Home > Uncategorized > Money and the myth of barter

Money and the myth of barter

from David Ruccio

fig_7

In the beginning, there was barter. Then, and forever after, there was money

That’s the myth every student of economics learns, that money grows out of barter. The idea is that monetary exchange solves the problem of the double coincidence of wants—that a person who is interested in trading needs to find someone who wants what they have and has what they want. Money makes trade much easier, so the story goes, and thus becomes a remarkable example of both human ingenuity and economic progress.

The fact is, as Ilana E. Strauss [ht: ja] explains, the story is false. Human beings did not invent money to solve the difficulties of barter exchange. Barter turns out to be a historical myth.

various anthropologists have pointed out that this barter economy has never been witnessed as researchers have traveled to undeveloped parts of the globe. “No example of a barter economy, pure and simple, has ever been described, let alone the emergence from it of money,” wrote the Cambridge anthropology professor Caroline Humphrey in a 1985 paper. “All available ethnography suggests that there never has been such a thing.”

Humphrey isn’t alone. Other academics, including the French sociologist Marcel Mauss, and the Cambridge political economist Geoffrey Ingham have long espoused similar arguments.

When barter has appeared, it wasn’t as part of a purely barter economy, and money didn’t emerge from it—rather, it emerged from money. After Rome fell, for instance, Europeans used barter as a substitute for the Roman currency people had gotten used to. “In most of the cases we know about, [barter] takes place between people who are familiar with the use of money, but for one reason or another, don’t have a lot of it around,” explains David Graeber, an anthropology professor at the London School of Economics.

A good example is the kind of exchange described by Fibonacci in his Liber Abbaci. He devoted the ninth chapter to “barter of merchandise and similar things.” But it wasn’t pre-monetary barter. Instead, as Randy K. Schwartz explains,

A barter was often recorded as such in a register or account book, as if actual coins had been exchanged, when in fact no coins at all were involved.

Because coins were still scarce, the widespread custom among merchants was to set the barter price for a commodity by “marking up” the cash price by a certain percentage. The two barterers had to agree on the markup rate ahead of time, or else one would feel cheated.

In other words, this was exchange that took money as the unit of account but, because coins were scarce, it took the form of the direct exchange of goods—say, wool for cloth.

And there are many other examples in the historical and anthropological record of forms of exchange that precluded money—centralization and redistribution, gifts, potlatch, trade at the edges of and between non-monetary societies, and so on. But there was no original barter economy, which was then surpassed by the use of money.

That’s a myth that began with Adam Smith:

But when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations. One man, we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less. The former, consequently, would be glad to dispose of; and the latter to purchase, a part of this superfluity. But if this latter should chance to have nothing that the former stands in need of, no exchange can be made between them. The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each of them be willing to purchase a part of it. But they have nothing to offer in exchange, except the different productions of their respective trades, and the butcher is already provided with all the bread and beer which he has immediate occasion for. No exchange can, in this case, be made between them. He cannot be their merchant, nor they his customers; and they are all of them thus mutually less serviceable to one another. In order to avoid the inconveniency of such situations, every prudent man in every period of society, after the first establishment of the division of labour, must naturally have endeavoured to manage his affairs in such a manner, as to have at all times by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry. Many different commodities, it is probable, were successively both thought of and employed for this purpose. In the rude ages of society, cattle are said to have been the common instrument of commerce; and, though they must have been a most inconvenient one, yet, in old times, we find things were frequently valued according to the number of cattle which had been given in exchange for them. The armour of Diomede, says Homer, cost only nine oxen; but that of Glaucus cost a hundred oxen. Salt is said to be the common instrument of commerce and exchanges in Abyssinia; a species of shells in some parts of the coast of India; dried cod at Newfoundland; tobacco in Virginia; sugar in some of our West India colonies; hides or dressed leather in some other countries; and there is at this day a village in Scotland, where it is not uncommon, I am told, for a workman to carry nails instead of money to the baker’s shop or the ale-house.

