Poemander

Building upon the previous discussion, let us say that humankind is now very far from the public ownership becoming a rule rather than exception and the reign of money is here to stay. While mentioned earlier is a macro view; what we are concerned with at the moment is the role of money and it still brings us back to the same concept of trust. But the trust as a form of risk management rather then pure altruistic trust mentioned earlier. Here money act as a quantifying mechanism in this system of managing risks, promises, expectations and fears. We have been successful at quantifying pretty much everything: we have been able to attach prices to human lives, relationships, creativity, future. We even still accept alms for redemption of sins ( yes we still do, just think of bribes, bails and fines for the prescribed types of offenses, including criminal). Do I thus criticize the system? No I don't, I even think that this is the best we can do at the moment. And if we move further along the same trajectory, we'll be able to eventually break through this emotional toll that money customary carry with them. Money will become completely impersonal, fluid and diminutive, in other words a 'currency', which we never had in a pure form so far except for the name itself...

Now, if we continue to refine our understanding, along these very prostrate ideas, could we not start seeing how the concept of money has emerged as a very tangible takeaway.

For now, Lets imagine that money is made of the following two components: a debt/wealth quantifier and the currency as a transactional facility.

The first element is indispensably tied to the proposition that debt is very much a socio-cultural phenomenon. If we draw from he above mentioned concept of public custodianship, can we not see how the cosmological continuity regarded as the single all-important 'wealth' of existence could have turned into something like a feeling of unredeemable indebtedness to this very same eternal existence. It is only logical to consider that this shift has happened as a natural consequence of the earlier outlined process of individualization. That is the time of the 'original sin' mutated into a feeling of guilt and indebtedness to the omnipotent powers of the Cosmos. Upon finding themselves deeply burdened with the infinite debt to the powers supreme, it is understandable that people would start looking for a substitute inside the material world suitable or valuable enough to, at least in principle, relieve some of this burden. The closest 'item' they could figure somehow matching these grandiose powers was human life itself. It is not to say that the lives were not thrown to the feet of 'divine creditors' (of cause they were in multitudes, just think all those sacrifices), it is, in fact, the continuation of life that was seen as the greatest worldly miracle. Childbirth is certainly this incredible (pun intended, see the etymology of the word) miracle bordering to nothing else but the realms of divinity. So fertility has become synonymous with the cosmological continuity. Human fertility, animal fertility and fertility of the land, as above, so below. This is how an archetypal woman, or a 'wombed man', became precursory to what we now know as money. No, I do not intend to offend anyone, but all the monetary values sprang as quantifiers to first cosmological (which is feminine in principal) and then directly feminine fertility. It is nothing else but fertility or the claim on reproduction that became the most important measure of wealth. All wars to this day have been fought solely for this feature: from crude acquisition of maidens and fertile lands in the older days, to more convoluted, now actual and economical wars in essentially staking the claim on reproductivity of the former. Feuds were potentially and at times actually settled in women, more often, however, with the 'acceptable' equivalent in cattle or goods. Until now it is most insulting to call upon your opponent's mother, wife, sister or daughter since 'female' is the dearest measure to all other measures and values we know of, culturally and naturally. I do apologize as all this seems totally immoral, disrespectful and unjust, but this is how it actually happened and continue to be. I can see how males could have been commoditized in the matriarchal society instead, just think how Amazons would have ascribed value to males for the continuation of their kin. Don't hold me for my word, but no regime or social movement can create a complete gender equality as long as childbirth is a female prerogative. Only the development of cloning can potentially liberate women; however, it is not to imply that 'liberation' means 'good', neither does it mean 'bad', after all liberty is just a change of perception.

