It is often perceived that money equals wealth. We have been taught that we must work in order to acquire some money. Why money? Because money can buy many good things in life. Generally, the more Green Bucks (or whatever currency) one possesses, the more one is able to get things that he/she wants by the means of purchasing them from market transaction(s) that recognize the currency he/she uses.
So simplified is the concept of money that we are taught to think that the paper money we are using is wealth by itself. So far the concept had derived from it that we even treat those paper currencies as commodity, as if the paper by itself has an intrinsic value that can be used to make something or something that can be readily consumed. This is a betrayal to concept of money, where whatever we use to represent our wealth is supposed to be grounded as true representation of wealth, not mere imagination of it.
It took me a long time to understand why the Bible make such a strong statement regarding money:
For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs. (1 Timothy 6:10, New International Version)
Notice the Bible (or the Bible translators) did not use the term 'wealth' as the root of evil. Rather, the term 'money' is used. This calls for scrutiny, is the concept of money is at fault or the medium we are using as money is at fault, or both? Now let us identify some possible consequences of lazy stereotyping of money equals wealth.
First, imagine if the entire monetary system crumbles overnight (or almost overnight) due to loss of trust in the banking system. This had happened in Latin American history and Japanese Banana Currency in Malaya. As a consequence, whatever monetary value (i.e $100 000) one has in the bank or in hand, the value is now useless in terms of representing wealth. In short, one is just as broke regardless of certain amount of Green Bucks with a person possessing none. But with seemingly unrelenting confidence of the mass with this 'fiat money' system, they rest their fate based on mere trust on the 'legal tender' of the government that their money really have real value!
Paper money is not equal to wealth. A wealth is a material good that one can use for consume and/or to produce other goods. For example, a pound of rice is wealth because one can eat the rice and consume it. A pair of male and female goats are also wealth because they can give birth to more goats - adding to more wealth of similar kind to the owner. But paper money is being treated as wealth in our modern society. People invest in interest-giving accounts and in money market in hope that it can serve to multiply their wealth, in terms of making more money.
But when it comes to issue of stability, paper money is hardly stable. The value fluctuates daily and its perceived value is determined by the Central Bank of the government that produces the money. Interest rates are used by Central Banks to determine the purchasing power of money - meaning if the Central Banks will, they can make one (artificially) rich and poor by decreasing and increasing the interest rate and/or amount of money in the market.
And the derivatives that come from this paper money is no better. The prevalence of plastic money and now, online money, adds more to the misrepresentation of wealth. The material goods, which is supposed to exist and can be seen (picture the living pair of goats and a bag of 1lb of rice), is now imaginary numbers in one's head. Transactions are now perceived as the increase and decrease of those numbers instead of real transactions that involve real transfer of wealth. Let alone outrageous interest rates charged by those who operate in the plastic money industry, almost literally enslaving those unawares with a vicious cycle of debts.
Nor does paper money money a good motivator to create real wealth if it is to be seen in the electronic transactions of Wall Street and Nikkei. Those involved produce more money (or lose them) by mere clicks, form fillings, and shouts of the computer and at the floors of the stock exchange, not planting apple trees and nurture them until they bear fruits that can be consumed or produce more apple trees. Again, the former is derived from the assumption of the credibility of imagined value, and the latter is derived based on true creation of wealth.
There must be an alternative to this system. The concept of money itself is not a problem, but they way we treat money as equal to wealth is. What alternatives are available out there? Should we resort to barter trade? Should we use other commodities (i.e. gold, silver, or precious metals) to represent money? Or should we rethink the entire concept of market transactions based on money?
Subscribe to:
Post Comments (Atom)
Yes there are some mobility and security issues by using commodity-based currency. Let us address the mobility issue first.
ReplyDeleteSimilar to current monetary system, we can denominate the coins based with ‘low denominations’ for low-value (more common) transactions and ‘high denominations’ for high-value transactions.
As a hypothetical example, of 1lb of 99.9% pure gold coin is similar to the amount of 100 bags of 5lbs of rice. We can treat this much like RM100 where it is less commonly carried around. But, a .01lb coin of similar gold purity can be mass-produced to serve common needs (because it has the purchasing power of buying only one bag of 5lbs of rice). ... See More
The system does not have to be in one metal-based currency. Other precious metals such as silver can be used to accompany the gold to further divide the value of denominations. Few would complain carrying a nickel-based 50 sen (or even ten of them) in their pockets, so why is there any difference with precious-based system if mobility is an issue?
But, it takes more serious effort when it comes to international trade or any trade that require long distance transactions. I have not yet thorough in thinking about this matter, but one way to address this issue is perhaps by appointing trustee that act much like the clearance house of current day checking system. But a thorough system is required to address the issue.
As security, one may counter-argue that even possessing plastic money or even online money does not ensure peace of mind. While one may lose a RM50 note because one’s wallet is stolen, one can lose RM5000 if one’s credit card (or just credit card number) is stolen by means of identity theft or simple signature transactions.
Plus, wallet designers or even fashion designers can invent some kind of coin bags or jeans with coin pockets to improve the security of the money. That’s for day-to-day security issue. But for more serious issues such as storing the wealth in bulk require more serious system.
Perhaps a gold-bank can be re-introduced to facilitate the system. These commercial banks may charge a small amount of fee for their safekeeping service. As for common household protection, a vault (in form of hard-metal safebox) can be introduced.
Furthermore, the commonality of presence of those precious metal can be a form of security as well. We are much inclined to steal an RM10 money because they are too common and represent only a certain amount of value. For a higher denomination or transaction in bulk, it certainly require a higher level of security. This merit further thought, though.
But the core of the argument remain: can the money one possesses represent true value of one’s wealth?