ENERGY-MONEY EQUILIBRIUM: THE VALUE OF MONEY IN THE AGE OF OIL
Trying to figure out exactly how Money achieves and holds its value is very difficult. In all but the simplest systems, which are little more than Barter, you quickly develop a level of complexity which is confounding mainly because it is always so self-referential. In this exercise I try to elucidate the process used over the centuries to not just create money, which is primary, but also to control money once created. I have some basic ideas here, but I have no idea how this post will come out in the end. It’s a very difficult problem.
Starting Point: You cannot have Money without a surplus in basic needs, but neither is surplus by itself sufficient. You also must have control over at least one basic conduit of wealth, which is in the beginning food. Why is this so?
First let us look at a pre-agricultural Hunter Gatherer (H-G) society. Said society can be in surplus, but they don’t need or use money because each member of the society can take from the surplus as much as he or she needs. You may barter things, but you do not need an intermediary of money to do that. It’s a very simple system, but it allows for virtually no savings and none are necessary so long as you always have and expect surplus. A small group of H-Gs in a large territory who are not competing with others are always in surplus. So no money develops in such a society.
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