What is a printed square paper truly worth?
Some countries used to back the value of the paper with the real exchangeable goods, which is the gold. I used to learn this in school and believe that it is always so (until recently) . My initial understanding of the paper money was that the amount printed is the authorized portion of the total value of gold reserved in the bank. Thus, when i buy something, let say a laptop worth Rp 5 million, using 50 pieces of Rp100,000 notes, i'm giving the shop the authority of that gold to the store owner as an exchange of the laptop received.
Lately, i often pondered about the real gold that is in the reserve. Ideally when there's a hike in the economic activity, there should be an addition to the gold reserve in the central bank. But then how come the value of the paper money is still highly reluctant to the so called inflation rate, which is fluctuative depending on the domestic production of goods in the country or GDP. which means, that if i were to trade back the gold coin that i had previously exchanged with some printed money (which i considered as a certificate of gold ownership) , i will need different sum of paper money instead.
Somewhat I'm begining to see that our economy is no longer based on the gold reserve, rather by the amount of exchangeable goods in the country, including gold, which somewhat later turn the society into a what i would probably call : Government administered barter system. YES! somewhat I feel that we're back at the age where 'money' had not existed. (the apostrophe refers to the real exchangeable value-laden money, the gold and silver system). Because the current day money is the representation of product in the system be it good or services. When the demand of product increases, the money should be printed more. But when the money gets stuck in the system (no goods are exchanged due to shoratges, indicated by the hike of price), the money would not have more value if it is printed more, thus the inflation.
But then, ARE WE in this ideal system yet? looking at the amount of 'products' that some of us might produce, or the over valuation of certain goods/services, or the gullibility of our consumer society towards ads/promotions, are we really ready to adopt this system?
Ideally this system will not encourage people to save certain goods, as anything that is owned is virtually exchangable, the value of goods will depend on the needs, and the needs will depend on the minds. thus the stability of economy should possibly depend on the perception of the availability of the goods, and the gullibility of the mind. Thus in this system the ideal way of getting wealth ( power of exchangeability) is by producing goods that matches the needs of the people.
However, there's what we call as 'interest' and interest rates that are charged to certain amount of money borrowed from the central bank, which consecutively charged over its business derivatives through bank or financing institution. How would these affect the balance of product and the amount of printed representation of the product (i.e. paper money)? somewhat i'm poised to think that the emergence of valueless product or the irrational valuation of goods in society, came from such practice of interest/usury/riba in the system. somewhat, in order for us to fulfill the balance, in other words, to match the amount of money 'virtually' produced due to interest, we need to produce the unnecessary goods/service and influence the mind of the consumer to make it somewhat necessary, or to match the value of the goods the business eventually provide. it's probably what is called the act of opening new markets (in marketing we study how people acts and learn how to create needs and make people wanting something new they've never wanted before).
Ideally also, within this system, there shouldnt be any illegal exchange of money, which could derive from non-productive/goods-related services, an abuse of power to exchange for non-fulfillable needs (Ideally needs should be restricted to be of basic sustenance of human only, and the rest should be called wisdom or policy that is not exchangeable whatsoever), or simply an incremental value of the lended money. so if this happened, something might have happened in the mind that encourage someone to do so. I reckon 'the irrational urge' (we know who).
Consequently, with the presence of these unlawful exchange, imbalances will occur. and somewhat I tend to think that riots / earthquakes / disaster, anything that destroys is just another way of balancing the imbalances, basically matching the true value by turning some parts of the overall goods devoid of value, due to false valuation of the invaluables.
All and all, just follow what God has ordained to us, including to avoid usury.
God Knows Best, Wallahu a'lam.
Continue reading on How I think this monetary system should only be conducted (ideally)
or A brief simulation on how paper money had been introduced, and my imagination on how it should have come about
No comments:
Post a Comment