My tryst with money

money3Money is something I can never really understand. I mean, I know how to earn it, save it, invest it, spend it. But I really don’t know what it truly is? As I kid I could never appreciate crumbs of papers determining life and death of people. I grew up, learning about money from my environment and entered the world without really knowing what it is.

I find it difficult to understand where it comes from, or what it means. I mean economic theories apart, what it really means. At a philosophical level. Yet it somehow continues to dictate nearly everything in the human civilization. Half of the books and articles I come across are written around it. Most theories in the world are based on it. We are given long lectures by our parents and colleagues on its importance. We know how much we have of it. We know what we can do with it. But we really don’t know what it is.

It is truly preposterous how little we know about arguably the single most influential concept humans has ever created. It isn’t taught in schools, nor are there television serials based on it. A few documentaries surrounding it are immediately termed as conspiracy theories and are ridiculed. The widespread ignorance about what furnishes the existence of money is possibly the greatest scandal of modern times. Money can suddenly make someone rich, or it can make someone go bankrupt.

I once asked my teacher, what recession is? He told me an interesting story.

Once upon a time, a traveller arrived in a village. He was tired, and hence wanted to spend the night there. He reached the village inn and asked for the rent. The inn keeper told him that rent is rupees 1000. The traveller wanted to check the room once before booking it. The inn keeper asked for rupees 500 as security deposit before he could allow the traveller to see the room, which will be returned back immediately if the traveller chooses not to stay there.The traveller agreed and gave him a 500 rupees note.

As the traveller proceeded towards the room for inspection, the inn keeper ran to the village grocery store and gave the shopkeeper the 500 rupees note which he had indebted while buying groceries a few days back. The grocery store keeper ran to the village storehouse owner and paid the 500 rupees note to him and claimed himself as debt free. The storehouse owner ran to the village farmer and paid him with the 500 rupees note against the crop he had purchased. The farmer ran to the same inn keeper, who happened to be his friend, and paid him the 500 rupees which he had borrowed to buy seeds. Meanwhile, the traveller came back, claimed that he didn’t like the room, took his 500 rupees currency note, and left the village.

Something happened here. An entire village became debt free, simply based on assumptions. One failure in this chain reaction would have led the village to, what we call recession.

Currency notes in a bank vault and those in stock market are no longer money. They are vegetative, useless, stale. You have to sell the stock to somebody to get it. To put money into the stock market you buy stock owned by someone else or issued by a company to raise cash from the public. The company gets the cash and you get stock that changes by the second. None of that actually reveals what money is. It takes value in the items or products exchanged for money. It can be used to estimate the value of an asset, or the price of a food item. It can be used to cite the national debt, but the national debt is not money.

It is the cycle of money that produces the mechanism to bring products to consumers. In the process money is created and destroyed. More money is created by a margin of interest on a loan and as profit of selling goods. Money can be used to buy goods. It can be paid to the government as taxes that then use it to allocate food and other items to government workers who spend it back into circulation as money that ultimately winds up back at a bank and it is no longer money but currency in the bank vault. Money is only money in the hands of spenders. The government treasury has no money, but only promises to pay.

Only when government pays for goods or services does it become money. When we use a credit card, we do not spend money, but issue a promise to pay for it in the future. If I do not pay for it, the value of money ceases to exist and money supply is reduced by the value of the item I bought. If enough debt is defaulted the money supply shrinks and production slows. Taxes cannot be paid, debts cannot be repaid, interest is forgone, banks and businesses fail. Newer theories are written. Revolutions begin and governments fall. Sometimes, there is a successful recession until the economy recovers from the crisis. Money is ultimately measured in the food eaten by people. It is inflated to cover the fictitious profit and interest value.

We all know that banks create money in the act of lending it. But to repay the interests added with the sum, governments eventually borrow more and more money. If something can never be repaid back, how can it be lent? The debt spirals are designed to grow forever. Recall that banks are not democratic bodies. In most countries, they are owned by the richest people. These rich people control politics and economic policies directly. Given these facts, how can I be expected to love money? How can I be expected to understand something that is created out of thin air, which eventually adds up to the class divide and disparity among people.

What is money then? Well, I believe it’s the physical form of human greed. Yet money is one common denominator that links us all together while at the same time drives us apart. It is beautiful yet ugly. It is the axis on which the logical earth rotates. Money itself has a beautiful origin. It is one of the most beautiful concepts by man. Money came into existence when simple barter systems could not cope up with human productivity and complexity. At the time when 4 sacks of grain could be exchanged against a cow, but 2 sacks of grains would lead to killing it. I started believing in a piece of paper, thinking you would believe in it too. Economics – the first purely belief based theory – was born.

But over time, the mediator has become the dominator. During the feudal ages, it was only natural that kings took full control over creation, distribution and collection of wealth, thus leaving masses impoverished and struggling to make their ends meet. While, scientifically we have come a long way, the men who run the money machine, are still exploiting the masses. In our case, the Bankers backed by their good old fellows, the politicians. It all started when world left the gold standards. Economics today is based on the perception of future production instead of the absolute valuation of work as a measure of production of goods and services that have a direct impact on the lives of people. In simple words, the same money can be invested and reinvested 10 times, i.e., there is only 10% of the hard cash available, of what is projected in all the accounts of all humans put together. It is the assumption that investment is good, that is driving the global economic machine.

I, personally don’t find money fascinating. I know, it is only a matter of time before the whole stupidity is out. It once happened in 2008 in a very small scale. It will happen again. As an artist, I just want to have the cash in my pocket that will help enable me to do what I want to do in life. Anything extra is a liability that I can do without.

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