A Brief History and Perspective on Money/Currency
“Indeed, civilizations seem to rise and fall on the quality of money.” 1
The development of the “Rock Farm” and the farming of economic “ROCKS” is an evolutionary step that is both logical and modern and solves both micro and macro-economic flaws that exist with currency that have been encountered for thousands of years. To understand this evolution, we need to take a deeper dive into the history of economic transactions and challenges of using currencies in order to get to the remarkable benefits provided by the Rock Farm app-based “ROCKS” ledger.Historically, ancient Historically, ancient bartering created challenging negotiations (how many sacks of grain will I trade for two oxen). Nevertheless, it has always been the fairest and purist negotiation methodology for ensuring that both parties were perfectly satisfied. Barter created a transaction with an absolute and agreeable intrinsic value. Barter created a win/win transaction with no medium of exchange (i.e., money) to dilute, contaminate or debase the economic value of the transaction agreed to by both parties. While the use of currency was intended to improve on the bartering system, it has suffered from repetitive cycles of destabilizing booms and busts that always ended with currency failure. The underlying principal flaw that has perpetuated this very consistent boom bust cycle of currency destruction for thousands of years, is simply the irresistible temptation to violate, in principle, the ancient Mosaic law against tampering with the weights and measures: “Just balances, just weights, a just ephah, and a just hin, shall ye have: I am the Lord your God.2”
Although not obvious at first, a major impediment to creating a beneficial social and economic interconnection among members of a local community is “money” – that in and of itself, is largely created (without any control) outside of the community. And by that we don’t mean the amount of money a person or business accumulates or achieves, but rather the actual currency being used to transact business (i.e., using dollars to buy goods). The checkered history of “currency/money” has a never-ending series of boom-bust cycles. Weimar Germany, Argentina, Mexico, Britain, and Greece are just a few of the currency debacles that many may remember. But this cyclical pattern (that usually leads to currency and local economic failure) has actually been occurring for thousands of years going back at least to Mesopotamian civilization where for a period the “shekel” was the currency/coin that futilely attempted to replace barter. Although it might seem primitive, boom bust episodes (of currency) all start with sound, satisfying barter, followed by the creation of a proxy medium of exchange (e.g., currency), followed by dilution, debasement, and destruction of the currency, almost always returning to sound practical barter.
Here in the United States prior to the Civil War, there were over eight thousand different currencies in circulation, (many are on display in the museum inside the Federal Reserve Bank of Atlanta). Then to reign in control of money in circulation, The National Bank Act of 1863 provided for the Federal Charter and supervision of a system of banks known as “National Banks”; tasked with circulating a “stable”, uniform national currency. That did not play out as planned, so later in 1913 The Federal Reserve Act was passed which created the Federal Reserve System, the central banking system of the United States that would primarily manage the country’s “money supply”. As it turned out, that approach became unmanageable and impractical because the ever-present impulse towards frivolous and fraudulent money creation and use that the prophet Amos warned against – those “making the ephah small, and the shekel great, and falsifying the balances by deceit.”3
Even the foundational gold standard that was later designed as a solution did not work out. So, to sidestep the discipline that prevented unlimited money creation, President Nixon in 1971 closed the gold window taking the dollar off the gold standard. This resulted in a floating rate exchange mechanism of total fiat (and unlimited money creation that is accelerating today) – in essence becoming, albeit slowly, another failed experiment in currency. This is playing out with volatility across the globe in an “everyman (i.e., every country) for itself” rush to devalue their currency against others to give their national economy an edge or advantage, as well as a new push for de-dollarization from the BRICS nations4, potentially further destabilizing the existing floating rate system and US dollar reserve currency status.
From the feudal lords who once practiced “seigniorage,” to modern Central Banks around the world, most are ignoring the warning of the Prophet Amos. The recent epoch of US dollar dominance, foiled by global Central Bank mismanagement5, near zero rate lending for over a decade, and frivolous/negligent money creation as a solution to every economic hiccup will certainly lead to a continuation of international rolling currency failures or inflationary devaluations, completing the cycle described above of what will ultimately lead to a logical and organic return to (albeit more technologically sophisticated) barter. Just in the past few years, we have seen a crisis with the Turkish lira and separately, preparations by Russia and China to exit the SWIFT international payment system in favor of a possible, new Russia/China based transaction mechanism. We have also seen Russia and Iran recently turn to barter more frequently as a method of trading oil given the international sanctions levied against them. Right here in the US we also are seeing politically charged events that result in some states refusing to do business with other states tearing at the fabric of even domestic interstate trade and economic activity. All of these tectonic economic shifts are taking place in a way that will certainly affect the landscape of the entire global monetary system with outcomes that will likely be consistent with the boom bust cycle of money for the last several thousands of years.
