International Trade vs Cyber Currencies!
We currently live in a world of Nation States where each country trades to resolve their economic survival. America trades with almost all the 200 + countries on our planet. We sell our products (called wealth) and we buy products (called wealth). This exchange is supposed to be a Value for Value exchange with accounting balanced at the end of each year. Historically, the balance of trade accounts were settled in gold or silver. Today, Nations settle their imbalances with cyber currencies (stored in cyberspace). Computers have created new currencies for all Nations. These new cyber currencies, however, should not be viewed as units of wealth. Think about the nature of a cyber currency! So what is ‘wealth’?
International Trade consists of exchanges of production (wealth)! A currency must be tied to real items of production to be valid in trading!
In economics, historical wealth has been material products produced by each country from the land, water, technology, and labor. Wealth consists of lumber, iron, coal, cattle, wheat, corn, cotton, metals, oil, gas, textiles, computers, etc. Wealth is what we create and then consume for our economic survival. Excess or surplus wealth is also traded with other countries so as to increase our material prosperity and growth (as we exchange Value for Value). The idea in economics is that each country produce things (goods) and then we Value these things (goods) with a currency. We then exchange currencies for all this wealth.
Value for Value (bartering) is one option or we can use a currency (tied to wealth)! In economics we produce wealth and then trade this wealth to grow our economy!
All this works rather well IF the currencies (being exchanged as proxies for this wealth) are tied (in some logical manner) to the real Value of the wealth which is being created and exchanged. The idea in economics is that a currency must relate itself to the Value of the wealth being exchanged. This means that the seller of wealth (goods) and the buyer of wealth (goods) actually Value their exchanges in some logical and sound basis. The purpose of a currency is to Value goods for exchange. How must this be done? Why is this foundational to trading and exchanging!
Think of your house when selling! What is it’s Value? If there were no currency to Value your house then what would you desire in trade?
First of all, a currency (in order to Value anything material) must be tied to a thing of Value. This is called a Standard of Value. A Standard of Value is some item from nature (which is also viewed as wealth). This Standard emerges from the people who trade and exchange their items of wealth. In other words, the marketplace is where a Standard of Value (also called ‘money’) emerges. Most of modern history demonstrates that each National Currency was tied (via a definition) to a commodity item like silver or gold. These two commodities became known as Precious Metals as they were viewed as containing Value.
Originally, our dollar currency was defined in terms of silver. This definition is what gave our currency credibility in the marketplace (for trading and exchanges)! Every trader would accept our dollar!
By defining a currency (such as the dollar, yen, pound, etc.) in terms of silver or gold (specifically) and also making the currency convertible into these metals (at the discretion of the holder) this produced a currency which represented Value for Value (when exchanged). The currency then was viewed as a form of real wealth as the holder could exchange or convert this currency into real physical wealth. Countries could settle their yearly trade imbalances via a currency which had substance and convertibility. All this changed on August 15, 1971.
President Nixon in 1971 closed any access to our gold by all International traders! This effectively created our fiat dollar which has now emerged into our cyber dollar! Why did Nixon do this?
In 1933, Franklin D Roosevelt created a fiat paper dollar for all Americans. He allowed a gold dollar for International trading, however!
Prior to August 15, 1971, all international trade (done via the U.S. dollar) could be settled in either dollars or its definition (specific grains of gold). This made the dollar a currency which was viewed as being equivalent to gold. For every dollar I accumulated (say in France) from prior trade with America (my exports vs imports), I could exchange any surplus dollars (at the end of a trading year) for gold based upon the agreed definition ($35 = 1 ounce of gold). This made dollars logically sound and with a Value which was tied to nature and real physical production.
Today, we live with a cyber dollar (in cyberspace)! Where is cyberspace? What kind of dollar is this? Is it a real Standard of Value?
Today, however, all this is upside down. I now trade (say I am France) with America on a basis where all imbalances in trade are settled (not in gold or its equivalent) but in cyber dollars which America creates OUT OF NOTHING (a mere electronic entry). This makes all trade confusing, distorting, and illogical. A cyber dollar (a mere digit in the computer) has no real Value and is not tied to nature or the production of wealth. A cyber dollar is a creation of our Central Bank and our Treasury and this unit has no tie to anything real or physical. It circulates in cyberspace as a bit-currency.
China’s cyber dollar reserves now exceed $3.7 trillion. America exchanges these electronic digits for real physical production (wealth) from China! Is this Value for Value? Why do we get by with this?
All international trade today is via these cyber bit-currencies which each Nation can/could/does create out of their inner consciousness (out of nothing). This is now being done by our corrupt Central Bank (the Fed), the Central Bank of Japan, the Central Bank of Europe, the Central Bank of Sweden, the Central Bank of China, the Central Bank of England, etc. Today, trade imbalances are settled with currencies that have no tie to reality, nature, or goods created within our greater material universe. Cyber currencies are in cyberspace and outside any material economic reality! Our deceived economists and politicians seem totally oblivious to this situation!
Actually, QE is digitization of a currency via the stroke of a computer key! Can this process be called creating wealth or prosperity?
The economics profession needs to wake-up to the above realities and start thinking about why our markets are now distorted and without any logic which makes sense. There is no Value for Value transactions today. Think about trading within a Barter Marketplace. What is the core concept of trading? Isn’t the concept of Value at the core of trading and exchanging? Do we have any Standard of Value today? What is it? Where is it? A Standard of Value (money) must be viewed as real and tangible to have any meaning! Trading ‘digits’ (in cyberspace) for China’s production is not a Value for Value exchange. Digits can be manufactured merely with the stroke of a computer key!
A stroke of the computer key now produces unlimited cyber money ($$$) for the elite customers of our Central Banks!
What we now need globally is a total reset of all trading based upon a NEW Standard of Value (chosen by the people). The concept of a Standard of Value must be chosen by the people to be viable and lasting. The only other alternative going forward (after the coming market crash) is to eliminate all currencies and money. Think about it! Either we create New Money or we live with None! The message for today is: all our cyber currencies are really imaginary and useless as logical units of Value. We have no Standard of Value for the dollar today! Our money is in Cyberspace! Think about this reality! I am: https://kingdomecon.wordpress.com.
P.S. Wisdom: Money must be tangible and a Currency needs to be defined!