Libertas

“Coinage is imprinted gold or silver, by which the prices of things bought and sold are reckoned. . . . It is therefore a measure of values. A measure, however, must always preserve a fixed and constant standard. Otherwise, public order is necessarily disturbed, with buyers and sellers being cheated in many ways, just as if the yard, bushel, or pound did not maintain an invariable magnitude.” ~Nicholas Copernicus, “Treatise on Debasement,” 1517

“The Individualistic Capitalism of to-day, precisely because it entrusts savings to the individual investor and production to the individual employer, presumes a stable measuring-rod of value, and cannot be efficient – perhaps cannot survive – without one.” ~John Maynard Keynes, “Social Consequences of Changes in the Value of Money,” 1923

Humans are by nature capitalists, says Nathan Lewes, the author of Gold: The Once And Future Money, because of their need “to invest time and effort to create tools, techniques, and organizations to become more productive.” However, there is also risk involved, because there is no certainty. Problems may occur in the production, such as finding supplies or technological problems in creating the item. The end result may not actually work. Each tool is a capital investment, whether that be a rock to break open a clam or a semiconductor factory.

Using the family as an example, Lewis shows that not only are humans by nature capitalists, they are cooperative through “the division of labor, specialization and trade to improve their productivity still further.” They must create tools and “build knowledge (capital investments), engage in specialization and trade, jointly entering into productive endeavors (equity investments), and forming contracts, or promises, with others (bonds)” This is true for the most primitive family unit as it is true for modern day society.

As humans deal with others who are less closely related, their agreements or transactions become more formal. The two parties can no longer resort to family or tribal relationships for building trust but must find another form to base their trust for the transaction.

As people turn to one commodity as a medium of exchange, money is slowly created over time. Governments are not needed for its creation. No one invented money, it is a natural process throughout the world.  All kinds of goods have been used as money: miniaturized tools in China and miniaturized swords in Roman Britain, cowry shells, slabs of salt, beaded belts (wampum), giant stone wheels, tobacco, and so on. This creativity has continued into modern times, such as after World War II when the Germans used cigarettes as money.

Will we soon be in a similar situation when the dollar collapses? Will we return to gold as money? If we want to keep our freedom, we better turn to gold.

Based on GOLD: The Once and Future Money by Nathan Lewis

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