The March cover story of Wired Magazine highlighted the changing nature of money, and how certain companies are adapting. The article followed the progress of PayPal, and the development of their latest project, X.com. PayPal released their API (application programming interface), for programmers to use PayPal in new, creative ways.
It’s going to be awesome, and the implications are huge.
Wired writes:
Peter Thiel, PayPal’s cofounder and a die-hard libertarian, launched the company as a means of creating a stateless monetary system, making it possible for anyone to switch, instantly and easily, between global currencies. “PayPal will give citizens worldwide more direct control over their currencies than they’ve ever had before,” he told new employees in 1999, according to the book The PayPal Wars. “It will be nearly impossible for corrupt governments to steal wealth from their people.”
The dollar is inflating, gold is on the rise, and soon investors will be looking for more secure places to park their money. Second Life, Facebook and World of Warcraft all have their own currencies (some pegged to the dollar, others aren’t), and every year they see more use. With the simplification of money transfers through companies like PayPal, I think we may one step closer to a dollar-less society. However, that doesn’t necessarily imply a one-world currency—it implies a wide variety of currencies that can be converted easily from one to the other. This will remove the stranglehold federal governments have on commerce (it’s currently illegal to make business transactions with any currency in this country other than Federal Reserve notes ), and make international trade flow more easily.
These new forms of transactions may in the future create a war between the established credit card companies and the myriad of start-ups (banks and card companies handle $3.2 trillion every year). The floodgates have already opened, and innovative entrepreneurs will learn to stay one step ahead of the old, lumbering financial institutions.
Looking (and speculating) even further, I’m completely for a digital currency revolution. Forget wallets, let’s pay with our bills with cell phones and ipods. After all, money is really just a placeholder for ACTUAL wealth. Who cares what form it’s in?! Let companies create their own currencies that are pegged to gold, platinum, or the price of wheat. I’m sick of credit card companies changing percentage rates, tacking on ridiculous fees, and being regulated by a congress that needs to be regulated itself.
From shells to coins to paper, money has certainly come a long way. We shouldn’t stop its advance.
However simplistic that example may have been, that’s what’s going on to our dollar right now.
With trillion-dollar bailouts and expensive wars going on, the dollar is being cheapened every day by the printing presses at the Federal Reserve.
How is it that we don’t feel it, you ask? Here’s the short answer: We’re in a depression. People have begun saving again and paying off bills, banks are loaning less and NOT circulating the dollars. So while many, many dollars are being pumped into the system, not a lot of them are being spent.
Just like a bunch of Mickey Mantle cards in storage, no one feels the effects of uncirculated dollars.
This is why an economic recovery is going to be the worst thing imaginable for dollar holders
As the markets thaw out, and consumers start spending again, people are going to realize that there’s a whole lot more paper dollars floating around than before. About a week ago, as rumors started floating around that we were on our way out of this slump, the dollar fell. Coincidence? No way.
This is how Obama is going to cut the federal deficit in half
Loans don’t adjust for inflation (yet). Pres. Obama is going to pay off debts with cheap dollars. The dollar is already at risk of losing its AAA rating, and China, our biggest debt holder, is taking notice.
The important thing is to have something that has value in and of itself. The dollar is worth something because the US Government says it does. That’s no good — this is where gold comes in. It’s real, it doesn’t inflate, it can be stored, sold, bought, melted down and can be transported easily.
Well, the transportability issue isn’t really all that accurate, since we don’t even deal with cash much anymore– we’re used to the digital buying and selling of dollar-backed credits. Fortunately, I found an awesome site called GoldMoney.com. they have their own currency, called GoldGrams, which are 100 percent backed by gold. They function like a bank, allowing you to make payments on things online and transfer from GoldGrams to dollars quickly (for a small fee). The best thing is that the money is independent of the dollar, so the more the dollar tanks, the more buying power you have. Just these last few weeks, one GoldGram went up in value by 3 dollars. The more dollars begin to circulate, the lower they’ll go in value, while gold goes up. Gold is about to hit 1,000 dollars an ounce. The time to get into gold is now.
If you like sensible economics, and good monetary advice, check out Richard Maybury’s free bulletins. Honestly, his books changed how I see the world.