Turning the Page


Today is my last day at my day job.

That’s right, you heard me, I wasn’t laid off due to a bad economy and I wasn’t as my dad liked to put it “asked to resign”, which is really just a nice way of saying somebody got sacked.  No, in the middle of the worst recession of the past 30 years, I decided it was time to quit a stable job, a job where I am valued and respected, a job quite honestly that I need, and took a step into the unknown.  I’m pulling up stakes and moving over 200 miles to a new city, leaving everyone and everything that is familiar and starting over.

Why?

I could tell you about family, being there to meet the needs of others and doing the “right thing”, and to a degree that would be true.  But it wouldn’t be 100% honest.  You see there is a difference between truth and honesty, truth is concerned with facts, while honesty is more about emotions and motivations.  So yes, I am moving to be closer to my family in their time of need, that’s technically true, but it’s really not why I did it.

I did it because my life story, or as Donald Miller puts in his book “A Million Miles in a Thousand Years”, the “story I am telling with my life”, got boring.

As Miller explains, if you want to have an exciting life you have to think about it as if you are the main character in a story.  Is your story a page turner?  If it where a movie, would the audience root for you or would they get bored and walk out?

Now don’t get me wrong, my story started out exciting enough.  Young man goes to work at a local recording studio only to discover the owner is a mentally ill drug addict and pathological liar who has to check in to rehab after a nervous breakdown.  Young man stays on for two more years and tries to save the business but finally gives up and leaves to join an energetic start-up where he changes the way independent artists release music.  That’s a pretty good story.

The problem is that story only took about 10 years to tell, and I’m not dead yet.

For the last few years I’ve been living the story of a middle aged man struggling to make ends meet while other younger, more energetic men and women continue to change the music business.  Middle aged man get’s increasingly frustrated and concerned that life is passing him by.  Who wants to live inside that story?

You see, the hero in any good story is someone who wants something and overcomes obstacles to get it.  At least that’s the definition Donald Miller gives in that book I just mentioned.  I’ve just been coasting and it shows.

One of the things I’ve accomplished by quitting my job is create some tension, something to overcome.  Bottom line; if you don’t have a goal, and it isn’t a goal that’s going to cost you something, you’re living a poor story.

I haven’t fully defined my goal yet.  But I do know it has something to do with this website.  I’ve spent nearly 3 years reading everything I can get my hands on about economics, politics, religion, and personal development.  It’s amazing to me how it all holds together when you really stop and think about it.

The fact of the matter is I need an income, but my sincere hope is that I find something that compliments my writing and research, not just a job that competes with it.  In short, I want to make The Meekonomics Project my full time job.  I think that could be a pretty amazing story.

Middle aged man quits stable job to pursue a dream of transforming the way people think about economics, politics and God.  Now, is that a page turner or what?  I think so, let’s find out what’s on the next page shall we?

Treasures in Heaven


Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moths and vermin do not destroy, and where thieves do not break in and steal. For where your treasure is, there  your heart will be also. [Jesus; Matthew 6:19-21]

So I just spent the weekend at my in-law’s house.  Let me first say that my in-laws are great people, real salt of the earth types.  My father-in-law spent 35 years working at the national headquarters of Canada Post, before that he worked in the defence industry.  My mother-in-law was a stay at home mom.  The Cleavers have nothing on these two.  But I learned something about them this past weekend that was a bit disturbing.

My father-in-law’s heart is stored in the basement.

Disposophobia, more commonly known as Compulsive Hoarding, is a newly recognized mental disorder.  It is the fear of getting rid of stuff, even if the items are worthless, hazardous or unsanitary.  According to the Mayo Clinic; hoarders collect items because they believe they will have some value in the future but compulsive hoarding impairs mobility and interferes with basic activities, including cooking, cleaning, hygiene, sanitation and sleeping.   It’s really just been in the last 10 to 15 years that psychologists have begun to treat hoarding separately from other closely related disorders like Obsessive Compulsive Disorder (OCD) and most psychologists still believe it is just a manifestation of OCD and not a separate disorder at all.