So what about the second, currency element of money? Even though bringing the parallels between 'woman' and 'money' evokes outrage and slave trade quickly comes to mind, I contend to say that in majority of situations no one would have actually thought of transacting in 'women' because to do so would not only be inhumane (as if anyone cared especially in the times of war), but largely inconvenient. In fact, the ties a woman had to her parents, husband, brothers and so on would have made a trade morally as well as financially (unquantifiable) impossible; however, not so for a slave forcefully removed from all these connections and thus deemed to represent a 'separate unit' or even a 'currency'. I highly recommend here a book written by David Graeber, “Debt: The First 5000 Years” which explores this topic in great depth by drawing parallels between the historic events, traditions and the current function of money.

But this is not what I am trying to explain, instead I want to point out that the currency element was almost non-existent in those original monetary forms, instead they were mostly and totally an ultimate debt/wealth measure from which other values have been derived. Just think, the cost of transacting with these ultimate values is enormous: not only you have to feed a person, a cattle, upkeep the land, but also provide care, and coming back to 'women' example, actually surround her with 'love' if you really wanted her to be that 'ultimate value'. Of cause love is unquantifiable, but one could try to replicate it in the form of adornments. The beautiful garments and jewelry would be (and still are) presented not to increase, but merely to upkeep this esteem, prestige associated with the ultimate measure of human wealth, i.e. feminine aspect. Not surprisingly, that it is nothing else but precious metals and gemstones, all used in adornments, that became the next form of money. What they indeed represent is the transaction costs (up-keeping costs) required as maintenance to the ultimate representation of value. Same with the cattle and land, these transactional costs would be hay, barley, the hoes and the ploughs.

You may rightfully ask how do I relate transactional costs with the up-keeping costs? It would have been a difficult question if not for this functional division of money into two elements: what the up-keeping costs to the debt/wealth side of money is the transactional costs to the currency side of money and vice versa.

So, without a further ado, let's see what we have:

Currency is purely a transactional mechanism. It is disconnected from debt and wealth. How? Because it doesn't have the time effect. Debt, right, entitlement, obligation all require a time factor thus carrying with them significant moral toll. Currency instead, is like petrol flaring up inside the cylinder, a pure function. Debt element of money on the other hand, is that petrol that sits in the tank, gas station or beneath the bedrock in the form of oil. Debt money is not a function, it is a waiting, it is both, an asset and a liability, thus the saying: “time is money”, maybe coincidental, but deeply significant in representing this debt/wealth component. Fertility, as a primal monetary measure is thus the claim on the future potential of a human being, animal or the land, all of which make it a form of waiting and, therefore, predicate the concept of wealth. Pure currency, however, is achieved when we can completely remove this burden of 'waiting', the fuel lines, the fuel tank etc, to become a pure function flaring up on demand. And since all IOUs need time factor, upon diminishing the longer-term purpose of money, i.e. the 'fuel tanks' and increasing the viability of the short-end, i.e. 'combustion chamber', the curve shall move towards the short-term thus decreasing the functionality of IOUs.

We can see the progression, how the newer forms of money would have a larger currency element and a smaller wealth element. Gold, for instance, has come as a claim on some broader wealth of fertility, better quantified, yet only a claim, somewhat more of a replica of the original wealth. Take middle-eastern harems for example, women inhabitants there would rank to nothing less than the well-being of family, the esteem and the prestige of a husband. No amount of gold would come close to matching these types of wealth. Only a wicked or desperate husband would quantify one of his women in gold, instead, wherever possible, he would try to lure in the new wife with gold and luxuries, knowing well that those are just the up-keeping costs and in no way a price of a woman. In turn, the up-keeping costs of gold, i.e. minting, storage, are only a tiny fraction of those required to 'maintain' a human being, even if only from financial perspective. As a currency, transaction costs of gold, therefore, have significantly reduced, divisibility dramatically improved, add to it the uniformity and portability and you have an almost perfect settlement currency.

