The United States is hated across the Islamic world because of specific U.S. government policies and actions. That hatred is concrete not abstract, martial not intellectual, and it will grow for the foreseeable future. While important voices in the United States claim the intent of U.S. policy is misunderstood by Muslims, that Arabic television channels deliberately distort the policy, and that better public diplomacy is the remedy, they are wrong. America is hated and attacked because Muslims believe they know precisely what the United States is doing in the Islamic world. They know partly because of bin Laden’s words, partly because of satellite television, but mostly because of the tangible reality of U.S. policy.

We are at war with an al Qaeda-led, worldwide Islamist insurgency. None of the reasons have anything to do with our freedom, liberty, and democracy, but have everything to do with U.S. policies and actions in the Muslim world. Keep in mind how easy it is for Muslims to see, hear, experience, and hate the U.S. policies bin Laden repeatedly refers to as anti-Muslim.

-          U.S. support for Israel that keeps Palestinians in the Israeli’s thrall.

-          U.S. and other Western troops on the Arabian Peninsula.

-          U.S. occupation of Iraq and Afghanistan.

-          U.S. support for Russia, India and China against their Muslim militants.

-          U.S. pressure on Arab energy producers to keep oil prices low.

-          U.S support for apostate, corrupt, and tyrannical Muslim governments.

The Persian Gulf regimes – especially Saudi Arabia – are among the earth’s most corrupt, dictatorial, and oppressive. They rule peoples eager to be free of their yoke and who think their torturers survive because of U.S. protection. Washington and the West have supported the Muslim tyrannies bin Laden and other Islamists seek to destroy. We have nothing in common with the regimes; the tie is based overwhelmingly on the West’s obsession with cheap oil.

Few Muslims would oppose the destruction of these apostate governments that are among the planet’s most brutal, repressive, corrupt, and hypocritical, family ruled regimes that have the profits from oil sale to fund their own debauchery and rent the loyalty of their bankers, businessman, and academics.

The U.S. has allied itself with regimes whose barbarism has long earned the Muslim world’s hatred. It is America that is on bin Laden’s bull’s-eye; at this time, Russia, China, and India are not. We are in fight to the death with al Qaeda whether or not these states approve, and our support for them makes the fight harder because it again validates bin Laden’s contention that the United States is attacking Islam and supports any country willing to kill or persecute Muslims.

Washington’s half-century record of safeguarding tyrannies entirely discredits for Muslims any claim we make of intending to build democracies. The creditability issues that result from America’s proven taste for any Muslim tyrant who maintains internal order and stability, peace with Israel, and low oil prices destroys what little democracy-building potential we may possess.

Imperial Hubris Series

America has moved from being the much admired champion of liberty and self government to the hated and feared advocate of a new imperial order, one that has much the same characteristics as nineteenth-century European imperialism: military garrisons; economic penetration and control; support for leaders, no matter how brutal and undemocratic, as long as they obey the imperial power; and the exploitation and depletion of natural resources. Muslims have seen this before.

While U.S. leaders will not say America is at War with Islam, some of Islam is waging war on the United States, and more is edging closer to that status. The war is being waged against us for specific, quantifiable reasons and not as our leaders claim because a few Muslim fanatics hate democracy and freedom. This claim belittles the Muslims opposing us and thereby weakens America’s ability to resist by underestimating the brains, patience, and religion-based fortitude of our foes.

Reality for America is that there is a large and growing number of Muslims who hate our policies and actions toward the Islamic world, many of whom have or will take up arms against us as a result. Muslims believe what Muslims believe, and today tens of millions of Muslims believe their faith is being attacked by the U.S.-led Western Crusaders and that Islam will be changed beyond recognition, if not eradicated, if each Muslim does not step forth to defend with his life.

We cannot talk or negotiate our way out of this mess; the enemy has listened for thirty years and believes U.S. promises of fairness for Muslims have been lies. Simply put, the enemy wants war and is not listening; he has no reason to listen, he is winning. We have no choice but to fight; it is the decision about current policy that will determine the fight’s length and cost.

The military is now America’s only tool and will remain so while current policies are in place. No public diplomacy, presidential praise for Islam, or politically correct debate masking the reality that many of the world’s 1.3 billion Muslims hate us for actions not values, will get America out of this war. This war has the potential to last beyond our children’s lifetimes and to be fought mostly on U.S. soil.

