THE ARRIVAL OF FREE MARKET MONEY 

Stage Two in the Life Cycle of Money

Thursday May 31st, AD2007

A new economy has emerged. People have applied their labour to the natural resources around them. It has become an ordered society with a high division of labour. From people's labour has come the production of tangible and essential assets; those things essential to the sustaining 
and improving of human life. This 'production' is the direct result of their labour, and so, this 'production' has become the stored wealth of the people in the economy. Due to the natural 'division of labour', different people produce different things, which are all exchanged 
(bought and sold) in the market place. This pattern is as old as man walking the planet. In yesterday's Daily Dig we described it as a 'Free Market Emerging'; Stage One in the Life Cycle of Money. 

In our new 'Free Market Economy' the market place itself is functioning well. It has a natural pricing mechanism. Because of their past labour, people are freely trading goods that now have 'intrinsic value'. People barter price to close a transaction; the higher the stored labour in 
something, the more valuable and the higher its price will be. 

The only real problem is that, due to the difference in relative value between goods being exchanged, it is often difficult to settle out all trades. For example, how does one man trade a highly valued item for a small amount of perishables? The market place needs something that 
can fill the gaps; match value for value in unequal transactions. Or maybe a person has something to sell now but doesn't want to buy anything else till a later time; he or she needs something that will store the value of what they are selling now until a later date. The market 
place needs 'money'. Throughout all of history we have seen that money automatically develops to aid the free market process in a barter of exchange economy; something we call the natural 'Development of Free Market Money', which is Stage Two in the Life Cycle of Money (1). 

This money itself must have a consistent and high intrinsic value for its size and weight. It must be portable and recognizable to everyone throughout the economy and beyond, its quality must be easy to test and determine and it should be able to be stored for periods of time without loss of value. 

Many things can function as money providing they consistently and fairly represent the stored value of man's past labour. For example grain (wheat) can function as Free Market Money because it has intrinsic value, it is universally recognizable and it can be stored. However grain 
is poor when it comes to paying for high value transactions. Its intrinsic value is too low for its size and weight. 

But some men in our new economy have turned their labour to studying the ground, prospecting and mining gold and silver. Both these metals are beautiful and extremely rare. They are very hard to find and even more difficult and dangerous to recover. Each ounce of both gold and 
silver brought into our new economy represent huge amounts of time, research, effort and risk, and once mined, that gold and silver becomes highly sort after in the free market. 

Through nearly 5000 years of free market history, gold and silver have always emerged as the Free Market Money of choice. Why? Because they function better than any other commodity or thing in fairly and intrinsically representing the combined labour and wealth of man.

Sincerely - Philip Judge pjudge@anglofareast.com 

(1) http://www.anglofareast.com/images/LCM2.jpg