About money: primitive, secured, Fiat, cryptographic
Economics is an exact science, and the science of this natural. Many consider it a humanitarian — because it describes human society, some do not consider Economics a science, because what science is: a set of laws, principles, and techniques that are used by people to predict the development of certain natural processes. With the predictions of the modern economy is not very smooth, it is not enough of the fundamental, inherent to the same physics.
Economy perfectly describes the events that have already occurred. Here she is in something like history, which too often are denied the status of science. Why is this happening and why the economy is still science, and natural science?
The answer is simple: the economy describes the processes in human society. If an individual has a maximum degree of freedom and can do whatever he wills, the human mass, crowd, operates in a more limited framework, which can be described by certain laws.
Ideally, Economics is the universal language of communication between the individual man and humanity as a whole.
Human society is constantly evolving, and thus changing the subject of study of Economics. Imagine that physics is somehow transported into the distant past and began to describe the Universe since the Big Bang. At that time the properties of matter was changing rapidly and, therefore, physical theories have collapsed one after another. About this situation is the economy — the object of study is changing rapidly, almost as fast as matter after the Big Bang. Of course, economic theory also crumble after these changes.
Moreover, the economy has no such stable units, as in physics. The basis of economic relations — money. But unlike the physical meters, or seconds, there is no basic values, no constants, which could be reduced to money relations. We can change the meter on the ft, and second for the month, and natural formula will not stop working. But the money yesterday and money today already have to equate to each other by using different coefficients, the same discount rate. And she, unfortunately, is quite conditional, is evaluated by statistical methods, and therefore contains a wide range of assumptions.
Why is this happening and what is money anyway?
Money has many definitions and many functions, but most importantly, perhaps: money is measure of value. People appreciate using the money labour spent on the production of some good. All the best, because all that surrounds us, is produced using labor. Well, almost everything.
People have a need somehow to pile up your work, storing it for the future. For example, the hunter went into the woods and killed the bear. He doesn’t need the whole bear right now, it, but bear, you have a lot more, but he has only a dead bear. It would be good to sell the meat, pelt, claws, internal organs of the beast to other people in exchange for their future labor? Well of course, that was coined money.
Money had a different shape, sometimes quite strange. For example, in one of the archipelagos of the Pacific ocean the money was a huge stone discs. With a hole in the middle, which is typical. Weighing several tons. To carry that kind of money was impossible, so the inhabitants of the archipelago came up with blockchain technology, but rather is a decentralized consensus.
Each coin had a master, and everyone knew it. When a coin passed from one host to another, the former owner just told everyone that it’s the coin didn’t belong to him, but it VAS on the other island. Bob didn’t need to pick up a coin physically, it was enough that everyone around knew whose it was now.
But most civilizations have tied money to gold. Actually this is a very inconvenient way to fix the cost and ensure the future of labor. And all the dreams of individuals about the return to the gold standard broken one simple fact.
Gold is also a commodity, and its production takes a lot of work, both physical and embodied technique, that is a capital investment. So, to use gold as equivalent, it is necessary or to buy at a lower price (that is, to change the gold to a smaller amount of gold), or ideally, to take it away for free. The law of circulation of money States that money supply should be proportional to the entire gross domestic product, not just mining.
Either we must admit that all the work in the world owns gold mining companies and declare their bodies of the issue of universal money. But will rise to the logical question: why gold? Why not oil? Or a liter of pure water? Or a kilowatt of electricity? Or kilocalorie, as embodied in the food? And logical answer to this question is no.
And so we come to the Maxim: the equivalent value does not necessarily have to cost anything at all. In principle, it is something like the existing Fiat money in their electronic form or for cash. Yes, today’s money is just numbers, no matter on the Bank or in the blockchain — which themselves are not worth anything, and therefore can be a perfect medium of exchange, a way to accumulate future work.
Fiat money is subject to inflation. Here arises a contradiction: if I sell my current work for the money, which in the future will be able to exchange for the labor of others, why the money cheaper? After all, the work in the past are always more valuable than labor in the future.
