Coin hoard

What is money?

Why do we have money?

Money was invented because trade would be difficult without it. For example, if you are a hatter in need of legal advice, then without money, you have to find a lawyer who craves a hat. That is unlikely to happen. Maybe there is a fisherman dreaming of a hat, but he can’t give you legal advice. Maybe there is a lawyer in need of a hairdo instead of a hat. With money, all these problems disappear like magic. You can buy the services of the lawyer so that she can go to the barber. After that, the barber can buy some fish so that the fisherman can buy a hat from you.

Despite these mind-blowing advantages humans didn’t need money for a long time because they lived in small bands and villages where everyone depended on each other and everyone helped each other. This meant, for example, that when a fisherman needed a hat, you would make a hat for him, and if you needed anything, someone else would provide it to you. You did someone a favour so that he or she was obliged to do something back. Villagers produced most of what they needed themselves. Trade with the outside world was limited and was done with barter.

Uses of money

Later cities, kingdoms and empires emerged. People living in cities, kingdoms and empires didn’t know each other so it became difficult to track whether or not everyone was contributing. Favours and obligations didn’t suffice. They were replaced by a formal system for making payments and tracking contributions and obligations. Commerce and tax collection needed a means of payment as well as administration. It is therefore not a coincidence that writing and money were invented around the same time in the same area. The earliest writings were bookkeeping entries. Money has the following uses:

  • buying and selling stuff (payment) so money is a medium of exchange
  • saying how much something is worth, so money is a unit of account
  • keeping track of contributions and obligations (saving and borrowing) so money is a store of value.
Nickelodeon character CatDog

Money being a medium of exchange as well as a store of value is like your pet being a cat as well as a dog. The result is not really a success. The parts of the pet may often quarrel, for example, because the dog part wants to play while the cat part wants to sleep. If someone keeps some money for a rainy day and does not spend it, others cannot use this money for buying stuff. And this can be a problem. A simple example can explain this.

Imagine that everyone decides to save all his or her money. Nothing would be bought or sold anymore. All businesses would go bankrupt and everybody would be unemployed. All the money that has been saved would buy nothing because there isn’t anything to buy anymore. This is a total economic collapse.

In reality, it doesn’t get that bad as people always spend on basic necessities like tablets and mobile phones, and perhaps food. When people only spend money on necessities there is an economic depression, which is not as bad as a total economic collapse but still very bad. Saving can make you poorer, but only when there are too many savings already. Savings are used to invest in businesses and hire workers to make products and services. Only if there are more savings than investments, does money remain unused.

The value of money

Money has no value when there isn’t any stuff to buy or when there aren’t any other people to trade with. Imagine that you get the offer to be dropped alone on a remote and uninhabited island in the Pacific with 10 million euros. Probably you would decline the deal, even if you can keep your mobile phone. It is other people and stuff that give money its value. But how? The answer is remarkably simple. The value of money is just a belief.

People are willing to work for money and sell their stuff for money. And because others do this, you do the same. For example, you may think that euro notes have an appalling design as well as an unpleasant odour, but nevertheless, you desire to own them because other people want them too. The euro’s value is based on the belief that other people accept euros for payment.

This is just a belief as the following example demonstrates. Suppose that you wake up one day to hear on the news that the European Union has been dissolved overnight. Suddenly you may have second thoughts about your precious stockpile of foul-smelling unstylishly decorated euro banknotes.

Lord of the Rings character Sméagol
Lord of the Rings character Sméagol

You may ask yourself in distress whether or not your precious bank notes still have any value. What is the value of the euro without the European Union? You may find yourself hurrying to the nearest phone shop in an effort to exchange this pile of banknotes for the latest model mobile phone.

And to prove this point even further, suppose that the phone shop gladly accepts your euros. Suddenly they become desirable again and you may start to have second thoughts about that latest model you are about to buy. It may not remain hip for much longer, so you may change your mind again and prefer to keep your precious euros because there may be a newer model next month. So, because the shop wants your euros, you wants them too.

Types of money

At first, money was an item that people needed or desired. Grain was one of the earliest forms of money. Everybody needed food so it was easy to make people believe that others accept grain for payment. In prison camps during World War II cigarettes became money because they were in high demand. Even non-smokers accepted them because they knew that other people desired them very badly. For that reason, cocaine can be money too.