In October 2002, bin Laden said the war must go on because U.S. leaders and people show no understanding of “the lesson of the New York and Washington raids” and were not changing U.S. policies. “Whether America escalates or de-escalates the conflict, we will reply in kind. The youth of Islam are preparing things that will fill your hearts with fear. They will target key sectors of your economy until you stop your injustice and aggression or until the more short-live of us die.”

Imperial Hubris Series -- At War with Islam

The acceptance of alternate forms of money is the path of least resistance, an alternative to conflict. One may speculate on alternate forms of money. Recall, any commodity can be money. As an example, let’s consider electricity as an alternate form of money.

Electricity is a primary societal need. To not have electricity would severely disrupt society. Everybody is wired to electricity. The intrinsic value of an electrical unit, measured in kilowatts, is uniform and could be fairly obvious. One root of all comparative valuation would be a kilowatt.

Since the storage capacity of electricity is negligible, the extraction rate of electricity equals its consumption rate. For the most part, what’s produced is consumed immediately. Though the extraction rate and the consumption rate may increase, they increase proportionately. As long as the storage capacity of electricity is negligible, the result is a zero growth rate of money. A zero growth rate does not facilitate the application of interest. Society will restructure itself to accommodate a zero growth form of money.

The process of extraction is the replenishment of electricity since the storage capacity of electricity is negligible. The extraction and replenishment rate of electricity are correlative to the extraction and replenishment rates of its energy sources. Oil, natural gas, coal, nuclear, and hydro are the predominate sources of energy used in the production of electricity. Solar, wind, and bio are ancillary energy sources. Oil, natural gas, and coal are finite resources with extremely low replenishment rates.

The relationship of a kilowatt with its energy source would become primary societal knowledge. To ‘save money’ would be to save electricity, perhaps enough to eliminate the need for nuclear and foreign fossil fuels immediately.

The immediate source of money would be the utility serving the local power grid. In California, PG&E would be the utility for Northern California and Socal Edison would be the utility for Southern California. The production of electricity comes from many sources contracted with the utility; however, the distribution of electricity is centralized and controlled by the utility. The management of money would go from global to regional while still maintaining a global form of money. Eventually and perhaps quickly, more independent ways to produce electricity would be creatively found.

From there, the logistical details of how an actual transaction occurs using electricity as a form of money becomes academic. It takes a lot of people to run the utility and they have needs like everyone else i.e., the basis of trade with others. The rest is accounting.

The same analysis can be applied to other alternate forms of money.

Those who control, or are perceived to control, the societal form of money walk a perilous line. On one hand, they are highly compensated and enjoy luxuries afforded to few. On the other hand, if the skewed distribution of wealth causes intolerable stress for many others, then those perceived to control the societal form of money may suffer the wrath of a Market correction.

Albert Speer: His Battle with Truth by Gitta Sereny

"You have to think," Dr. Huphauer said, "that multiplying that ‘seven million unemployed’ figure by a conservative three to include families, there were then about twenty million people in need, with no unemployment insurance and only the most minimal social security benefits. When the earlier catastrophe, the inflation, struck, when a loaf of bread cost a million marks and butter and meat ceased to exist for millions of people, they grew to hate - really hate - anyone who had money, thereby exacerbating the already profoundly resented class system."

Tagging a specific social group that has been significantly woven into a society and then yanking that group from the fabric will tear the society significantly. All societal members will suffer the tear, rippling through generations.

When the societal form of money does not function well for many, those who maintain wealth are perceived by the others to be privileged and conspirators. When monetary stress becomes critical, the simplistic tagging of all wealthy people prevails.

Usury (Random House Dictionary)

1. the lending or practice of lending money at an exorbitant interest. 2. The exorbitant amount or rate of interest, esp. in excess of the legal rate.

Usury (Dictionary of Cultural Literacy)

The practice of charging more than the legal interest rate.

Law separates interest and usury by defining what is exorbitant. From a mathematical perspective, the determination is arbitrary. Interest and usury are conceptually synonymous. The difference between interest and usury is an arbitrary legal determination with no basis in mathematics.

Deuteronomy XXIII:19 (Old Testament)

Thou shalt not lend upon usury to the brother; usury on money, usury of victuals, usury of anything that is lent upon usury:

Deuteronomy XXIII:20 (Old Testament)

Unto a stranger thou mayest lend upon a stranger; but unto thy brother thou shalt not lend upon usury...

