The Random Comic Strip

The Random Comic Strip

Words to live by...

"How beautiful it is to do nothing, and to rest afterward."

[Spanish Proverb]

Ius luxuriae publice datum est

(The right to looseness has been officially given)

"Everyone carries a part of society on his shoulders," wrote Ludwig von Mises, "no one is relieved of his share of responsibility by others. And no one can find a safe way for himself if society is sweeping towards destruction. Therefore everyone, in his own interest, must thrust himself vigorously into the intellectual battle."

Apparently, the crossword puzzle that disappeared from the blog, came back.

Wednesday, October 24, 2012

Money, cash, gelt, shekels, rubles, etc.

The best thing in life is free,
but you can give it to the birds an' bees
I need some money, need some money
Oh, yeah, what I want
Your love gimme such a thrill,
but your lovin' don' t pay my bills
I need some money, need some money
Oh, yeah, what I want
I need some money, honey
I need some money right away
I need some money bad
I need some money
Oh, yeah, what I want

 [John Lee Hooker- Money]

The other day I wrote a post that included a little bit about how I view the concept of money. I don't think I expressed it well because Tom (of Sightings at 60) thought I equated money and food.

Money is nothing more than a concept. (Here's a pretty good take on its history [link])  But it's a concept that permitted commerce on a larger scale than is possible with barter systems. In a barter system, people were limited to the immediate area. After all, anything you might have for barter (crops, livestock, etc) had to be transported to some other farm or a community. There were no refrigerated trucks, no railroads, no highways. You might have an ox-drawn cart to carry your extra crops or you could drive what cattle you could afford to trade.

Money facilitated trade between widely separated communities. It came to represent a value that could be exchanged. It's complex and simple at the same time. In some ways, it is like language. At one time, each tribe/community might have had its own language. Eventually, these languages merged into a common language. This had two effects. The first would be obvious: a sense of commonality, a kinship. The second is allowing commerce to expand. And commerce allows a community to grow and evolve.

I believe that towns grew out of marketplaces. People would bring their goods to a common place and barter their goods for the goods of others.  Some people saw opportunity in providing that common place and perhaps keeping it secure and safe while possibly providing some form of security for the traders. People would then move closer to these marketplaces to make it easier for them to trade, the paths trampled down by people walking or their beasts of burden eventually becoming roads. I would guess places where these roads crossed could easily become additional marketplaces.

But how did money help? Ask yourself a simple question: Is it easier to bring a load of wheat or a pocketful of coins to a marketplace? And how much farther could you travel wit the latter than with the former? The farther away you go, the more exotic the goods you could find. You can then bring these back to your local marketplace and trade them for local goods or the monetary equivalent.

Trade (either straight barter or in exchange for money) allows people to specialize in what they produce. You no longer had to grow a variety of crops because you could trade the excess crop you grow to someone who grew some other crop. You could trade for hides which you might turn into clothing which you could then trade for food. Money became the exchange medium and made all this trade much easier.

I hope this rudimentary explanation helps clarify my earlier post.

It might also raise a question: Would we be better off with a common world currency?

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