Currency & Monetary Operations, And How To Use Them.

This blog kicks off with three questions, addressed in successive posts.

1) What are monetary operations, and

2) what are they for? [We forget, and even forget to ask.]

3) How do we seek a general method for answering those unending questions, and keeping emerging monetary Q&A meaningful to all.

As you'll see, these questions can't be separated, only revisited in a useful, variable sequence.

Initial answers, up front are, respectively:
bookkeeping;
for accelerating cultural growth; and
by simultaneously optimizing [people+nation], not either separately.

Some needn't read any further.

For the less astute here is post #1, what is money and what are monetary operations?

Money, or "currency," is what people use to denominate distributed transactions. It's that simple. If you have no need for widely separated transactions, then you have no need for currency. Adam & Eve didn't mention currency, just fig leaves. Who knows what they were really hiding.

In small groups, organization can track affinity bonds, and currency can be considered to be "backed" by Central Stores of arbitrary commodities. Yet as separation between transactions scales - with population size and/or market complexity - currency becomes a more distributed form of bookkeeping. A currency transition occurs, from primarily a store of local value, to primarily a unit of account for coordinating widely separated events in increasingly complex transaction chains. Transitions occur because net value to an organized group trumps any local definition of value. Strategic, organizational agility can't co-scale with population without a transition to fiat currency methods.

Someone smarter can always take your Central Stores, whether your men, your women, your horses, your gold, or any other commodity.  Therefore, currency is always backed by group initiative. Affinity bookkeeping can't scale with population, so organizational state requires more distributed logistics accounting. In larger populations, currency must be backed more & more directly by distributed public initiative.

"Why is state money better than gold?” Because the highest return is always the return-on-coordination. Scaling up ability to explore large-group options requires scalable large-group agility and scalable large-group intelligence & coherent alignment to emerging options. That's the same reason that species & armies are never resource constrained. The biggest constraint is always organizational ability. That means that only state-money denominations are agile enough to keep up with the kinetic demands of uncontrollable public initiative. Commodity-money was thoroughly tested, and was found inadequate. Its valuation has to be constantly re-scaled, simply because populations & their options scale faster than the magnitude of any commodity store. If that’s the case, just simplify and cut the commodity out of the re-scaling loop that links organizational ability to group outcomes.

Currency concepts differ for local-, mid- and broad-minded people. Minds-in-training start with personal transactions, while experienced minds also consider nationwide coordination. Somehow, that spectrum sums to a coordinated whole greater than the sum of it's parts.  It's no wonder that Ben Franklin, an early proponent of the return-on-coordination, was also an early student of fiat currency. For now, let's just agree that money or currency tends to mean different things to different people in different stages of their development.

To review the history of money, there are no better places to start than Wray's book Understanding Modern Money [a historical guide]. and Graebers book Debt: The First 5000 Years.