Regardless, I have no problem pronouncing my father-in-law a hoarder.  Everything from years of Life Magazine (dating back to 1950s), broken telephones, old clothes, and practically every piece of mail he has ever received, from personal letters to bills, some dating back more than 40 years are stored in his basement.  And it is next to impossible to get him to go through any of it and determine what has value and what can be thrown out.  To me, that is the very definition of disposophobia.

But this isn’t just about my father-in-law.  Hoarding is a 21st century epidemic and from a spiritual point of view, it’s a symptom of a much bigger issue.  It’s about our human tendency to place value in the wrong place and on the wrong things.

Jesus it seems knew a thing or two about hoarding.  He knew that it would “impair mobility and interfere with basic activities.”  Most of all he knew that if you place undue value on things it would damage relationships.

He goes on in Matthew 6 to talk about the damaging effects of worry.

Therefore I tell you, do not worry about your life, what you will eat or drink; or about your body, what you will wear. Is not life  more than food, and the body more than clothes? [Matthew 6:25]

Worry, to me is what lies at the heart of hoarding and OCD.  It’s a matter of trust.  If you place your trust in Jesus and His Kingdom (or community) you don’t need to hang on to things in the same way.  When you release your hold on the things of this world you can more freely give them away to people in greater need thereby building relationships with people and furthering the kingdom.

One incident this past weekend drove that point home for me more than any other.  We found a box containing 4 winter coats.  All where is slight need of repair, lining was torn or they were stained in some way, but they were otherwise in pretty good shape.  He hasn’t worn any of them in years.  Winter is coming so we suggested we take them to goodwill so someone less fortunate could benefit.  He panicked!  Claimed that he might wear them again, that he needed time to look at them and think about it.  He came up with ridiculous scenarios in which he lost or damaged his current coat and needed one of these old ones in an emergency.  (There really is no limit to our human creativity under pressure but that’s a topic for another time.)  In the end my brother-in-law finally just picked up the box and walked out.

The bottom line is this; hoarders are really nothing more than compulsive worriers who don’t trust anyone, especially God.  Therefore they become their own worst enemy when it comes to experiencing true community and joining in the workings of the Kingdom of Heaven.

So do not worry, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’ For the pagans run after all these  things, and your heavenly Father knows that you need them. But seek first his kingdom and his righteousness, and all these things will be given to you as well. Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own. [Matthew 6:31-34]

Release your worry and pray for the hoarders, Meekonomists seek first the kingdom and his righteousness.

Do You Own Your Home?


 It’s not owning property that gives you security; it just gives your creditors security.  Real security comes from having a steady income… – Niall Ferguson; The Ascent of Money, A Financial History of the World

So every time I have ever applied for credit of any type, whether a credit card, store credit or for something larger like my car I’ve been asked the same question and I’ve always lied about the answer.  I even lie on my tax return every year, that’s got to be illegal right?  But I dare say every one of you at one time or another has lied too.

The question I’m referring to is this one; do you own your home or rent?

If you have a mortgage then the truthful answer to that question is neither.  The bank owns it, but that isn’t even true since they likely bundled your mortgage with a bunch more and sold it again.  The fact is I have no idea who owns my home, I just live there.  But one of the pillars of our society is built on the illusion of owning property and there is no box that says I make payments into the ether for the right to live in my 3 bedroom condo, so instead I lie on my tax return every year.  It’s just easier that way.

One of the arguments used to support the ownership of property as the be all and end all of society is that it gives you security for obtaining credit but that isn’t really true.  With the average North American home costing the equivalent of 3 to 5 years of household income, credit is a prerequisite to owning property, not the other way around.  And how to you obtain that credit in the first place has nothing to do with owning property.

At the end of the day carrying debt is nothing more than an expense or a reduction of your income.  For every dollar that I pay servicing debt I have one less dollar that I can use to purchase other goods and services.  Yes credit allows me to make large purchases and pay for them in instalments but with interest charges ever increasing the cost of those goods wouldn’t I be better off to take that same monthly payment amount and put in an interest bearing savings account?  That way when I purchased something it would truly be mine.