Wares like grain, cigarettes and cocaine have disadvantages. They degrade over time so they aren’t a very good store of value. This makes them a great medium of exchange because people won’t save them. An example can demonstrate this. Imagine that apples are money and you want to buy a house. A house costs 120,000 apples but your monthly salary is just 2,500 apples of which you can save 1,000. It takes 10 years of saving to buy a house. Soon you will discover that apples rot and that you will never be able to buy a house. Then you will spend all your apples right away.

Saving is difficult with apples. This is where gold and silver come in. Gold and silver do have not much use, but humans were always attracted to shiny stuff. Gold is rare so a small amount of gold can have a lot of value because some people feel a strong desire for shiny stuff. Gold and silver coins can be made of different sizes and purity so that they are suitable for payment and can be used as a unit of account.

More importantly, gold and silver do not deteriorate in quality like apples, grain or cigarettes. They do not even rust after 1,000 years. This makes gold and silver an excellent store of value. But this should make us suspicious. A perfect cat makes a lousy dog so a perfect store of value can fail the test for being a good medium of exchange. People can store gold and silver so that there is less money available for buying and selling stuff. And this can cause an economic depression as we have seen.

Governments create money too, for example by printing “10 euro” on a piece of paper. Governments require by law that this money should be used for payments and taxes. This makes people believe that others accept this money too. Government money is called fiat currency or simply currency. The authority of a government is limited to the area it controls so in the past government currencies had little value outside the country itself unless this money consisted of coins containing gold or silver.

In fact, another reason why gold and silver are attractive as money is that the value of gold and silver does not depend on the authority of a government. This made gold and silver internationally accepted as money. In the 19th century, most government currencies could be exchanged for a fixed amount of gold. This is the gold standard. The gold standard boosted trade because gold was internationally accepted as money.

Most money is debt

Debts can have value and so debts can be money too. This may seem strange or even outrageous, but money is just a belief. For example, money is the belief that you can exchange a hat for money and then exchange this money for legal advice. Hence, if you believe that the debtor is going to pay, you can accept his or her promise to pay as payment. And if others believe this too, you can use this promise to pay someone else.

So if the fisherman promises you to pay next week for the hat you just made, you could say to the lawyer that you expect the fisherman to pay in a week, and ask her if you can pay in a week too. The lawyer could then ask the same of the barber and the barber could ask the same of the fisherman. If all debts cancel out then there is no need for cash. Most of the money we currently use is debt. In most cases, debts don’t cancel out and there are many more people involved so it would be complicated to keep track of all debts and savings. That is where banks come in.

Featured image: Close up of coin hoard CC BY-SA 2.0. Portable Antiquities Scheme from London, England (2010). Wikimedia Commons.

Other images: Nickelodeon character CatDog, Sméagol character from The Lord of the Rings [copyright info]

Joseph interpreting the Pharaoh's dream

Joseph in Egypt

In the Bible is a story about a Pharaoh having bad dreams that his advisors could not explain. He dreamt about seven fat cows eaten. Then came seven lean cows who ate the fat cows. And then came seven full ears of grain. Seven thin and blasted ears devoured them. Joseph explained those dreams. He told the Pharaoh that seven years with good harvests would come, followed by seven lean years with crop failures. Joseph advised the Egyptians to store food. They followed his advice and built storehouses for grain. In this way, Egypt survived the seven years of scarcity.1

There is something that the Bible does not tell us. The Egyptians used this grain storage as a financial system. The historian Friedrich Preisigke discovered that the Egyptians used grain receipts for money.2 Farmers bringing in the grain received these vouchers. Bakers brought them back in and exchanged them for grain to make bread. In the meantime, these receipts circulated as money. The vouchers had value because you could exchange them for grain. According to the Bible, Joseph took all the money from the Egyptians.3 And so the Egyptians may have started to use the vouchers as money instead.

When you exchanged the receipts for the grain, you had to pay the storage cost. In this way, these vouchers gradually lost value over time. It worked like a negative interest rate. It may have helped to keep the money circulating and may have prevented financial crises caused by interest charges that prompted the Sumerians to cancel debts from time to time. During the reign of Ramesses the Great, Egypt became a leading power again. Some historians suggested that the Pharao’s wealth at the time came from grain money.

