Humanitarian Government: Part 4, Part 1 of Economic Primer
Section 4
To start this off, economics isn’t a small subject. It also interacts with just about everything; if not, it interacts with everything. Since I believe everything is interconnected, I lean to the ‘does interact with everything’ camp.
This section is more for terminology with definitions and a bit of history thrown in. It’s to build a foundation that doesn’t assume anyone has any formal training in economics or even knowledge beyond ‘pay’, ‘debt’, ‘taxes’, and …pardon the wording, ‘I’m fucked because I can’t work enough hours.’
So, a way for everyone who reads this to be on the same page I am on. This isn’t talking down; it’s simply because ‘specialists’ have their own language. Everyone else might use the same term, but it means something different but similar, and I’m trying to head off a potential crossing of lines before it happens.
My views, as again a disclaimer, are mine. I’m presenting this as a proposal and sharing some ideas. There will be, I know, people I will piss off mightily. There will be some that might sing my praises, so to speak.
Either way, it’s fine. If nothing else, we all have our views, and maybe this will spark conversations. I don’t see ‘business’ as the enemy. I do see those who use ‘business’ as a tool for unbridled wealth and power in a very different light, however.
Issue
Before I get into anything, I’m going to take the time to define some terms. They’re in use today, but may be defined differently in various contexts. Some will be common words, like ‘money’, while others will be socio-econ-governmental systems and descriptions, and there might even be new terms I come up with.
I use the term ‘socio-econ-governmental systems’ for a specific reason. When people interchangeably use terms like ‘Socialism’, ‘Marxism’, ‘Communism’, and others, it means I need to spend the time necessary not only to clarify but also to teach. Those terms I mentioned? They share similar features but can differ significantly. Those who lump them together are like mixing ‘oranges’, ‘tangerines’, ‘tangelos’, ‘grapefruit’, and saying they are all the same thing. If anyone has firsthand experience with that variety, they can attest to their differences. They may all be citrus, but they are also very different. Additionally, another important facet is often overlooked: everything, every little thing, is interconnected.
Definitions
Now, as I begin this, I’m starting to think that even this section won’t be a single posting. Economics is a huge issue all by itself and is very complex in reality. Not of the math or structure, but of just defining what it is, how it relates to governmental or social structures, and such. I will try very hard to keep things brief, but I may not be able to do so. Also, don’t bother looking things up alphabetically, either. I may have the option of organizing it that way, but what’s the fun of making it easy and skipping the needed knowledge?
Money (1, 2, 3, 4, 8): This one may be an extended explanation/definition. In today’s terms, it’s an item with a fixed worth within the society in which it is used, or its worth can be negotiated when dealing with another society or business in exchange for goods or services.
The history of money reveals that humanity didn’t start out using something fixed in any way—humans in various regions, along trading routes, and among each other used barter.
So…you’re a goat farmer, but you need bread. Now, you can’t say ‘The bread is $5’, that wouldn’t make any sense in a bartering world. However, you can say ‘The bread you can get for a goat is x-amount of loaves’ or something similar. The parties involved compromise (‘dicker’) on what amounts are wanted for what, come to an understanding, make the trade, and part as happy individuals. I say it that way, even if neither got 100% of what they wanted, because they both lived, knew compromise was needed, and ultimately got what they wanted. Those humans learned lessons that some have forgotten. Not only all that, but those goats? They could also be referred to as commodity currencies. Before America left the gold and silver standards, even the American monetary system could be called a commodity currency system.
Currently, we operate within a fiat monetary system.
When you get to the fiat monetary system, a time of crossover happened to the pure fiat monetary system we use today. Back in the 7th century BCE to about 700 BCE, there is evidence that struck money of various sorts existed. Bronze and copper cowrie imitations and metal tools were used in China around 1000 BCE. In a kingdom of Greece called Lydia, which would have been in Turkey in today’s geography, coins of an alloy called electrum have been found. That alloy was made from gold and silver. I could call the struck because they had specialized weights and had official markings, guaranteeing their worth.
The move from heavy coinage to a more paper currency happened during the Song Dynasty in China (960-1279 CE). Like in today’s world, it was receipts for deposited coins or worked as promissory notes issued by merchants. This allowed for large transactions, and as stated, who would want to have any beast of burden or even beasts weighted down with coinage to conduct business when trading multiple or large amounts of goods? Those animals would be better used for more goods.
