By Steven Clyde
“Money, get away. Get a good job with more pay and you’re O.K.
Money, it’s a gas, grab that cash with both hands and make a stash. New car, caviar, four star daydream. Think I’ll buy me a football team.
Money, get back. I’m all right, Jack, keep your hands off of my stack.
Money, it’s a hit. Don’t give me that do goody good bullshit. I’m in the hi-fi fidelity first class traveling set. And I think I need a Lear jet.
Money, it’s a crime. Share it fairly but don’t take a slice of my pie.
Money, so they say, is the root of all evil today. But if you ask for a rise it’s no surprise that they’re giving none away.”
Money is one of the most misunderstood facets of our personal lives, and we spend a large portion of our existence attempting to acquire more of it. Furthermore, the general public lacks a realistic sense of the world we live in based on media propaganda and misinformation spread through the lens of “conventional wisdom”; so it’s no mystery why there exists this gap of knowledge.
Still it must be true that at least some of us realize in some aspect that this same thing we use every day is exorbitantly complex in nature. Does the average citizen really know what the Federal Reserve is? What a reserve ratio is? What inflation is (beyond the thought of their price of living rising)? Should they be expected to?
To quote Murray Rothbard from a 1970 piece when he was attacking the Anarcho-Communist school of thought, which was heavily attracting Marxist-Stalinists at the time:
“It is no accident that it was precisely the economists in the Communist countries who led the rush away from communism, socialism, and central planning, and toward free markets. It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a “dismal science.” But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance. Yet this sort of aggressive ignorance is inherent in the creed of anarcho-communism.”
Yet, to this day most have not even the slightest interest in economics or history, yet take positions which would have to imply they are masters of both.
Before we examine money in full, a few examples of how our thinking is heavily influenced by information that is false will illustrate why it’s critical to dissect these assertions. There will never come a time when it won’t be important to stress the pontifications of the main stream media, and their half-truths.
The State and Education:
Education, surely, would be non-existent if not for the system in place. We would all be illiterate if not for the standards set up by the Department of Education. This is of course regardless of places like Detroit where the illiteracy rate is thought to be 47% of adults; facts like this are to be left out of the discussion if we are to be taken seriously in academia. And despite rising costs and flat lining results across public schools, it is deemed to be a spit in the face of teachers to examine their effectiveness. They work so hard to educate our students on the taxpayer dime, so this isn’t to be questioned.
The State and Healthcare:
And we would be enamored to believe that without the government there would be access to healthcare. “We would all just die in the streets” they proclaim, and they could point to the Emergency Medical Treatment and Active Labor act signed in 1986 by Ronald Reagan as proof. This required hospitals to accept new patients regardless of their ability to pay or their legal status and only applies to hospitals that accept Medicare, so surely we all must be better off. Despite the decades of rising costs and the extremely high deductibles (essentially catastrophic coverage) on plans whom poor people tend to use, there is still the belief that more people are insured now than ever because of Obamacare. To quote the IRS Revenue Procedure for 2017, it states:
“For calendar year 2017, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,550 for self-only coverage or $13,100 for family coverage.”
You read that correctly: If you are a poor person and you are gaining “health coverage” for the first time, your out of cost expenses will be anywhere between $1,300 to $6,550 before your insurance will cover anything. So despite the fact that poor people are by definition more uninsured than ever, and are essentially given the bread crumbs from the loaf of bread, the statistics that are produced paint a startling picture. Between 2014 and 2015, 7.4 million people gained access to insurance according to National Health Interview Survey, yet in the same graph they show that trends are starting to reverse: more people are starting to opt for private insurance plans over public insurance plans now that they are realizing they are getting the short end of the stick with government insurance.
Why Do We Use Money?