Indeed, it is always difficult to make the first move. To build the first house in the open field is difficult and expensive. You have to create the infrastructure for this building. To build a second home is easier, and to build ten thousand in a row house in a big city is much easier than the first. In fact, current startups, coming to the same conclusions, actively used shares in the companies as a means of stimulating workers. Right, to start a new business terribly hard (or rather, scary, and hard), the first labor workers should be evaluated much more work of future specialists that will come in your already working project. But only if the project will work in the end.
In fact the opposite is true — not every work must be paid. I love to give a simple example: to get the thick steel door to the roof of a house under construction is very hard and requires a lot of work, but the trouble — the front door is on the roof of the house useless, and hardly someone will agree to pay for such work.
I understand the claims of the pensioners. Their savings depreciated over time, but they created a basis that allows the current generation to earn much more and easier than they had in the past, when such technological and infrastructure base has not yet been created.
The resolution of this issue feels a cryptocurrency. The principle of its issue creates a deflationary model. Indeed, bitcoin spherical in vacuum should always go up, that is, last, more valuable and hard work of people involved in the cryptocurrency becomes with the years more expensive. It would have been great if the bitcoin in a vacuum and stressed spherical. However, it is not, and we somehow solve this issue in future articles. Now let me just say that all the current cryptocurrencies are doomed to death and oblivion, or to a profound transformation.
Here we implicitly addressed another problem of the current money — inflation. We all know that inflation is inevitable. We talk about it at school, but always as something categorically: “the inevitable Inflation, because deflation is very bad. But deflation is bad because…”
Without delving into the multiple causes of inflation, I will try briefly to reveal its philosophical essence and nature.
Yes, previous work is worth more than the labor of the future, and money is the way to accumulate labour. That is, the idea after working for an hour yesterday and got a conditional coin, today would should I buy with this coin more than yesterday. Because my last labor was heavier than today’s labour, or in extreme cases equal in severity, but were not exactly easier, because the economy and productive forces are developing, and not degraded.
But then we remember that labor creates more capital. And the capital has the properties of wear. That is, if the labour past, the idea should always go up, the capital of the past is getting cheaper every day. Shovel made by me yesterday, today is already worse than new and cheaper. Therefore, the capitalist is vital to the devaluation of past labor, at least at the same rate as capital depreciates due to depreciation. That is, the equilibrium rate of inflation must be proportional to the average rate of depreciation of capital, otherwise violated the cycle of simple reproduction of capital.
Here to save the basics of operation of the present capitalist economy and the need for a devaluation of past labor, and no other working model yet. The question is purely psychological. Very few people would love a constant and regular decrease in wages, but since the value of money is conventional and is disclosed solely in a comparison of prices on goods and the current cost of labor, the absolute size of wage decreases and even increases, but the same or faster rising commodity prices. Marx called it exploitation of labour, but no other ways for the functioning of a Fiat economy is not yet invented.
As can be seen, for existing cryptocurrency such a scheme is not respected, and respected not. They are based on a deflationary model, and invest the crypt unprofitable and even pointless, except to cover the transactions of margin trading or co-exchange transactions (but not investment in the classical sense, capital is not formed here). But it is possible the parallel existence of crypto – and Fiat monetary systems. Moreover, the simultaneous existence of deflationary and inflationary money solves a lot of contradictions, such as the notorious depreciation of past labor.
So now our society is at a very important stage of Perevoznaya basic economic categories — a measure of value. A bunch of “crypto — Fiat” it is able to solve a long-standing contradiction of the depreciation of past labor.
But in addition to the paradox of money in the economy there is another serious problem, another factor which fails to settle into a coherent and consistent model. Let us recall the main resources of the economy, which are somehow identified all economists as factors of production: labour, capital and land. If the work is measured in money, a capital is created by labor, bought the land from the scheme falls. The earth is not created by labour, though its cost and depends on the invested labour, but this work is not always made by the owner of the land. The land costs money and gives the owner an income.
Here is the point I propose to consider the following article and understand how you can work around this paradox in the future. In my humble opinion, of course.