Paper money, have in turn emerged again as a claim on its predecessor, this time gold or in come cases a certain commodity. Thus in the debt/wealth sequence they became a claim on a claim, making the emotional wealth component even remoter and smaller. Indeed, you can witness that people would rarely think of paper money as a main 'wealth', they would still rank gold, live stock, property higher in the hierarchy, and even higher they would rank the non-financial (because not quantifiable) wealth such as health, family relationships and the continuity of their kin above all. Yet still, some would rank even higher the spiritual realms as their ultimate wealth, taking the concept much closer to the original idea of custodianship over the cosmological continuity.

Promissory notes deviated yet further from the notion of ultimate debt/wealth. Concomitantly, the up-keeping costs have almost become negligible (protection against counterfeit, storage) and the currency component of paper money have improved even further with only small transaction costs (physical handling, conversions). I'm quite adamant that you may want to include the inflation into the up-keeping costs of money. However, this is not technically correct; the inflation is always a cost of governance and not the cost of money even if it feels like it (I shall expand on this topic in the coming series).

The fiat money (not directly supported by gold or any other tangibles) have extended the same progression to greater heights (depths perhaps?). The debt/wealth claim of fiat has moved back into the intangible as it has been aeons ago (and to a certain degree during the various times of antiquity and even modern history). Interestingly, this may signify the grandiose shift in perception and perhaps even the turning point which has not been reached for milenias. This shift goes down to the most fundamental layer of human perception, aka trust. The fiat money were the first global attempt (at least on such a scale that we know not happened before) to acknowledge trust directly as the basis of all values. I don't think it has yet settled in and have been fully understood, but the appearance of crypto currencies and digital assets is shifting this paradigm exactly along the charted course of history, i.e. greater currency and lesser debt/wealth component of money. It is not to say that this is all a smooth sailing, global perception needs time to evolve. We have witnessed how bitcoin designed to be a transactional currency has completely slipped into the old mentality of 'wealth quantification'. Of course, the technology is just one side of equation, yet the mentality needs to catch up reforming the perception of debt/wealth and the function of money.

So why is then debt/wealth? We have spoken about the origin of debt, first as a form of deep gratitude towards powers supreme and then as a feeling of indebtedness and outright guilt requiring redemption, yet never fully redeemable in principle. Wealth in this sense has never been sufficient enough to extinguish this debt; more to it, wealth has only been just a form of debt, a mere interest payment only delaying the inevitable. Hence debt and wealth in this context are almost synonymous and I see no contradiction in using these terms interchangeably. However, should we take a broader view, by removing the blinkers of the very same debt, we should notice that it had never existed. All what was there and will ever be is an infinite wealth of Cosmological continuity from which we are not at all separate.

Saying this I am not suggesting that things will somehow suddenly slip into metaphysical realms. What I am aiming, instead, is showing that many of some deeply entrenches concepts are much less tangible than you think. Perception often plays a major role not just in interpreting, but in actually shaping these concepts into something more tangible than it is, to the point where it requires now a lot of mental acrobatics to just appreciate what the original idea actually looked like. Take the concept of price for example; we can look at price-tag, feel it on touch, we can almost assure ourselves that we know what is suppose-to-be price of a particular item. The economists will bang the table saying that price is a function of supply and demand, yet who can tell what is the price of love based on these formulas? What is the the price of kindness, a price of sweat, tears, joy? Ok, if that was a far stretch, than what is the price of labour, say laborer in the field? What if the same laborer now has got the arthritis and osteochondrosis, will the price of wheat he reaps be the same? Maybe higher? Or maybe lower? What is the price of milk in the shop? Will it be the same if you, yourself, have actually grown and fed this cow? Allowed her calf to suckle until naturally weening off and not butchered on its first day to preserve the profits? The answer of a voodoo practitioner and the astrologist would not be far off from the answer an economist can give. Economy as a discipline is thriving on the fact that it cannot be proved wrong. So who shall have the answer then? No one. The price is the answer and this answer is never impersonal, for at least as long as we remember. No, I am not here to bash the economists, neither do I want to discredit the voodoo practitioners; both play an important role at actually working with the fact that some most important things are inherently immeasurable. And the most tangible handle we have in this ephemeral world of trust, perception and expectations is indeed the price. Thus price is a valuable indicator (other indicators anyone?) of transformation, the transformation of perception. And one particular feature I want to observe is the change in perception of prices from personal to impersonal.

