Ditties and Commodities
To tackle this problem, I believe that they should 1) work from the top down, by which I mean agree on the size of the cuts to the deficit as a percentage of GDP that need to be made to stabilize the debt and 2) agree on a fallback plan that achieves the necessary budget cuts that would automatically happen if they can’t reach agreement on the particulars. — Ray Dalio, “How Countries Go Broke: The Big Cycle” (pg 336)
Capitalism and the scarcity mindset makes sense on a planet that has limited resources. Gold and silver are not produced at will, neither do minerals, gems, and crops grow at the blink of an eye. Our world follows natural laws that at times arbitrarily corrects or rewards its inhabitants despite their care for the planet or others. (Ecc 9:2–4; Matt 5:44–45) If supernatural laws override or suspend natural laws, boy do we need them right now! In my last financial blog, there was a brief overview about counterfeit and complementary currencies. Building upon that blog, we will explore a little about commodity monies, in hopes that could spark discussion on a more comprehensive fallback plan to avoid cycles of financial recessions, depressions, and the perpetrating disinvestment in marginalized communities; urban, suburban, and rural.
What are Commodities?
In economics, a commodity is a fundamental economic good or product that is fungible, meaning it can be readily interchanged with other goods of the same type regardless of who produced it. For example, a bushel of corn from one farm is essentially the same as a bushel of corn from another. This uniformity and interchangeability are what make commodities so important in global trade and finance, as they can be easily bought, sold, and traded on exchanges.
The 6 Cents
The world of commodities is often broken down into three widely recognized types: agriculture, energy, and metal. However, as the global economy has evolved, the definition of a commodity has expanded. Based on this broader understanding, three additional commodities can be considered, which are often traded or used as essential economic inputs:
- Agriculture: This category includes staple crops like corn, soybeans, wheat, and coffee, as well as livestock and other food products.
- Energy: Energy commodities include crude oil, natural gas, gasoline, and electricity.
- Metal: This category encompasses precious metals like gold and silver, as well as industrial metals such as copper, aluminum, and iron ore.
- Minerals: Beyond metals, this group includes industrial minerals like coal, phosphates, precious gems, and potash, which are crucial for manufacturing and agriculture.
- Chemicals: Chemical products, such as plastics, cement, silicon, fertilizers, and industrial acids, are essential to modern manufacturing and are traded globally.
- Technology: While not a traditional commodity, certain technological goods and services are becoming commoditized. For example, a standard microchip or cloud computing service from one provider is largely interchangeable with that from another, making them a type of modern-day commodity. Additionally, cryptocurrencies and stablecoins can be considered commodities under the Web 3.0 financial system.
The G Force is Strong
The strength of a currency is often a reflection of the economic stability, political security, and commodity output of the country that issues it. While many currencies are pegged to the U.S. dollar, others derive their strength from their independent economies. Two excellent examples are the Kuwaiti Dinar (KWD) and the British Pound (GBP). The Kuwaiti Dinar is the world’s strongest currency due to Kuwait’s significant oil reserves and stable, tax-free economy. It is not pegged to the US Dollar. The British Pound, one of the oldest and most trusted currencies, maintains its value because of the UK’s robust economy, which is a global financial hub and has strong commodity trading, particularly in oil from the North Sea. These currencies demonstrate that economic self-reliance, backed by strong trade and commodity output, can lead to a stable and powerful currency.
A U.S. Commodity-Backed Credit System
In the United States, a new approach to economic stability could involve the use of complementary currencies backed by the country’s vast commodity production. With the U.S. being a top producer of a wide range of goods — from agriculture in the Midwest to technology in the West — interstate and intercity commodity trading could be used to generate credit and strengthen the U.S. dollar. This system could create localized commodity-backed credit, which would provide a buffer against inflation, recessions, and global depressions.
While such a system has not been implemented in the U.S. for several reasons, the idea is not without merit. It is a novel concept that would require significant structural changes. Furthermore, challenges such as natural disasters that disrupt commodity production and deep-seated social injustices — including racism, sexism, and xenophobia — have long prevented the kind of unified effort needed to establish such a system.
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However, if a nation could overcome these social and logistical challenges and unite to develop a robust, commodity-backed credit system, it could serve as a powerful fallback plan. This system could provide a stable foundation for the economy, reducing the need for deficit spending, counteracting inflation, and providing a safeguard against global economic shocks. The collective wealth of a nation, if properly leveraged through its own resources, could be the key to long-term financial security and prosperity.
Additional Considerations
For End Time Enthusiasts
- Read Ecc 3; Matt 24; Luke 21; and Ephesians 1. How do you reconcile the last days with the end times, and the fullness of times?
- Read Revelation 22. How to you reconcile Jesus not returning after 2 millennia? Should these words be taken literally, a vivid allegory, or is this a metaphor for changing one’s mindset?
For Institutional and Casual Investors
- In what ways can Wall Street be expanded to include small businesses and institutions across the U.S?
- In what ways can investors invest in Black Wall St and Brown Wall St be rebuilt without threat of its destruction?
For Believers of the Supernatural
- Is injustice, ignorance, and death the mystical nature of reality, or is there yet still a global awakening among soul seekers?
- Is wealth mostly gained through works, grace, or works of faith?
For those Committed to Social Justice
- How can you restore inherent and priceless value to people without enslaving others or merchandizing them under a capitalist society?
- How do you reconcile the problems of crime in underinvested communities? Are more police and military needed to reduce crime, or more legitimate funding is needed to build communities and discourage crime (e.g gang wars, human trafficking, and domestic violence)?
For Artists
- Do you view your art as a commodity? If so, how can you use it so that it enhances the economy in your local community?
- Do you understand how business works related to art? What financial models could you adopt to help yourself and others evolve from the ‘starving artist’?
Additional Resources
Top 10 Currencies in the World
