How Money Works

I want to be alive & happy about it. I cannot be alive without possessions. e.g. I need to possess a functioning kidney. I cannot have possessions without producing them myself, or exchanging them for what I can produce. Either way I have to produce something.

Unlike animals I have very little automatic courses of action. Unlike animals I do not have strength, speed or special abilities. All I have is a mind and the capacity to make actions which are not necessary, but are caused. To be alive & happy I have to choose to use my mind to do life sustaining activities.

I have a limited amount of time to do anything instead of another thing. To do one thing with my mind means to not do another thing. Thus I recognize the cost of a productive activity as the best alternative productive activity forgone. Since I do not have time to produce everything I need, I recognize the necessity to do what I am best at, so that I can exchange it for what I need, and what others are good at producing in excess.

Unfortunately it is tedious to find someone who has in excess what I need, and is in need of what I have in excess. Therefore, as a matter of convenience, over the course of time, I have like many like me, decided to use certain products as the "common commodities of exchange" (CCE). I "sell" what I have in excess, in exchange for these CCEs. I use these CCEs as the means to "buy" what I need.

Unfortunately these CCEs are difficult to carry around, so I deposit them in a bank and they gave me a bearer receipt a.k.a note, which I or anyone can use to collect back the CCEs. Pretty soon no one needed to collect the CCEs from the bank. They left it there, and exchanged these notes instead, to buy and sell what they need to exist.

Unfortunately banks started lending more notes than they had as equivalent CCEs in their vaults. The governments recognized these activities as moral & legal so as to encourage funding imperialistic expansions throughout the planet. In some places banks issued so many notes that when everyone went the same day to collect back the CCEs, and the banks failed, making many lose the CCEs they earned throughout the years.

As more banks started failing governments intervened. They transferred CCEs to their vaults and started forming Supreme Government Banks or Bank which could issue the only kind of currency to be circulated. The exact method in which newly dispersed money is pumped into banks which need it are different depending on the government. But initially this helped recover from serial multiple bank failures.

But as time went by, politicians started using the power to issue money to dilute the savings of its citizens so as to wage the bloodiest world wars, and unsustainable public welfare programs.

The countries which could produce less failed first when they created more currency, because their currencies were less wanted in the international markets as they had less to offer that the world needed. Countries which used to produce the most, because of better management, and prior human ingenuity, ended up having their luxury of having their currencies the most desired to buy what they had to produce. These richer countries could afford to dilute their currencies even more to save their failing businesses, waging costly wars and providing unsustainable welfare. For a while this worked and it was good.

Soon these richer countries started to tax their richer citizens excessively, and recklessly mismanaging their country with poor decisions. The competent citizens like venture capitalists and inventors slowly started to move their manufacturing facilities, capital and finally their own selves abroad. Over the course of half a century, the brain drain left the richer countries in a path of stagnation. Their currencies then became less wanted because they had less to offer. And this in turn made welfare to be provided to their welfare addicted citizens. Anarchy ensued. More and more people started emigrating to the newly growing nations seeking freedom and prosperity. And once again the cycle of growth started again.


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