Deuteronomy was a base of morality for Hebrew tribesman. Usury could be applied to a stranger, but not to a brother. For some, usury was viewed as a weapon to be used against an enemy who could not be defeated in direct confrontation.

De Tobia by St. Ambrose (340-397)

From him, it says there, demand usury, whom you rightly desire to harm, against whom weapons are lawfully carried. Upon him usury is legally imposed. On him whom you cannot easily conquer in war, you can quickly take vengeance with the hundredth. From him exact usury whom it would not be a crime to kill. He fights without a weapon who demands usury: he who revenges himself upon an enemy, who is an interest collector from his foe, fights without a sword. Therefore, where there is the right of war, there also is the right of usury.

As the argument goes, the New Testament proclamation of universal brotherhood negated the use of usury in any circumstance.

The Idea of Usury by Benjamin N. Nelson, Princeton University Press, 1949

St. Jerome (340-420) contended that the prohibition of usury among brother in Deuteronomy had been universalized by the Prophets and the New Testament. There was, in short, no scriptural warrant for taking usury from anyone.

Though usury was a banned practice, it still crept into society and propagated itself.

Religion and the Rise of Capitalism by R. H. Tawney, Oxford, 1922

The Papacy was, in a sense, the greatest financial institution of the Middle Ages, and, as its fiscal system was elaborated, things became, not better, but worse. The abuses which were a trickle in the thirteenth century were a torrent in the fifteenth. The papacy might denounce usurers, but, as the center of the most highly organized administrative system of the age, receiving remittances all over Europe, and receiving them in money at a time when the revenues of other Governments still included personal services and payments in kind, it could not dispense with them.

The Idea of Usury by Benjamin N. Nelson, Princeton University Press, 1949

In fifteenth-century Italy, economic expediencies completely overshadowed moral philosophy as a force in the propagation of Christian Universalism. By 1509, eighty-seven banks had been set up in Italy with papal approval despite insistent pleas of traditionalist theologians, chiefly Augustinians and Dominicans, that the interest charges taken by the monti were contrary to all tradition, natural and Divine law, and subversive of Christian brotherhood.

Religious scholars began to question the Roman papacy as the sole path to spiritual enlightenment.

The History of the Modern World by Palmer and Colton, 1995

Germany in the fourteenth century produced a series of mystics. The essence of mysticism lay in the belief, or experience, that the individual soul could in perfect solitude commune directly with God. The mystic had no need of reason, nor of words, nor of joining with other people in open worship, nor even sacraments administered by the priests - or even of the church. The mystics did not rebel against the church; they accepted its pattern of salvation; but at bottom they offered, to those would follow, a deeper religion in which the church as a social institution had no place. All social institutions, in fact, were transcended in mysticism by the individual soul; and on this doctrine, both profound and socially disruptive, Martin Luther was later to draw.

Considering Germany’s economic condition, Luther’s opinion upon usury, a fundamental mechanism of money having a biblical reference, was relevant. During this period, Luther stood forth as the spokesman of the German nation against "usurious" extortions of the Roman Church. All Germany, he charged, was being exhausted by usury. In 1524, the peasants of Germany revolted. Luther’s convictions were shaken by the peasants’ violent methods of retaliations.

The History of the Modern World by Palmer and Colton

Luther repudiated all connection with the peasants, called them filthy swine, and urged the princes to suppress them by sword. The peasants were unmercifully put down, but popular unrest continued to stir the country, expressing itself, in a religious age, in various forms of extreme religious frenzy.

Neither interest nor usury were eradicated.

Another Religious Perspective

The Koran, the Holy Text of Islam delivered by the seventh century prophet Muhammad, also mentions usury.

The Glorious Qur’an, Translation by Marmaduke Pickthall

Surah II - 275

Those who swallow usury cannot rise up save as he ariseth whom the devil hath prostrated by (his) touch. That is because they say: Trade is just like usury; whereas Allah permitteth trading and forbiddeth usury. He unto whom an admonition from his Lord cometh, and (he) refraineth (in obedience thereto), he shall keep (the profits of) that which is past, and his affair (henceforth) is with Allah. As for him who returneth (to Usury) - such are rightful owners of Fire. They will abide therein.

Surah II - 276

Allah hath blighted usury and made almsgiving fruitful. Allah loveth not the impious and guilty.

