The Science of Business Creating Futures
Money and Exchange
~This weeks lesson is a global collaboration between John Struggledork and R. Walter Struggledork~
For ME making Fiat Money has always been simple. From the age of ten, I somehow understood that if I wanted Fiat money it was about exchanging what I had for what I wanted. At ten years of age, I wanted to go to the movies. I didn’t have any money, but I had time, energy and ambition I could exchange for the money I needed to buy a movie ticket. I noticed a neighbourhood of older people, mostly widows, whose grass had not been cut. I knocked on a door and offered to cut the widow’s grass for $1.00. She agreed. We now had an agreement to exchange. The problem was, I didn’t have a mower. We made another agreement; I offered to cut her grass for $.25 if she would let me use her mower. She also agreed to allow me to use the mower to cut other lawns on the same block. I charged them the full $1.00. As I said, making Fiat money was easy for me.
That was a simple two-way exchange. The process of exchange can become more complex when there are several parties (relationships) involved in a single transaction.
Fiat Money makes Business Exchanging Easy, Simple, Fast and Repeatable
Fiat Money: is currency which derives its value from government regulation or law. Wikipedia
So why do Money Transactions sometimes seem so complex and difficult to understand?
Are there different forms of Money? Where did money come from?
The history of money concerns the development of means of carrying out transactions involving a physical medium of exchange. Money is any clearly identifiable object of value that is generally accepted as payment for goods and services and repayment of debts within a market or which is legal tender within a country.
Many things have been used as medium of exchange in markets including, for example, livestock and sacks of cereal grain (from which the Shekel is derived) – things directly useful in themselves, but also sometimes merely attractive items such as cowry shells or beads were exchanged for more useful commodities. Wikipedia
Where and When did Fiat-Money become Important?
Fiat money originated in 11th century China, and its use became widespread during the Yuan and Ming dynasties.
Song Dynasty Jiaozi, the world's earliest paper money.
The Song Dynasty in China was the first to issue paper money, Jiaozi, around the 10th century AD. Although the notes were valued at a certain exchange rate for gold, silver, or silk, conversion was never allowed in practice.
The Code of Hammurabi, the best preserved ancient law code, was created ca. 1760 BC (middle chronology) in ancient Babylon. It was enacted by the sixth Babylonian king, Hammurabi. Earlier collections of laws include the code of Ur-Nammu, king of Ur (ca. 2050 BC), the Code of Eshnunna (ca. 1930 BC) and the code of Lipit-Ishtar of Isin (ca. 1870 BC). These law codes formalized the role of money in civil society. They set amounts of interest on debt… fines for 'wrongdoing'… and compensation in money for various infractions of formalized law.
“Fiat” means, “By decree.” Fiat currency derives its power from the decree of a government that declares the otherwise worthless paper as being legal tender.
The Mesopotamian civilization developed a large-scale economy based on commodity money [trading stuff based on the relative value of each item]. The Babylonians and their neighbouring city states later developed the earliest system of economics as we think of it today, in terms of rules on debt, legal contracts and law codes relating to business practices and private property. [Early] money was not only an emergence, it was a necessity [to allow for easier, faster, more convenient exchange of value]. Wikipedia
It isn’t exchange itself that makes money systems and processes complex. It is the volume and diversity of the billions of simultaneous exchanges that are constantly taking place on the planet that creates complexity. At a Universe level, exchange perpetually happens as part of the greater design of Universe (See comments on Photosynthesis below). Money systems are a human creation based on the understanding (or misunderstanding) of Omni-Universe, always in motion and always exchanging from one energy form to another energy, but forever becoming something new in the endless energy exchange process.
As Wiki states, “Money was not only an emergence, it became a necessity for everyday commerce in 21st economies, given the speed of transactions and information flows.”
Fiat Money became a necessity because the Omni-complexities involved in widespread, large-scale and innumerable exchange transactions of Systems and Processes created between individuals and societies. Can you imagine settling interbank balance requirements at the end of each business day with a Billion Dollars worth of cattle? At an average of $500 per head, that would be two million head of cattle. Imagine two million bulls being herded from one bank to another on Wall Street every night. That would redefine a “Bull Market” in a hurry!
Imagine Shopping at Wal-Mart With Cows instead of Cash!
As I said, making money is really very simple, just as it was with the widows who needed their grass cut, when a transaction is an agreement to exchange between two parties. However, “creating” money and turning money into wealth is a more complex matter that involves in part:
1. Rules and Regulations
2. Accounting to be done
3. Taxes to pay
4. Value to be created
5. Trust to be built between transacting parties and
6. Agreements to be kept
All six points are created by subjective human realities and have evolved over thousands of years through a process of trial and error. I like the basic concept and function of Fiat money systems. What I don’t like are the processes that have been created over the last century by poor rules, corrupt regulations, deceitful accounting, imbalanced agreements, excessive taxations (at all levels) skewed values and the lack of trust between parties. Most of our money systems have become a game of Win/Lose, rather than Win/Win. Win/Lose is for sporting events- not for the business of life.