In all countries, however, men seem at last to have been determined by irresistible reasons to give the preference, for this employment, to metals above every other commodity. Metals can not only be kept with as little loss as any other commodity, scarce any thing being less perishable than they are, but they can likewise, without any loss, be divided into any number of parts, as by fusion those parts can easily be re-united again; a quality which no other equally durable commodities possess, and which, more than any other quality, renders them fit to be the instruments of commerce and circulation. The man who wanted to buy salt, for example, and had nothing but cattle to give in exchange for it, must have been obliged to buy salt to the value of a whole ox, or a whole sheep, at a time. He could seldom buy less than this, because what he was to give for it could seldom be divided without loss; and if he had a mind to buy more, he must, for the same reasons, have been obliged to buy double or triple the quantity, the value, to wit, of two or three oxen, or of two or three sheep. If, on the contrary, instead of sheep or oxen, he had metals to give in exchange for it, he could easily proportion the quantity of the metal to the precise quantity of the commodity which he had immediate occasion for.

It’s a myth that continues to be taught to hundreds of thousands of economics students every semester.

It occupies much the same position as the Robinson Crusoe story. In both cases, it’s a myth that starts with self-interested individuals who make decisions—to trade with money or to enter into a division of labor—that, at one and the same time, benefit themselves and society as a whole.

But, of course, there are many things missing from these mythical origin stories. There’s no exploitation or instability; no debt, unequal power, or state coercion; no social relations or embeddedness of the economy within society.

Instead, what mainstream economics offers starting with Smith, and continues to offer studies today, is a story about the mythical—not real, historical—origins of capitalism.

The sooner we recognize those stories for what they are, the sooner we can get on with the business of imagining and creating alternative economic institutions.

  1. March 3, 2016 at 1:38 pm

    Today we think of money as a means to settle accounts, which blinds us to its function, which is to settle accounts. Bear with me.

    Without money people traded in long chains of favour. In a stable group A gives something to B, B to C, and so on. People modulated their give and take to be fair in the long run, or settled only occasionally. But most of the time the group had favours outstanding, and that’s what people wanted because it’s good for cohesion.

    The innovation of money is that it allows you to settle immediately and thus trade with transient people such as soldiers, other tribes, or travelling merchants. It also destroys social cohesion to this day. So blind are we to the fact that settling accounts is the innovation, that we imagine people trying to do that with barter and struggling.

    • March 3, 2016 at 2:52 pm

      I quite agree with Pavlos. While it is interesting that barter came after money, it is a complete irrelevance to the problems we face today or “with the business of imagining and creating alternative economic institutions.” The idea that we could learn anything about capitalism from the history of barter is foolish, as is all Marxist thought on the problem, having got it all the wrong way round. It was industrialisation that marginally changed the face of capitalism, chiefly by necessitating limited liability shareholding, not remotely required until industrialisation and its economies of scale necessitated it. Read Aristotle’s ‘Economics’ to see that apart from this little wrinkle, capitalism was recognisable in all its major elements 2500 years ago.

  2. louisperetzperetz
    March 3, 2016 at 3:18 pm

    Of course barter comes first, but only for local ones. But as it was impossible to do so with goods to be lent to people living too far, people invent money. That means the money becomes good value for a time. If this time is long, it becomes capitalism. That is why I told in my book that economics can be shown as a multitude of values vectors moving everywhere for barter. That became a problem when money became paper bills, and now only script money. Where are the goods which they seem to look as the money says? Here is the myth, I believe.

  3. Alan
    March 3, 2016 at 5:00 pm

    Smith was fairly clear that he was being speculative. Smith, unlike ourselves, did not have access to over a hundred years of anthropological texts filled with data on exchange relationships.

