Posts Tagged ‘creating money’

Money’s Swan Song

August 11, 2019

In the beginning God created the heavens and the earth.

Well a lot has happened since then.

Our Creator had done some amazing creating through that original sparkle, and has given us the wherewithal to jump in there and participate in the creative playing out of all things in our domain.

The power to create was not given to other species on our planet—only to us.

We humans have done some pretty amazing things with our God-given talents.

After hunting and gathering, we planted, harvested and ate the fruits of our labors.

in the course of history, we have moved far beyond just eating, drinking and homesteading.

It’s been ever onward and upward for us, since we got a hold of this divine spark thing that we call creativity.

We’ve built pyramids and great walls, temples, mosques, cathedrals, skyscrapers, great bridges and machines that move across those bridges.

We’ve built roads, rails, blazed trails, had great successes and fails. We’ve devised tools, schools, lots of rules; we’ve forged implements, arts, coins, currency, and we’ve maintained a steady errancy.

We’ve painted, sculpted, interpreted the real world as works of art. We’ve disrupted, interrupted, corrupted and upended nature itself.

Now our carbonized creation turns—in some ways—against us.

Back at the olden time, when we received the power to cultivate earth, we were instructed to subdue those elements of the natural world that seem to be active against us—like, say, lions and tigers and bears. Such critters we had to subdue, so they would not make mincemeat of us.

Earthquakes, volcanoes, storms, tsunamis, etc.— these adverse forces we could not subdue, so we took shelter. As the ages rolled by, our sheltering instincts developed into elaborate structures.

And we have done pretty well with that. We homo sapiens have taken control of the planet—or at least we think we have. The planet may yet rise up to bite us in the ass. We shall see what happens with that.

A major sea-change that happened along the long odyssey of our progress was: we devised ways to substitute real goods into artificial representations of wealth.

Better known as making money.

MoneySwan

Land, food, livestock, clothing, shelter and such commodities that are essential for survival—all these are now exchanged by monies, currencies, paper-backed assets. And the latest thing is: electrons seem to be our new currency.

Our ancestors carved trails out of the wilderness. They gathered grains, sowed seeds, domesticated animals, and sold to neighbors or merchants all the produce thereof.

As those primary goods coalesced over the ages as markets, their value was measured and traded as money. This we called trade. Then we called it commerce, then business, and now. . . economics. We humans invented the system a long time ago because . . . well, because . . . I don’t why.

lt’s just what we do I guess.

For one thing, it made the process of manipulating wealth easier.

In economics, wealth was and is evaluated in terms of dollars or yuan or yen, or marks, francs, drachmas, denarii, zlotys, rubles, pesos, pounds sterling, etc.

Euros are the new kid on the block. They seem to have trouble making that one work.

The difficulty with retaining true value in these currencies is related to the fact that they’re—in real survival life terms—not really worth anything.

They only represent wealth. But they are not really the real thing.

I say the EU is having trouble establishing the value of their Euro. This goes way back.

The Brits, for instance, were having trouble in the 1930’s retaining the value of their pound. It seemed that their constructed currency could not maintain its value compared to gold.

Who the hell can compete with gold?

Gold goes way back.

Way back.

The second chapter of Genesis, for instance, mentions gold.

“The name of the first (river) is Pishon; it flows around the whole land of Havilah, where there is gold.”

I suppose there’s a reason why gold goes way back in our history. Even though you can’t eat it, drink it, or keep your household warm with it, it is . . .

quite shiny.

Beautiful stuff, that gold. Precious!

Back to the Brits. As the world economy was falling apart back in the ’30’s, many savvy persons decided they would trade their British currency—pounds—for gold.

So many savvies were wanting to get back to gold, that the British government quit selling it.

What would happen after such an arrangement?

I think it was that fellow Keynes who figured out that—guess what—the economy just kept on cranking—all the goods and stuff and commodities and products and financial instruments and whatnot—just kept swirling around in international commerce.

The world didn’t stop turning. Business just kept on doing their thing. Rich get richer and poor get poorer and hey what else is new.

What else is new? Nothing. Nothing new under the sun.

Guess what. We didn’t really need gold to back currency! It was just a phase we were going through—the golden age of gold.

Back in ’73, Nixon pulled the same trick as the Brits had done in the ’30’s. He and his Bretton Woods powers-that-be decided we could no longer afford to sell gold for dollars. Too many folks wanted the gold instead of the dollars.

So we see that man-made currencies are not foolproof, and the gold bugs are always trying to make a comeback.

Money is a habit; that’s all. A very old habit.

Folks are born and bred into this modern economic world.  We are commercialized, or socialized (depending on your politics) to just keep spending those pounds and dollars and cents and euros and yuan and yen and SDRs and thusandsuch.

Nowadays we don’t really even use the money any more. Now it’s just electrons flowing around that represent debits and credits.

And that’s why—I suppose— the central banks of the world can keep cranking out their reserves, because the right to assign value is now reserved to them. It has nothing to do with gold or fiscal guarantee.

The central banks, in the fatal footsteps of every financial crisis, have reserved the right to “create money out of thin air.”

I told you we were creative!

The greatest discovery of the modern world:  we don’t even need anything to take the place of gold.

Money is just an old habit we have; we’ll never put it to rest. So somebody has to be “printing” it somewhere.  We spend so much money that all the .govs of the world are running deep debts trying to keep all the citizens fat ‘n happy.

There’s so much liquidity in the world today that the dark swan of excess has smooth sailing. Someday, some Leninish strongman will come along and dissolve all that debt into even more liquidity.

It will be a meal ticket for everybody. Yes, Virginia, there is a free lunch, doesn’t matter who’s paying for it.

It’s only money.

Glass half-Full