In this post I share the conclusions of my long-term analysis of [alternative] currencies. True money is only ever a unit of measure (it is never a commodity that can be issued or controlled) and is technically only ever a “record of a half completed transaction”. Taking this knowledge then deep into the discipline of biblical guidance, we find that personal accountability is at the centre of all credit, trust, and . . . wait for it . . . backs the best currency – our own. Enjoy.
It is frequently said that money is a threefold thing: a) a measurement; b) a storage of value; and c) an enabler of trade (fungible, infinitely divisible etc). This is a logical fallacy for it can only ever be the former. Sure, it can achieve the second two but true money is only ever a unit of measure. It is literally a measurement of debt – in fact a measurement of a half completed transaction.
Money is …
Money measures debt. Money records an IOU. If I catch a bus into town from a rural Samoan village and I know the driver, I may pay him a coin, or write him in IOU in his day-book, or hold the debt ‘in mind’ until I return that evening to sort the debt out. All these events are in essence the same, thus the coin = the IOU written or memorised. The coin simply measures the debt as a result of a half completed transaction the same way as the IOU does. Once the driver uses the coin to buy a beer or bottle of milk and so on backwards to the issuer of the coin, the debt back to the government is erased and the coin is valueless. The Dollar (or in Samoa the Tala) is simply a unit of measurement. The coin represents the debt and the Tala measures the debt.
In the case of legal tender currencies, money issued by our governments measures debt from or to our government via their appointed Central Banks. When they print money and issue it to us this records a debt from them to us. We then use that money (coin or note or digital) in trade by buying and selling, but when it returns to the bank, it is cancelled out and becomes valueless – just back to its paper value, often burned when old and unusable.
Good money, true money can therefore technically never be issued nor controlled.
Try controlling or issuing other units of measure (like a litre or metre or a kg) to see how this works. One can have a kg OF something, or measure a metre OF something but you can never own or control the measurement unit itself. The question, “How many kgs do you have today?” simply doesn’t make sense! A dollar or a yen therefore as a unit of measure is likewise always a measurement OF something – actually it is a measurement of debt.
You can also see this point clearly when you introduce a second currency into the mix. I may not have any cash in my pocket but I can wash dishes (barter) to pay my restaurant bill. If I have Bartercard credits or Bitcoins or other alternative currencies I may choose to use them to pay a debt instead of using legal tender currencies. Who issues or controls my capacity to wash dishes? Surely not the Central Bank?
If I feel I owe my neighbour because she brought me some of her baking, then do I return the favour by giving her a nice smile or do I give her my brand new $100k Mercedes? Her baking can be valued at perhaps $5.00 but the Merc is valued at $100,000, thus the trade is imbalanced and does not work. Assuming that her baking is not a gift, then my IOU back to her, can be valued in dollars or lawn mowing services or anything agreed with her, in fact.
Now, using a dollar of say US debt, may be convenient for trading (as it is widely used and accepted) but it is essentially only ever a unit of measure.
Use of legal tender money is common in the West and has grown in popularity over the years but in many other cultures (particularly where the USD has not penetrated well) other measurement systems have been used for years. Shells, beads, guns, direct barter, notches in sticks (talley sticks), silver, gold, foods, even large rocks. Other community-based credit systems are necessary and actually quite common outside of those who have indebted themselves to the issuers of the mainstream currencies.
Any currency needs trust in order to survive. When the people globally lose faith in say the USDollar then they will use the Renmibi, Yen or Euro to trade. If the cryptos are making headway then they may use them (if they can) to trade. If they are looking at retaining value then they will likely invest into precious metals and if they are seeking profits from their wealth then the Stock Market in boom times may look attractive. Barter or counter-trading too is an option for some.
In all culture, times and markets the backing of any currency comes down to trust. We trust Uncle Sam to be “good for it” in regards to the USD, or we trust that the Bitcoin algorithm is safe from human tweaking. We trust that the private Barter company (for example Bartercard) is not ripping us off and we trust that gold and silver will have a solid value in the future (because it always has or for whatever other reason).
While I know that in ALL of the above examples (except the last one, except for biblical advice not to trust in gold or silver) our trust is grossly misplaced, my point here is not that any one particular currency is destined to failure, it is that TRUST is always at the heart of any currencies backing. The people will only ever use a currency that they trust.
I will repeat this because it is so important. All of us will only ever use a currency that we trust. Unless they are stupid or brain-washed into the BS that they have to, nobody will voluntarily say, “Let’s use an inflating currency to trade!” knowing that something will have less purchasing power tomorrow than it has today. We must trust that the currency will retain its value and have the same (or similar) purchasing power today as it had yesterday when we earned it before we will invest.
This trust then is the critical starting point for getting into assessing what the best currency is to use.
The Biblical Understanding
Stepping to one side from the money issue for just one moment, I blog from a Christian Worldview. I specialise in analysis of alternative currencies (and other things such as conspiracies, cultures, crooks, crims & crazies & so on) in the light of Christian values.
The bible emphasises personal responsibility which logically means personal accountability. Just as Adam & Eve failed and were judged personally, likewise we too will face personal accountability. It just didn’t work when Eve blamed the serpent and Adam blamed Eve! They got what was coming to them, spiritually and physically, just as we too will get our just rewards here and now as well as at the end or our time.
This personal responsibility and personal accountability then carries forward into the biblical teaching on money. Both Testaments make it clear that our word should be our bond; that it is our lot in life to bless others through generosity and care of and for our fellow man; that the making of money off money (aka “usury”) is lazy, greedy and inherently evil; that the improper worship of money (what is called “mammon”) ensnares and in terms of predictions, that the global financial (and commercial systems) will eventually implode, sending the crooked leaders to hide in the hills.
According to the Good Book, the way to be blessed is to hear and obey the Master personally.
The Best Currency
The best currency is our own. It is when we build up trust in our own brand that our own ‘currency’ becomes trusted. It is when we take a strong stance for the downtrodden, weak and oppressed that we gain the respect of the astute around us. It is when day after day, year after year that those around us trust us that we can replace the misguided trust that Uncle Sam is not furiously printing money for distribution out the back door, and that the sign, “TRUST US” on the font door equates to reality. It is when the little old ladies who have engaged with a trader for decades stand up and say, “He’ll be good for it!” that our word is worth anything.
Our name; our reputation; our creditworthiness is THE most valuable, most useful currency to each of us no matter the environment we find ourselves in. It doesn’t matter our age, nationality, gender, faith, intellectual or physical capacity if those around us can trust us. The mechanics of what your currency is called or what or how it is shared matters not. It may take years or decades even for the new markets to mature and develop but the essence of your best currency is trust – and in you, personally.
There are two remaining points I wish to make here:
a) I have taught for years that the future of money is our capacity to handle multiple currencies. Individual credit-worthiness is central to developing our own brand which will eventually compete in the marketplace. Understand how this is actually a return to the biblical ways where we all get our just deserts – whether this be good or bad is entirely up to us and our choices. “Oh sorry, Lord – It appears as though our government lied or did wrong by You!” does not cut it for an excuse when we face our Maker. Legal Tender currencies are all based on interest-bearing debt – a big no-no to Him! Period.
b) Monetary change has already commenced and the global change that occurred (with the supply of information changing from privately owned and controlled to Open Source c. 2000) is now only 20 years later commencing in earnest. Punters wishing to remain with it, will need to know and understand the supreme importance of personal reputation and personal credit. Like with online gaming or trading reputation factors (such as FB likes or shares, LinkedIn endorsements and TradeMe references) when those around you in your community know you and trust you, then you will have a currency which you can bank on. Bye bye, BNZ, or Westpac, or the USD.