The December 26, 2022
PinFeed Almanack
What is Money?
If it were easy to carry cows, barter would be the ideal means of exchanging
goods for services or other goods, as long as everyone who wanted to trade
could agree on a deal. But cows are cumbersome, and agreement can be
problematic, so cowrie shells or gold dubloons are more convenient. The
king, or 'the market', can decide how many dubloons for a cow, or how many
cowrie shells to shoe a horse.
That's how we have understood money, i.e., fiat currency, for several millenia.
There are lots of things that can be used in lieu of currency: diamonds or
paintings or racehorses, but trades are always negotiated with an eye on their
fungibility, meaning you can sell the stuff for money.
So money can be thought of as a quantity of stuff, or a quantity of work.
Most stuff is the product of work. Once it's produced, it becomes 'inventory',
and after it's sold, it depreciates, and pretty soon, it's worthless. Seen
that way, the only thing of actual value is the work that is done. Work that
might be done is potential, or intangible.
The land we call 'real estate' once upon a time was 'real' because the
land came with peasants attached, who could do work and make stuff. Nowadays,
real estate is mostly a liability, unless you can put a factory on it.
The most annoying thing about money is, the government produces it. It used to
be actual gold, or silver, or at least copper, something of value. Not anymore.
Now it's just worthless paper, and so-called 'experts' decide how much of it
to print. Or not even print, because most of it isn't ever printed, it's just
bits in the government's bank's computer.
The second most annoying thing about money is the banks control it. If you
borrow money from a bank, they charge you 8% interest; if you give them your
money, they pay you 1%. If you bounce a check, it's $135, but if they sit on
money they owe you, well, sit on it. A mortgage is the bank's way of putting a
factory on a useless piece of 'real estate', with a peasant on it to make stuff,
for the bank.
It might seem good to let the market decide how much money to print, and how
much it's worth. Especially if it's just bits in a computer. And, we can make
every bit self-documenting, so every single time a bit moves, its history goes
with it. While we're at it, since it's just 2 computers talking, every
transaction can be completely secret. We cut out the middle-man, we're masters
of our own destiny.
What could go wrong?
When El Salvador decided to use Bitcoin as their currency, they crashed like a
plane without a tail. Because crypto has no regulator, FTX imploded, and took
its exchange and customers' money into a black hole. There will be more
blazing examples. On the upside, arms dealers, drug dealers, and slave traders
have never had it so good.
The government's 'experts' really are experts. They know how many people are
working, and how many aren't who could be. They spend a lot of research on
how much stuff everyone makes, and they adjust the amount of money available
so that everyone has enough cash to pay for it. They insure the banks so they
don't run out of money, and regulate them so they don't do stupid things with
it, because bankers really are money-grubbing shysters, sometimes.
The banks keep your money safe, and you can get your password reset if you
forget it. You can move money anywhere in the world for a surprisingly small
fee. You can get some of your money anytime, and all of your money if you want
it, even if the bank goes broke. The economic problems of Japan or Europe stay
in Japan or Europe, but because we have a system, we can use dollars to buy
some of their currency if we want to.
If there are problems with this system, and there are a few, they will not be
fixed by crypto.
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