    Anthropologists understanding of the nature of exchange is much broader than that of most economists. Exchanges are always bound up with social relationships and cultural context so one encounters different types of exchange in different contexts and in relationship to kinship distance.  For some discussion see:
    Chris Gregory: On Money, Debt and Morality: Before Smith, Smith, After Smith. Part of Gregory’s point is that Smith understood, unlike our modern Benthamites, the moral component of exchange.

  4. March 4, 2016 at 3:56 am

    Polanyi spends a lot of time discussing the myth of barter, introduced by Adam Smith: — this is one of the elements of The Great Transformation. His words are enlightening:

    We have good reason to insist on this point with all the emphasis at
    our command. No less a thinker than Adam Smith suggested that the
    division of labor in society was dependent upon the existence of
    markets, or, as he put it, upon man’s “propensity to barter, truck and
    exchange one thing for another.” This phrase was later to yield the
    concept of the Economic Man. In retrospect it can be said that no misreading
    of the past ever proved more prophetic of the future. For while
    up to Adam Smith’s time that propensity had hardly shown up on a
    considerable scale in the life of any observed community

    There are two interesting points, related to the Great Transformation – the myth of barter is a MISREADING of the past, and aso PROPHETIC of the future. This is a deep insight — our modern economy is ENTIRELY BASED ON BARTER == if we think of money transactions as barter as well – we trade money for commodities, in exactly equal quantities. Precisely as Pavlos states with deep insight, structuring the economy this way destroys social harmony, which operates with lubricant of debt — people are in debt to each other which can never be paid, and this drives social cooperation. This point is at the heart of the powerful and deep historical analysid by David Graeber in Debt: The first 5000 years.

    • March 4, 2016 at 11:15 am

      I pretty much totally agree that money transactions can be viewed as a form of barter.

      (I once met Graeber at one of the ‘occupy’ group meetings—we basically agreed to disagree which is why he has a bestselling book and tenure and i have next to nothing.

      But 0.999…-1 /= 0. Having next to nothing is still something.

      One review of Graeber’s book called it ‘the first 5000 pages of anecdotes’ (by a sort of left wing heterodox economist who i think is in australia.( .

      This view actually comes straight out of Arrow and Hahn’s proof of general equilibirum theory (which says basically there is a ‘fixed point’ or equilibrium using Brouwer’s theorem or Perron-Frobenius theorem —- perfect utopia and a Pareto optimum of any kind you want (eg John Roemer—everyone has equal income, or 1 person owns everything and the rest live in squalor—these are political decisions (‘norms’), as even Krugman recognized)

      You just put money in as another commodity..

      As was later noted, finding that ‘fixed point’ or equilibrium is basically noncomputable—as easy as hitting a real number when throwing a dart at the real number. The probabilitity is zero.

  5. March 4, 2016 at 7:54 am

    Thanks to David Ruccio, Pavlov, Louis and Asad for pointing directing us to the crucial truth, which for me came together in my reaction to the kindness of strangers giving me lifts during my National Service in 1958-60 and reflections on how much I owed my parents and other benefactors and teachers. I was envisaging the concept of a Hitch-Hiker’s Economy as long ago as that, and it great to see at last some independent support for the idea.

    Curiously, having slept on the “wonkish” thread on the definition of numbers, I came down to share an insight on the use of mathematics in time-tabling, whereby give and take in the synchronisation and prioritisation of events is essential to the smooth running of an economy. Similar considerations apply to spatial tolerancing.

  6. David Chester
    March 4, 2016 at 8:26 am

    Simply because there are no records of barter taking place in pre-history times, does not prove that it is a myth that this stage in the development of trade did not occur. Adam Smith’s contention may well be based on a certain amount of imagination, yet without the necessary logical progress of barter to preceding the introduction of money, we would not have the better working social system of today. So based on logical argument alone, barter must have happened, just as the evolution of the universe from the Big Bang occurred. Its time to move on.

