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Teaching the History of ‘Money’ for understanding!

August 12, 2012

The Evolution and Role of Money in our Society!

The step-by-step process  for understanding ‘money’ and ‘value’ can be described in eight (8) steps, as follows:

1.  Idea        (I start with the ‘idea’ of money as a unit of consciousness derived from mind)

2.  Word     (the ‘word’ which emerges from the idea is ‘money’)

3.  Thing     (a chosen item of matter, such as silver,  that people desire for the exchange of value)

4.  Unit       (small items of matter, such as a grain, that is logical for counting purposes)

5.  Name    (a word which specifies the ‘unit (s)’ chosen, such as the name ‘dollar’)

6.  Number  (a unit of mind for counting and mathematical logic, such as $1.00)

7.  Unit/Name/Number   (the result which encompasses all of the above, such as ‘silver’, ‘dollar’, ‘$1.00’)

8.  Proxy    (the goal of above is to accomplish the ‘valuation’ of goods and services in the marketplace)

The role for ‘money’ is to serve as a proxy for ‘valuation’ or ‘pricing’ of goods and services. To accomplish this objective ‘money’ needs to HOLD its VALUE so that ‘prices’ remain relatively STABLE over time. This is not an easy goal, however, as people are ‘subjective’ beings in their thinking and in their wants, desires, and viewpoints of value. The concept of ‘value’ is derived from the subjective consciousness of each person and this creates change over time. Every person today denominates their ‘value’ perceptions in some legal tender currency unit.
 
The best historical proxies for ‘value’, however, have been precious metals. These metals have proven to be RELATIVELY stable over time when compared to other proxies (say paper or computer digits). The foundation of any money unit needs to START with some THING that people generally view as having ‘value’. Silver and gold have generally worked best as proxies for ‘value’ but they have not worked as well for mediums of exchange. Yet, when push comes to shove in economics (say a major recession or depression) these metals usually emerge as the best ‘safe havens’ for wealth preservation during the crisis period.
 

 
To increase the RATE or VELOCITY of transactions in the marketplace, a better medium of exchange are paper notes. Paper notes are easy to distribute and transfer from buyer to seller. They can serve as proxies for value if people BELIEVE that they work in the marketplace and also if they HOLD their ‘value’ over time. Paper, however, is still ‘paper’ and people recognize that these units are meaningless if the issuing AUTHORITY becomes insolvent or losses its CREDITABILITY. This happens regularly over longer time periods (cycles) and it is then when people choose a proxy which has more substance and longterm desirability. Confidence…is key to viable currencies!
 

 
The least acceptable currency unit is our current ‘digital’ unit. The reason for this is because this unit is ‘virtual’ and ‘imaginary’ in its nature. This means that it is ‘no thing’ and has ‘no value’. It is purely a unit which works until a financial collapse occurs. When a collapse or a value destruction occurs, then this unit vanishes into ‘money heaven’…our collective consciousness. This unit totally disappears from ‘spacetime’ as a THING of ‘value’ and a unit of ‘legal tender’. Past currency units which have disappeared from spacetime as units of value are the Drachma, the Lira, the Franc, the Reichsmark, and recent Zimbabwe Dollar. These units are now in ‘money heaven’.
 

 

 
The digital currency unit which now composes some 96% of all money transactions in the Western World is a recent phenomena (1990’s to present) which emerged because of our computer technology. Our Central Banks now created these units ‘out of thin air’ or really ‘out of the consciousness’ of key policymakers’ minds. This type of unit emerges on our computer screen as a ‘virtual image’. This unit is then transferred at the speed of light from buyers to sellers in exchange for goods and services in the marketplace. Our Credit Cards and all our On-line financial accounts are now ‘digital’ or ‘virtual’ accounts. Reality has become VIRTUAL for most money transactions today!
 

 
 The above evolution of ‘money’ shows why we now have a major problem in our world economy. Money has evolved from an ‘idea’ to a ‘unit of matter’ to a ‘no thing unit of consciousness’.  Money started out as a ‘immaterial’ concept of one’s mind and is now back to an ‘immaterial’ concept of one’s mind. Money now needs to vanish from this planet as an ‘imaginary’ experience with no future OR we will need to adopt and choose a NEW item of VALUE for our money unit. I see ONLY two choices for our future:  New Money or None! We all need to get educated on the history of MONEY and also its role within our SOCIETY. Get ready for major CHANGE down the road!
 
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