Of course I wouldn’t get to take home my shiny new whatever right away but that’s the price of saving.  It’s called delayed gratification or more to the point in terms of meekonomics it’s the patience part.  We in North America are really bad at that. [see Meek-o-what-ics]

The greatest single engine in the destruction of the Protestant ethic was the invention of the instalment plan, or instant credit.  – Daniel Bell, the Cultural Contradictions of Capitalism

So here is one of the formulas that drive meekonomics.

(Net Income – Debt Payments) = Spendable Cash.

It’s the spendable cash that matters.  When a banker is looking at your credit worthiness all they really care about is whether or not your can make the payments, their goal is to reduce your spendable cash by increasing your debt payment and whether you own your home or not is irrelevant.  If you want to live like a meekonomist your goal should be the exact opposite, reduce that dept payment to increase spendable cash.

Meekonomics and Non-Violence


Non-Violence is possibly the least understood pillar of my theory of Meekonomics so let me take a minute to expand upon what I  mean here.

Often times when I speak of non-violence or more accurately, pacifism, it gets confused with passivism and I am accused of not caring about the plight of the weak and down trodden.  Nothing could be further from the truth.  The push back from just war or just violence theorists almost always begins the same way, “but what if _______”, fill in the blank with whatever outrageous scenario you can think of.

What if I had a gun to your head?

What if I had a gun to your child’s head?

My honest answer is always the same; I don’t know, I’ve never been faced with any of these situations and I likely never will be.  It is for that reason that I do not condemn the choices people make when faced with an impossible dilemma.  But the bottom line here is that pacifism and non-violence are not the same as sitting on the sidelines and letting people get away with evil and disgusting acts.

Pacifism has been called the weapon of the weak.  Perhaps the most famous pacifist of the last century was Mohandas K. Ghandi.  At the risk of oversimplifying history, Ghandi over threw perhaps one of the most powerful empires in the world and led India to independence without firing a single shot.  Passive resistance and civil-disobedience, when deployed carefully and committed to fully are powerful weapons against which there is no defence.

When a stronger party enters into conflict with a pacifist the result is often and long and drawn out war of wills in which the weaker pacifist simply wears the aggressor out by refusing to play their game.

For example:  My high-school basketball team was regarded as one of the best in the province.  When we got the championships we were the heavy favourite and we would have won handily had it not been for a quirk in the rules set out by the Ontario Federation of Secondary School Athletics (OFSSA).  You see, since teenagers aren’t expected to be as accurate at shooting as college or NBA players, there is no shot clock at the high-school level.  Knowing this, when ever our opponent got control of the ball, they simply passed it around for as long as they could and ran out the clock.  As a result my school ended up losing one of the lowest scoring games in OFSSA history because our opponents were pacifists and simply refused to play the game the way everyone, referees and OFSSA brass included expected them too.

Pacifism in war, as in basketball games, renders offensive weapons meant to force submission, useless.  While at first it may look like the stronger party has won a decisive victory with minimal casualties, over time they end up looking like bullies.  That’s when the  power shifts and pacifist slowly but surely begin to gain the upper hand through the court of public opinion.  I dare say that no aggressor in history has ever won a long war against a large group of pacifist.  They may be driven underground for a time but by taking a posture of passive resistance they never have to surrender.

It took years, but Ghandi defeated Great Britten.  After renouncing violence and spending decades in prison, Nelson Mandela defeated white rule in South Africa.   The student protests in Tiananmen Square began a program of economic reform in China that we are only now beginning to see and understand.  And the Arab spring, now summer, with the exception of civil war in Libya, looks a lot more like a pacifist uprising than it does a violent transfer of power.

A commitment to the principles of Meekonomics is a commitment to support the way of non-violence and pacifism as it reflects the will of the people and influences world affairs.  “No blood for Oil”, indeed no blood for any commodity is the rally cry of the meekonomist.

