Adonis Diaries

Posts Tagged ‘Color of your money

Smell of your money

I explained in a previous post “Color of your money” (https://adonis49.wordpress.com/2009/12/27/color-of-your-money/) that liquidity (currencies and banknotes) is no longer neutral and that it has lost its mythical concept of a “lubricating” medium to facilitate the exchange of merchandise   This post is investigating the other attributes of money on family, close relative relationships, and how it might have contributed in changing value systems.

Money has acquired an “intrinsic” value,  independent of the barter value concept or image that most economists are still  trying to perpetuate for over a century.

The rationale was that, since money is mainly an oiling mechanism to encourage and expand commerce then, money should be dissociated from the economic factors of national worth.

The fact is that the lubricating notion of money was tampered with since after US independence when Britain regained its monopoly over issuing US money supply, which shrank the expanding internal trades.  For example,  when the authority refrains from accommodating economic expansion by infusing more money in the market then, money is overvalued:  Particular merchandises gets practically more expensive, internal market shrinks, export is slowed down, and commerce suffers because of lack of liquidity.

When a person is in need of liquid money then he is at disadvantage when bargaining for the right price of goods that he is trying to sell as liquid money is overvalued.

The dollar is still powerful ,though it is not worth a dime if accounted on factors such as national debt, gold reserves, or even manufactured goods.  The liquidity of the dollar, being accepted as a global currency for global exchange, is its fundamental power.   The dollar is steadily being challenged to be replaced by a basket of valuable reserves indexes.

This article “Smell of your money” examines the effects of money in the affective sphere among family members and close relatives.

Sociologists started with the hypothesis that money will enhance rational “cold” interactions among family members and thus, money will eventually tarnish the traditional family value standards.  Currently, sociologists came to the realization that it was changes in the value systems that affected monetary exchanges among family members.

For example, working wives decide on either a proportional (equity) division of incoming salaries or stubbornly insist on equal shares in the household expenses, even though women might be earning less than men.

Why this irrational decision for equal shares?

In this struggle for acquiring autonomy and equality between genders in society, a wife might react as if “equitability” is promoting the perception of older generation values of “man economic dominance and power in the household”.

Money has different smell and is not neutral relative to its sources.

For example, single mothers smell money differently with respect to the sources:  money received from State welfare systems is accounted differently than money acquired by other means and spent differently on personal wants.  Thus, money is spent and viewed differently.

Money gained from prostitution is lavishly spent on luxury items.  At first, we might attribute this lavish behavior as “re-investing” in the business: to catch high scale clients you have got to look it!  Then, the luxury trend makes room to a different smell of money: luxury generates luxurious behaviors that are not easily broken.  Money from prostitution is set aside for personal class statue appearances  (class standing) and reactions to society’s perception for this oldest of businesses.

Another example is related to divorce cases. Adultery is always and originally an affective hurt that might lead to divorce.  Adultery behavior is mainly mentioned and it then takes the forefront in monetary negotiation in a divorce deal when one party does not feel that the division is fair. The issue is “how much was spent to entertaining the lover?

Adultery thus becomes an important economic factor for dilapidation of family “confidence” and traditional value systems.  Adultery remuneration in divorce cases is comparable to winning the lotto: we feel free to spending lavishly this extra windfall that was not earned from our sweat.

Another example of smell of money is the gifts to family members.

Gifts are transformed from gifts in kinds into liquid money, though verbal “contracts” are usually attached on how money should be spent.  In the 1920’s, US social assistance to the poorer classes attached clauses on how money aid should be spent.  Consequently, social workers acquired vast supervisory leverage to controlling the recipients of money aid. Maybe one day, verbal contracts will be accepted by courts as information and communication technologies become standard tools in most family applications.

Change in value systems is the major factor that easily explains social transformations, but there are needs to considering the consequences of intermediate direct factors.

The intermediate factor is, for example, the expansion and development of economic base that generates various wants and needs.

The immediate factor is the transformation, due to economic expansion, to the creation of various forms of liquidity in money such as checks, credit cards, and technical facilities to withdrawing cash money.

Forms of liquid money are not neutral: they qualitatively contribute to value transformations within family relations.

Smell of your money; (Jan. 5, 2010)

            I explained in a previous post “Color of your money” that liquid money (currencies and banknotes) are not neutral and that it has lost its mythical concept of a “lubricating” medium to facilitate exchange of merchandize.  This post is investigating the other attributes of money on family and close relative relationships and how it might have contributed to change in value systems.

            Money has acquired an “intrinsic” value independent of the barter value that most economy thinkers tried to perpetuate the concept for over a century; that is since money is mainly an oiling mechanism to encourage and expand commerce then money should be dissociated from the economic factors of national worth. The fact is the lubricating notion of money was tampered with since after US independence when Britain regained its monopoly over issuing US money supply. When the authority refrains from accommodating economic expansion by infusing more money in the market then money overvalues: particular merchandizes gets practically more expensive, internal market shrink, export is slowed down, and commerce suffers because of lack of liquidities.  For example, when a person is in need of liquid money then he is at disadvantage when bargaining for the right price of goods that he is trying to sell as liquid money is overvalued.

