Money has value, right? Right?!?!
That is not necessarily the case. While we're busy not wondering about fiscal facts, they often seem to change, or vanish. The fear that numbers in a bank account mean nothing and have no correlation to items in the real world keeps us pretending.
"I'll keep pretending if you'll keep pretending."
"It's a deal!"
This is the fiat currency system. The system is contingent upon the continuation of agreements which must become more elaborate as the stakes of otherwise valueless money are raised. These agreements are foreign to most people. They are sometimes made without the expressed consent of even one person. In fiscal computing, these agreements must make themselves with algorithms, because the rate of transactions that require new "money" is too rapid and voluminous to involve human thought. These algorithms theoretically abide by fundamental agreements about value, and these agreements about the value of any currency are its monetary policy.
"Every currency needs a sound monetary policy in order to maintain public trust in its long term stability. A currency whose economic value fluctuates rapidly complicates trades and finance, damages the economy, and eventually pushes people to use other currencies." (White, 2018) When these policies stay in effect, value remains stable, and people use currencies with relative confidence as to what they can purchase in the real world. However, when these policies are poorly chosen, we see distorted interest rates and asset prices, loanable funds diverted into the wrong investments, and normally robust financial institutions twisted into unsustainable positions. (White, 2008)
While White wondered how we got into the financial mess of 2008 enough to write an article, numismatists and stackers probably didn't see it as a surprise. Although economists and bankers alike understand themselves as the real source of knowledge about money, numismatists, stackers and coin collectors beg to differ. Numismatics, as many with an affinity for rare coins agree, is the true study of money. Strangely, coins (especially rare coins) may have become a currency other than their original mintage. There is an alternate system of agreement for their value, creating a different monetary policy. "Most pure collectors make money; often times in spite of themselves. This is because they buy coins for the right reason: they love them. They buy what interests them and they carefully research their purchases." Numismatists establish their own regulatory systems and grade coins according to their policies. There is a community of trust and documentation that is not seen in the world of high finance.
Likewise, new and novel currencies function on their own policies that incorporate security and confidence in core philosophies about how money should work. Cryptocurrencies and platform-based currencies all have inviolable agreements at their core. The fundamental reality of these types of money is that they are not ruled by a fickle system, but one that is unalterable from the outset. Thus, one of the core assertions of this series remains: currencies of old and their value systems have more in common with cryptocurrency than the financial systems and fiat currency created in the Twentieth Century.