The True Evil of our Time


It is impossible to have healthy, equitable, and  democratic societies when political and economic power is concentrated in a few gigantic corporations.  We have created a  system that is now beyond the control even of those who created it and whom it richly rewards for serving its ends.  – David C. Korten; When Corporations Rule The World

I’ve been waiting for somebody else to write about  this but nobody seems willing to put their neck out so I guess I have to.

You see; it’s not rich and greedy people who are ruining our society, it’s  rich and greedy corporations that have run amok and are beyond the control even of the people running them.  We’ve created a monster that is eventually going to kill us all.

Corporations are supposed to be chartered in the public interest.  The first corporations were given charters for a limited time, say 10 years, in order to establish a beach head in a local economy and allow individuals to come in and establish themselves.  The intention then was for small owner operated firms to come in and serve the public on a more personal level.  Somewhere along the line however
something changed.

I’d say it started way back in the 1600’s during the colonial era when corporations set up to help develop the new world took on a life of their own and some like the East India Company in Asia and the Hudson’s Bay Corporation here in North America became as powerful, if not more so, that the governments and people they were meant to serve.  The East India Company in particular raped and pillaged South Asia for nearly two centuries making its investors back home in England fabulously rich while leaving behind a devastated and impoverished sub-continent that is still struggling to emerge as a viable economy more than 50 years after the divestiture of its holdings.

During the 1980s, under the libertarian policies of Ronald Regan and Margaret Thatcher governments further abdicated their responsibility by eroding labour laws and deregulating entire industries.  Today the chickens have come home to roost.  The real power to direct our economy and our society no longer lies in the halls of government, no; now the real power lies in corporate board rooms thousands of miles away from the people they most deeply effect.

If the recent monetary crisis around the world has shown us anything it has been that governments are not really incompetent at fixing the problem so much as they are impotent.

The problem is that corporations, especially the big multinationals, have no interest in governing a people and developing society as a whole.  Their only interest is in making money.  Or to further quote author David Korten, “In an economy that measures performance in terms of the creation of money, people become a major source of inefficiency – and the economy is shedding them with a vengeance.  When the institutions of money rule the world, it is perhaps inevitable that the interests of money will take precedence over the interests of people.” [When Corporations Rule the World]

Even corporate masters who see the problem and try to do something about it are impotent.  The corporation itself is more powerful than its directors.  In what is called “breach of fiduciary responsibility” if a director of a corporation knowingly makes decision that adversely affects the potential for making money they can not only be summarily dismissed, but also charged with fraud and do hard time!

Think about it. If the director of a multi-national corporation has to decide where to locate a new manufacturing facility what do think they will do?  Locate in an area with a high minimum wage and strict environmental regulations or one with no minimum wage and no environmental policy worth mentioning?  Regardless of what their own moral compass may say they have a responsibility to generate profits for the corporation and will locate where the potential for financial gain is greatest regardless of human or environmental consequences.

And that my friends, is the true evil of our time.  Nameless, faceless corporations act very much like greedy humans but in reality they are not human at all.  They are legal shells with one purpose, and one purpose only; to make money and pity the mere mortal who tries to rein them in.

Watch Your Mouth!


FYI: Nothing turns me off your blog, twitter or facebook page faster than the gratuitous use of profanity or name calling!

Recently I unsubscribed from a blog I was following because the author called President Obama a “f__king asshole” and his liberal base a bunch of whiners.  Honestly I think that everyone involved in the recent fight over US monetary policy, including the president have been less than perfect in recent weeks but that is no excuse to stoop to name calling!

Similarly a few months ago I got into a heated argument and ultimately lost a friend because I chose to defend a person that I felt he was unfairly attacking.

It’s not that I disagree, it’s not about that.  My position on any one political issue is irrelevant here.  But when you use name calling and foul language to get your point across, you’ve lost something far more important that the argument itself, you’ve lost your dignity and your credibility walks out the door right on its heels.

