Somebody made a comment on a website the other day which, so far as it goes, is correct, but completely beside the point:
“And what exactly would you like to point out? The two are one and the same, because a thriving, competitive marketplace always drives prices down. That’s, like, Capitalism 101, guys.”
It is correct, of course, but the necessary assumption is that Capitalism as such is the primary operative mode of the economy. It’s beside the point precisely because Capitalism no longer is the primary operative mode of the economy, and insofar as it is operative at all, is simply eating itself.
Money, as itself insubstantial, cannot make money. Capitalism involves the pretense that it can, by taking surplus wages. That in itself though requires that there are such surplus wages to be taken, but that is no longer the case, ironically as a result predominantly of higher productivity. The phenomenal rise in the cost of property is only the most noticeable effect, and has occurred simply because those with money must put it somewhere, and property, with the rentier income it provides, is the only reliable intermediary state between having money and getting income from it.
While in individual situations a capitalist can make money from investment, whatever money is made is predicated on a further overall divestment of capital. Successful companies such as Apple and Google are only successful insofar as they disrupt and decapitalize companies with larger initial capital bases than the resulting capital bases of the newly successful firms. Thus overall, the success of specific companies doesn’t take away from the overall decapitalization of the economy, but rather accelerates it.
Money, as such, can only be measured relative to other money. While a rough estimate could theoretically be made of the absolute value by looking at the relative prices of the same goods or services over a given period, too many goods and services have not existed for long enough, while others have disappeared, to make any accurate estimates possible. This leads to the odd situation that we really don’t know what, if anything, any given money is worth.
Any attempt to base money on something else, such as energy (the petrodollar, Bitcoin) or a specific material (the gold standard) inevitably fails, since the value of energy and gold themselves are measured in money.
Money is, quite literally, worth whatever society as a whole believes it is worth. This belief is itself based on a mythos of substantialized currency, a mythos that was substituted for the initial mythos of currency as valuable due to the god’s blessing. The apparent testimony to the substantial nature of money came from the technology of the touchstone, but of course it, like any other measure of money, could only measure relative, not absolute value.
This mythos, though, is on its deathbed, only sustained at the moment by a combination of artificial life-support and fear of what will happen if it does in fact die. The desubstantialization of money via its digization, combined with the decapitalization of the economy, has resulted in a situation where the operative economy is closer to feudalism than to capitalism proper, based as it is primarily on property as real estate.
The next financial crisis, if it follows the pattern of the others since the 1970s, will be “too big to bail”, since the amount of currency at risk is larger than any government’s ability to bailout without creating a domino effect on all other currencies. The desire for local stability, which creates global instability by (from each local perspective sensible) intertwining of financial and other large industry globally.
The question is, what then? Nobody can simply resurrect the global fnancial system since too many conflicting interests would have to agree. I don’t have an answer, and as far as I can tell, neither does anyone else. When the system crashes is entirely unpredictable, it may be this year, next year, or two hundred years from now, but with a much higher than zero probability, it inevitably will happen at some point.
The proper meaning of “currency” is “something generally accepted as meaningful” in a given society, as in “certain slang terms gained currency in the 1920’s, only to be eclipsed by others and virtually disappearing by the 1940’s”. Currency in the monetary sense is no more substantial than slang, and the idea that currency itself could not ‘lose currency’ is neither backed up by evidence, nor is sensible in itself.