            The dollar is still powerful though it is not worth a dime if accounted on factors such as national debt, gold reserves, or even manufactured goods.  The liquidity of the dollar as being accepted a global currency for global exchange is its fundamental power; the dollar is steadily being challenged to be replaced by a basket of valuable reserves indexes.

            This article “Smell of your money” examines the effects of money in the affective sphere among family members and close relatives. Sociologist started with the hypothesis that money will enhance rational “cold” interactions among family members and thus, money will eventually tarnish the traditional family value standards.  Currently, sociologists came to the realization that it was changes in the value systems that affected monetary exchanges among family members. For example, working wives decide on either a proportional (equity) division of incoming salaries or stubbornly insist on equal shares in the household expenses even though women might be earning less than men. Why this irrational decision for equal shares? In this struggle for acquiring autonomy and equality between genders in society then, a wife might react as if “equitability” is promoting the perception of older generation values of man economic dominance and power in the household.

            Money has different smell and is not neutral relative to its sources.  For example, single mothers smell money differently: money received from State welfare systems is accounted differently than money acquired by other means; thus, money is spent and viewed differently.  Money gained from prostitution is lavishly spent on luxury items.  At first, we might attribute this lavish behavior as “re-investing” in the business: to catch high scale clients you have got to look it!  Then, the luxury trend makes room to a different smell of money: luxury generates luxurious behaviors that are not easily broken.  Money from prostitution is set aside for personal class statue appearances and reactions to society perception for this oldest of businesses.

            Another example is related to divorce cases. Adultery is always and originally an affective hurt that might lead to divorce.  Adultery behavior is mainly mentioned and then takes the fore front in monetary negotiation in a divorce deal when one party does not feel that the division is fair. Then, the issue is “how much was spent to entertaining the lover?” Adultery thus becomes an important economic factor for dilapidating family “confidence” and traditional value systems.  Adultery remuneration is thus comparable to winning the lotto: we feel free to spend lavishly this extra windfall that was not earned from our sweat.

            Another example of smell of money is the gifts to family members.  Gifts are transformed from gifts in kinds into liquid money, though verbal “contracts” are usually attached on how money should be spent. In the 1920’s, US social assistance to the poorer classes attached clauses on how money aid should be spent: social workers acquired vast supervisory leverage to controlling the recipients of money aid. Maybe one day, verbal contracts will be accepted by courts as information and communication technologies become standard tools in most family applications.

            Change in value systems is the upper order factor that easily explains social transformations but they are the consequences of intermediate direct factors.  The intermediate factor is expansion and development of economic base that generate various wants and needs. The immediate factor is the transformation, due to economic expansion, to the creation of various forms of liquidity in money such as checks, credit cards, and technical facilities to withdrawing cash money.  Forms of liquid money are not neutral: they qualitatively contribute of value transformations within family relations.

593.  ICT: Transmitter of crisis and catalyst of global economic restructuring; (Dec. 19, 2009)

594.  First “mathematical” philosopher: Descartes; (Dec. 20, 2009)

595.  Idiosyncrasy in “conjectures”; (Dec. 21, 2009)

596.  Cases of “Historical Dialectics” of human and knowledge development; (Dec. 23, 2009)

597.  How causality relation and invariant are perceived by the brain; (Dec. 24, 2009)

598.  Color of your money; (Dec. 25, 2009)

Color of your money; (Dec. 25, 2009)

Consider a settled community. Suppose that in the beginning each extended family has its own water source, its lot to grow food, its chicken, a goat or cow for milk. For a time, this extended family is sufficient; it might not occasionally eat its fill but it does not suffer of famine or existential danger. Due to calamities in weather, disease, or family problems then productivity for survival is at risk. The slack periods of labor, during winter season for example, has encouraged the extended family to becoming proficient in specific economic practices.

One group of families opts for artisanal productions (such as clothing, pottery, woodworking, metal tools, stonework…) and it trained a few of the members to that kind of non perishable products. Another group of families goes into raising cattle; a third group goes for agriculture of grain based or fruit products. Question: which group of families has potentially the upper hand economically within the community?  Maybe the cattle raisers can existentially survive better and exchange or barter better their products with other kinds of merchandizes. Most probably, goat, cows, or sheep might become the basic common “currency” for exchanges during community market days, events, marriages, and daily routines. The cattle families grow richer in worth especially that they are producing existential needs.

