7/31/07
I just finished reading one of the smartest stupid books I've ever encountered. Either that or one of the stupidest smart ones — I'm not sure.

It's amazing to discover signs of aging in a work less than ten years old, but that's always been a peril of spec-fic, and despite its undeniable erudition, Neal Stephenson's Cryptonomicon is already long in the tooth and gray at the temples with its breathless depictions of dotcom entrepreneurs cranking up a third world data-haven with purloined WWII gold — oh, and linux! And cryptography! Many of the issues it touches or stomps on, from politically-correct college professors to Greatest Generation military exploits, have been kinda downsized by this the Gawdawful Twentyfirst Century. And its take on the war and/or collaboration between the sexes would be geekariffic heterophobic snarge in any age, Golden, Gilted or just Electroplate.

Still, a ripping good read is never a total waste, anymore than a decent three-day drunk (or so I've been told...). Any book with giant hallucinated lizards, headhunters, vast international conspiracies, sunken submarines, fearless badass Marines and the afforementioned Tons o' Gold can't help but provide some kind of popcorn entertainment, or at least distraction. Also it was only a buck in a yard sale.

But nature seldom does a very good imitation of rip-roaring adventure stories. In the real world, heros die, or at least get indicted. Or both. And theories that have little difference from practice in theory are considerably more inconsistent — in practice. Stephenson is at pains to provide a massive argument in favor of what, from what I can tell, at least half the economics world considers a thoroughly beaten dead white elephant: the gold standard.

While I've had my share of laughs in the pursuit of the Dismal Science, I'm not really soldered into the main wack circuitry of econ. The whole question of currency value base is still a puzzler to me. I smell tautology in the arguments for gold-based money. "A currency must be based on a valuable substance. Gold is the most valuable substance. Therefore currency should be based on gold." With a few gigabytes of complication and tailchasing logic thrown in, but without a Space Child With Brow Serene to innocently ask Howcuzdat?

Admittedly, it would be convenient to have some center of value to assess currencies with, but not only is gold not central to value (can't eat it, can't wear it, can't smoke it — what's this stuff good for again?), but it's a commodity among many with all the lunar inconstance of one, supply and demand alike. Building an economy on gold is the equivalent of building a summer house on a tide flat. Oh wait, people do that too. But they learn, eventually — little trivial events like Katrina and the Panic of 1869 have the knack of informing the ill-advised of their illness in somewhat stark and unambiguous ways.

The problem here may well be that any discussion of currency is moot without a thorough investigation of what it represents, a subject nebulously scary enough to send nervous academics back to beddie clutching their golden teddy bears. In the end, money is just the metal or paper enbodiment of a mutual interest among people, be it bridaled greed, wide-eyed cooperation or genteel competition. As game theory tells us, there can be no dispute among participants without some universal ground rules, some agreement for disagreement. More than value, money represents trust. Faith. Belief in the ability of one's fellow to come through in the clinch.

There's another name for this belief: credit. Not quite ordinary Evil Usury Gnomes Of Zurich type credit, but the monetary form of the purely social credence that glues societies together. We're a gregarious species and to survive we need to be able to live together without slitting each other's jugulars and drinking the blood at random intervals. We've developed culture and ethos and ethics and laws to enable and regulate that process. Similarly, credit gives individuals and banks and entire societies the ability to function without constantly descending into gyppo game wars. Without a well-recognized credit system, currency is just a meaningless abstraction.

This is all of more than theoretical interest to me because in my current state of involutary simplicity I have to substitute credit for savings. Like a startup business, I'm managing debt rather than assets. Of course, part of that credit stems from the equity in my house, but as I tell my guests, mi casa es the bank's casa, but they're cordially invited to hang out here too, which judging from the size of my mortgage payment is more than just a funny. The Altoids can full of unused plastic in my desk drawer is more a monument to my willingness to demonstrate consistency in the monthly gauntlet of bill-paying than any hair of the dog I might have flea-deeded to me.

In truth, I think the world is moving away from the whole notion of value-based specie, be it gold or oil or rice or land or carbon nanotube-based. In the convenience of the debit card, we're embracing a universal electronic money based entirely on local risk assessment by creditors like banks and such instead of symbolic piles of greasy yellow metal or whatever. While there's all kinds of ways a centralized currency can be gamed, diversified credit seems a bit more sure-footed, and it isn't a hapless victim of the next Sutter's Creek that happens down the pike.

So my personal financial condition feels like an analogy of the new economics. That I am a wholly owned subsidiary of the mortgage company and such is tolerable as long as they don't try to run my life. While they remain content to sip daintily from my income stream, leaving me to tend my invalid wifie and contemplate chickadees on the backyard feeder in peace, far be it from me to start burying Krugerands in the back yard.