I started to think about writing this post long before I heard that Standard & Poors had downgraded the US Credit Rating.  One of the reasons cited for the downgrade was the “three ring circus” atmosphere of the political system.  Democratic politics is supposed to be about debating good ideas to find the best one.  Not creating a polarized system of us versus them where people are branded as either bleeding heart liberals or cold and calculating conservatives.  Nothing gets done in an environment like that.

In a weekly news roundup a British commentator for The Economist said that the members of the Republican Party in Congress have spent that last year shooting down every single proposal put forth by the Democrats and thus made the country “un-governable”.  Heading into a presidential election next year the strategy for the Republicans will be to point to the chaos and say that Obama and the Democrats are incompetent.

But the question isn’t about competence.  It’s about co-operation.

The American political system is based on checks and balances that prevent one branch of government from becoming too powerful and imposing its will on the country.  But when the branches refuse to work together it’s as if the two parties are standing there with guns pointed at each other, neither one willing to give an inch for fear that the other will blow their head off.  That’s not a political debate, that’s a civil war!

Funny thing about civil wars; no matter who wins, the country itself is always destroyed.

I cannot stress this enough. When you disagree with someone, don’t just automatically brand them as one of those people, write them off or call them names.   Take a second to listen, try to understand their point, maybe do a bit of reflection and then respond.  And always, I repeat always, remember they are people just like you, who have looked at the same evidence you have and come to a different conclusion.  That doesn’t make them wrong any more than it makes you right.

When you start calling people names it only proves that you’re out of answers yourself.  Maybe you just need to shut up and listen.

Math Quiz for United States Congress


Quick – What’s 2+2?

4?  Good you can do basic math.  Now for the quiz.

If you don’t have enough money to pay your bills should you;

a)      Get more money?

b)      Lower your expenses?

c)       Get less money?

d)      A combination of a and b?

e)      A combination of b and c?

The correct answer is d).  If you answered a) or b) we’ll put you on probation for giving an incomplete answer or perhaps not fully understanding the question but you can keep your job, for now.

If you answered c) or e) YOU’RE FIRED!

How to Make Money out of Thin Air


I’m going to be rich! I just figured out a fool proof way to create wealth and because I’m such a nice guy I’m going to share it with you. Are you ready?  Here we go!

Step One:  Get someone to lend you $1000.00.  Tell that person that you will pay them back in one year, one lump sum with 10% interest.  So they make $100.00, they just have to wait for a full year.

Step Two: Lend $900 to someone else at 15% interest for one year.  They pay you back in equal monthly instalments of $86.25 per month.  At the end of the year you would have received back $1035.  Add that to the $100 you held in reserve from the original loan an you just pocketed $65. Not a whole lot but here`s the genius of the plan.

Step Three: Beginning on month two, from the payments on the $900 loan make several small loans of $80 each at 20% interest.  For each $80 loan you will make back $16 over the course of the year.  If you make just one loan a month 11 months you will have made an additional $528 over and above the original $1000 loan.  Mind you; after deducting $80 off the payments received on the original $900 loan for 11 months you would actually only have $683 in the bank so you would need to refinance your original loan to cover the $417 still owing but with such a strong `balance sheet` you wouldn`t have any trouble doing that would you?

So pay back $600 and refinance another $500 at 10%, hold $50 in reserve and repeat the process with the remaining $450, this time lending even smaller amounts of $40 at 20% interest.

At the end of 2 years you would have balance sheet of $1227 with which to pay out the second loan of $550 and you will still only have $677 in the bank and out-standing loans of $440.00, but $677 is now more than enough to pay back the second loan.  Now you will have profited $210 off original loans of $1500.

On the original loans you`ve made 14% in two years, or 7% a year.  That`s a pretty decent return, especially considering you haven`t spent one cent of your own money.  What you’ve actually done is created money out of nothing but time and patience.

This is called loan pyramiding and it is fool proof, all you need is one fool willing to give you $1000.  The only problem is; it`s illegal!