Quite simply, the reason we have mediums of exchange is because humans want more than they have. It is because of this circumstance, that we must also want things we do not have, regardless of whether we have access to any resources at all. I, as person “A”, can logically deduce that if I want person “B’s” product that I must offer them something in return. It must be something that I value less then what I want from them, and they must find more value in what I offer then what they are willing to give up.
Trade, by definition, only exists in the paradigm that person “B” and I both benefit.
If only one person benefits in a transaction, it can also be deduced that one party is using violence or coercion against the other party. When dealing with human action, it’s always assumed that people act to improve their current condition, not stifle it.
Carl Menger points out in “Principles of Economics” that:
“As long as the development of a people is so retarded economically that there is no significant amount of trade and the requirements of the various families for goods must be met directly from their own production, goods obviously have value to economizing individuals only if the goods are themselves capable of satisfying the needs of the isolated economizing individuals or their families directly.”
His point is that the reason we trade in the first place is because otherwise, we’d be solely relying on our own productive capacities. Even if we could transform the resources around us from soil to commodity, we would be unable to use them because they coalesce with other resources to form usable goods.
What Money Is and Where It Came From:
The majority of the population will tend to fall in line with what society has told them to be true, and the proof is that most would look at you strangely when you explained that money is a commodity, just like any other good. We are very much hardwired to believe that money exists as an external part of our economy, and that it’s all thanks to government.
The origin of money is one of much controversy among historians. New pieces of information regarding how homo sapiens have traded with each other comes to light all the time, and all we really know from research is that where there was trade there were was money; at least if we’re defining money as a medium of exchange (rather than fiat money or bank notes). For example, in August 2016 a group of researchers from the University of Victoria in Canada discovered “scrapers, flakes, projectile points and hand axes” among other ancient tools that seem to date back to 250,000 years ago. This is very significant because up till now we thought based on the Omo bone remains discovered in Ethiopia between 1967 and 1974 that modern humans emerged about 195,000 years ago. Though the answer is always changing, Wampum Beads are thought to be one of the first types of currency used, if not the first at least in American history. Marc Shell discusses this in his book “Wampum and the Origins of American Money”, which has received exuberant criticisms and which will inevitably push for more research in this area.
What we deem to be “money” in the present day is dollar bills and coins, but yet there is still an important corollary between barter and indirect exchange. We are lifetimes past the idea of simple barter because of the great utility we get from having a medium of exchange that represents value; it allows us the freedom to buy what we want. The other alternative, which history has shown to be ineffective, is the daily coincidence of having the exact good someone else needs, and them having the exact good you need. Not only do these values hardly ever line up, but both parties are ending up in worse situations when they can’t trade because they are stuck with a good that has little value to them, at least in contrast to what they really need.
Murray Rothbard gives this example:
“Consider the case of A, the farmer, who wants to buy the shoes made by B. Since B doesn’t want his eggs, he finds what B does want – let’s say butter. A then exchanges his eggs for C’s butter, and sells the butter to B for shoes. He first buys the butter not because he wants it directly, but because it will permit him to get his shoes. Similarly, Smith, a plow-owner, will see his plow for one commodity which he can more readily divide and sell – say, butter – and will then exchange parts of the butter for eggs, bread clothes, etc. In both cases, the superiority of butter – the reason there is extra demand for it beyond simple consumption – is its great marketability. If one good is more marketable than another – if everyone is confident that it will be more readily sold – then it will come into greater demand because it will be used as a medium of exchange. It will be the medium through which one specialist can exchange his product for the goods of other specialists.”
Stay tuned for next week when I’ll discuss the most important idea: Why Money and Governments are incompatible.
 From Pink Floyd, Dark Side of The Moon, Money, 1973
 Murray Rothbard, The Death Wish Of Anarcho-Communists, Libertarian Forum, January 1st, 1970
 Exchange (something) for something else, typically as a commercial transaction.,Oxford Dictionary
 Carl Menger, Principles of Economics, 1871, 226.
 Modern day humans
 Murray Rothbard, What Has Government Done to Our Money