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What IS money?

My people have changed their glory for that which does not profit. Be appalled, O heavens, at this; be shocked, be utterly desolate,” declares the LORD, “for my people have committed two evils: they have forsaken me, the fountain of living waters, and hewed out cisterns for themselves, broken cisterns that can hold no water.” Jeremiah 2: 11-13 (circa 600 BC, Jerusalem)
 
Of all places in the world Jersey should know what money actually IS. After all, at the last count, Jersey has bank deposits totalling £139 billion. These do not belong to Jersey residents but, if they did, every resident would, on average, have £1,390,000 in the bank (plus that amount again – and more - in investment funds in Jersey). Can any other jurisdiction match that average?

But is anyone in Jersey able to say what this money actually IS? Economists have clarified this from their point of view: money is a means of exchange and a store of value. These two are interconnected.

Money as a means of exchange means that money is the method by which one item or service can be exchanged with another. If 10 tomatoes sell for £1 and a hammer costs £5, then I can buy a hammer with my 50 tomatoes. I sell my tomatoes for money and with money I buy a hammer. Even when folk lived by bartering goods with one another they took account of the different values of things they were exchanging with one another. But that was very inefficient - until money came along.

Money as a store of value is connected but different. My 10 tomatoes will not be of any use to me if I still have them in 2 weeks time. But if I sell them for £1, that £1 will still be mine in 2 weeks time. That £1 – that money itself – is, in that way, a store of value. OK, inflation may erode what I can buy with £1 in 2 weeks time – but that £1 will buy more than I could then get in exchange for 10 rotten tomatoes.
 
 
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‘No matter how hard you hug your money – it never hugs back.' (H. Jackson Brown, Jr., author)
So, money is, indeed, a store of value because it is a means of exchange – as long as people are confident about money. One major disadvantage of money is the risk that people may lose confidence in it. I keep in my wallet a 1993 bank note issued by Yugoslavia for 50 billion dinars......That year in Belgrade, money was no longer a store of value. It ceased to be a means of exchange as well.

The fact that money is only worth something if people trust it leads many people to obtain assets instead of money: land, houses, gold, etc. But if there is only food for 1% of the starving, a house may be exchanged for 10 tomatoes. Not even houses are a sure and certain store of value....
Jersey is the cistern (see bold above), the barn where money is “securely” stored – where the store of value is itself stored for later use.
 
 
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‘Our ordinary mind always tries to persuade us that we are nothing but acorns and that our greatest happiness will be to become bigger, fatter, shinier acorns; but that is of interest only to pigs. Our faith gives us knowledge of something better: that we can become oak trees." (E F Schumacher, economist, 1911-1977)
Let’s go back 2,500 years to Jerusalem and listen to a man who spoke and wrote with the authority of the LORD, the God of Israel, to His own people – the Jews. A momentous event was about to overtake Judah and Jerusalem its capital city. That event would change everything for the Jews and would be played out in world history until today: Jerusalem, the home of God’s chosen people, would be taken over by her enemies and no longer be governed by Jews.... BC 586.

But not without warning. See bold above! What an interesting warning!

Cisterns to hold essential water had been hewn out of the rock. But there were fissures in the rocks. The cisterns – like money as a store of value – could not (in those years) store anything. They were broken. The store of value no longer stored value.

But that wasn’t the worst of it. There were two evils being committed in Jerusalem in BC 600. One was this reliance on a broken store of value. The other was declared by the LORD: they have forsaken me, the fountain of living waters…

 In AD 30, Jesus the Messiah, a few miles north of Jerusalem spoke these words to a woman at a well: “Everyone who drinks of this water will be thirsty again, but whoever drinks of the water that I will give him will never be thirsty again. The water that I will give him will become in him a spring of water welling up to eternal life.”
 
 
Richard Syvret

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