    • March 7, 2016 at 8:25 pm

      I’ll not speak for David. But for myself the anthropological evidence we have is clear. There was indeed barter, especially with distant groups in early human civilizations. And I mean barter in the sense Adam Smith used the term. Very little in hunter-gatherer societies. More so as humans switched to fixed settlements and planned agriculture. Even more as formal government structures emerged along with changes in technology. But it is also clear from the evidence that barter in this sense was not a primary means of exchange for humans. Primary exchanges were gifts (reciprocity) and redistribution, along with family alliances. These were more effective at dealing with the concerns of humans. By the time Smith wrote there was a good amount of trade in goods and services, some worldwide. But even with this uptick gifts, redistribution, and family agreements remained primary in exchanges. Smith seems to be describing how he’d prefer exchanges to occur not how they were occurring or had occurred historically.

  7. March 4, 2016 at 10:49 am

    Discussions like this one remind me of just how off kilter economists’ depictions of the world really are. People make exchanges and have for thousands of years. They make these for many reasons and in many ways. Based on the historical record the reasons seldom fit the economist’s notion of utility and markets are generally not the means. To build a ship, for example the things needed can be acquired in many ways. For example, through family, gifts, obligations of labor/materials from past transactions, slavery, for future benefits (I can ride on the ship), moral commitments, religious obligations, neighbor helping neighbor, etc. The important and interesting question is why have economists chosen to focus their work on only one form of exchange carried out via one means? And even more interesting why they have chosen to elevate this form and this means above all others. Make it the form and means of exchange that determines not only human history but human futures as well. Are they stupid or bad academics – or are there other reasons?

    • David Chester
      March 4, 2016 at 10:56 am

      Compared to the number and total sums involved in the exchange of good for money, the exchange for goods in kind is very small. Macro-economists need to concentrate on the major issues and to neglect the “in kind” transactions scarcely affect the quality of their findings. On the other hand, the failure to properly these major effect has for many years confused what should be a sensible and logical side to human engineering. Political bias effects still prevail and a true theory of macroeconomics must represent all the KINDS of activities present within our system.

      • March 5, 2016 at 5:51 am

        Who the hell invented “macroeconomics” and why did they do it? Economists invented macroeconomics, for the convenience of their theorizing, textbook writing, and indoctrination of students into economics. I ask “ordinary” folks all the time about macroeconomics and microeconomics. The answers are generally uniform. They don’t know what these are, have never encountered them, and see no relationship of them to their lives. So let’s look at all exchanges as just forms of relationships. And the world is made through relationships. For the last 150 years in the US and other “developed” parts of the world exchanges involving money have become prevalent. But before that time and even today in many “underdeveloped” parts of the world today money and non-money exchange are mixed and overlap.

        “Sensible and logical” are also relationships. If we explore these relationships we can with work and luck see their construction and use. Just using them in sentences is pointless. That’s one reason I object strongly to the depiction by economists of “rational” exchanges (relationships) as economic. They’ve spent no time studying the construction and use of rational. How can someone that ignorant pretend they know what the relationships are?

    • March 4, 2016 at 1:22 pm

      I agree. It’s high time that we view an economy as a whole network where people transfer value to each other in all kinds of ways. Employees transfer value from one to another in order to build something together, it’s not just each employee transferring “labour” to the company. People transfer value within families, quite a lot in fact. Even commercial transactions have a network rather than a market character if I buy regularly from my favourite shop.

      Economies are networks. We should use more graph theory and less calculus to make sense of them.

      • Alan
        March 4, 2016 at 2:03 pm

        There’s a whole academic field devoted to the types of exchanges you and Ken reference: social/cultural anthropology. It’s largely ignored by mainstream economists.

      • March 5, 2016 at 5:17 am

        Social historians have been studying relationships in time, including the relationships economists call exchanges for over 50 years now. So there are lots of sources for economists to use and learn from. But they ignore these as well. The general ignorance of most economists is frightening.