Surah II - 278

O ye who believe! Observe your duty to Allah, and give up what remaineth (due to you) for usury, if ye are (in truth) believers.

Surah III - 130

O we who believe! Devour not usury, doubling and quadrupling (the sum lent). Observe your duty to Allah, that ye may be successful.

Surah XXX - 39

That which ye give in usury in order that it may increase on (other) people’s property hath no increase with Allah; but that which ye give in charity, seeking Allah’s countenance, hath increase manifold.

It is interesting to note that the New Age translation of Surah III - 130 [above] incorporates the modern concept of usury as separate from interest.

The Essential Koran, Translation by Thomas Cleary

Faithful believers, do not take usurious interest, multiplied and compounded, and be wary of God, that you may prosper.

Today, the use of usury remains a source of contention within the Islamic world and amongst religions.

Osama bin Laden: You are the nation that permits Usury, which has been forbidden by all the religions. Yet you build your economy and investments on Usury.

A History of Interest Rates by Sidney Homer, Rutgers University Press, 1963

Credit is sometimes considered a modern device or even a modern vice. It is true that a few new credit forms have been developed in our century and statistics reflecting the growth of the volume of credit during recent decades are impressive. But a glance through the pages of financial history will dispel the notion of novelty. Credit was in general use in ancient and medieval times. Credit long antedated industry, banking and even coinage; it probably antedated primitive forms of money.

For example, about 1800 B.C., Hammurabi, a king of the first dynasty of ancient Babylonia, gave his people their earliest formal code of laws. A number of chief provisions of this code regulated the relation of debtor to creditor. The maximum rate of interest was set at 33 1/3% per annum for loans of grain repayable in kind, and at 20% per annum for loans of silver by weight.

Twelve hundred years later, around 600 B.C., the legal history of classical Greece began with the laws of Solon. Drastic reforms were then called for by an economic crisis in Athens stemming in part from excessive debt and widespread personal slavery for debt.

The Romans also began their legal history with a body of laws regulating credit. This, too, was forced by a crisis characterized by excessive debt.

These three examples from the earliest days of historic Babylon, Greece and Rome are enough to support the conclusion that credit at interest was widespread enough to create major political problems before the emergence of written history.

Usury, or interest, was fundamental to the economics of these great civilizations, driving its unsustainable growth and eventual epochal collapse. 

Form of Money Series

http://en.wikipedia.org/wiki/Salam_Fayyad

Salam Fayyad, a Palestinian politician, on June 15, 2007 was appointed the Prime Minister of the Palestinian National Authority. Fayyad had been the Finance Minister in the Fatah government from 2002. Fayyad is highly respected in the Israeli establishment and has close ties with the Bush administration. His Ph.D. in economics is from the University of Texas at Austin, a student of William A. Barnett, did early research on the American Divisia Monetary Aggregates [growth rate of the aggregate is the weighted average of the growth rates of the component quantities], and was on the staff of the Federal Reserve Bank of St. Louis. An economist and a former World Bank official who lived in the United States for twenty years, he was an official of the World Bank from 1987-1995 and subsequently became the International Monetary Fund representative to Palestine until 2001, before becoming Finance Minister of the Palestinian National Authority.

Abbas Signs New Government Decree

http://english.aljazeera.net/NR/exeres/B212594B-B6FC-4C81-BCBC-9AA6191EE1C7.htm

June 17, 2007

Mahmoud Abbas, the Palestinian president, has signed a decree allowing a Palestinian emergency government to take office without parliamentary approval. The decree came after reports that Abbas was expected to swear in Salam Fayyad, an economist. A US envoy told Abbas that the US would lift a direct ban on aid to the government once the new administration was announced. Jacob Walles, the US consul-general in Jerusalem, said: "I expect that we are going to be engaged with this government.”

Fatah remains in control of the West Bank.

Abbas Appoints New Palestinian PM

http://news.bbc.co.uk/2/hi/middle_east/6756079.stm

15 June 2007

Palestinian President Mahmoud Abbas has appointed a new prime minister, a day after dissolving the Hamas-led coalition. Finance Minister Salam Fayyad has been asked to take over and form an emergency government. It comes amid political upheaval in Gaza, where Hamas has forcibly taken control from its Fatah rivals.

http://en.wikipedia.org/wiki/Hamas

Hamas is listed as a terrorist organization by Canada, the European Union, Israel, Japan, and the United States.

