A Brief History of Money

The first generation of Civilizations didn’t have it. Money is not quite as necessary as some modern Philosophers would have us believe. We only have to think about what money does, mechanically, and then wonder if something else would do. The first Generation of Civilizations simply dealt in ‘kind’ – where exchanges had to be made, goods of equivalent value were traded. Indeed, some areas of the World still are willing conduct business along such lines, and I remember years ago in the Peace Corps (yes, I was one of John Kennedy’s best and brightest a long time ago) that I could pay my rents in the Far East with either money or an occasional large bag of rice, and I suppose my Land Lady preferred the rice because it would save her the trouble of fetching it from the store herself.

The first deviations from Trade in Kind were with Checks for Value – I.O.U.’s -- Promissory Notes – Letters of Exchange. Much of the Modern Economy has reverted to these very ancient devices and devices very similar to them.

Money in the form of coinage was actually something of a step backward toward Trade in Kind, as gold and silver are actually just commodities themselves. It is because Gold and Silver were only just commodities themselves that the exchange in Gold and Silver was often complicated by the inevitable swings in value and then all the manners of fraud – alloying the precious metals with tin and lead, or shaving the coins. It required every Trader to become something of an expert in metallurgy so as not be too extensively defrauded.

The Modern World was able, finally, to shake off Gold Standards and Silver Standards after England, when maneuvering to corner the World’s Gold Market in the late 1920’s was successful in almost completely destroying the World’s Economy, particularly the economy of America, which we presume was their primary target (it was never explained to the Public at large what exactly had happened, since it was felt that the Public had often enough clamored for War because of far far less then what the English had then provided excuse for, and then, since the Wealthiest of the Wealthy were able to get by, and just the little inconsequential people were hurt, it was decided that England’s attack on the World Economy could be written off as a joke that was not very amusing). Bolstering one’s Economy of a Metallic Commodity that could be manipulated by outside forces was simply not wise. So it was replaced by a kind of set of arbitrary values, but arbitrary values that are agreed upon by most trading parties. Basically, each national currency is worth what people are willing to give for it, though we do have exceptions, for instance, now with America who is demanding that the Chinese artificially increase the value of the Yuan against the Dollar – a silly way America has conceived to impose Trade Tariffs while allowing the targeted Trading Partner to keep the fine imposed against it.

The problem we may foresee with such arbitrary values may involved perceived value. For instance, one may infer that the reason America is willing to pay more for Chinese Goods, is that they assume that purchases will decline and the hemorrhaging of Dollar Debt to the Chinese will stem off (where if purchases in quantity hold steady, as China is still the supplier of choice, the result for America will be that the Debt will only grow larger…. Those silly politicians!). The problem of perceived value comes into play as America may suspect that the World Banks may eventually be concerned that any one World Power holds so many dollars out of circulation. If any One Power decides to simply dump a large percentage of another Nation’s Currency onto the World Markets, it could be worth virtually nothing – so many Dollars against so little actual commodities that could be purchased for them (America no longer has any Manufacturing, and only sells a little grain, and less beef). We can imagine what would happen if China, Japan and Arabia were to put their heads together and decide to simply throw their Dollar Reserves and Dollar Bonds upon the trading floors of the World. It would effectively be America losing World War III without anybody needing to fire a shot.

The next evolutions we might expect for Mediums of Exchange would be toward E-Cash, to forestall all the Money Laundering, Corruption and Crime which relies upon Cash Only Purchases. And then we might see a Euro Style One World Currency, to get away from the American Style games of adjusting Currency Values as crude substitutes for Trade Tariffs.