Closer to ‘home,’ I know that the Poor Fellow-Soldiers of Christ and the Temple of Solomon used a similar system. A pilgrim traveling to the Middle East, more specifically Jerusalem, would deposit money with one posting and be issued a note. When you arrive at your destination, you can present the note for the amount, minus a small transactional fee. The same on the way back home. Sounds like today’s banks, right? Well, yes, and what would become known as the Knights Templar also got into major trouble because of it. They ended up in a position that they could lend a great deal of money to Monarchs. That led to King Phillip IV of France not wanting to take out another loan for another war. Rather, he wanted to skip the payback. I won’t go more into the back story, but between various factors and stories, Pope Clement V charged the Templars with heresy, and the Templars were dissolved, and some of the leadership were even burned at the stake.
On a personal note: in ways I can foresee something, maybe not as bloody, but similar in nature.
Commodity currency (2, 4, 8): Around the world and at various times, certain items evolved to be seen as having more than a negotiated price for another item or service. Cattle were among the earliest domesticated animals and have been utilized in many cultures throughout history. The Mesopotamians (Sumerians and Babylonians) used barley and the shekel. You might want to argue that a shekel is a fiat currency, but originally it was a unit of weight. Therefore, a shekel of barley was deemed by society to be worth a fixed amount.
Cacao beans for the Maya and Aztecs, various shells were used by many cultures, including American Colonists and Ancient China, stones of different sorts, cuts, and such have been used, noticeably the Yap in Micronesia, and other farmed items and resources that weren’t struck or minted but still developed a fixed worth.
Fiat currency (3, 4): Fiat money you use daily. Simply put, it’s a physical form of acceptable worth issued by a government. The dollar used to be backed by silver and gold. That in itself is an interesting bit of history. I’ll define ‘Gold Standard’ and ‘Bimetallic Standard’ in separate entries. Currently, the US prints out what is essentially a piece of paper that, in itself, has no real worth. However, between governmental law, societal acceptance, and an understanding that it is accepted in lieu of something physical of value but has been given a measurement of value, it’s used. Unfortunately for the U.S., due to many factors, the dollar is falling out of favor as ‘the gold standard’ of fiat currencies.
Gold Standard (4,5): In 1834, the U.S. transitioned to a gold standard, which became official in 1900 with the Gold Standard Act of 1900. Before that, it was, indeed, gold and silver, so if one wants to debate my wording, I can honestly say it was both.
Unfortunately, that standard was suspended during the Great Depression in 1933 by President Franklin D. Roosevelt. Even worse, in 1971, President Richard Nixon ended international convertibility of the dollar to gold. Meaning our dollar became severed from its backing. I will note that many turn to gold or other metals as a safe haven for monetary value here in this country. However, although valuable, I will give it a caveat: you can’t eat or drink it, and if things fell through entirely, you might want to learn what sort of farming or skills you have that might be worthwhile.
Specie Payments (4, 6): This is the form of ‘trade’ between the use of a bank note (in this case, a dollar) into coins or precious metals (AKA specie) upon demand. This was used in an attempt to avoid inflationary issues with the printing and use of paper money, but was, in reality, difficult. That’s because the prices of gold and silver fluctuated, and economic crises led to suspensions due to the volatility of their value several times, despite the U.S. Constitution granting Congress the power to coin money and regulate its value.
Bimetallic standard (4, 5, 9 ): I’ve mentioned that the US had a Gold and Silver Standard monetary system, and we did. At one time, we had a working Act called The Coinage Act of 1792 that set the official unit of currency as silver at a ratio of 15 gold to 1 silver. That ended in 1873 when the Coinage Act of 1873 ceased the circulation of silver dollars. There were smaller coinage that were still made of silver, and the entire episode also has a term ‘Crime of 73’ attached to it. Another side effect? A ‘Free Silver’ movement that wanted the return of unlimited coinage of silver. This was to expand the money supply, and it was posited as an ability to ease financial burdens on farmers and debtors.