Gaza: Not Just a Prison, a Laboratory by Naomi Klein

http://www.commondreams.org/archive/2007/06/15/1901/

June 15, 2007

Israel’s economy isn’t booming despite the political chaos that devours the headlines, but because of it. This phase of development dates back to the mid-nineties, when Israel was in the vanguard of the information revolution - the most tech-dependent economy in the world. After the dot-com bubble burst in 2000, Israel’s economy was devastated, facing its worst year since 1953. Then came 9/11, and suddenly new profit vistas opened up for any company that claimed it could spot terrorists in crowds, seal borders from attack and extract confessions from closed-mouthed prisoners.

Overlooked is Israel’s huge and expanding export business. Israel now sends $1.2 billion in “defense” products to the United States-up dramatically from $270 million in 1999. In 2006 Israel exported $3.4 billion in defense products-well over a billion more than it received in US military aid. That makes Israel the fourth-largest arms dealer in the world, overtaking Britain.

Much of this growth has been in the so-called “homeland security” sector. Before 9/11 homeland security barely existed as an industry. By the end of this year, Israeli exports in the sector will reach $1.2 billion-an increase of 20 percent. The key products and services are high-tech fences, unmanned drones, biometric IDs, video and audio surveillance gear, air passenger profiling and prisoner interrogation systems - precisely the tools and technologies Israel has used to lock-in the occupied territories.

The chaos in Gaza and the rest of the region doesn’t threaten the bottom line in Tel Aviv, and may actually boost it. Israel has learned to turn endless war into a brand asset, pitching its uprooting, occupation and containment of the Palestinian people as a half-century head start in the “global war on terror.”

REPRESENTATIVE MONEY

Money that represents an intrinsic form of money is ‘representative money’. Representative money differs in physical form and has less intrinsic value than the form of money it represents. Using representative money, the intrinsic form of money may be redeemed on demand.

Example

Assume [1] rice is the societal form of money and [2] the Monetary Unit is a fixed volume of rice – one cup.

Raiders from afar have emerged who rob farmers of their stored rice, so farmers decided to store their rice in a shared facility, structurally fortified and protected. Each farmer brings his harvest to the shared facility, the harvest is volumed, and each farmer is issued paper currency representative of the total cups delivered. On demand, any holder of the paper currency may go to the facility and receive the stated amount of rice in cups. Paper currency becomes the circulated form of money, replacing rice. Societal changes occur to accommodate the movement of the new form of money.

Monetary Management

In the example, the Monetary Unit is stated to represent a fixed volume of rice; however, the paper currency does not represent the specific rice for which the paper currency was originally issued since the rice of one farmer has been intermingled with the rice of other farmers in the storage bin. Some rice may spoil in the storage bin; however, paper currency does not spoil and worn currency is reissued.

The actual worth of the Monetary Unit equals the total amount of usable stored rice divided by the total amount of issued paper currency. If one cup of rice spoils in storage, then the actual value of a unit of paper currency is something less than its stated value of one cup. If there was a run on the facility, those units of representative money that cannot be redeemed on demand are actually units of non-representative money – fiat money. Representative money has to be actively managed to insure that the variations stay within reason, to maintain confidence in the currency in order to prevent a run on the facility.

FIAT MONEY

When there are more Monetary Units of representative money in circulation than Monetary Units of the original form of money in reserve, then the excess representative money is fiat money – it has no foundation of value.

Reserve Ratio

A reserve ratio of 1:1 implies that the amount of the original form of money in reserve equals the issued amount of representative money. By reducing the reserve ratio below the value of one, fiat money increases. There is nothing sacrosanct about a fixed minimum reserve ratio. The Bank of England, before Peel's Act of 1844, maintained a 33 per cent gold reserve against notes and deposits. By continually ratcheting down the reserve ratio, the more fiat money is created.

Eventually, the reserve ratio approaches zero, and all money becomes fiat money, no longer redeemable. Since fiat money has no foundation of value, the perceived value of fiat money can drift. Managing the value of fiat money is intricate when there is no rooted value.

Issuance of Fiat Money

In the United States, Fiat Money is created by the Federal Reserve Bank and is injected into the monetary system in the form of debt. The Bank has discretion to whom and for what purpose they will issue debt. The total amount of fiat money in circulation increases by every debt issuance.

