Proposal for the implementation of a society-oriented universal value-exchange instrument The invention of money is one of the most import...
Proposal for the implementation of a society-oriented universal value-exchange instrument
The invention of money is one of the most important discoveries of humankind, which is perhaps an even more fundamental tool than using fire or wheel. The most important role of money is its use as a universal medium of exchange for the values created by society. People express the value of all things created by society in the amount of money, and in this way all the things become easily obtainable through the medium of money, i.e. it can be easily commodified by society.
Money is also a representation of value from the function of expressing value. That which is more difficult or complicated to produce, of which there is less, or which is needed more, has more value and hence, is worth more money. Money is society's universal medium of exchange for representing value.
Money is suitable for acting as a universal medium of exchange if it is easy to carry and exists in a durable form. A universal medium of exchange that is easily portable, durable, and represents value is also a means of storing value, and also, being able to accumulate value.
In practice, however, money's function as a store of value does not work. In the history of mankind, the actual used money seems constantly, apparently naturally losing its value. Since this seems to be a general phenomenon, the behavior has a name: inflation. As if money were somehow incapable of storing value.
This behavior of the utility money is more than unpleasant, it has a significant social impact. Inflationary money also results in an increase in social inequalities, which leads to social instability and, in extreme cases, leads to the disintegration of society. Money, a fundamentally useful tool, is seen by a large part of society as dangerous, downright evil, often identified as the devil.
This contradictory behavior of money does not follow naturally from its fundamental properties. What is the origin of this behavior of money, which seems to be a matter of law, and which is so dangerous to society?
There are many well-known explanations of inflation, but the fundamental reason for the tendency of money to depreciate its value is that money is an invention of humanity, not something that exists naturally. The behavior of money is fundamentally determined by the way it is used by the people. The behavior of money is a representation of human behavior. The origin of inflation is usually explained by economic and financial causes, but it is fundamentally caused by human greed.
Which property of money makes it possible for human behavior to have inflation-inducing effects on the behavior of money?
The possibility of inflation is created by the fact that typically (and intentionally) the asset that performs the function of money does not in itself, in a generic way, possess the value it represents. If the generic and representative value of money were to be associated with each other, inflation would not exist.
The money used over time has had periods when it directly or indirectly generically represented value, for example when the value of money was determined by the amount of gold that was associated with it in some way, either by the fact that it was itself physically made of gold, or by the fact that the amount of money it was used was linked to the amount of gold physically held by the issuer of money. In several ways, gold has always represented value to people, and in doing so, it has given money a generic value. The history of the money backed by gold is well known, and as a form it was easy to circumvent, and as a method it was easy to eliminate.
Carrying generic value could be a practical, inflation-preventing property of money, since in that case it would not only carry value in a way artificially assigned to it by society, it would have physical value also. However, the generic value of money is not in fact a rational property of money in use. Although it would be useful from the point of view of preventing inflation if the two values were related, it is irrational to expect this property from the money used. Why?
In principle, money, given its function as a medium of exchange, necessarily must represent the value created by society, the value, and that much of value that is determined by the unfinished, pending, incomplete process of exchange of any created value. Ideally, money should only represent value, or even exist, as long as the value exchange process is underway. For this reason, it is therefore preferable that money does not carry value generically since money as a medium of exchange could and should in principle cease to exist when the exchange it mediates is completed.
However, when money has no generic value, its function as a mediator of value exchange is based on trust. Since honesty is not necessarily a feature of human nature, it is still necessary for money to be used as a medium of exchange to have some form of generic value in a value-exchange relationship that does not presuppose trust. If, however, money has a physically existing value, it unnecessarily increases the amount of value present in society, which society must create and maintain.
The money in use today does not carry value in a direct way, as it did when the money was made of gold, nor does it carry a deposit-like value, as it did when the amount of money in use was backed by gold of equal value. But it is necessary to represent value in itself somehow.
The money in use today practically only has virtual generic value necessary for its untrusted use by the state's declared guarantee of the value of its issued money, which is difficult to interpret in concrete terms and does not really work in reality, and which we call the fiat nature of the universal medium of exchange used.
