The End of Money

It has been said that money is the root of all evil and for the most part that saying is correct. The number one cause of crime, divorces, arguments, fights and just about every problem that you have in your life boils down to one common denominator and that is money or lack thereof. This is not to say that money has always been a great evil that humanity has had to deal with. But when one takes the time to review the evolution of money and the role that it has played in society it then becomes clear that use of money has become obsolete and hence a problem in modern society.

One of the earliest forms of physical currency was commodity money. Commodity money were objects that had direct value in themselves (tobacco, corn, wheat, leather, alcohol, gold, silver etc..) and could be used as a medium of exchange for other goods. One of the key problems with commodity money was that, like bartering, it required a “coincidence of wants”. Meaning, if you walked into a shop with tobacco as your commodity money but the shop owner had no need nor use for the tobacco then you could not purchase anything in the shop. As time progressed more and more people began using gold and silver coins as a medium of exchange due to the inconvenience of storage, transportation and decaying of commodity money they possessed. This is a very important mark in the transition to take note of. The shift from commodity money to coinage made goods more liquid because the actual coinage had a single recognized unit of exchange.

Shortly there after, along side with coinage, came representative money (paper money, gold standard). Representative money (paper money, gold standard) was backed by an underlying commodity, in the case of the United States the underlying commodity was gold. During the time of the “gold standard” in the United States you could exchange you dollar for gold and that is what gave the dollar actual worth. This reduced the need of having to actually walk around with physical gold, it was simply a lot lighter on the pockets. The practice of purchasing goods with gold and other precious metals continued until 1933 when it was banned out of fear of hoarding gold during a period of economic depression in which maximal circulation of money was desired by influential economist. In 1971 the gold standard was officially banned by President Nixon due to foreign arbitrage during the Vietnam War (Nixon Shock).

(Example of Arbitrage)

Suppose that the exchange rates (after taking out the fees for making the exchange) in London are £5 = $10 = ¥1000 and the exchange rates in Tokyo are ¥1000 = $12 = £6. Converting ¥1000 to $12 in Tokyo and converting that $12 into ¥1200 in London, for a profit of ¥200, would be arbitrage. In reality, this “triangle arbitrage” is so simple that it almost never occurs. But more complicated foreign exchange arbitrages, such as the spot-forward arbitrage are much more common.

The elimination of representative money brings us to where we are today, Fiat Money. Fiat money is a form of currency that is without any intrinsic value. Essentially the dollar in you pocket today is merely a worthless piece of paper whose value is established by government decree. Fiat money is the current prevailing form of currency in the world today. One of the main problems with fiat money is that because it is not backed by a fixed amount of gold or any other commodity of worth it can be printed at will. Unregulated this eventually causes hyperinflation.

Upon the examination of the evolution of money there is one thing which sharply stands out. Which is, up until this point in humane history money has always been, essentially, a tool of resource management guiding the distribution of goods accordingly. During the time in humane history when scarcity of goods were real it was necessary for money to exist in order to prevent rapid shortages of goods that could not be quickly reproduced, due to the lack of scientific and technological understanding. Today, scarcity in the world is not actual but deliberate simply to maintain our old outdated social structure. Currently,we have the technological understanding to produce the necessities of life for everyone on the planet without the need for money,  it is merely a matter of applying it. Money is no longer necessary in human society.

At this point in time money dose nothing but cause problems. The next time you see a homeless man laying on the side of the road, stop and think about why he is homeless. Is because there is it because there isn’t enough housing. Nope, as you drive around your city there are plenty of vacant apartments and condominiums that you see everyday. Then ask yourself why is the homeless man hungry. Is it because there is a shortage of food. Nope, every time you walk into a grocery store the shelves, not including the stockroom, are filled with more food than they can sell that they eventually end up throwing out. Then why, why is he in such a horrible state, oh yeah, its because “he can’t afford” any of those things, that’s why. Well why doesn’t he stop being lazy and get a stupid job. Yeah, a stupid job, you know what I’m talking about. Kind of like the one you (the reader) wake up and go to everyday, standing behind a cash register or sitting behind a cubical in an office, that kind of stupid job. The stupid job that you hate going to everyday and then will call a homeless person lazy for not having when in actuality your just jealous because you wish you didn’t have to work like the homeless man. As a matter of fact why don’t you just quit your job and pursue that thing that your actually passionate about, oh yeah, “you can’t afford to”.

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2 responses to “The End of Money

  1. Right. People make everything. The money is only a symbol of greed and power. BTW did you know that banks can legally create up to 9 times the amount of existing money out of thin air each time a person takes out a loan? Gotta love the fact that you put your hard earned money into a bank that they use to back up all of the digital credit they create out of nothing.

  2. Your argument about the financial system that we have is logical and I agree that it needs to change. However, it won’t happen until generation Y realize that in order to change it since the previous ones brought it.

    You blended also our work choices which I found true on separate terms but confusing when trying to reach a cause & effect relationship about: our financial system – how money is related to our job choice – and to a homeless man

    Good post anyway
    @nsarafidis

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