Form of Money Series

Any form of money can be minted into Monetary Units, i.e., packaged units of money of specific quantity and quality. The Monetary Unit is a reliable and convenient store of value, simplifying the valuation and logistical process of barter. The Minter guarantees the content of each Monetary Unit, such as a stamp, and keeps a portion of the minted material, called seigniorage, to cover the expense of minting.

The Monetary Unit is equivalent to a standard weight and measure. A meter is a fixed length, and a liter is a fixed volume. Once defined, the standard should never change. A changing standard is societally disruptive. As an example, if the meter or yard were to be redefined, the impact upon science, engineering, and the trades would be severely disruptive. In the same manner and same magnitude, redefining the Monetary Unit disrupts comparative valuations, negatively impacting the Market and Society.

The minting of money is very ancient in origin.

Moses, Prince of Egypt by Howard Fast (Fictional History)

Yet a sort of money there had to be, and among the Phoenicians pearls and precious stones became the units of trade and measure. The Sea Rovers of the Achaean islands used balls of tin and gold and silver, and the people of Hatti used the most precious metal man had ever found, iron, in cubit-long bars. Among the Egyptians, yardage of linen and sacks of wheat had become too cumbersome for the ever growing commerce of the City of the Ramses, and finger-rings and bracelets of copper, tin and gold were becoming set units of value. Nowhere on all the known earth was there a place where the Egyptian ring had not found its way, and there was no movable product of the earth that had not been unloaded at the stone docks of Ramses.

The legacy of the ancient metals as forms of money lingers today in modern coins. Such pieces of metal have been excavated in Troy, Asia Minor, Babylonia, Assyria, Syria, Egypt, and Iran.

Form of Money Series

Market (Random House Dictionary): A meeting of people for selling and buying.

Trading allows one specialty to be exchanged for another specialty. Each specialty has its own nuances and learning curve to overcome. Nobody can cover all the required specialties of life, hence the need for trade. Specialties develop economic efficiencies, which saves work, time, and resources.

The intrinsic value of each form of money is comparative to the intrinsic values of all other forms of money. All factors affecting the valuation of each and all forms of money are inclusive in the Market. The Market checks and balances the valuation of each form of money in relation to everything that is valued. The valuation process is comparative, variable, corrective, and ongoing in the Market.

The relational complexity of the Market is analogous to the complexity of the weather system. Modern weather forecasting is still limited in accuracy to less than a few days. In fact, the weather itself can significantly alter Market valuations by drought, flood, etc. and is therefore a significant component of the Market. The complexity of the Market is all inclusive.

Barter is the process by which valuations are mutually achieved. Whether one takes the price as is or haggles over it, it is still part of the barter process, with or without money. Money merely facilitates the barter process.

Transactions of categorical sizes, large to small, use different forms of money, with overlapping of all categories, which allows the Market to make comparative valuations among the various forms of money. All forms of money cannot be perfectly proportioned throughout a society, which creates societal distinctions based on the proportional use of each form of money. Historically, metals had been established forms of money long before written history. Large transactions used gold, small transactions used copper, and transactions in between used silver, all overlapping in use. The metals are still represented in today’s coinage, though not in substance.

Form of Money Series

Money (World Book Encyclopedia)

Money is anything that is generally accepted by people in exchange for the things they sell or the work they do. Any object or substance that serves as a medium of exchange, a unit of account, and a store of wealth is money. To be convenient, however, money should have several qualities. It should come in pieces of standard value so that it does not have to be weighed or measured every time it is used. It should be easy to carry so that people can carry enough money to buy what they need. Finally, it should divide into units so that people can make small purchases and receive change.

A unit of money is the lowest common denominator for comparative valuation among many persons. Money allows the exchange of goods and services to be conducted in interregnum transactions. Something of value is exchanged for an amount of money, and that money is later exchanged for something else of equivalent value with someone else completely unrelated to the first exchange. That is the simplicity and beauty of money.

A History of Interest Rates by Sidney Homer, Rutgers, 1963

A study of primitive money catalogues some 173 objects and materials which in ancient and modern times have had monetary attributes in one or more places and at one or more times. Those most frequently mentioned include beads, cattle, cloth, copper, gold, grain, iron, rice, salt, shells, silver, skins, slaves and tobacco.

Commodities, some more than others, have an intrinsic value that is uniform, storable, divisible, and transportable. Cattle sufficed as money for large transactions, but obviously not smaller transactions since cattle are not divisible. However, cattle sufficed so well for larger transactions that the term pecuniary, which means 'related to money,' is derived from the Latin pecuniarius, meaning 'wealth in cattle.' What does and does not qualify to be called ‘money’ is not cut and dry.