      • March 5, 2016 at 5:09 am

        Life is created by a series of relationships. Each human, each of what’s usually called “institutions,” what’s given the name “natural” events, the atmosphere that surrounds us — all are ongoing relationships. These series of relationships are given different names. One name is networks. Once we see this then we see that so called economic events are really no different than political events or religious events, etc. We just need to be ready to set aside our preconceptions and let the world show us what’s happening. This may seem simple and easy. It is not.

      • Alan
        March 5, 2016 at 9:05 pm

        @Ken

        Yes, there are lots of good materials on economics to be found in other social sciences and humanities disciplines. Historians who write about the discipline of economics are also revealing of the discipline’s various mythologies and origin myths.

      • March 6, 2016 at 4:35 am

        You are correct. I work with many anthropologists and historians whose focus is “material welfare.” That’s often the phrase they use, rather than economics. Many of them object to the hijacking of such work by economists. And many object to economists in general. A good read on the history of professional economists is the volume by Jonathan Franklin “A History of Professional Economists and Policymaking in the United States.” I also find the subtitle of this volume fascinating – “Irrelevant geniuses.” On a more personal note, much of my career involved arguing in court with economists and lawyers. The latter argued but never called me a second rate analyst because my doctorates are in history and anthropology. The economists always questioned the relevance of my degrees in making policy decisions about “economic” concerns.

  8. Ian Greenwood STEERglobal
    March 4, 2016 at 11:00 am

    thanks for the academic analysis and the link to the Great Transformation. Transition Towns is cottoning on to similar stuff – what could be rationalised from the Western-style Bucaneer capitalism of winner takes all (or most, for the least amount of work.. That is whats driving current digitalisation after we have seen monetarisation tip the world out of balance).

    At a practical level those with enough “Money” and “success” in England etc hanker after the country property and when they get there they spend their weekends on a ride-on lawnmower – paying substantial bills for transport and heating older homes.
    From one sedentary job to another. Let’s call him rich (R)

    BBC “Lark Rise to Candelford” is worth having in primary schools, taking us on a history story of how the village, hamlet and town worked. To allow a happy society for most. A flatter structure – fewer in trhe middle and the top. Solidarity in the Hamlet won the day. OUTCOME: of all the characters and strata the happiest was the literate tradesman with hand skills. and the most telling was the understanding that the agricultural worker (AW) had what the Rs of this world strive for – and YET mechanisation forced AW off the land to his Dismay (shades of Wizard of Oz, yet without clear explanation of advantages and disadvantages of UNBALANCED capitalism – What ERA exposed over 10 years ago – 10 % of money was cash and 90% or more commercially created without additional tax AT SOURCE (avoiding Expenses dilution of Profit Declared as is the habit of banks).

    Growing up in Parkerville WAust (in Heaven with all the ripe fruit i could eat all the sun we could ask for and lying in the long grass – a kids private room) the rules were: being looked after by Mum was “free”:work half your free time – she made sure of our English and our times tables mentally.. Board and lodge and Pocket money was there but you had to make a good case to get it from Dad’s pocket – the basis of solid banking and reasonable mark-up of interest from HIGHER Rates paid TO DEPOSITORS (ANOTHER INCENTIVE with solid social benefit – having savings – taught early. Good incentive to work on neighbouring orchards.and now with 40 year’s experience as designer/constructer but also running community projects, I’d say the simple economic model wins IF ONLY we had Balanced Capitalism (BCap).. ALL YOU NEED TO DO IS DIVERT THE CASH RATE TO THE PUBLIC PURSE!! a SIMPLE tweak of the system could grow back balance – Bcap, and could be started with Eco-Fit (email for details ian[DOT]greenwood@phonecoop.coop that CUTS THE COST OF LIVING – and of Eco-Load – with simpler more vwholesome needs/wants)

    Instead of that other falsehood that was given us at primary level in the1960s “subsistence” was looked down on. Yet look up “3” at BBC Newsnight for the demolition of a village and 3000-year old sustainable culture for a new city – for more rabbits on a treadmill. Focussing on a bit of dirt and damp to discredit poorer workers otherwise happy. Letting their children support them with money from “work” in the city while living in a box with not much time. what it really boils down to is being happy on enough.

