The evolution of mediums of exchange

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  • Commodities: copper, gold, oil and silver are among mediums of exchange

    Commodities: copper, gold, oil and silver are among mediums of exchange


There are numerous definitions for medium of exchange. The best one is from www.dictionary.com: “Anything generally accepted as representing a standard of value and exchangeable for goods or services.”

I prefer this definition. A medium of exchange is a method of using something we have for something we want.

Generally, the medium of exchange refers to money, but the concept today encompasses so much more.

A medium of exchange has value in the eye of the beholder, if needed for ordinary necessities, to enhance ambition, achieve financial success, negotiate for a better life, a better country, a dominant position in world trade, or global power control.

The exchange mediums of today are astonishing, linked and complex. Some exchange mediums increase the accumulation of assets, while others focus on far more ambitious goals.

Physical mediums

• Cash, physical paper and coins.

• Commodities: gold, oil, gas, diamonds, copper, uranium, food production, narcotics and drugs (illegal).

• Barter: labour for products, possessions for money, people for possessions, commodities for power.

Digital mediums

• Cryptocurrencies: bitcoin, blockchain technologies, ethereum technology, etc.

• Investments: traditional stocks, bonds, and the like.

Control-driven mediums

• Nuclear capability.

• Electric power grids; satellites, drones, internet, and the like.

• Social media, but remember dependent upon power grids.

More esoteric mediums

Consumer wants; this, too, is an amazing medium of exchange. “Just because you build it, is no guarantee, they will come.” — Field of Dreams (1989)

Power and control is the most valuable medium of exchange. It is not “he who dies with the most toys, wins”, attributed to the late Malcolm Forbes, but he or the country who has the unending supply of the most valuable mediums.

The ever-shifting game of influence by nations is perpetual. Events of the recent year all swirling around the mediums of exchange encompass the lot above and more, because mediums are means to change the equation of power and control.

Consider the following information on medium ownership emanating during the last year.

Venezuela (oil) announces they will only accept euros in payment for oil, no more US dollars. https://goo.gl/FExHLK.

Saudi Arabia (oil) has been reducing the size of their US Treasury holdings for the past couple of years, according to US Treasury statistics.

In 2017, Saudi Arabia launched their own treasury debt offering in three oversubscribed tranches totalling more than $40 billion.

Further, Saudi Arabia (petrodollars) have stated their intentions to launch an initial public offering of stock in the Saudi Arabian Oil Company (Aramco). The actual launch date is not yet known. https://goo.gl/83gefc.

Russia (oil) and China (gold) Governments have entered into various agreements to trade between the two nations utilising gold and oil combination. China, the largest consumer of oil, will purchase crude from Russia, which has one of the world’s largest reserves, with payment in Chinese currency the yuan (also known as renminbi), which is backed by China’s gold reserves.

The yuan can be can be converted almost instantaneously into physical gold (petroyuan). You think every trader out there won’t be buying into that product?

In January 2018, China will formally and officially launch the petroyuan, a crude oil futures contract, into global markets, fully convertible into gold on the Shanghai and Hong Kong trading exchanges, thus, challenging the long-dominance of the US petrodollars.

See “It’s a huge story — China launching petroyuan in two months.” https://goo.gl/CkZoJe.

China, the largest holder of US Treasury debt, with an estimated $1.2 trillion, earlier this year also launched a yuan-denominated gold futures contract in several investment markets. http://ticdata.treasury.gov/Publish/mfh.txt

The world’s reserve currencies

The United States has been the dominant player in this arena for decades given that everything meaningful in large commodities required US dollar payments.

In November 2015, Chinese yuan officially became a world reserve currency. It represents 10.92 per cent of the IMF’s Special Drawing Rights currency basket.

This makes Chinese yuan the third reserve currency after the US dollar and euro along with the UK pound, the Dutch guilder, the Japanese yen, the Canadian dollar and the Swiss franc. https://en.wikipedia.org/wiki/Reserve_currency.

With the new petroyuan agreement between Russia and China, it appears that the largest nation in the world will increase competition for the first place in the legitimate world currency reserve. See China’s Rise, America’s Fall. October 24, 2017 by Golem XIV Author of the Debt Generation http://www.golemxiv.co.uk/2017/10/chinas-rise-americas-fall/.

Meanwhile, the World Bank has announced its intention to form a new world currency that will be without influence from all the big players, and the International Money Fund, independent of the World Bank, has plans of its own for a new currency launch of its own.

Interplay conflict abounds. It appears that he (the country) that has the best mediums of exchange wins but what are they, or will they be?

Cash greenbacks, oil, gold, other natural commodities, nuclear capabilities, country commodity dominance?

What has all of this to do with Bermuda, a tiny dot in the middle of the Atlantic? We don’t know yet, but can surmise at this juncture. We will explore these questions and influences in this series in future articles.

Three things we do know.

1. All of the mediums and actions above are linked.

2. When countries renegotiate, or upend, trade patterns, implement (or reverse) sanctions and tariffs, reorganise Treasury investments, and revise various other diplomatic or treaty accords, the major mediums of exchange and currency valuation imbalances occur while businesses, individual consumers and governments are impacted.

3. The Bermuda dollar is pegged to the US dollar.

Further food for thought.

China’s Rise, Americas Fall http://www.zerohedge.com/news/2017-10-25/chinas-rise-americas-fall

Stay tuned for part two. What is cash? Who has the gold?

Martha Harris Myron, CPA, JSM: Masters of Law — International Tax and Financial Services, Pondstraddler Life. Contact: martha.myron@gmail.com

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Published Oct 28, 2017 at 8:00 am (Updated Oct 27, 2017 at 11:50 pm)

The evolution of mediums of exchange

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