For discussion purposes, all persons who use the same form(s) of money comprise a ‘society’. The valuation process increases in complexity as the number of different forms of money in coexistence increases, to such a degree that no more than a handful would most likely coexist at the same time within the same society. Which commodity transforms into or out of the category of ‘money’ is a Darwinian selection process determined by the Market.

The mere logistics of gathering, manufacturing and handling each form of money significantly shapes the culture of a society, impacting the way and manner a society interacts. All those who use the same form, or forms, of money have something in common with each other. Any change in the form of money will impact societal interaction as a whole and individually. When a society changes or alters its form of money, societal changes occur in proportion to the magnitude of the change or alteration.

Money has evolved into a complex system that defies definition. Money originated long before written history; however, the modern form of money has its origins in 600 B.C. Lydia, then a part of the Greek empire located in Western Turkey. The Form of Money explores the essence of money and its evolution to the present - rich with intrigue, drama, conflict, fear, and hope of civilizations past and present - and then speculates on future forms of money.  

Form of Money Series

Reliance Upon Perpetual Growth

INTRODUCTION

The stock market provides an opportunity for investors of all sizes to participate in the ownership of corporations. The premise for purchasing the stock of a corporation is to obtain equity or owner rates of return on the investment plus the eventual return of the original investment. Question: when and how does a publicly traded corporation plan to repay the original investment?

CORPORATE INVESTMENT

Generally, a corporation identifies an investment opportunity and issues stock to fund the investment. The investment, such as machinery, has a useful life expectancy. The investor who purchases the stock expects to get a targeted return on the investment plus the recovery of the original investment.

As so far described, the issuance of stock has been tied to a specific investment. In practice, the issuance of stock is blended into the overall corporate ownership and is not tied to a specific investment. The stockholder participates in many investments by the corporation. Regardless, the funds received from stock issuance are used to make specific investments by the corporation.

THE ABERRATION

The corporation uses the proceeds from stock issuance to make an investment, such as machinery, and someday that investment will eventually reach the end of it's useful life. When that investment expires, the corporation should retire the originally issued stock. If not, the stock remains on the balance sheet expecting equity rates of returns to be serviced by an expired investment.

Corporations occasionally buy back its own stock, usually to be reissued at a later date, but rarely to "retire" the stock based on an expired investment. A corporation may issue stock to pay down existing debt; however, this is counter to conventional capital theory that equity money is more expensive than borrowed money. On the other hand, borrowed money has a due date for repayment and equity money does not.

As more stock is issued for other investments, the cash flow to service the expected returns on recently issued stock must also service stock returns issued for past investments whose useful life has expired. This is equivalent to continually borrowing money to pay interest due.

Hence, a corporation that does not retire stock is a type of pyramid scheme. All pyramid schemes have a compounding period and interest rate. A lower interest rate and a longer compounding period merely flattens the pyramid and takes longer to play out. In bankruptcy proceedings, the stockholder is last in line to make a claim, and the well is usually dry by the time the stockholder steps up to the line.

PERPETUAL GROWTH

Stock collapse is prevented by "perpetual growth." As long as the corporation can maintain compounding growth, the event where the returns on current investments can no longer service a disproportionately large equity base can be pushed into the future, but not indefinitely.

SUMMARY

The issue is not whether "growth" is a flawed concept. Growth itself is a vague term that has a wide variety of meanings from individual to individual and is generally viewed as "a good thing"; however, the emphasis of compounding growth as a national economic policy measured by the Dow Jones Average or Gross National Product may not encompass all the desired attributes of growth.

An investor wants to recover his equity before investment failure; hence, the search for the greater fool, the greater fool being the investor who buys the stock of a corporation just as perpetual growth slows or ceases. The public stock market is the most opportune market to find the last buyers, hence the greatest fools.

When a corporation's stock declines, an investor's losses can be offset with gains in other corporations using a diversified corporate portfolio. When an industry starts to decline, an investor's losses can be offset with gains in other industries using a diversified industry portfolio. The diversified portfolio is insurance that the investor will only be fooled part of the time.

CONCLUSION

Ever-increasing Growth, as measured by compounding interest concepts, is an inherent flaw embedded in the corporate and debt structure. Collapse is inevitable.