The next hiccup came with the Great Depression and the Gold Reserve Act and Silver Purchase Act of 1934, which returned the US to a silver standard. Then came the above-mentioned severing of any backing by President Nixon in 1971.
Currently, there are no countries worldwide that use a silver standard.
Credit (10): Credit has been around for a while. As stated in my fiat money definition, the Knights Templar lent money to King Philip IV, but he wasn’t the only one who borrowed, either. The expectation was payback with some sort of fee or interest for that borrowing. The same still applies.
The thing about credit in today’s economies is that a significant portion of the money supply is created by credit. But for the ability to purchase or invest that a business or person may not have been able to afford otherwise, there are significant drawbacks and secondary positives.
Credit, despite current circumstances, can spark or promote economic growth. It can also drive consumption and production, allow cash flow management, and provide individuals a way to cover unexpected expenses or invest. One could even stretch it to ‘wealth building’: home ownership, education, and business start-up are just a few examples.
I could also argue about it being a detriment.
As stated, it could spark or promote economic growth. Fine, I get that. Starting or even running a business until it can stand on its proverbial two feet is an economic challenge. Been there, done that. But it can also hurt. What happens when a business fails? The individual is stuck with any debts past any assets the business had and were sold off for. That can and has sparked both business and individual bankruptcy.
As far as consumption and production, not all of this is based on what I’ve read, but rather observation, and that’s not necessarily a good thing either. From the time I was a ‘little girl’, I’ve always heard the adage ‘Keeping up with the Joneses’. In short, your neighbor or friends may make more money or have some other sort of monetary edge and can afford goods or services that you can’t without using some kind of outside money source. I’m not talking about a second job or another source, but credit. So, you get a line of credit, and you sign a piece of paper promising to pay it back with some arrangement of interest or a fee. You ‘Keep up with the Jones’, and, as we’ve seen in at least the last two decades if not three, various financial factors figure into wages essentially stagnating, prices increasing, those in debt failing, and such and that ‘Keeping up with the Jones’ ends up with one not just in the hole, but that hole has become a black hole. I know from personal experience that an increasing number of people are using credit cards (a form of credit line) to simply make ends meet. Food, gas, utilities, and all are increasingly being put into the debt model. Personally, I’ve cut up every credit card and use alternative means to pay down my debt, allowing credit only for my car and house. That’s it. What does that do? You might have guessed it: economic turndowns.
Granted, cash flow management can be achieved through a fixed outflow per month, allowing for easier access to goods and services, and all that entails, such as ‘keeping up with the Joneses’. Again, that feeds into precisely what the previous paragraph stated. Businesses increasingly turned to credit cards and debit cards as a means to transfer money and pay for things, especially online. So, in ways, credit has become a way of life that is increasingly ‘mandatory’. Granted, debit cards are directly tied to a bank account, but being tied to paying bills or purchasing goods wasn’t what they were used for to start with. Simply a way of doing banking at any hour and at ATMS to pull money out of your accounts.
As far as wealth building. Housing and cars, I can see, but those depreciate in value. Even education to a point, but even that has become problematic. Remember that little thing called ‘increasing the money supply’? That can cause or feed into ‘inflation’. But the Great Depression was sparked by the Stock Market Crash of 1929. I’ll get to that later.
There are also two distinct versions of credit: trade and consumer.
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For now, I’m going to stop here.
In however many entries this subject takes, just remember: I took High School Economics about forty years ago (I’m old as dirt and most days I feel it). When you get to accountants, CPAs, Economists, and such, they take at least three or four years of theory and practice. Mine is more ‘practice’ around a kitchen table and the one year as ‘theory’. Who knows more?
I leave you with these questions: if one knows theory and pure practice but doesn’t necessarily have much real-world experience, do they understand the reality or the preferred viewpoint? If you live the real-world experience and aren’t listened to or your life can’t get to that preferred viewpoint, are you wrong?
I know my answer. Do you know yours?
