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Common Currency: Idea age about to replace info-based economy

Alan Zemek

There is no such thing as money.

I recently became engaged in an interesting conversation with a conservative friend of mind who insisted, as some do, that the only path of financial salvation for our country was a return to the gold standard, as the only true form of money.

I decided to counter his argument with the most basic principle of banking and finance I could think of: There is no such thing as money.

The most fundamental thing about money is that money is not a "thing" at all. Money is nothing more than an idea. We make it tangible by giving it a physical form, but money is nothing more than a conceptual expression that allows the value of a good to be separated from its physical place.

It is the basis of all modern prosperity; that you can carry around the value of the goods and services that you own in a convenient portable form, and trade that value with someone else, even if none of the goods or services that they have to offer you has any interest to you at all.

Prior to the invention of a money system of exchange, goods were traded like-for-like, requiring an exact match of wants and needs for every transaction.

I have a pocket knife, you have a coffee pot. I am willing to give you my pocket knife for your coffee pot, but you want a new hammer. Now we have to find someone willing to trade a hammer for a pocket knife.

How to solve this problem? Invent a system of monetary exchange based on the value of a universal commodity that everyone agrees has value.

Here are several examples of a universal commodity-based monetary system: gold, silver, copper, salt, rice, carved stones and even cigarettes have all been used by different societies and cultures as the universal commodity accepted in commerce.

Paper currency was invented as a convenient substitute for carrying all that heavy stuff around in your pocket. Today, we don't even bother with that. Today, money is nothing more than a series of zeros and ones written in digital code on a piece of magnetic tape attached to a piece of plastic.

Even more fantastic, today, when I drive through the electronic tollbooth near my house, a little radio frequency chip on my dash board tells the toll booth who I am and pays the bill for me.

For an instant, money is literally flying through the air expressed only as a micro burst of electromagnetic energy. It is hardly even real. (My kids take it completely for granted, and find it a huge bore that I am so interested in the workings of the automatic electronic tollbooth).

Throughout history our understanding of the idea of money has changed to adapt to the world around it.

Prior to the industrial age, commodity-based economies used commodity-based money. During the industrial age money became expressed as "time in a bottle". (Apologies to Jim Croce).

Money wages and the value of a "job" as expressed in the output-per-hour economic model became the universal standard. As we moved into the post-industrial information age, money also adapted to become information based.

So, what happens next?

What comes after the post-industrial, post-information age?

Well, here is something to think about: When we were an industrial-based economy, our car companies dominated the world.

When we were an information-based economy, our computer scientists and engineers dominated the world. By the way - Intel Corporation's newest state-of-the-art computer chip manufacturing plant is not in Silicon Valley. It was built in China.

We are already leaving the information economy behind, and we are now entering the age of the idea. We are already in transition to an idea-based economy. Will we win the race to create the first idea-based economy and dominate the world with the dynamism of our innovation and creativity?

For the sake of my kids, I certainly hope we can. In the meantime, you can keep your gold. One good idea is all I need. Wanna trade?
