The Tragedy of "Money" As We Know It
My aunt gave me 100 US dollars yesterday. Christmas present, I presumed and cause she's always been nice to me.
This sparked a discussion between my father and I.
"The [US] dollar is the world's reserve; wag mo papalitan." he replied after I expresed intentions to convert it to Bitcoin or bullion (kahit maliit lang ang value).
I showed him Geithner's signature on the paper note (former US Sec of Treasury). "You really trust this guy?" He chuckled and filled his glass with wine.
We continue to talk about Goldman-Sachs, bailouts, inflation, and the 07-08 recession.
You see, in 1971, during the Bretton-Woods agreement, most, if not all, of the world's monies were stripped of its equivalent or representation in gold reserves. Its worth now comes from the sheer edict of government (fiat currency).
This means that markets do not dictate the value of money or of interest rates. This discretion now resides among a group of a select few -- merely appointed and never elected; often times having ties with the administration and its cronies' companies. For the PH, it's the people over at BSP.
They are the esteemed 'expert' econometricians whose job is to plan and fix economies. This arrogance is partly what F.A. Hayek referred to as The Pretense of Knowledge.
I ended our conversation with my favorite ender for these kinds of arguments: "What is money?"
It remains mysterious and baffling, even to me, but he replied with a textbook answer: "it is a medium of exchange. Without central control [of the US, EU, local governments, etc.], that would mean chaos."
But could it really be that simple? If we look at history and if we try to define money and its qualifiers, we're bound to be taken aback. [recommended readings: The Politically Incorrect Guide to The Great Depression by Robert Murphy, How an Economy Grows and Why it Crashes by Peter Schiff]
It's appalling, really, especially for those who are not part of the oligarchy; for those who have nothing to eat or have no 'money' for education and whatnot.
I had the US paper note exchanged this morning and the long line made me reflect.
Just my two cents.