If prices rise, it is assumed that the same monetary process must be at work; if the quantity of money increases, some kind of “boom” must be lurking. Even a large inflow of commodity money into a free market is thought to generate a mild or temporary version of the business cycle. Its apparent absence is attributed merely to the rarity of such inflows and the cost and slowness of mining, rather than to any fundamental difference in the underlying process.
“It can happen to you, or it can happen with you, but it will happen.” — Mark Tauschek, The Age Of Exponential IT Is Here
First, let me acknowledge the influence of the late Mogambo Guru with the appearance of “freaking” in this article’s title. I considered it an appropriate amplifier. I hope you will, too.
Every map of civilizations is, underneath, a map of transaction costs. The usual stories about nations and civilizations fall into two camps, and both run into the same problem. One camp, the constructivists, sees nations as political projects—the products of state-building, what Benedict Anderson called “print capitalism” in his book Imagined Communities: Reflections on the Origin and Spread of Nationalism, and of deliberate elite mobilization.
Previously, I have argued that sovereign credit systems are structurally biased toward expansion: crises justify new interventions, those interventions are never fully reversed, and each cycle leaves behind a higher institutional baseline than before. The Cantillon effect ensures that the gains from monetary expansion distribute unevenly, flowing first to those nearest the financial system.
Absolute poverty is an old and universal human problem. Over the past few centuries, the spread of property rights, commerce, capital accumulation, and mass production has produced a dramatic decline in poverty and a steady rise in living standards across much of the world.