Win/Lose practices have led to the today’s widespread, unconscious and conditioned belief in the Malthusian theory, which holds that there isn’t enough resource on the planet to go around, so you better get yours at my expense, while the getting is good (Win/Lose). On the contrary, the work of R. Buckminster Fuller reveals and documents a more abundant view of the world. Mr. Fuller proves in his work that we are cosmic Billionaires, because of the endowment of energy that is ours, perpetually and free of charge from the radiation of the sun and from the forces of gravity. He points out that there is no lack if we each work toward designing ever-more efficient means of harnessing the energy inherent in nature for the benefit of all. Bucky encourages each of us to seek for everyone to have all that we have. That is abundance.
The Malthusians say there isn’t enough. Enough what? Enough food, water, shelter? When we study Bucky through a scientific perspective, we find that everything in the universe is a form of energy. Energy is never lost or destroyed, it only moves from one form to another. If all of the wealth that ever was and ever will be already exists in unimaginable abundance, where is the lack? Why play Win/Lose? Why not strive for everyone to have all they need and want? The key to such abundance is balanced exchange. The universe is based on the principle of balanced exchange and therefore supports such balance in all circumstances.
There is a law in nature that mandates that all exchanges be in balance. The animal kingdom breathes in oxygen and breathes out carbon dioxide. The plant kingdom, through the process of photosynthesis, based once again on the power of sunlight, inhales the carbon dioxide and exhales pure oxygen. Without thinking and even without knowing, we are supported moment-to-moment by the life-giving power of the sun. As long as we maintain balance in that exchange, it will go on perpetually and give us life. If we disrupt the balance, the exchange will eventually collapse and the offending party will pay a price for the imbalance. One cannot play Win/Lose to his or her ongoing advantage. The laws of nature will balance all accounts over time. As a now-departed friend of mine liked to say, “The mills of the Gods grind slowly, but ever so fine.”
We achieve such balance by being mindful of the exchanges of which we are a part. Stephen R. Covey’s Fourth Habit of Highly Effective People is “Win/Win or No Deal.” When commerce is conducted in such a way that we make every effort to assure that what the other party gets out of our exchange is at least as beneficial to them as what I get out of it, we create balance in the exchange. Note that benefits in an exchange are not always monetary. In fact, in most really exceptional exchanges, one or both parties receive something of non-monetary value that is often truly priceless to them. The delivery of such a benefit takes the exchange beyond money and creates true abundance for all.
Abundance is the inherent design of our lives in Universe. Win/Win Works. Win/Lose doesn’t! Most of the world is focused only on money, which is limited and has nothing to doing with the true nature of abundance found in the exchange of energy. Money is only a mechanism for exchange and a storehouse of various other forms of human energy for future consumption and use. Each person is at choice as to his or her focus. Together, we have both the potential capability and capacity to design better scenarios and therefore better lives. What will your individual choice be? Will we continue to play the Win/Lose money game with each other or will we grasp the bigger picture and commit ourselves to playing the game of life by the rules of Win/Win or No Deal?
The following play on mathematics is satirical and irreverent, but I think it makes an important point about Win/Win vs. Win/Lose:
Mathematics
What Makes 100%?
What does it mean to give MORE than 100%?
Ever wonder about those people who say they are giving more than 100%? We have all been to those meetings where someone wants you to give over 100%. How about achieving 103%? What makes up 100% in life?
Here's a little mathematical formula that might help you answer these questions:
If: A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Is represented as:
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26, Then:
1. H-A-R-D-W-O-R-K 8+1+18+4+23+15+18+11 = 98% And
2. K-N-O-W-L-E-D-G-E 11+14+15+23+12+5+4+7+5 = 96% But,
3. A-T-T-I-T-U-D-E 1+20+20+9+20+21+4+5 = 100% And,
4. B-U-L-L-S-H-I-T 2+21+12+12+19+8+9+20 = 103% AND,
5. A-S-S-K-I-S-S-I-N-G 1+19+19+11+9+19+19+9+14+7 = 127%
(Look how far ass kissing will take you.)
So, one can conclude with mathematical certainty, that while Hard work and Knowledge will get you close, and Attitude will get you there,
It’s the Bullshit and Ass Kissing that will put you over the top.
Now you know why some people are where they are! (Unknown author)
The reason why I measure and want to be accurate is to create an objective reality…
Did you make a sale or not? Where is the proof?
Did the sale create a customer or not? What is the proof?
How do you deal with a Customer who has a Subjective Reality
that leans towards Win/Lose Bullshit?
JDS OUT!_!
