Money is good: the intuition marking the upward surge of mankind.
Updated: Dec 23, 2019
The first law of thermodynamics states that energy can be neither created nor destroyed, but only transformed. On another front, the main principle bestowed upon the traditional concept of Karma tells that the more you give (of anything to the universe) the more you receive. So, it is right in between these two concepts, or on the border between science and the intangible, that I see the original intuition sparking the invention of the one thing everyone may well consider as the most chased exchange and communication tool in our society - or called it by its name: money.
In the early days of limited local economies, the prime shift from an economy of subsistence to an economy of commerce (and then to a capitalist one) was that most resources and manufactured goods started to be traded in exchange of something else (mostly other goods and labour time). However, the real challenge that our ancestors faced was how to standardise the value of similar goods, and at that point, someone came up with an idea: why don’t we create a commonly accepted symbol of value? Certainly, a revolutionary idea back then, but that required to shift from an intrinsic value approach to a symbolic one, where the common consensus would have had the ultimate decision on what is worth what. It may all sound cumbersome even today, but back then was an idea in the neighbour of E=MC2 or even time itself.
So here it comes my first bold statement, and that is that money is one of the greatest tangible inventions of all time, for money (on its bright side) allowed the progression of humankind as nothing else has ever got close to. Money gave people the capacity to elevate themselves through hard work in an exponential way – not just linearly. Money is also the ultimate communication medium, it allows understanding between people regardless of their language, distance, religion, political creed, character or mindset. So, how did the intuition of money come to be in the first place and what’s its ultimate essence? Psychologically, I believe that it all traces back to the fundamental necessity of humans to seek patterns and evaluate things, but more so money (and its usage) is the mirror of one’s personality and attitude towards life – good or bad, fortunately, or unfortunately.
Today is even more fascinating to speak about money when we look at the whole cryptocurrencies’ movement, perhaps the most ground-breaking monetary innovation since the abandonment of the Gold Standard. The possibilities for this new digital monetary medium are almost boundless, even if, being this an embryonic currency and asset, the bugs to be fixed are still many. In the last years, we saw how cryptos’ prices swung vehemently between hype and fear with the high volatility that put off a lot of new users – but maybe once again Mr Market knows nothing? Nonetheless, it is truly fascinating to imagine a world where currencies will not be mainly dependant on Central Banks and where market consensus will be the main value driver of this new type of money. Moreover, regarding the detriment of our overly indebt monetary economy, since we departed from the Gold Standard in the 70s, every person in the world that gets into a monetary transaction is basically using the debt of a Sovereign State. This evidence should per se raise eyebrows if we just think about the past when people were paying in precious metals, or when the late JP Morgan said “Gold is money, all the rest is credit”, as to him the evidence that cash is per se worthless was clear already 100+ years ago – that late old sport…
So, in all its forms, why money is money? Maybe even Shakespeare would stumble if called at the bar to answer this Hamletic doubt; but money is money because we say so, period! Money is a symbol of value like a stock is a symbol of ownership, and that ownership has a value itself that is given by the capacity of a business to attract more money, in their case higher revenues. Hence, retracing to the previous paragraph for a side note, we get closer to understand why major financial institutions and Central Banks may fear cryptos, as they could literally redesign the whole architecture of our global monetary economy.
Looking for a completion stamp of this article, I’d like to fly back in time to a famous script line from the immortal movie Wall Street, shot by Oliver Stone in the mid-80s: "greed is good", as said by Gordon Gecko during his masterfully delivered speech at the shareholders meeting of Teldar Paper Inc. (a company targeted by one of his hostile rides). However, the great shame to me is that people recall only those three words from a much wider and wiser speech, for Mr Gecko didn’t only refer to “greed for money” but also “greed for life, knowledge and love” as drivers that “marked the upward surge of mankind” – so please, please, please, next time that some random cynic will call out the good old “greed is good” help that person to fill up the gaps in that sentence, as money and greed can actually be good.