    It Seems Those in Control via a currently disproportionate money system (in Aircon Apartments and high Eco-load) WANT (or see as an acceptable norm) a large section of strugglers addicted to fags (declining) and coffee (headaches if you do not have it) while paying rent for 3 times as long as homeowners if they can buy before 25 (thus with a better life for kids and less cost to the state in old age or in case of “unemployment”! And a set of ultra-rich (some philanthropy) to paint the clearest picture and MOTIVATE to get out of bed. Even self-employed geeks are being given a place to work like treadmill hamsters – because they have to get washed (then). LET’S GET THE CASH RATE DIVERTED (BASE RATE in the UK) TO THE PUBLIC PURSE. AND THINK ABOUT THE FREE MONEY LATER! Simple or what?

    • March 5, 2016 at 6:15 am

      I grew up in Texas, a long way from the UK. But our experiences are not that different. Of the 50 hands on my uncle’s ranch 43 were family members. This was 1957. And the tradition of family working on my uncle’s ranch goes back 7 generations. And then there is the ranch itself. All the ranches and farms in the region worked cooperatively on community needs such as water infrastructure, electricity (through a cooperative), road maintenance (through the state and several county roads departments), community college campuses, construction and maintenance of local hospitals and doctors, local police, etc. The primary things that were “sold” via markets for cash were cattle, sheep, corn, and cotton. And even these sales were done in bulk for the region rather than ranch-by-ranch or farm-by-farm. I admit much of this has changed since I was a boy. Mostly as the result of farm and ranch foreclosures, and more and more children moving away to Houston or Dallas, as well as much of the land and ranching and farming now being owned by “corporate” agricultural conglomerates. You can judge the changes for yourself. As for me I don’t like them.

      • March 5, 2016 at 6:41 pm

        i had relatives in laredo texas (my grandma—they have many interesting plants down there which i found and so i got in a tiny bit of trouble — a kind of cactus and mushroom). my grandma always had this sticker on her little old mustang car for pacifica radio. the KKK bombed that station 2 times but she wasnt scared.

        my other grandma had a farm—not ranch–in streater north dakota where half my family is from. ‘see on youtube ‘a tour around streater north dakota’ —they have the highest mountains in the world there and also green snakes–my favorite kind of snake.

        she was an academic—pinciple of a very upscale one room schoolhouse with no heat or electrcity. it could be -36 in winter .
        the bank took that farm —they invested in a combine but then my grandpa died (i never met him) and the crops failed. so they moved to fargo to run a rooming house. my mom went to university of north dakota agricultural college, and then transferred to university of chicago where she met my dad. he was on gi bill. he took classes with milton friedman too, and had very low opinion of him.

        i had quite a few relatives in north dakota and minnesota and still have a few who had farms but they were all aquired by agribusiness. many of the native americans in that area had it even worse.

      • March 6, 2016 at 3:25 am

        Just goes to show how much benefit the US has received from private firms that absorb farm and ranch land that once supported dozens of families and use it to support dozens of share owners, destroy local infrastructure (road, water system, electric cooperative) to give even more “profit” to these share owners, and make deals all the time that bankrupt local economies. Bravo! So by all means let’s privatize the counties in all the states. In a few years the country will be as dysfunctional as Exxon or Halliburton.

  9. March 5, 2016 at 9:21 pm

    The locals in Rotorua, NZ, say of the Maori barn there, that it was the greatest architectural achievemen in the pacific islands: up on legs to keep the vermin out. What I saw was a communal storage facility wherein people put in what they could spare and took out what they needed, with no need for barter at all.

