to participants of the bartering system (even though the adopted money experiment had inherent flaws). Where did the unit of currency attain its value? Who gives the unit of currency value? From where does “money” get power?

Who gives currency value?
Using the previous example with chickens, potatoes and goats… the unit of currency has no value in and of itself. It is a fiat currency. Is it the products against which the currency is weighted and, more importantly, the people using/accepting it that gives it value. The people are the money power. For example, if the 3 men with chickens, potatoes and goats had no interest in the selected unit of currency and chose not to use/accept it, then the currency would hold no value. It would cease to exist.

Banks do not give currency power. Governments do not give currency power. The only reason any currency has value is because the people use and accept it for a unit of exchange. Seeking equal pay, fair taxes, distribution of wealth, financial regulations and jobs from anyone but yourself keeps the power of unreal money, and the associated currency, in the hands of those being queried for action. Why are those with the power (the majority) asking for graces from those that they empower (the minority, government, money, banks)? Those actions do not make sense now, Those actions did not make sense before now, and Those actions will not make sense tomorrow.

If this reality of “people powering money” is accepted and acted upon, without first understanding money, then the world of money would enter a phase of multiple mini-currencies that cause more confusion and separation than the few monopolistic currencies of today.

CHALLENGE YOUR UNDERSTANDING In protest of banks, various activists have called for all customers of large banks to withdraw their funds and transfer them to local credit unions and small banks. While this action may send a message of displeasure to big banks, it will not resolve any short or long-term problems with money. In order to truly disrupt the operations of banks and see the power we have over money, the simplest and most effective course of action is to withdraw all funds from all banks and hold said funds physically. Do not open another bank account, do not transfer funds to a credit union, do not set up direct deposit with an alternate financial institution and do not pay any bills for 50 days. By withholding funds from the banks and debtors, the people will witness the real power of money and how we can control it.

I propose November 15, 2012 as the commencement date of this worldwide celebration. With several day’s dedicated to mass purchases and group gatherings, what better 50-day span to show the power of people over commerce. The power of unity and reason versus that of divide and conquer. It will be imperative that we aid our family, neighbors and community. Group conversation, meals (I like bonfires) and activities will reform the strong bond lost long ago. A bond that was never broken though greatly forgotten. We give money power; Though we only need people power. November 15, 2012 Will you dance at the celebration?

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