Wednesday, 23 October 2013

When Money Becomes a Social Tool

Money is supposed to be a unit of measurement, to facilitate trade upon an expanded barter system. It's function is similar to a kilometer or a pound or a gram. "One dollar" is a universal measurement that represents X/Y the value of a portion of a bag of flour, or a pig, or a gallon of gas, or a labourer's production output. This universal measurement allows for the facilitation of trade on a large scale, rather by the simple barter system which we all know has its limitations.

But what happens when a unit of measurement is used by outside forces to manipulate the actions of a society? Is that measurement still valuable? What if, for example, most people walked five kilometers a day for exercise, and the government decided to "help" these people get even healthier by declaring that a kilometer is now 1100 meters instead of a thousand, and then next year, they increase it to 1200 meters, and so forth? The usefulness of a unit of measure decreases the more it can be manipulated. The more precise it remains, the more valuable it is. Imagine how screwed up things could get if a construction crew were building a house and the men working on the one side of the house were measuring with inches that were 10% longer than the workers on the other side of the house. Chaos would ensue. The more static and standardized a unit of measure is, the more useful it is.  

Money used to function in this fashion. Sure, prices did not always stay static, as the forces of supply and demand, along with others, still have a fluctuating force on the value of goods and services, but in the aggregate of available goods, the cost of living remained more or less the same over time. When money was more static in value, you could pretty much figure out exactly how much wealth you would need in order to survive for the rest of your life. If you knew that $30,000/yr would allow you to live comfortably in perpetuity, you'll know that when you have $600,000 invested at 5%/yr, you'll never have to worry about getting by again. Whatever your figure is, if you can rest assured that what it costs to get by today will be the same figure as it will be twenty years from now, you can start to do some real calculations and goal setting becomes much easier. 

The way money functions today, however, has nothing to do with money being a static unit of measure. Rather, it has become an instrument our governments are using to manipulate the actions of society. Take Japan where it was declared the Yen was going to be devalued by something like 40%. This was done intentionally to stimulate the economy by social means - to panic people out of their savings, either to spend it before its purchasing power is lost or to invest it elsewhere than "low-risk" savings (ie. in stocks or real estate) in an attempt to preserve its value. In America, money is being held at artificially low interest rates in part to stimulate the housing market higher, the intention being to motivate people to borrow against their home equity and spend it in the greater economy. In other words, the unit of measure known as "money" is being used as a social tool to manipulate people's actions. It's value is not objectively static, but rather subjective to the manipulations of government elites as they try to herd us into one direction or another.

Furthermore, this unit of measure is manipulated - at your expense - to fund the viability of corporations which do not benefit you directly. In Canada, for example, we often hear smug yackity-yack about how much better we made it through the 08/09 Financial Crisis than so many other countries in the world. It's like we have been lulled into a false sense of security. The Canadian dollar has been held at par with the US Dollar both before and after the Financial Crisis. While we sit here on top of the world, our mouths dropping at the amount of money the USA is printing, we scarcely seem to realize that if their dollar is losing power... then as our dollar remains at par with theirs, ours is losing power too! In a sense, we are unofficially "pegged" to the US Dollar, in order that our export industries won't lose their competitiveness in their respective markets. So, in order that a steel mill in Ontario is able to remain competitive in the American market, dear citizen in British Columbia, we are going to devalue the purchasing power of your personal savings at the same rate the Americans are devaluing their citizens' savings through reckless money printing. It may be bad for your personal savings, Mr. Citizen, but it's good for Canadian corporations... er, the Canadian economy! This is mere further distortion of the unit of measure known as money, and shows the uselessness of even considering it a valid tool for financial planning. 

I remember reading once, that during Germany's hyperinflation, some people tried to preserve their wealth by buying as many pianos as they could get their hands on and stuffing one into every room of the house. The logic being that a piano, even a used one, will maintain its value as a used piano, regardless of the monetary value of it today or tomorrow. A piano is not only worth $X, it is also worth "one piano." Similarly, a house has value besides its monetary value. It's a place where you live and raise a family. A house is worth "one house" on a different level than whether its monetary value is $50,000 or $750,000.

It's along these lines of thinking that I start to look at actual products on the market as having more value than others. Here is an example of what I mean: Recently my cordless phone went on the fritz. The battery no longer held a charge. It was a cheap phone worth no more than $30 and it lasted for two years. Aside from the monetary value of that particular phone, buying the phone also represented value in providing me with "phone service." In fact, the ability to communicate is really what I was buying. Before this phone, I had another cordless phone. An expensive one. I paid $200 for it - back in 1997. It lasted for 14 years without any trouble at all. Now, the monetary value, spread out over the years is not really that different between the two phones. (Electronics is perhaps a bad example to use since Chinese products have flooded the market). However, with the first phone, once I paid the price, I had secured "phone service" for a long time into the future, regardless of what the price of a phone is from one year to the next. The $30 phone might be $40 next year and $50 after that, and I will constantly have to pay more and more simply to keep buying phones so that I may maintain my "phone service." The more I am in the cycle, the more beholden I am to money manipulation. The more I can remove myself from the cycle, the more "real" my spent money becomes.

Investing in self-sufficiency therefore logically becomes "money well spent." Anything you own that self-sustains into the future is pretty much as good as savings. If you keep goats on your property that provide you with meat and milk for years to come, regardless of what the government does to money that affects the price of meat and milk at the grocery store, those goats become "as good as gold." They do not lose their true value, which is the value of having meat to eat and milk to drink, removed from valuing it in dollars and cents. Those goats directly protect you against manipulations of the monetary system that are felt through inflation at the grocery store. Anything you invest in which helps to provide for your needs outside of the monetary system gives you enormous "quality of life protection." Remember the movie "The Jerk"? Bernadette and Steve are newly wealthy and entertaining friends in their lavish mansion when they learn on the news that they have lost everything because of a class action suit. As their friends leave, realizing they are broke, Bernadette whines, "It's not the money that I'll miss. It's all of the stuff!"

Of course, you can never truly be removed from the monetary system and its manipulations. As with my expensive phone, nothing lasts forever. You can live in a cabin in the woods and have all that you need without money, but eventually you'll need to buy a new axe or replace a broken window. Still, the more you can remove yourself from the monetary system, the better off you will be. If you could remove 50% of your needs by providing them outside of the monetary system, you are 50% less vulnerable to the social manipulations of money.

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