The money remained in circulation after the introduction of coins around 400 BC until the Romans conquered Egypt around 40 BC. The grain money survived for more than a thousand years. A holding fee on money and negative interest rates can create a stable financial system that lasts forever. It contrasts with the Sumerian interest-bearing debts that had to be cancelled from time to time to prevent permanent debt-slavery of the masses.

The Bible provides an explanation as to how the Egyptian grain storage financial system might have come to be even though the story probably is fiction. The Bible and the Quran also condemn charging interest. There appears to be a link between interest-free money with a holding fee and the Abrahamic religions.

Featured image: Joseph interpreting the Pharaoh’s dream. Illustrations for La Grande Bible de Tours. Gustave Doré (1866). Public Domain.

1. Genesis 41 [link]
2. A Strategy for a Convertible Currency. Bernard A. Lietaer, ICIS Forum, Vol. 20, No.3, 1990 [link]
3. Genesis 47:15 [link]

Earth from space

The sacredness of Creation

Thus spoke Chief Seattle

In 1854, the native American Chief Seattle gave a speech when the United States government wanted to buy the land of his tribe. You can read it by clicking on the above link.

Different versions of Seattle’s speech are circulating. In 1971, a screenwriter wrote the text you just read. It subsequently became a religious creed within the environmentalist movement. It differs significantly from the first published text compiled from memories and notes of one of the attendants. As is often the case with religion, historicity is not of the essence. It is an inspiring speech.

The message strikes at the heart of the matter. Nothing is sacred anymore. The pursuit of money destroys our planet and our humanity. The white man may think he owns the land, but he does not. He may think he controls his destiny, but he does not. We share a common destiny. Whatever befalls the Earth, befalls the children of the Earth.

As long as production and consumption increase, new problems emerge faster than we can solve old ones with laws, technology, targets and other solutions. Most of us believe that structural changes are impossible, but acknowledging a problem is the beginning of a solution. Our belief that nothing will help can become a self-fulfilling prophecy.

We need a new starting point, a new foundation for our culture, our beliefs and thinking and our place in the universe. Small steps cannot save us. We need to completely change the way we live. God gave us this planet on loan. As long as we do not change our ways, our societies will not become more humane and respectful of Creation.

People within the environmentalist movement tried to make the planet and everything on it sacred and claimed that everything is interconnected. In 1991, the environmentalist group Strohalm issued a booklet named Towards a Philosophy of Connectedness.1 It lays out Strohalm’s vision for a sustainable and humane society.

The principal founder of Strohalm is Henk van Arkel, a dedicated individual who remained its driving force for many decades. His views mask that Van Arkel is a moderate man who does not blame anyone in particular for our current predicament. In 1993, I became familiar with Strohalm when I joined the environmentalist movement.

I knew that the people from Strohalm were right, but I also believed they were naive dreamers. People will not change their lifestyles out of their free will. And we cannot do without energy. But as we are heading for an apocalypse, we cannot allow a false sense of realism to stand in the way of what we should do. Things have to change dramatically. Perhaps, there is a way out, but it will not be easy.

Featured image: Earth from space. NASA. Public Domain.

1. Naar een filosofie van verbondenheid. Guus Peterse, Henk van Arkel, Hans Radder, Seattle, Pieter Schroever and Margrit Kennedy (1990). Aktie Strohalm.

Venus of Willendorf

Reconstructing the Garden of Eden

In archaeological excavations, female figurines have turned up that could depict mother goddesses. The most famous one is the Venus of Willendorf from around 23,000 BC. In ancient cultures, mother goddesses represented fertility. Women give birth, and early humans may not have understood fatherhood and believed that women create life. The ability of women to produce offspring could have been the essence of mother goddess worship. The virgin birth is the miracle of the mother goddess. One of the best-known mother goddesses was Isis in ancient Egypt.

Women can be sure that their children are their own, but for men, this is different. When the fathers of children are unknown, families are matrilineal, which means that family lines depend on motherhood. The worship of mother goddesses may have disappeared because men desired to control women and their sexuality. The transition from hunting-gathering to agriculture may have played a role in this development.

Hunter-gatherers were wanderers. They had fewer territorial conflicts than farmers because population density was low, and their disputes were less intense because hunter-gatherers had no property and could move on.1 That changed with the advent of agriculture. Farmers had to defend their property and family, otherwise, they would starve and lose their offspring. Men are willing to defend women and children they consider their own. Men can also walk out when they doubt their fatherhood. That may have given them a position of power so patriarchy emerged.

