Historically, people traded in real goods. That meant that it was advisable to locate, produce or otherwise obtain something of real significant value with which to trade for the things you were otherwise unwilling or unable to produce for yourself. This system required a level of honesty and trust similar to today’s financial system, but much less so because normally the transaction would have occurred in real time with both trading parties walking away with the returns from their trade.
Hold down the fast forward button a few millennia and we have progressed to a much less tangible system. Sometimes i wonder what those old-timers would think, were they to watch one of our financial transactions currently playing out in front of them. They would view one party walking away with something apparently edible, and the other party seemingly content with a few lights flashing across some shiny flat screen-thingy. Weird.
We call it fiat money and the italian word fiat itself, means to bring into being by command or decree. If this is how our money is formed, apparently another decree by some authority could render it all effectively worthless, and this brings me to the point of this article.
Our financial system is often called a debt-based system, and perhaps rather sadly, that is a pretty good description of what is going on these days. Without getting into some discussion of whether the world is quadrillions or perhaps merely hundreds of trillions of dollars in debt, the thing is that a rather big chunk of the human population can clearly be seen carrying a rather angry, large, smelly and aggressive sasquatch on it’s back. How did this come about? We all live on the same planet, a planet with abundant resources with abundant manpower to turn raw resources into consumables, and yet somehow, billions of us have already spent the earnings we hope to have sometimes even decades into the future.
In considering a title for this rant, i thought of using “promises, promises” because it wasn’t so long ago that when i used the plastic, i had to sign a paper announcing that i “promise to pay” a certain amount and on the basis of that promise i was forwarded the product in advance of actual payment how wonderful.
Trouble is, it is all too easy, too convenient for the thoughtless and the simple to grab everything in sight and haul it off, telling themselves tomorrow things will be better and paying for it then will be a peach. We lie to ourselves quite a lot, don’t we? A month goes by, what we bought has stopped working or been consumed and we’re angrily staring at an even bigger “negative balance”. Those bass-turds! And even for those who pay attention to their surroundings, what to do when the rent is due and your choice is between increasing your “temporary” outstanding balance and not eating for a month? Or worse, watching your kids dine on donut holes day after day i hated that.
Really, when the lard is rendered what we have today is an entire financial system based on promises. How solid is that, right!? I’m sure you’ve been approached by several people who promised to pay you back for a few bucks today and had their memory unexplicabley damaged by a falling brick. It’s actually kind of amazing this promise-based system works as well as it does. What percentage of folks would it take, failing to return what they borrowed, before no one would ever accept a promise as currency, ever again?
Our currency itself, the fiat kind, meaning dollar bills and all those glowing numbers on those screens we look at far too much, are all nothing more than promises to pay. Your cash in your pocket is a promise that the bank will accept it as payment when it is returned to them. The money you have on deposit at the bank is a loan you made to the bank. Did you know that? If the bank goes bust, the only way to get your funds back is through the insurance the bank allegedly has paid the premium for against such an event.
In my own experience, having suffered a long period of indebtedness and having later enjoyed the freedom of crawling slowly from that clutching oozing bog of debt-dung or should i say, that indebtedness, i have come to realize that getting out of debt is half the fun. The other half is deciding what to do with what you accumulate after the jailbreak from the jaws of what Gerald Clemente calls “slavelandia”. How to invest? Is it really worth saving at all, knowing that wherever you put your earnings, you are basically trusting someone else who “promises to pay”? We all live in uncertain times and the best laid plans of mice and men go oft awry. I’ve certainly seen the truth of that in regard to some of the mice i’ve encountered, whose plans, whatever they were, went badly awry.
Thankfully, as an acquaintance reminds me, “most people are good” and seem to feel compelled to return what they have borrowed, even the banks. This goodness in people is of course not to say that they are without fault, perfect, but simply that many have apparently learned that doing the right thing gives them a better more carefree life than constantly having to worry about getting a baseball bat in the back of the head when Guido and Tyrone come a callin’ after hours. As for the porch-pirates, the call center scammers, those in the euphoria-type businesses, and the law-makers, the lessons await.
i’m sure we can work out something that will be mutually beneficial…
This type of unfortunate outcome awaits individuals, businesses, and even whole governments who make the mistake of promising things which are uncertain to happen in the future. People, businesses and those in the financial services industries do not really enjoy being played for suckers and tend to get irate when promises are not kept. And oh, the excuses will flow like rivers in a deluge. This is too be and is anticipated. The problem is that those playing games will use the same excuses as those with legitimate excuses, and in the end, what does it matter to the disappointed lender, legitimate or contrived, he is not going to be repaid. Under such circumstances, there are those who quietly learn their lessons and suffer the loss, and there are those not so warmly inclined.
Some will choose to wait, in the hope of future repayment and some will choose a more old testament based solution. Probably, if we knew the hidden details, many of the unfortunate military conflicts currently unfolding around us have their origins in financial miscalculations.
Here’s a hint i have found helpful in my own life. Only make promises on weekdays that don’t end in the letter “Y”. This policy has made my life a lot more enjoyable and i believe, it will yours too you’re welcome.
Skulltripper 