    • Boolean, Logic from India?
      March 9, 2016 at 12:52 am

      Great example of an elegantly working custom!

  10. March 7, 2016 at 11:04 pm

    The core problem as I see it is a fundamental conceptual confusion — of “money” with currency-like things. Category error.

    As you point out, money expressed the form of tallies is tens of thousands of years old. Coins weren’t invented till about 700 BC.

    Coins and paper are actually an extra step removed from being money qua assets on balance sheets — they’re convenient physical tokens allowing people to move assets from one person’s balance sheet to another, without editing — or even having, actual, written — balance sheets. But we’ve always called coins and bills “money,” hence the confusion.

    I wrote about this at more length here:

    http://evonomics.com/did-money-evolve-you-might-not-be-surprised/

    • March 8, 2016 at 8:27 am

      I agree that ‘money’ as a term embodies a category error, i.e. the confusion between money (as token of prior provision of goods, services or labour) and the loan of money (IOU). The only economist to point this out as far as I am aware is Hartley Withers 100 years ago: “But the other most common use of the word leads to complication, because in its second sense money means not money, but the loan of money. This is the sense in which the word is used when we speak of a money market or a price of money, phrases which are wholly incomprehensible to those to whom this difference of meaning is not made clear.”

      What this means is that monetary aggregates like the UK’s M4 are a category mistake, mixing money as currency with money as bank IOUs. In this light the approximately £3trn UK bank balance sheet is an IOU on the liability side to the saving sector and an IOU on the asset side to the borrowing sector of marginally less, where the difference is made up of currency, reserves and physical assets. In other words only about 1-3% of that M4 aggregate is ‘money’ in the normal sense. Otherwise £3trn has been lent by savers to the banks, who in turn have lent nearly £3trn to borrowers, who have spent it. There is no money worth speaking of ‘in’ the banks!

  11. Mike1
    March 9, 2016 at 4:11 am

    Since you didn’t suggest an alternative narrative I will do the job for you: two guys were sitting around in a cave and started discussing how a unit of account would be super helpful. One guy was like “hey, what if we could create an abstract concept to represent value?”

    The other guy was all like “wow, that is genius! So, how would we work it if I wanted to give you two deer legs for that sweet bow and arrow?”

    Guy number one “no you idiot that is barter! We need to create a unit of account, popularize it and then we can work out relative value. If we just do an exchange it will confuse the bejesus out of people in the future who have never done a days manual labor or run a business.”

    Guy number two “wait, is this one of things you say at parties to try and look cool to girls that always fails miserably. Like your weird ‘what if we were living the same life but in a different dimension’ thing? That has never worked”.

  12. March 9, 2016 at 2:33 pm

    “This ‘core problem’ is “the issuance of money that has ‘no something given up’ and recording it as wealth” can only lead to bust, failure, and ultimately to “monetary collapse”.
    IMHO as stated by Soddy, “Loans equal deposits’ is a lie”. Bank loans based upon Fractional Reserve System are “counterfeit” as they are merely copies of money already owned by someone else.

    http://steadystate.org/nationalize-money-not-banks/

    “In the 1920s the leading academic economists, Frank Knight of Chicago and Irving Fisher of Yale, along with others including underground economist and Nobel Laureate in Chemistry, Frederick Soddy, strongly advocated a policy of 100% reserves for commercial banks. Why did this suggestion for financial reform disappear from discussion? ”

    “Soddy was especially cautious about uncontrolled physical growth, but his main concern was with the symbolic financial system and its disconnect from the real system that it was supposed to symbolize. As he put it: “You cannot permanently pit an absurd human convention, such as the spontaneous increment of debt [compound interest], against the natural law of the spontaneous decrement of wealth [entropy].” Wealth has a physical dimension and is subject to physical limits; debt is a purely mathematical quantity and is unlimited.”

    BEWARE: You have been notified. Every boom must bust ! When the wealth is ultimately discovered to be “counterfeit”.

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