The “Intrinsic Value” Myth
The “Intrinsic Value” Myth by Joel Bowman for International Man
Today, we unsheathe the mighty pen to slay a sacred cow… or perhaps merely to foil a lame canard.
Every so often, history invites Man to reconsider all he thought he knew about a given subject, to upend his presuppositions, and to send him – humbled and eager – back to the drawing board once more.
And a good thing, too, for unexamined “truths” can do just as much to retard our intellectual development as undiscovered lies. Especially when we tend to adhere blindly to them, often in care of little more than wounded Pride.
But let us turn directly to our subject, to meet it head on: Money is the matter… its nature our question.
What is money? We begin before its birth, to get a fuller picture.
Prior to money itself – that is, before folks carried cash, coins, cryptos, cowrie shells, et al. – there was barter. A barter system is one of direct exchange and, as such, does not require money as an intermediary to function. For tens of thousands of years our wandering ancestors got by on such a provincial understanding.
The barter arrangement is primitive, at best – suitable only for relatively simple transactions in which both buyer and seller desire the exact good offered by the counterparty, and at precisely the right time; something economists call the “double coincidence of wants.”
In a complex economy, however, “my three pigs for your one cow” does not exactly form the framework for a viable economic system. (As for vegetarians, they are simply out of luck… as well they should be.)
Money, Money, Money
By the time the Greek philosopher Aristotle (384 B.C.- 322 B.C.) was to be seen traipsing the halls of the Lyceum, Man had been using all manner of scrip and shekel to facilitate trade. Some monies were undoubtedly superior to others, with gold and silver typically rising up the ranks over their competitors.
The question of the day was, Why? What made one money better than the next?
An incurable cataloger, Aristotle quickly set about defining what henceforth came to be known as his eponymous “essential characteristics of sound money.”