Monday, November 19, 2007

The Disquieting Reality of Money

Most people don't have a clue where money really comes from. Nor are they taught in schools the nature of simple economics. I would even go so far as to argue that not making people aware of the basic principles of economic theory is a deliberate measure to pull wool-over-the-eyes of the common citizen. More people would be up in arms if they realized the discomforting fact that money, in its current incarnation, is purely speculative; it is based on supply, demand, and imaginary concepts in much the same fashion as the value of the stock market at any point in time.

Money doesn't exist in any conventional sense. It can't be perceived with any of the five senses. A gross oversimplification would be to say that money is fake. A more accurate description would be to say that money exists in a state of perpetual ebb and flow. In mathematical terms, our fiat money system is akin to an imaginary number, merely a construct created to explain something that exists outside the realm of substantive reality.

The disinterest of most people regarding Economics is understandable, at least to these eyes. The mere mention of the word Economics brings up images of grey, leaden type, numerous esoteric bar and line graphs, and a smattering of important-sounding, intimidating ten dollar words that make the discipline seem frigid and impenetrable. No effort is made to make Economics interesting and as such only those devoted to the subject find it worth their time to wrap their brains around it. It really doesn't have to be that way. Yet, in matters such as this, it's not hard to understand why the powers that be don't want the average citizen to understand.

I am moved to point this out due to the current currency woes our country is experiencing, particularly regarding the deflation of the dollar compared to the British Pound, the Euro, and even the Canadian dollar. The United States and most industrialized nations haven't been on a gold standard for decades. This means that if, at any point in time, all of our creditors wanted hard currency in exchange for their debts, we simply couldn't provide it. We'd be forced to declare bankruptcy.

Lest I seem to pander for the good old days of the Gold Standard, let it be known that we couldn't return to such a system if we wanted to. What I do propose is a return to some sort of system whereby where our currency is backed by something finite.

Instead, we are beholden to a fiat currency system.

For seventy years, our entire economy has rested upon an elaborate scheme, created by the wealthy elite, a scheme which extracts maximum profit from minimum effort. I might go a step farther and say that it caters to human nature, particularly the regrettable tag-team of sloth combined with greed. Lest we forget, this scheme has formed the basis of the banking industry, and has repeatedly led to the same conclusion, financial collapse perpetrated by unrestrained greed.

How long can the best minds money can buy keep this house of cards piling higher before it collapses? Fiat money schemes, in previous reincarnations, have lasted less than ten years. Ours has lasted seven times longer than that, though it has had some very close calls over the years. And if it does collapse, you can be sure that the wealthy could absorb the hit much better than most of us could. The majority of us would be thrust into the sort of poverty of which only our grandparents can conceive.

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