Fractional Reserve Lending by banks, what I may refer to here in this article as Fracking, becomes a problem in the issue of cash and government issued Debt Notes. What I hope to address here in this article for Steemit is the push toward centralization of state power an the increase of personally liberty.
I might better phrase it as how not to get locked on board a sinking ship with a fractional banking system facing collapse (such as in Greece) but to make your own judgments independent of the environment of a 'security state' and their growing powers. Vote with your 'Digital Monetary Feet'.
Money is a commodity, such like fish, grain or oil. Yet in a market economy (Global) one could not use the system of barter & trade that might happen (local) in a community. As an example, as a farmer I produce tomatoes – Very Fine Tomatoes I might add, so I had inputs & cost associated with the production of these fruits. After a season, I require tending to the boots I wear in my occupation and seek out a shoe merchant & repair shop. So approaching the shoe merchant with my tomatoes, he says he has no use for them but desires a goat for meat to feed his family. I go to the local goat herder, and offer my fruits in exchange for his raised up kid, we settle on exchange and I return to the Shoe Maker for my repairs – Goat in hand. Not very efficient on the commodity scale. Hence money as accepted, above the barter & trade, in a global sense is an exchangeable commodity.
If the Goat Herder, the shoe maker and I the producer of tomatoes agree on a general medium of exchange (money) then it becomes the most marketable commodity. I'd refer you to the concept of the Petro-Dollar, for a better understanding in modern vernacular.
Hence the rise of BTC Bitcoin, and other forms of Digital Currency. One can only slice a tomato so many ways, and it value decrease from the whole, it is not transportable and holds a limited (local) value. Not a successful medium of exchange. One might learn more by reading this, written by Murray Rothbard:
“Just as in nature there is a great variety of skills and resources, so there is a variety in the marketability of goods. Some goods are more widely demanded than others, some are more divisible into smaller units without loss of value, some more durable over long periods of time, some more transportable over large distances. All of these advantages make for greater marketability. It is clear that in every society, the most marketable goods will be gradually selected as the media for exchange. As they are more and more selected as media, the demand for them increases because of this use, and so they become even more marketable. The result is a reinforcing spiral: more marketability causes wider use as a medium which causes more marketability, etc. Eventually, one or two commodities are used as general media — in almost all exchanges — and these are called money.”
Does this sound like BTC or possibly STEEM in the future? There is a great capacity in individuals, apart from state or government, to determine through decentralization apposed to the failed centralization of Fiat Issued Currencies – the True Value of Money, separate from Debt.
What about Gold as Money?
Gold in the past has severed as a monetary standard. Scarcity and value were placed in it and it was a defacto standard for thousands of years. In the wake of fiat currencies it was not scale-able and was abandoned as a global market exchange in the 1900's. Just as you could not slice a tomato, you could not shave a portion of gold to buy a “Pack of Gum”. It fails, not as a store of value, but as a workable medium of exchange. It's heavy, and not easily transportable. Hence, Bitcoin and other digital currencies. At any point in time individuals can keep their digital money either in their wallets, under their mattresses (Papper Wallets), in a safe deposit box or stored (Cold Storage). In depositing money, a person never relinquishes ownership. No one else is expected to make use of it. When the Average Joe stores his money with a BTC, he continues to have an unlimited claim against it and is entitled to take charge of it at any time. Hence the value of Bitcoin.
What About India?
Any attempt to totally remove cash — i.e., money — implies the destruction of the medium of exchange and, ultimately, the market economy. The recent experiment in India to remove large denomination notes has caused serious havoc. Toward the end of last year Prime Minister Modi surprised his country by announcing the banning of 500 and 1,000 rupee notes, with some estimating that around 86 percent of all cash in circulation in India was no longer considered as legal tender.
Any policy directed at phasing out cash in order to stop the shadow economy has the effect of preventing individuals from employing their economy’s medium of exchange. This, however, is unlikely to succeed as individuals will always find various other goods or services to serve as money.(1) Source Mises
Hence the value of BTCis at a 20% greater value in India currently. Pushed to accept digital currency becomes a greater store then local banks, or faith in the local or government issued currency – people find ways to trade.
I hope you read this to the end. It is my reaction to what I see in global market forces toward physical cash and growing demand for digital currencies. I do see extreme value in Bitcoin becoming “Digital Gold”.