Well not exactly. It`s illegal for an individual like you and me to do it on a small scale but that is exactly what the banks, governments and other lending institutions do every day on a massive scale.

In banker speak step one is called a bond.  Governments and big business issue bonds everyday to raise money and pay it back at a fixed interest rate for a term of 1 to 10 years.  The investor cannot redeem the bonds until the end of the fixed term which allows the issuing institution to lend that money out again at a higher interest rate and for a shorter term in hope that the payments received will be enough to pay back the original bond holder on the maturation date.

Steps two and three are things like mortgages and credit cards issued to consumers who wish to make purchases on instalments.

The whole system works perfectly until someone can`t pay. If enough people stop paying the pyramid collapses on itself like the house of cards it truly is.  It stars innocently enough.  Individuals declare bankruptcy and the banks just write off the loss.  But then banks begin to fail so governments step in to prop them up.  Eventually though governments begin to default on their bonds and entire economies collapse taking the only really productive piece of the system with them.

Who gets hurt the most when the house of cards collapses?  The investor/taxpayer at the base of the pyramid who, through hard work and the creation of value added goods and services had access to the only real money available to in the system in the first place.

Pyramid and Ponzi schemes are illegal because they are inherently unstable and far too risky. They are peddled by slick con-men to unscrupulous and naive investors with promises of big pay outs if only they stay in long enough to reap the rewards.  Governments have written laws to protect investors from cons like this only to turn around and offer the same products, dressed up and backed by confidence in big business or government itself.

But a con is a con is a con, no matter how big the backer.  Indeed con is just short for confidence anyway right?

Governments and big business would rather you have confidence in them than Jimmy Knuckles up the street who offers investors a modest return while giving customers high interest loans out of the back of his van.  But at the end of the day there is no difference in what big government or two bit con-men are peddling.  It’s predatory finance, extractive investment, usury and a big fat con!

As the clock ticks down to Aug 2, debt default day for the United States, people all over the world are waking up to the fact that we’ve
been coned and when the pyramid collapses it will be the workers, the ones who truly create value who will be crushed by the weight of it all.  If you are heavily invested in the markets, especially in bonds, get out while you still can!

Cash is king; it’s the only real money in the system anyway.

The Wealthiest Nation on Earth?


Last night the lead story on the 11 o’clock news was the impending debt crisis in the United States. To be fair this has been big news for several weeks now with everybody fighting over how much debt its okay for the government to carry and whether or not they will need to raise taxes or cut spending to get there (or do both).  As the talking head wrapped up the story he said something that I’ve heard before but which struck me as a bit odd this time given the circumstances.  He said that the United States is still the wealthiest nation on earth.

Really?  How can a nation that is more than $13 trillion in debt still be considered the wealthiest nation on earth?  I guess it depends on how you measure wealth.

True if all you calculate is income then the United States does bring in the most money of any other economy.  It’s called Gross Domestic Product or GDP and in the United States that number stands at $14 trillion per year, almost 3 times that of its closest rival, Japan at just under $5 trillion.

But income doesn’t tell the whole story.

My investment advisor once told me that when measuring wealth you have to consider the amount of debt you carry.  By that measurement that United States is not the wealthiest Nation on Earth, they are in fact the poorest.  Their debt is more than the entire European Union combined, and nearly triple that of such international debt pariahs as Greece and Portugal.

Of course when you have a population of over 300 million people you can afford to have a bit more debt right? You have more citizens contributing to the income of the nation and helping to make those dept payments so looking at the gross debt doesn’t quite tell the whole story, maybe a better measure of debt is per capita.  By that measure each US citizen is responsible for approximately $45,000 of debt.  That’s less than tiny Luxemburg (over $3 million) and Ireland ($500,000) but still more than the overall average for the European Union ($27,000), Russia, ($3,700) and poverty-stricken Ethiopia ($51!).

