Chapter 2: CURRENCIES? HUMAN PRODUCTS!
Can you name a currency anywhere at anytime--elsewhere or elsetime--that was not a product of human production? You can't. Has there ever been a currency that did not require human time, energy, or matter? No, there hasn't been. All currencies have been products of human effort, products of human beings directing time into the production of a product. In all cases, the product used as currency was recognized as
the common intermediate product by which
None of the currencies elsewhere or elsetime have ever been manna from heaven; in fact, if currency started raining from heaven, its usefulness as the common intermediate product within a system of production would be greatly reduced. Think what would happen tomorrow if everyone found next to their bed a bushel of Federal Reserve Notes? Of gold? Of diamonds? Of Treasury Bonds? Of any negotiable Stock or Bond?
Currency Worth: Present vs. Future
Certain products have throughout history been singled out as currencies. Officially or unofficially, certain products are selected as the common intermediate products by which producers can exchange the other products within the system of production without regard to place or time.
The usefulness of a currency is dependent upon its stability, that is, whether or not it is "kept constant in value". To understand how a currency can be "kept constant in value", one needs to distinguish the present and the future worth of currencies. In addition, one needs to know the historical trends of the common intermediate products known as currency.
Present Worth: The Worth in Other Products Today.
At any one time a currency as a whole is worth no more than the rest of the products available for exchange. If no other products are available, then the currency as a whole is worth nothing, it has no present value, no product worth. The other products can be unavailable for a number of reasons. Perhaps they don't exist because there is insufficient profit in producing them compared to other goods or services as occurs in an imbalanced system of production. Or people are hoarding their goods or services so that no products are available on the market.
When people will not exchange their goods or services for currency, they are withholding their past or present production time; they are not trading their production time for the common intermediate product. Expressed another way, the people are implicitly stating that the currency does not maintain its time content to justify exchanging their production time for the currency.
Future Worth: Productive or Destructive Currency
The common intermediate product loses its productive potential when is allowed to be used in counterproductive ways. Quite simply, if a currency is used in ways counter to production, the future product worth of the currency will be less than its present value.
A currency loses its product worth over time, that is, suffers inflation, as a result of counter-productive use.
When currency is not productively used in the day-to-day transaction of goods and services, then it has a destructive worth. It is destructive or counterproductive of future production. The quality of transactions involving the currency affects the quality of the currency moreso than the quantity of currency in circulation.
Opposed to the existing product worth of currency at any one time, there is the future worth of a currency. The future worth of currency depends on how the currency is used within a system of production: Do the transactions of goods and services promote or retard the future production of products? If a currency is not used in productive ways, then the number of products available in the future will be less; consequently, the future worth of the currency will be less. And, it can be said that the currency had a destructive worth based on how it was used in the past.
If currency gravitates toward the activity of gambling, the other busytime activities in the economy would suffer. The suffering would occur in various ways. If the currency was totally tied-up in gambling, a barter-plagued economy would develop. Production-constipation would occur within the non-gambling enterprises; product shortages would arise in these other enterprises. The product shortages would generate sinflationary (shortage inflation) price rises in these "cash-starved" enterprises.
The previous example of gambling enterprises "crowding-out" the cash flow to production enterprises is an extreme example of people pursuing
The crowding-out effect does not have to be total in order for production to suffer and in order for the product worth of currency to decline everyday. The degree to which people naively, blissfully, or deceitfully pursue inflationary returns--rather than production profits--parallels the drop in the product worth of the currency. As production suffers, the amount of products available for exchange will decrease while the amount of currency does not. Consequently, inflation will occur, the currency will be losing production time worth because there simply is not as much production occurring. People are spending their time gambling, speculating, or unemployed rather than spending time at production.
The destructive, rather than productive, use of currency is something that no system of production can tolerate for long. If tolerated too long, the system of production will cease to be. The purpose of government, in this sense, is to regulate the use of currency within a system of production for productive rather than destructive transactions. Government is supposed to be composed in such a manner that productive policy making polices the system of production.
If the policy makers do not productively police the use of currency, then they will unavoidably be without a jobs. The people will peacefully or violently remove the destructive politicians. Even if the people don't do anything, the destructive use of currency will destroy the system of production--production will recess, depress, and then cease. Everyone, including the politicians, will be without a job. Are the politicians mispolicing the use of money?
All currencies have been products of human time at production. All currencies have present and future worth. The present worth of a currency is its product worth. The product worth is the other products--goods or services--available for exchange through the official or unofficial common intermediate product. The product worth can also be expressed as the past or present production time worth of the currency. If no one will trade any goods (products with past production time value) or services (products with present production time content) for currency, then the currency lacks
A currency loses its product worth by how it is used, by what goods or services it stimulates. If a currency is used to stimulate non-production busynesses, then production will suffer. The reduction of production (production time) will consistently lower the product worth of the currency. When used to crowd-out production by cash-starving the production, the currency is being used in a counter-productive, destructive manner. Of its future worth, the currency has destructive rather than productive value.
The destructive use of currency is whose fault? Most directly, it is the elected policy makers of a system of production. Indirectly, it is the productive individuals who do not take the time to understand production and the role of the common intermediate product known as currency. Until producers know and act, they will lack a common intermediate product in which their production time can be converted, in which their production time can be kept constant and current.
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