The Garden of Eden was in Mesopotamia. The biblical story probably was an ancient Mesopotamian myth that Jewish scribes tailored to their theological agenda. The Jews had been exiled to Babylon when their priests compiled their scriptures. In the original tale, Eve probably was Adam’s mother. That makes more sense than Eve coming from Adam’s rib. She is the Mother of All the Living (Genesis 3:20), and we are the woman’s offspring (Genesis 3:15). Elsewhere in the Bible, a child is called the father’s offspring, so this is noteworthy. Eve apparently gave birth without the intervention of a man, a virgin birth.

Eve is the mythical mother of humanity. Scientific evidence suggests that everyone descends from one woman called Mitochondrial Eve. This universe could be a simulation created by an advanced humanoid civilisation to entertain a post-human individual we call God. And so it may be part of the script. In other words, in the real world, all humans may not descend from one woman.

The purpose of the man probably was to be a companion for the woman and perhaps to fulfil her desires. The Bible says that God created the woman as a mate for the man (Genesis 2:18), but the tale only mentions the woman’s desire for her husband (Genesis 3:16). In the original story, Eve may have desired a mate and then gave birth to Adam. Eve probably was the leading character in the original tale as she discussed eating the fruit with the serpent and made Adam eat from it (Genesis 3:1-6).

A man left his father and mother and became united with his wife (Genesis 2:24). In patrilineal and patriarchal societies, women join their husband’s families. And so, Paradise might have been matrilineal or even matriarchal. The title Mother of all the Living refers to the mother goddess,2 but nothing suggests that Eve was a goddess in the original tale. It remains unclear who created the woman, but it could be the Mesopotamian gods.

The Fall reflects the transition from hunting and gathering to agriculture. The life of hunter-gatherers was more agreeable than the plight of farmers who came later on. The Agricultural Revolution was a curse for humanity.1 The Garden of Eden provided for everything. Eve and Adam were naked (Genesis 2:25) like hunter-gatherers in the jungle today. Adam was banished from the garden to work the ground and condemned to a life of toil (Genesis 3:17-19). Women had to obey their husbands from then on (Genesis 3:16).

Any explanation of the Fall is speculative, but the following plausibly elucidates the main elements. In ancient cultures, people worshipped snakes for their wisdom or knowledge. Hence, the serpent may have given counsel to Eve. The tree of knowledge relates to the sacred tree, which may explain why it was forbidden to eat from it. The prominent role of Eve may reflect the part women played in shifting from gathering to planting crops that condemned men to a life of property and warfare.

Farmers have to protect their crops from thieves. Otherwise, they face starvation. Perhaps, Cain murdered Abel because Abel’s flocks ate Cain’s crops, so he had only meagre offerings for the gods, while Abel could please the gods by offering well-nourished animals. The first murder happened just after the Fall and was a conflict between a cattle herder and a crop planter. Knowledge of agriculture and animal husbandry did not work out well. And so, Paradise was lost.

The first Christians may have believed that Eve was God and the Mother of all the Living, that Mary Magdalene was Eve, and that Jesus was Adam. And Eve did not come from Adam’s rib but that Adam was born as Eve’s son so Adam, and, therefore, Jesus were the Son of God. Humanity descends from Eve so we are God’s children (John 1:13). Tribes exist by the idea that they share common ancestors. Usually, these ancestors are mythical people who lived long ago. The myth of Eve and Adam has the potential to turn all of humanity into a single tribe. And, God’s plan may work like so. Paul of Tarsus may have realised that this message was meant for humankind rather than Jews alone.

Featured image: Venus of Willendorf. Don Hitchcock (2008). Wikimedia Commons.

1. Sapiens: A Brief History of Humankind. Yuval Noah Harari (2014). Harvil Secker.
2. Asherah – Wikipedia: Some scholars have found an early link between Asherah and Eve, based upon the coincidence of their common title as “the mother of all living” in Genesis 3:20 through the identification with the Hurrian mother goddess Hebat. Asherah was also given the title Chawat from which the name Hawwah in Aramaic and the biblical name Eve are derived.

The Spider’s Web

The Spider’s Web is an informative documentary about the hidden world of offshore finance.

This is a documentary that everyone should watch to understand what is going on behind the scenes.

If you have Netflix, you can also watch it there.