Just Where Do We Put Our Treasure? 12-4-10

Anderson, South Carolina

Throughout history the value of trading mediums was assured by making them exchangeable for something of great beauty and scarcity. For centuries the worth of money was insured by making it of gold or silver. Oak chests overflowing with gold doubloons have fired imaginations for half a millennium. We have compelling images of treasure seekers finding mountains of gold at the bottom of tropical oceans. Spanish galleons laden with pirated treasure create instant multi-millionaires.

With the invention of reliable printing presses and fine papers, paper currency came into vogue, allowing for the concentration and transport of great wealth without the necessity of hauling oak chests weighing hundreds of pounds. Countless nations, city-states, provinces, and even individual banks set up their own mints, printing this paper that suddenly had everyone’s attention. The value of currency was insured by agreement it could be swapped at anytime for an agreed amount of gold. Those issuing paper currencies ostensibly maintained enough gold reserves to support a run on it. Issuers made reasonable efforts to prevent counterfeiting as many nefarious individuals found printing currency much easier than opening up gold mines and digging for the yellow wonder themselves.

In the summer of 1971, the head of the world’s largest economy made an inconceivable decision. Nixon declared United States currency would no longer be linked to gold. No longer could bearers of dollars swap them for gold. As Paul Volker, the infamous head of the Federal Reserved recalled, “We were running out of gold. There was threat of a run on the dollar. Eventually there would be a crisis.” The U.S. mint had issued so many dollars there was a likelihood the U.S. would default on its agreement to swap currency for gold. By the summer of 1971 foreign governments held three times as many dollars as the U.S. had in gold. In pre-emptive fashion everyone was told, “No more gold!”

With baited breath, policy makers in America waited for the world’s response. “Ok.” “Ok?” Life went on. Jettisoning the historic Bretton Woods agreement, which linked gold and a basket of currencies to each other, resulted in the now ‘worthless’ American currency becoming the ascendant currency and store of wealth throughout the world. Foreign nations have so trusted this ‘worthless’ currency as to unilaterally abandon their own currencies and adopt the American dollar as their own. The most valuable thing on earth is so simply because we all agreed it would be so. Dollars have no inherent value whatever.

With the invention of computers and their ubiquitous adoption throughout modern life, even paper currency has taken a back seat. Money has become binary, being little more than magnetic spots on hard drives in bank computers. No longer does one even have to carry relatively compact paper currency. Money no longer has any mass whatever. I can click on my lap top computer and move fortunes with ease, it taking no more effort to move a million dollars than it does fifty cents. With electronic wire transfers it’s possible to move billions of dollars in seconds, leaving no trace whatever, not even on the sea bottom.

In the binary world of computers there are no shades of gray. Everything is black or white, on or off, zero or one. Using a mathematical symbology with only zeroes and ones, computer machine language is able to keep track of virtually all wealth and knowledge in the world. Money is nothing but a series of zeros and ones arrayed on magnetized surfaces of platters in a hard drive. Frenetic trading taking place on stock exchanges is nothing more than light speed manipulation of zeroes and ones in a million computers across the globe. By consensus we agree to relational value of symbolic forms of wealth. We have a binary sort of Bretton Woods agreement as to the value of patterns of zeroes and ones.

Alas, we do not extend a rational consensus of value into our physical worlds, losing sight of reality. We’ve somehow lost track of the true value of objects or people. Consensus easily runs amuck. As early as the 17th century, consensus got out of control and tulip bulbs were valued at millions, ultimately devastating the fortunes of millions of individuals and several national economies. Finally, someone in a pub said out loud, “It’s just a tulip bulb, stupid.” No one came to tulip auctions anymore and their value evaporated. Little need be said about what happened when buyers quit buying houses in America.

It’s very possible foreign investors will one day stop coming to weekly American T-bill auctions with the same result. One highly-placed Chinese bureaucrat, charged with buying T-bills at auction, could hobble the American economy merely by mouthing out loud dollars are worth about as much as tulip bulbs or houses in south Florida. The economic and social costs to hundreds of millions of people would be catastrophic. Conversely, comments from a single highly placed official can drive financial markets upward with irrational exuberance. In one recent day comments from several European officials created hundreds of billions in ‘wealth’, at least on paper.

In a cyber-era where life success is scored by the array of zeroes and ones on magnetized platters in bank computers, by how many zeroes we have after a leading one, life can seem precarious at best. For the 9.8% percent of us no longer having employer bank tapes altering our checking accounts on a weekly or monthly basis, living is potentially fragile.

An enduring imperative for our times would be to explore ways to live off the economic grid, finding experiences, relationships, and life purpose not demanding of gold, paper, or zeroes in the right place. In a consumer-driven world so highly dependent on what others think things are worth, it might be most profitable to consider what our Creator thinks things are worth.

Do not lay up for yourselves treasures upon earth, where moth and rust destroy, and where thieves break in and steal. But lay up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in or steal, for where your treasure is, there will be your heart also.