Calamities strike the community and raising cattle is no longer profitable. Suppose that artisans supplant other extended families in economical exchanges and cloth, tools for productions, or other artworks become the basic currency for bartering. It stands to reason that an artisanal product cannot be counterfeited easily because it requires years of training. Communities aid families in time of distress for a short time but customs require that help be returned, for example in labor work.

Life is not that predictable; after trying dominance of one group of families over other extended families then alliances emerge among families. A chief is selected from the allied families; the chief main worry is to establishing stability and good working relationships in the community. A trading and unifying “currency”, agreeable to the alliance, is accepted by the community. Most probably major warehouses for various products are instituted by the chief and his powerful alliance of families. The chiefs learn to consider a currency that is more effective and easier to handle than actual bartering. Soon, metal coins are manufactured: they are not easily counterfeited because they require skills and much training. By the by, rare metals are considered and monopoly for the rare metals is concentrated in the hand of the chief’s entourage. Gradually, political systems learn that a currency has to enjoy properties such as being small to handle, having intrinsic value, rare, and difficult to counterfeit. Families not designated to manufacture the currencies will have to invest large capitals for acquiring the raw material and the skills. Police force is established to guard the warehouses and to apprehend counterfeiters and then hang them. The effigy of the chief is stamped on the coins.

A new class of families emerges (the bankers) that specifically manufacture the coins and distribute them to “oil” the economy.      Conflicts of economic supremacy among groups of “professionals” are frequent and these conflicts turn political by mechanism of alliance of interests. When the political system changes, then the rules of the game change by exercising “preferential” treatments to the alliance. The victor will inherit the warehouses and a new currency is coined to the advantage of the alliance. Other community chiefs might counterfeit the “enemy’s” currency with lower quantity of gold or silver for profit and for discrediting the enemy chief. In general, pride along with the dissemination of perception that the enemy is expanding economically on territory forces the counterfeiting chief to “recall” the counterfeited currency.

The colonies in the US before independence experienced economic expansions while England was having hard times. Benjamin Franklin, Ambassador to France after the US independence, let out the secret: Economic expansion was related to the colonies enjoying the right to “printing” currency when the economy needed this “oiling” mechanism. England then convinced the U, after its independence, to have the monopoly of issuing money; the Rothschild family endeavored to ruin the US economic expansion by refraining from distributing needed currencies. The dollar received a higher value than being simply an oiling mechanism: the dollar was overvalued and the economy shrank. After the civil war of secession two powers got in conflict: the bullion gold group and the “Green buck” who rightly considered the bullion currency as undemocratic and favoring the northern States who horded most of the gold.

This concept of money as simply lubricating mechanism continued to be adopted by economists since Adam Smith: economists set the money aside as an economic factor of interest and analyzed the economy as a barter exchange of good that was no longer valid.  Money is an entire social fact; it is a language and an institution (a set of rules, regulations guaranteed by political power that should be accepted as legitimate); money reflects the tag of war among classes in times of financial crisis: money has not the same value and meaning for the poor and the rich. The rich classes have the connections and political cloud to efficiently utilize and fructify their worth in money. Money is indeed unequally distributed and has become a cultural capital that divides communities.

What happens when a currency with intrinsic value is substituted with paper money or banknotes? What kind of confidence the community members enjoy to resume exchanging good products with just papers or fiduciary banknotes?  What happens when citizens are forbidden to exchange this fiduciary paper with gold put in reserves to guarantee their worth?

Question: “how this currency is guaranteed to be accepted by the entire community for smooth exchange of merchandizes?” There are three levels of confidence required for times of financial crisis. First with have the “methodical confidence”; a check worth $100 from one national bank should be exchanged with $100 at another national bank; the institution of “independent” National Banks guarantee this kind of confidence when one bank goes bankrupt. The second kind of confidence is “hierarchical confidence”. In times of financial crisis there are hierarchical structures to quick “arbitration mechanisms” among financial institutions based on rules, laws, and regulations. The third kind of confidence is the “ethical confidence”. The political power in charge of supervising money distribution makes decisions that are never neutral economically and socially. If legitimacy of the authority is lacking due to ethnic or religious conflicts with a State, then ethical confidence is perturbed. It is the conformity to a system of values that is the last barrier against monetary crisis. This is what happened in Argentina, especially when Argentina tied its currency to the overvalued US dollar and thus Argentina lost its independence of issuing money relative to the internal trading expansion.

It is inevitable that globalization will institute two kinds of currencies; one currency meant for the little people and “derivatives” for the big players. The traditional monetary system for the little people will adopt an international banknote based on a basket of rare metals, critical industrial raw material metals, and other existential products. This currency would actually function as a redistribution mechanism of accumulated currency reserves from States to other needy States in currency. The little people currency would be transferred as fiscal exchange among federated states.

The “derivative” currency (future, forward, and option) will be established after international institutions guarantee the three kinds of confidence for derivative exchanges and stop being a competition among enemies.


adonis49

adonis49

adonis49

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