Like horses in the barn stirring before an earthquake, sensing impending, inevitable events based on the historical boom-bust cycle of money, we are already seeing international flows of money searching for ways to bifurcate from the control of global central bank fiat through, for example, the innovation of crypto currencies such as Bitcoin. However, crypto currencies are, in reality, a signal for the need for innovation in finance, not a solution for a local economy during times of social and economic turmoil and uncertainty. Only technologically sophisticated, modern barter will achieve that protective (and unifying) goal. And a wise community, educated to understand this history and learning from our most recent COVID crises, will have prepared well with sensible economic innovation to have safeguards in place that protects the community. This historically tried and true solution for our Fort Collins community/ economy may start small and grow slowly, but over time will be a protective, surefire, in place, parallel alterative to unstable currencies during high impact social and economic turmoil affecting the local community. Rethinking the potential impacts of future social/eco/geo events on the local economy is simply necessary after what we experienced in 2020 with COVID, in 2022 with the geographical ripple-effects of the Russian war against Ukraine, and in 2023 with the collapse of Silicon Valley Bank which prompted a recent comment in The Wall Street Journal that “Over the past 25 years or so, each crisis has become more complex than the one that proceeded it, each one has cost more in losses, each one has spread wider across industries and countries.”6 The stone-cold reality is that given the global, domestic, and local monetary and supply chain fragilities, “disruption” in any form could leave a community in a situation as depicted in yet another front-page article in the Wall Street Journal7 that provided a real example (albeit third world) of exactly what would happen anywhere where the monetary or local economic system was challenged or ruptured for any reason. This real event left the people resorting to “micro” bartering as the preferred exchange/monetary mechanism over all the other uncertain, untrustworthy mediums of exchange.
Some local communities here in the US are taking these recurring crises to heart and preparing themselves. Over the several years various cities in the US have taken steps towards a local currency. For example, the town of Little Tenino, Washington reintroduced its own currency imprinted with an image of George Washington and the phrase “We have it under control” imprinted in Latin. This currency was last used in Little Tenino during the Depression in the 1930s. The “new” Little Tenino currency is only accepted at local Tenino merchants. Importantly, the town set aside $10,000 worth of local Tenino currency for disadvantaged residents whose income was under the poverty line.
Although surprising at first, and a little different than a local currency like Little Tenino, and “micro” barter tied to a local community can improve significantly on the local currency experiments like the “new” Little Tenino currency. A modern, technology-enabled version of real, enhanced micro-barter has distinct advantages that can help address the economic disparities that have come into focus during the pandemic and other global economic events. Simply put, a modern app-based, technology-fueled, locally based, barter system can create the opportunity to support one another in a historically sound, profoundly simple, fundamental, and powerful manner that has the look and feel of a transaction with money but is not…that has the look and feel of a transaction with money but is exponentially better, more sound, more sensible, more secure.
Finally, given this factual history of currency, there is no reason to believe that the current monetary system will survive in the long run. The question is whether change is forced by an abrupt cataclysmic event that drives rapid innovation or change evolves slowly over time via modernized and micronized barter that was never achievable prior to app-based technology. The ability of this new app-based approach to enable the two halves of a barter transaction to occur at different times and with different participants is paramount as it offers an assortment of unique economic and social benefits. These benefits will accelerate beneficial transactional activity within a community, and at the same time provide the mechanism to protect and fortify the community from the inevitable harmful effects of a destabilized and volatile monetary system and turbulent economic crosswinds.
In our Fort Collins community will be the rebirth of a secure economic methodology that bridges the past with the future solving most modern-day problems of currency and exchange. We believe the Rock Farm’s approach will ultimately be the anciently inspired, yet futuristic economic model for all smart cities of the future! Futuristic and future in the same sentence!!
Citations
- Elgin Groseclose Money and Man: A Survey of Monetary Experience, 1961 (previously published as Money: The Human Conflict , University of Oklahoma Press, 1934)
- Leviticus 19:36 King James Version translation
- Amos 8:5 King James Version translation
- Brazil, Russia, India, China, South Africa (BRICS)
- “The New Bank Bailout”, The Wall Street Journal, September 1, 2023
- “Bank Runs Cause Panic: The Rescues Are Risky, Too.” The Wall Street Journal March 18-19, 2023 (Weekend Edition)
- “If A $100 Trillion Bill Doesn’t Work, How About Some Cheese?” The Wall Street Journal March 24, 2023