Currency and Value

last updated: 17 March 2019 (approximate reading time: 6 minutes; 1086 words)

When I started writing the Leathan Wilkey series, beyond telling the stories, I was interested to look at two aspects of modern life.

First, I wanted to think about how an individual survives without many comparatively modern items that we now take for granted. And as a secondary issue, I wanted to look at value and how we ascribe value in our day-to-day lives.

Leathan’s Dilemma

Leathan Wilkey left London in a hurry when he upset a people smuggling gang.

Rather than go somewhere secluded and be an obvious outsider, Leathan headed for a dense, busy city—Paris—where he could hide out as a needle in a huge stack of needles.

To maintain his anonymity, Leathan needs to live without anything that would make him traceable. In other words, he needs to dispense with many of those day to day details that we take for granted: credit cards and a bank account, a known phone number, and a permanent place to live.

Banking

Banks and the banking system are fundamental to our everyday existence. We might find some of the behaviors of these institutions highly distasteful—and we remember the financial crisis—but still we need these institutions.

Every time we spend money—whether that be buying a cup of coffee or buying a house—the money involved in the transaction is moved through the banking system. The banking system’s infrastructure and the trust which surrounds that system is what allows us to tap our phone on a terminal and have money shifted instantaneously from our bank account to the vendor’s account.

While there is a benefit to the banking system, from Leathan’s perspective there is a downside—each transaction creates a digital footprint, a digital trail that trail can be followed. So to ensure he does not make himself traceable and therefore vulnerable, Leathan stays clear of direct involvement with the financial system.

Cash

The system I’ve talked about so far is purely electronic and bank based. There are, of course, other ways to make a payment, most obviously, cash.

Cash offers many advantages over digital transactions—it is simple, straightforward, understandable, and from Leathan’s perspective, cash payments are largely untraceable.

For small amounts, cash is ideal. But for larger amounts, cash brings many challenges for Leathan. The primary challenge is that cash has to be looked after. If it is lost or stolen, then whatever value that cash represented is gone. Most people who have to handle large amounts of cash (for instance businesses) address this challenge by putting their cash into a bank, thereby turning a tangible asset into a digital line in their bank account.

For Leathan, the option of putting cash into a bank account is impractical—it would make him as traceable as if he had simply used a credit card.

There are other options, beyond cash, which can provide untraceable payments, for instance, precious metals and gemstones (primarily gold and diamonds). However, as with cash, these assets require secure storage since their value derives from having possession of tangible assets.

Barter

Since Leathan can’t rely on the banking system and cash has impracticalities, he exists through a network where he trades favors. Instead of working for money, Leathan works in an arrangement that is often little more than primitive bartering.

While bartering feels like something from a bygone time, it is still actively used in many places and many situations. Most obviously, like Leathan, it is used to complete trades when people don’t have access to banks.

And of course, where there is a vibrant banking infrastructure, bartering is often used for criminal activities, for instance, to avoid tax or to circumvent sanctions.

Value

When you think about barter, then the question arises: what is something worth?

In the context of buying an asset with a recognized currency—for instance, buying a house—you can bring many factors to assessing the value of an asset, but the most simple answer is, an asset is worth whatever someone is willing to pay for it. So if someone is willing to pay $1 million for a house, then the house is worth a million bucks. However, if the only offer for the property is $500,000 then the house is not worth a million.

But there’s a secondary issue here: why is $1 worth one dollar? A dollar bill is just a piece of paper with some ink on it, so what makes it worth one dollar? What makes a house worth one million of those pieces of paper?

In simplicity, a dollar bill is worth $1 because we believe it is worth $1 and we accept it is worth $1. This acceptance works while the US government stands behind the dollar and while the dollar has utility.

And just to be clear, I’m using the dollar as an example—this principle applies equally for all other major currencies. The reverse is also true: if no one believes a currency has value or they believe that the government standing behind the currency cannot back the currency, then the currency is worthless. For examples, see Venezuela and Zimbabwe.

Leathan and Value

Leathan has another view of currency. He sees the value of the pound, the euro, and the dollar, but currency has less value to him because it is inextricably linked to the banking system and interacting with the banking system brings risk and complication into his life. You can offer him $1 million to do a job, but he won’t see the value of that currency—all he will see is difficulty.

An obvious way for people who want Leathan’s services would be to pay him an hourly rate or a daily rate, in the same way you might pay a building contractor or a lawyer. But to think in this way misses how Leathan looks at his tasks.

Leathan doesn’t see his work in terms of time to be spent, instead he thinks about the task to be achieved. He thinks about protecting someone, finding someone, or solving a mystery.

Leathan doesn’t care if the task takes an hour or a month—he cares about the outcome.

And when it comes to, say, protecting a child’s life, what value should be ascribed to that task? What is the correct amount of money that should be paid to keep a child alive? If not money, then what is an appropriate trade to keep a child alive?

I’m not sure there is an answer to these sorts of questions, but it’s certainly interesting to think about what someone will barter with Leathan by way of payment.

Filed under

Category: background
People: Leathan Wilkey  
Tags: barter   currency   digital footprint