Mackerel Money
We are all aware that our currencies are legal tender. A Dollar bill, for example, is a note issued by the US Federal Reserve and clearly and coldly states: "This Note is Legal Tender for all Debts, Public and Private". It is signed by the Treasurer of the United States.
The Indian Rupee is a note issued by the Reserve Bank of India and guaranteed by the Central Government. It has a tone that reads more like a dramatic oath: "I Promise to pay the bearer the Sum of Five Rupees" (or whatever amount is boldly printed as the number on that note). It is signed by the Governor of the Reserve Bank of India so probably the "I" in the promise refers to the person holding Governor's office.
This piece of paper is accepted by those who believe in the stated promise as a legitimate form of exchange for goods or services. It also means that if I were to pay a visit to the Governor, with this legal tender in hand, he'd be bound to give me the "Sum" of five rupees. Traditionally that "Sum" is supposed to be in Gold. It is inherently understood that this piece of paper is worthless and behind every such piece of paper issued, the Government has enough Gold, Silver or some commodity of "Real Value" guaranteed, otherwise that banking system is counterfeit and can be sued for bankruptcy. This is known as the Gold Standard. The quantum of Gold actually available with the RBI or its subsidiaries is not revealed in India. It would be foolish to think that there is so much Gold inside the RBI except for a Bollywood film. In reality it is more like this: A rupee can be returned to the issuing bank in exchange for a rupee worth of the bank’s assets [link]. This shift from actual Gold to something of "Real Value" is enforced by an order (fiat) of the Government and hence the term Fiat Currency.
The Gold Standard is not the only standard across the world. For example, in a deal with OPEC it was agreed that oil, worldwide, would be exclusively priced in US dollars. What that essentially means is that US Dollar is backed by oil. At least part of the reason for the soaring oil prices is the crashing of the US Dollar but I digress. (though I highly recommend this fantastic speech by Ron Paul before the US House of Reps.)
To fully understand how modern money works and how far off we are from its founding premise, here's a brilliant animated presentation by Paul Grignon. If you ever wanted to know where does so much money come from but didn't know who to ask then you've found your answer. It explains, very lucidly the roots of money and how modern money is basically human debt.
As long as you can be kept in debt, modern money systems can be kept intact.
Thinking about Real Value
The more interesting aspect to me is that thing we settle for called "Real Value". A market is said to be Free when there is no interference in a trade transaction. Two parties are free to mutually trade anything they "own". This is the root of the term "Free Market". The "Free Market" is then considered free where that "transaction" is free. It has nothing to do with the freedom of people affected directly or indirectly by that transaction. That freedom is a presumed given (hence neutralized) and we hear the term "free choice".
Human history is fraught with stories of our fight against the tyranny of power. We have reached this present stage of the Human Condition after thousands of years of battle against Kings, Autocrats, Slave-owners, Colonists, Religious authorities, Dictators and today we fight for our freedoms against coalitions of democratically elected Governments. Due to such a history it has been generally accepted that the enemy of free choice is forceful coercion. That dystopian masterpiece by George Orwell, Nineteen Eighty-Four, perhaps best exemplifies the horrors of authoritarianism and the human will to fight against it.
In a democratic society, which has seemingly free choice for its citizens, I have increasingly begun to understand the opposite of free choice not to be forceful coercion. The opposite of choice is instinct. That other dystopian masterpiece by Aldous Huxley, Brave New World, is perhaps more suited to understanding this concept better. If you believe that your instinct is natural and of your own choosing, then you are oblivious to the power of advertising and propaganda over you.
As global legal systems grant a corporation full rights of a human being (and in fact more protections than a human being) and corporations become ubiquitous, more and more of our "Free Market Transactions" are taking place with Corporations. The function of modern business corporations is to create real and perceived value. You only have to look at terms like status symbols, brand names, niche products to realize that such a thing as perceived value exists over and above real value. The stock market, for example, which is completely based on speculation is nothing but perceived value. One of the biggest reasons you hear about "Free Markets" as the only way is because it has become so easy to create perceived value where instinct has been killed and choice has been shaped.
As long as the perception can be maintained and enough people support it, the presumption of this system is that it can stay intact. Those who do not support it are either indoctrinated via "education" to support it or violently plunged into it to have no choice but to support it. Those who point out that this system is not sustainable because you cannot live on perceived value and it is essentially hollow are labeled anti-development, anti-globalization, anti-progress and all other antis.
A small-town girl from near Bhopal, who was an aspiring journalist with a fellowship at NFI, once said to me that she had begun to understand how scoundrels from a fictitious economy were stealing the assets of real economies. At that time it didn't make much sense and she wasn't able to explain the meaning of fictitious vs real convincingly. Upon reflection though I have come to appreciate what she meant. The incident also made me acknowledge that Wisdom has little to do with your formal education or age and is really a result of empathy and keen observation.
What's Mackerel got to do with it?
Oh that! The idea to write this entire piece flashed through my head as I read this fascinating article by Justin Scheck in the Wall Street Journal where he examines how "stacks of macks" (Mackerel Fish) are used in prisons in the US as a form of currency. Its ironic that a greasy fillets system in a correctional facility is more honest than the one we have in the "civilized" world.
Related: Robots screwing Robots