Price will have to carry a lesser moral toll if we are to proceed on the course of an outlined transformation.

It will happen with the emergence of scenarios of 'price irrelevance' vs 'price relevance'. Wait, sorry, what does this at all means? This means that the price will become much more disconnected from the asset pricing (old debt/wealth aspect) and become more of a reflection of currency aspect of money, concerned mainly with the throughput and the flow mechanics of the underlying economy. Essentially, the 'on the book' values will become totally unusable and misrepresenting. Prices will become 'perishable', only representing the immediate values as current usefulness of an underlying good or service.

Yes, money have been steadily diminishing it's function as a store if value. The next frontier will be the diminishing function as a unit of account. These two will have to cede their ingrained partiality and a millenia-long debt toll to an impartial and trustless computer algorithm.

Only the means of exchange will remain as a sole function of a new money, the rest is too heavy of a burden to carry along into the new realities.

This has already been happening for some time. However, once the optimal velocity is reached, certain elements of the system will begin stabilizing at price equilibrium, only this time at equilibrium of 'price irrelevance'.

So, which factors can contribute towards 'price irrelevance'?

In general, these are all kinds of distortions to mental biases and stereotypes in price-referencing, some scenarios outlined:

-The price is too high or too low to base on it the dessicion-making. Take for instance a more viable and broader options of micro payments for services; the price fluctuation between say 10c and 20c makes much lesser psychological impact than the same price change measured in say hundreds of dollars. Now if you have more of these low price purchases/sales in aggregate, how likely that proper decision-making still not applied despite reaching the limit that would have implied the scrutiny otherwise? The same logic with prices much higher than typical expenditure. Take luxuries for instance where prices are more a reflection of prestige and status rather than actual materials, craftsmanship and labour. Also applies to institutions, not just individuals, just think of how many corporate acquisitions takes place in the times of overvaluation. Even the best methodologies have difficulty disconnecting prices from perception. Generally, we can say that the prices outside of these psychological ranges can get clouded and therefore deemed less relevant for rational decision-making.

-The price is too volatile to have it as a meaningful indicator. Self-explanatory, especially where no clear correlation with specific events. May also involve volatility across asset classes with nonexistent or broken correlations. If no reliable hedging can be identified under this scenario, the risk takers are likely to assume a prominent role in providing stability by averaging out prices across multiple assets and passing to clients in the form of pre-determined costs, thus rendering prices of individual assets 'irrelevant' to decission-making.

-The price-takers and users are non-related parties. Government policies and progressive taxation most always contributes to this phenomenon with the varying magnitude through wealth redistribution effect. Shared economy, crowd funding or any sort of transactions where payment arrangements and/or agreements are more elaborate than simple reciprocality shall increasingly contribute to 'price irrelevance'.

-The fragmentation of payment intervals. When payments ecosystem enables to drastically reduce transactional costs, it will make sense to align the payments frequency with the timing of actual delivery of goods/services. In other words, payments can be processed 'as you go' instead of advances or arrears. When most of incoming and outgoing funds are processed in such a continuous manner, the throughput of the sustem becomes more relevant measure than price.

All the factors combined, this can truly set up a stage for a generational shift in price perception. Bring it together with the behavioral changes and attitudes towards wealth, risk management, priorities in life and you may see the grassroots of something forming underneath the crust of old habits. Even more so, the monetary transition to greater velocity and transactional capacity of the currency may eventually tip the scales of the old debt conundrum, synonymous with enslavement and swing towards the liberating aspect of debt-free exchange. Which side of the scales shall we choose to stay?