NumismaticBlog.com

For the love of money

  • Question

    • Do you think that the US will eventually go to using only electronic transactions ?

      View Results

      Loading ... Loading ...


  • Categories

      open all | close all
    • Subscribe

      Weekly Newsletter
      type your e-mail address in below.
      (we do not spam or sell
      our list to anybody)

    • Meta




      Doug Barger
      #3123753
     

    What Is Money ?

    9th January 2009

     

          Have you ever really thought about it? Why can that piece of paper get you real tangible things? Why do people want it in trade for a physical item that took labor and time to make. Is money real? That number in your bank account or on your credit card statement, is that money?  What if we no longer had coin and currency, and we all used a credit card like item to change numbers in a computer somewhere, how is that money?

     

         Let’s back this conversation up to a time before any of us were alive. When people  lived off of the land. For the most part farmers really did not need money, just land. He had two hands he could build his house farm his land and have many kids to help sew seed and harvest his crop.  A way to trade with another farmer or dry goods store  was only necessary once in a while.  If a farmer did not have any money, that did not mean he would starve( unless a famine or other type of natural disaster was in the works.)

          Trade back then had a few problems; Joe may have a pig and Tom may have some wheat, but Joe may not need wheat, he may need corn and how much corn or wheat is  a pig worth. This is the problem that traders had. Originally animal pelts became a way to trade. Everybody accepted that a  pelt had value, and it was easy to carry and to use in a negotiation. Gold and silver existed, but not enough of it was available for everyone to use. The value of a pelt was still at that time a perception of value.  It only had value because someone wanted it. The person that wanted it knew someone else would want it, or he could use it his self. As abstract and in tangible as it is, the knowledge that that pelt was desired by other people made it valuable. But if for some reason it was not accepted, he had a backup. The pelt it’s self would keep him warm. So he had two reasons to want that pelt. It had a concrete value, and a non tangible value; the value of desire.

          Gold and silver are more abstract and we are now moving away from the tangible. The tangible part of gold and silver is that it is pretty and we can craft beautiful objects from the metal.  It can’t keep us warm , so it is less tangible it had no direct ability to improve our living. It’s intangible value of desire is it’s biggest asset. But how can we be sure that guy with the gold has real gold. That is where coins come in. Originally coins were more of a stamp of approval saying that the metal the coin is made of is gold or silver based on some kind of standard. That added another intangible asset. The asset of trust. We now trust that we have gold or silver. Money and it’s value was relatively simple and straight forward.  

           Now lets move a little bit further in time. Paper currency, originally was a piece of paper guaranteeing you that the bank or government had a piece of gold in their vault that they could give you at any time to redeem the paper for real hard gold coin. Now the tangible value has been reduced more, it was still something you can hold. The intangible parts were more important especially the trust. Now we have to trust the government or bank to do what they say they will do.  It’s value was gold but gold was not in your hand. Yet with a bit of weariness people usually accepted it as long as we had faith in the issuing entity.

           Let’s move further into the future, now people are used to using currency and most have forgotten or never lived in the days of bartering.  People are now accepting that currency will buy me what I need.  The general public now see money as a way to get something. The ideas of trust and intrinsic value are now blurred and not really understood, lost to the ways of the past. Gold now cannot be mined quick enough to supply the economy so the issuing entity’s ( the government) now says; We don’t need gold  to back up our currency. We now will tell people that the only way you can buy or sell is if you use our currency, this law will force it’s value. The tangible value is now nothing at all, other than the paper it is printed on. the intangible value of desire and trust are what’s left. Not that it wasn’t important back in the days of trading pelts, but a dollar bill is not going to intrinsically keep you warm.

         Now moving into our present we see numbers whizzing from one computer to another, each number representing the paper we used to have in our hand. We are now trusting that these numbers are not getting dropped or duplicated somewhere changing the preserved value. The government can add and remove numbers at will, and we will still desire  these numbers because it will buy us bread. After all it can still be exchanged for paper currency.

         We are no longer farmers, we cannot grow our own food, most of us have never killed a deer or tanned a hide or sewn our own clothes. We now rely on these numbers for our very survival.    How much different is it now then it was back in the fur trading days. We have shifted almost completely from something tangible to something completely imaginary. In some ways it is light years apart, but the basic element that is common to both currencies is desire (greed). Today we have distilled out “desire” as the single most important part of our society. It is a powerful but fragile human element to rely on.


    <
    Powered by WebRing.
    [Most Recent Quotes from www.kitco.com]

    NumismaticBlog.com is powered by WordPress | Design by Andreas Viklund | Ported by Ainslie Johnson