Wednesday, June 29, 2011
the story of imaginary money
i'm practicing my storytelling skills. can i tell you a story?
once upon a time people bartered for everything. if you needed an object you couldn't produce yourself, or needed help doing something you couldn't do alone, you had to not only find someone who had the skills or good you needed, but also arrange to trade them for something that they needed. there wasn't any money. if you raised chickens but didn't have enough land to grow grain, then you might trade some chickens or eggs to your neighbor who had more grain then he needed but no eggs or meat. large portions of the world still operate this way and there is a revival happening in our own society of trading goods and skills instead of money.
at some point, someone decided that this was a bit cumbersome so why don't we use items that are worth more but are smaller and easier to carry, store, protect, etc and have a standard that says about how much each item is "worth" in terms of, say, gold or silver. gold and silver have value of their own, of course. you can make things out of them and they have useful scientific traits such as conductivity, etc. they're also shiny and pretty and rare, so people like them. they're easy to carry around and can be standardized fairly easily. so far so good. you cannot eat gold and you're adding another step in the transaction process but you also don't have to carry chickens around and if the person with the grain doesn't want any more chickens, you have something else they will value. you can just go trade your chickens to someone else for gold and take your gold to the guy with the grain.
somewhere along the line people decided that gold was too inconvenient as well, so maybe we should store all that gold somewhere safe, and instead of carting it around, we'll get a little note from the guy who's holding onto it, saying how much we have. then we can trade the notes and whoever has the note can go to the guy who holds the gold and get it back anytime he likes, right? well, so far ok as long as the guy holding the gold can be trusted by everyone (uh...huh). people also decided that maybe that guy can just hold onto our notes and keep track of how much everyone has so they can't be stolen or lost or anything, right? we'll pay him a little percentage to take care of them for us.
we were using the notes for so long that we kinda forgot the gold existed, since no one had taken any out in so long. eventually the guys holding the gold, and the guys in charge of them, decided that there wasn't enough notes for everything they needed and that the gold wasn't really important anymore. the gold that represented the chickens and the grains, remember? they started printing more notes then there was gold to back it up. or chickens. or grains. so now the notes are representing, what exactly? if you said stupidity, you're correct! and not just a few more notes. a LOT more notes. and they didn't tell anyone. no one knew for a long time. by the time anyone found out they figured it didn't matter anymore.
moving on we enter the computer age! the guy holding the (not enough) gold doesn't have to keep paper records anymore of who has how much, he can just write it down on a computer and then it takes up less space and can bring up the info more easily. computers never have errors or anything, right? no more wondering if that is a number 7 or a number 9! everyone has perfect typing skills too, right? and they couldn't be affected by power outages or hackers or...hmmm, is this really a good idea, guys? now instead of chickens and grain, or an hour of skilled labor, we have a bunch of 1's and 0's on a computer somewhere. as you can imagine, that made it really easy to also create bigger numbers that have no physical things to back them up. a LOT bigger numbers.
while the banks are busily creating money that has nothing at all to back it up, they can now lend you some! if you promise to pay it back in a certain amount of time and give them a percentage more then what you borrowed, and give them rights to take something physical of yours if you don't pay them back their 1's and 0's that have nothing physical to back them up. wait a second....
now not just the banks want in on this lending of 1's and 0's for the exchange of more of them and possibly your physical stuff too. other people want to get in on that. guys like visa and mastercard. they're buddies with the banks and they back each-other up to try to sound like this is all totally normal and legit. they'll lend you smaller amounts of this pretend money, and usually you don't have to agree that they can take your house or whatever, but you have to pay them back a pretty large percentage more then what you borrowed. you can also only borrow from them if they can check with their buddies and make sure you usually pay things back. they like it when you do so really slowly so they get a bigger cut.
people are impatient. they like being able to buy things now instead of waiting to save up. it's considered the norm that you'll borrow at least some money, especially for big things like a house. let this go long enough and it all seems so normal and ok that now you have to check with all these guys in order to do lots of things, like rent an apartment (which you don't own), or get some jobs (that you need to pay those guys). if you've never borrowed anything from any of these guys, that's almost as bad as borrowing and not paying them back. if you've never worked with their... interesting... businesses, then they don't want anything to do with you. they're kinda like cliquey 14 year old girls shunning the new kid.
since the banks are the ones who lend the money for buying big things like land (why can you "own" land but you can't "own" air?), and it takes ages to pay them back, the banks are the ones who currently "own" most of the land, since it's their imaginary money that paid for your right to live on it, not the blood and sweat you put into it or the fact that it is your primary source of survival resources. and all land is "owned" by someone, right?
anyone else confused? really makes me long for something clean and real and honest. until i can "buy" some land of my own to care for and have it care for me, want to trade my fresh baked bread for an hour of swing dance lessons?
Posted by spiritussancto at 5:41 PM