Because of the functions of money as a medium of exchange, its apparently ideal temporary existence makes it practical for it not to physically have generic value, but human nature makes it impossible for it not to have some form of generic value, hence, which is virtually guaranteed as a seemingly practical solution by the state, which function as a monopoly issuing money.
However, even this virtual value that the state is supposedly demonstrating does not exist in reality. The state only pretends the value of money by declaring itself as a power, by laying down in law the compulsory use of a certain currency issued by the state for the process of exchange of value in society. It is not an actual, not even virtual guarantee of the value of money.
In reality, the value of the instrument used as money actually is not guaranteed by the state, it is created by society for itself. The real value of money for the people is actually represented by the effort invested in its acquisition, which is then passed on by people through the exchange of values. For the people, the value of money is not guaranteed by the state, but as a medium of exchange, it is represented by the effort of creating value that is invested in acquiring it. In fact, money has a generic value in this way, the effort that is made to earn it, and which, moreover, can be naturally related to its representative value as well.
The representative value of all the money present in society as a medium of exchange could act in a self-regulating way naturally, through the represented value of its acquisition by human effort, which is in practice generically and naturally equal to the value of all the ongoing, uncompleted exchanges in society. In principle, money, functioning naturally in society, would be able to function in a self-regulating way independently from the state, without the need for external intervention and manipulation, and without a concrete, physically existing generic value.
Money, as an asset, is both a store of value and an instrument for accumulation of value. In principle, this function of money in its natural, self-regulating form could not increase the amount of money in society that is necessarily present through the uncompleted processes of exchange either. Anyone may create and transfer more value to others than the person uses the value produced by others, and thus accumulate the difference in value in the form of money. However, this accumulated money also only represents unfinished exchanges of value. Hence, neither does the function of money as a store and accumulator of value, operating in a natural way, increase the amount of money in society without being covered by unfulfilled value exchange.
However, money as an existing medium of exchange must be created somehow. This task is carried out in a centralized manner, based on historical tradition, and the issue of money is appropriated by the state enforced by its power. Then, the state, using and controlled by its power, uses, and allows to use money for some chosen to perform other 'creative' economic and financial-technological functions in society in addition to its function as a medium of exchange. The potentially and ideally naturally self-regulating functioning money is artificially manipulated to carry additional functions.
The amount of money present in society, which has no physical value, can be easily manipulated artificially by the monopoly of the state which issues money, as the amount of money which is necessarily needed to be present can simply be increased. In reality, the state which manages the issue of money, actually does not guarantee the value of money, but rather manipulates it.
Since it is advantageous if money does not directly carry a generic value, the physical value of money in use is ideally zero, the state exploits its position to continuously create, and issue money not backed by the actually happening exchange process. The practical operation of the state monopoly, which can determine and control the quantity of money in circulation, results in the continuous depreciation of money used.
The amount of money in circulation is usually regulated by a non-political institution, the central bank, whose primary responsibility is to maintain the value of money. In principle, there should be no more money in society than the value of uncompleted exchanges. In practice, however, this is not the case. The state, which is supposed to ensure the proper functioning of society, uses the trust of society to artificially manipulate the amount of money it controls in cooperation with the central bank.
Artificially changing the quantity of money in society, which has no generic value, and is not in equilibrium with the actual exchange processes can have both positive and negative intentions and effects.
Negative characteristics- Because of the nature of money as a representation of value, in a value-centered society (all human societies are value-centered), money also represents power. Those with more money potentially have more value to acquire and therefore have more influence in society. In a power-centered society, money is the power, the goal, and the means of politics. Although such a society cannot function effectively and therefore falls short of societies governed by non-power-oriented leadership, it allows politicians, who see the acquisition and increase of power as their goal to maintain their position. For a power-oriented leadership, increasing money for its own purposes is beneficial even if it means a decrease in the value of money in circulation, as it is a loss for society.
- An increase in the amount of money issued by the state is a suitable means of reducing the monetary debt of the state (in fact, all debt) in terms of value. This is harmful to society because it causes an artificially generated reduction of actual value, causes inflation, leads to a reduction in the value of existing money representing value. However, this debt depreciation policy has a short-term benefit even for debt accumulation holders because it results in artificial value reduction that is not prosecuted by law, but which is harmful to society, in reality it is like legal theft.
