The Mode of Exchange of Value

How do we exchange value?  You enter an exchange, bringing something with you to exchange for the thing that you want.  There are basically two ways that you can do this.  You can either bring a needs-satisfier with you or a symbol for needs-satisfiers.  The direct needs-satisfier is something you can exchange with the other person, if they want this specific needs-satisfier here and now, in the conditions that you provide it in.  As this is very restrictive for most exchange – what if they only want 1/5 of your cow? – you can also exchange symbols for need-satisfiers.  Today these symbols are called money.  They are the currency that flows through the value exchange network.

Today you use three basic kinds of money: purchase money; loan money; and gift money.  You use purchase money in a direct exchange with someone else, right here and now.  Purchase money makes the exchange complete.  You enter the agreement about something you both want now, and you complete the agreement.  Loan money is a bit different.  With loan money, you are looking backward and forward in time.  You look backward to see what capacities you have going forward to utilize the loan well.  You look forward to see if you will be able to pay back the loan, with interest, in the agreed-upon time.  So, while purchase money looks at needs, right here and now, loan money looks forward and backward.  Another dimension also comes in here.  With purchase money, you only look at the immediate exchange.  What do you have to exchange with me?  With loan money, you are also looking at your proven capacity in the past to generate future money, and pay back the loan, with interest, with something extra to thank them for letting your use their money.  With gift money, you enter a different space-time.  Gift money looks only forward and comes with no conditions.

What becomes confusing in every-day language is the mixing of the terms purchase, loan, and gift.  You might call it a gift, yet it comes with strings or expectations.  This makes it a loan, not a gift.  You gave it to me, with expectations for future repayment.  This is a loan, disguised as a gift.  Likewise, with credit, you might think you are purchasing something, but you are really getting a loan to make a purchase, which you must repay in the future with interest.  While this might sound like semantics, you will see in later posts that misunderstanding and misnaming money types leads to very poor agreements, which can have a huge influence on your ability to achieve the harmonic vibrancy you desire.

I will also explore some big questions around the mode of exchange, such as who determines how much there is, how it is exchanged, and how its value is known.  These questions of the design of the mode of exchange and the exchange system directly influence who has it and who does not.

One thought on “The Mode of Exchange of Value

  1. Pingback: To Be or Not to Be, Happy with Money, That Is the Question « Jim Ritchie-Dunham

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