Now nobody is going to suggest that Ethiopia is richer than the United States so clearly dept per capita isn’t a good measure of wealth either. Then I remembered something else my investment advisor told me.  He told me that the only number that really matters is your debt to income ratio.  The United States debt is equal to 95% of its income. That’s better than England (400%) and Germany (142%) but again still not as good as the European Union as a whole (85%) my home of Canada (64%) or India (15%).

So taking all of these things into account who is the wealthiest nation on earth?

The Principality of Lichtenstein has $0.00 debt but with a GDP of just $4 billion and a population of just 34,000 is it fair to consider them the wealthiest?  I don’t think so.

In order to make a far comparison we need to establish a benchmark of some sort so for that sake of argument let’s go with a minimum GDP of $1 trillion.  Of the 14 countries with at least a $1 trillion GDP, none of them are completely without debt but
the country with the best debt to income ratio and therefore in my humble opinion the wealthiest nation on earth is;

Drum Roll…………

China!

The Chinese GDP is $4.4 trillion making it 3rd behind the United States and Japan but debt is just $407 billion which puts the  debt to income ratio at just 7%.  With a huge population, low debt and an annual growth rate of nearly 30%, China will likely surpass both Japan and the United states on the gross income scale within 5 years.  Until then the United States will still have a legitimate claim on the title of wealthiest nation by GDP but with such a high debt no one will be able to make that claim and keep a straight face for much longer.

(All numbers are based on 2009 data from the International Monetary Fund)

Salt


Continuing on with the Meekonomics project.  I’ve adjusted the focus of  Chapter One; Prehistoric – Trade, The Gold Standard and Numbers on Screens and refocussed the first 4 Chapters into a full section on the History of Money.   What follows is another excerpt from chapter one on the development of the salt trade.

Everyone knows you can’t live without salt.  The chemical compound, Sodium chloride, in small quantities, is essential for all animal life as it aids in regulating the fluid content of our bodies and helps to transmit electrical currents through our nervous systems.  The harmful effects of too much salt have been well documented, mainly focusing on increased blood pressure and heart disease but too little salt can also lead to dizziness, muscle cramping and neurological problems.  Salt occurs abundantly enough in nature that the human animal would likely have survived for millions of years without the need to mine or refine it but for human societies to grow and prosper the adequate distribution of salt was and is essential.

We can trace large scale salt production to areas of China and South Eastern Europe as far back as the 6th millennium BC.  The Precucuteni Culture of Romania and the Ukraine began boiling water from salt springs as early as 6000 BC in order to extract the precious mineral, while in the Shanxi province of China salt was skimmed of the surface of Xiechi Lake near the present day city of Yuncheng 500 years before that.  These ancient salt works are responsible for the rapid growth of these cultures nearly 2000 years before the emergence of agriculture and cities in the Fertile Crescent.

Salt took on the characteristics of currency and began to be traded as such with the emergence and growth of Egyptian society around 3000 BC.  Egyptian salt, along with salted fish and birds were traded all over Phoenicia, as far away as present day Greece and Iran.  The preservative qualities of salt made it easy to transport meat and other agricultural products over large distances as well as aiding in the growth of city states from Athens to Babylon and all points in between.

Even after salt ceased to be traded as currency, its trade remained arguable the most important industry in the world, outside of agriculture, for thousands of years, only to be surpassed by oil during the industrial revolution and at the advent of refrigeration.
Some economist would argue that WWI was fought in part as a clash between industrial powers and salt cartels.

Apart from the Egyptians; salt cartels much like the oil cartels of today grew and dominated throughout Europe giving rise to the Celts
and Romans and was largely responsible for the dominance of the Austro-Hungarian Empire right up until the beginning of the 20th
century.  Indeed at the end of WWI when the remaining members of the Austrian royal family were removed from power and exiled to one estate they were allowed to operate one business, a salt works outside of Salzburg (salt city) where they remain to this day.

But of course with wealth comes a desire for nice things; luxuries that have little or no practical value.  It was this desire for status that helped transform currency from trade in practical items to a fluid form of representative value.

Next Time I look at class distinctions, luxury and the development of a currency based on a trade in precious metals