- In the value creating process, the activity requires an investment of energy, in social practice, money. At the initial stages, the process is not supported by the money generated from the exchange of the value created. However, money is already needed at this phase, which, in advance, can be provided in the form of a loan. This step is necessary, but in practice it is not backed by existing money from exchanges that are underway and not completed. This loaned money is typically created, made in an institutional way. In principle, this money will be covered by real value, actual exchange if the value creation process is successful, but in actual practice the system of advancing money, providing credit, can be sophisticatedly complex, opaque, and, especially in corrupt societies, this created money is not used effectively for value creation, hence become inflationary.
The process of creating money virtually from scratch in the financial sector for creating loans institutionally has well-developed mechanisms, but since it is only virtual money, typically not supported by physical self-regulating processes, resulted from artificially created mechanisms, either unwittingly or deliberately for profit, or perhaps through ignorance, regularly lead to financial and economic crisis. Credit through 'created' money is an evident means of achieving advance money in practice, but it is in fact a dangerous practice, and therefore would be better if avoided. - By artificially changing the amount of money in the economy, the speed of operation of the economy can be regulated. By artificially pumping money into the economy can increase performance, reducing the amount of money can slow down the economy. It is the task of the central banks to determine the amount of money, with the objective of maintaining the value of money. In fact, central banks, in cooperation with the government, also utilize money to regulate the economy.
- Central banks consider automatic inflation, and consequently a certain level of money depreciation is necessary and useful. However, the argument in favor of controlled and limited money depreciation is not correct because, while it is indeed simple to implement as a method, its economic benefits could be achieved in other ways and in the longer term, its effect is more damaging than beneficial.
Money does indeed have economic influences, but any change in the quantity of money other than what is backed by value exchange, even if small artificial manipulation also causes a change in the value of money. Artificial manipulation of the quantity of money is a convenient means of regulating the economy in practice, but in reality, it is a dangerous and therefore avoidable method. Even the positive aspects of artificially manipulating the quantity of money have in fact negative consequences.
The operation of money through non-naturally balancing regulation, the presence of money over and above the pending value exchange creates a polarization of ownership of the values produced by society, causes an inductive increase in social inequality, and artificially creates differences in wealth. Money, however, is not the cause but the means of the increase in social differences.
Money is one of humanity's greatest inventions when used properly, but when used improperly it leads to the disintegration of society. However, cooperative development is the required condition of human society for a sustainable future for mankind. The functioning of money is one of the defining tools of humanity's future. The operation of money is a means of influencing the destiny of humanity by supporting or obstructing cooperation.
Can it be a form of universal exchange that its function is not determined by human behavior? Can there be money that cannot be artificially manipulated, which does not induce the increase in social inequalities?
Recently, there has been an interesting attempt to reform the way money works in the form of cryptocurrency. The concept of cryptocurrency was conceived to address the problems associated with money that can be artificially manipulated.
From the current operation of cryptocurrencies, it can be concluded that these assets are capable of issuing money independently of the state and of accounting in a trustless manner, i.e. without the involvement of a third party and without censorship, but they have even less generic value than classical money, because their issuance and acquisition do not necessarily require a real process of useful value creation for society, nor does central supervision address to guarantee their value.
The value of cryptocurrencies, as long as they are not generally used, is purely sentimental, which makes them unstable, and without a real value-creation background, human greed makes their existence speculative, which is also an obstacle to their widespread use.
The operation of cryptocurrencies removes both the negative and the positive side of the artificial regulation of the value of money, leaving it apparently to the judgment of society, but in reality, also leaving it in the hands of powerful but similarly greedy people. The use of the medium of exchange represented by cryptocurrencies is driven by human behavior like in the case of traditional money. Cryptocurrencies solve some problems, but do not solve the fundamental problem of money.
The ideal money has zero generic value in its production, its existence does not require central or third-party control, while it is capable of carrying real value in a trustless condition, without direct human intervention by self-regulation, and therefore generically represents real value that is practically existing in a generic way. This contradictory requirement should be met by an ideally functioning universal medium of exchange.
Is it possible? Can there be a form of money, a universal medium of exchange created by mankind, whose functioning cannot be artificially manipulated by human will? Which does not physically carry value, yet it can represent value that exists in a self-regulating way? The solution could be a medium of a society-integrated universal value-exchange instrument.
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