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FOOTNOTES
(1) https://www.google.com/search?q=money+historical+line+of+use&sca_esv=eff7f5ade088c338&rlz=1C1ONGR_enUS1168US1168&sxsrf=AE3TifPnkVzn2XQ9_vHg8IBQ7MIbIT4oKg%3A1754881690628&ei=ml6ZaNWTJsvVkPIPiOzf-QE&ved=0ahUKEwjVyKve44GPAxXLKkQIHQj2Nx8Q4dUDCBA&uact=5&oq=money+historical+line+of+use&gs_lp=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&sclient=gws-wiz-serp
(3) https://www.google.com/search?q=fiat+money&rlz=1C1ONGR_enUS1168US1168&oq=fiat+m&gs_lcrp=EgZjaHJvbWUqDwgAEAAYQxixAxiABBiKBTIPCAAQABhDGLEDGIAEGIoFMgwIARAAGEMYgAQYigUyDAgCEAAYQxiABBiKBTIMCAMQABgUGIcCGIAEMgYIBBBFGDkyBwgFEAAYgAQyDAgGEAAYQxiABBiKBTIMCAcQABhDGIAEGIoFMgcICBAAGI8CMgcICRAAGI8C0gEJNTY4NWowajE1qAIMsAIB8QVvAs2KpW9wtg&sourceid=chrome&ie=UTF-8
(4) https://en.wikipedia.org/wiki/History_of_money#:~:text=The%20Mesopotamian%20civilization%20developed%20a,and%20parallel%20form%20of%20currency.
(5) https://www.google.com/search?q=when+did+the+us+leave+the+gold+standard&rlz=1C1ONGR_enUS1168US1168&oq=when+did+the+us+leave+t&gs_lcrp=EgZjaHJvbWUqBwgAEAAYgAQyBwgAEAAYgAQyBggBEEUYOTIHCAIQABiABDIHCAMQABiABDIHCAQQABiABDIHCAUQABiABDIHCAYQABiABDIHCAcQABiABDIHCAgQABiABDIHCAkQABiABNIBCTc3MjdqMGoxNagCCLACAfEFHvEr7Q89C2U&sourceid=chrome&ie=UTF-8
(6) https://www.google.com/search?q=when+did+the+us+atart+the+gold+standard&sca_esv=3d2007566768416b&rlz=1C1ONGR_enUS1168US1168&sxsrf=AE3TifMyMaHDpbRPu_APFjU8NapHPpz_5g%3A1754883461955&ei=hWWZaKqHOufNkPIPn5a2gAk&ved=0ahUKEwjq3fyq6oGPAxXnJkQIHR-LDZAQ4dUDCBA&uact=5&oq=when+did+the+us+atart+the+gold+standard&gs_lp=Egxnd3Mtd2l6LXNlcnAiJ3doZW4gZGlkIHRoZSB1cyBhdGFydCB0aGUgZ29sZCBzdGFuZGFyZDIHEAAYgAQYDTIIEAAYCBgNGB4yCxAAGIAEGIYDGIoFMgsQABiABBiGAxiKBTILEAAYgAQYhgMYigUyCxAAGIAEGIYDGIoFMggQABiABBiiBEigKlCaBFj_HHAEeAGQAQCYAWegAe8EqgEDNi4xuAEDyAEA-AEBmAIKoAK-BMICChAAGLADGNYEGEfCAgYQABgHGB7CAggQABgHGAgYHsICCBAAGKIEGIkFwgIKECEYoAEYwwQYCsICBBAhGAqYAwCIBgGQBgiSBwM5LjGgB7UysgcDNS4xuAesBMIHBTAuOS4xyAcc&sclient=gws-wiz-serp
(8) https://www.google.com/search?q=the+history+of+money&sca_esv=a580e5b387f8dd29&rlz=1C1ONGR_enUS1168US1168&sxsrf=AE3TifP28smUynNRTLUKg3G69UWwDnKSQw%3A1755392080680&ei=UCihaPikKdbCkPIP6dPDwA8&ved=0ahUKEwj4jKSL0ZCPAxVWIUQIHenpEPgQ4dUDCBA&uact=5&oq=the+history+of+money&gs_lp=Egxnd3Mtd2l6LXNlcnAiFHRoZSBoaXN0b3J5IG9mIG1vbmV5MgUQABiABDIFEC4YgAQyBRAAGIAEMgUQABiABDIFEC4YgAQyBRAAGIAEMgUQLhiABDIFEAAYgAQyBRAAGIAEMgUQABiABEi_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&sclient=gws-wiz-serp