And now, a money order

I have probably learned more about how our conventional financial system actually works since getting involved in alternative currencies a few years ago than I ever learned back when I took it for granted as the only option for money.

The latest bit of recently acquired knowledge concerns the various ways in which fiat money is moved around. History of money presentations will typically cover the evolution of money from direct barter to rare item of value (silver, copper, gold), to paper notes representing rare item of value, to notes standing on their own, and finally to digital entries where no paper is needed.

Back in the old days when people did business through direct bartering, moving “money” around was as difficult as moving actual product around. If I traded my horse for your cow, then your cow had to be moved to my property and my horse had to be moved to yours. If we were neighbors that wasn’t too bad, but if we lived far away from each other then the transaction would turn into a major production.

The use of silver, gold and copper coins allowed me to show up at the market with my flock of broiler chickens, and you could buy as many as you wanted without inconveniencing me with your pigs, goats or fruit cake. You would instead pay me in metal, and then at my convenience I could use that metal to go buy whatever I needed.

As the use of metal opened up possibilities for transacting business farther away from home, transporting the coins from point A to point B posed their own problems. While it is easier to move several pounds of gold a few miles away than it would be to cover that same distance with livestock, moving several hundred pounds of the same made you vulnerable to attacks from bandits.

That’s when warehouses opened up. If I earned a pile of silver coins from selling off my horses, I could take them to the local warehouse. The warehouse owner would issue me a note for the value of my silver minus his commission. Then I could tuck that note away in my satchel and redeem it at the warehouse a hundred miles down the road. Then I could spend my silver in that community.

We all know what happened next, which is that the warehouse owners started issuing more notes than the number of precious metal coins they had on hand, and this gave rise to fractional reserve banking, and finally fiat currency. Fiat currency is basically paper notes with no metal backing, and they work for buying things because people have faith in the currency and the system, hence the name “fiat” which is Latin for “faith.”

What’s interesting to me now about the story of money is that the next step in its evolution was fueled by the desire or need to make moving that money easier. It’s too difficult to move livestock more than a mile or so down the road, so let’s first trade the lifestock for silver or gold, which is easy to move. It’s too risky to move a lot of gold a hundred miles away so let’s first trade the gold for a paper note which can be redeemed for different gold at the destination. More recently people started writing checks rather than carrying around paper cash, and now we don’t even want to bother with checks any more so we move our money around digitally with credit cards and online banking and the occasional wire transfer.

Another way to move fiat money from point A to point B is a money order. Until today I had never issued or received a money order. I always thought the fees were too steep. Then I paid forty dollars for a wire transfer and suddenly twenty dollars to send a money order sounds cheap.

This morning I logged into my bank account and was disappointed once again by my Camp BX ACH transfer not clearing. So I logged into my Camp BX account and studied the other money transfer options. There really was only one remaining, and it was a money order sent through the US Postal service. For twenty dollars and a lot of patience, I could have the funds sent my way. When the only way to access your money is to pay twenty dollars and wait, you pay twenty dollars and wait. I put in the request this morning and we’ll see. Camp BX processes money order requests twice a week.

I had to look up how to receive a money order because I honestly didn’t know. I learned that money orders sent through the post office can be cashed at any post office, though if it’s a large amount, you should take it to a larger branch as a small town post office might not have the cash on hand to cover it. You can also deposit it into a bank where it functions like a cashier’s check. The bank views it as a cash deposit so the money is available to you immediately.

The money order itself will be created in Atlanta where Camp BX is located and mailed to me where I live via certified or registered mail (I forget which). So there is an actual piece of paper that has to make it from point A to point B. I will then have to drive over to my bank to deposit it. If I want to turn it into cash I will need to pay a fee to the post office or other place which cashes money orders. I’m not sure if I will need to pay a fee to my bank just to deposit it. When it comes to taking cash, money orders are another way to transfer fiat money where they hit you coming and going with fees.

Wire transfers and ACH transfers are a much more convenient way to go than money orders. But when those options close, you take a step or two back technologically.

One thing I am learning through my various attempts to access my funds tied up in Camp BX is just how difficult it is to move fiat money around. There is no good reason for it to be this difficult. After all, fiat money is for the most part digital. It is no longer backed by precious metals and in a lot of cases it is not even backed by paper notes. Banks are allowed to lend out as much as nine or ten times the amount of money they have in their possession as cash. Fiat money has essentially become digital, which means it should be very easy and inexpensive to move.

But it’s not easy to move if you are not a bank and I now believe that is the driving force behind Bitcoin’s success. People in general felt the need to be able to transfer money quickly and inexpensively. Whoever developed Bitcoin was aware of this, and the time was ripe. The rest, as they say, is history.

The interesting thing about this from a money as a way to control the populace perspective is that the advent of Bitcoin has loosened the control over the money and by extension the people relying on that money that elite money masters have striven for and enjoyed for a long time. The various fiat money powers that be have expressed consternation over Bitcoin because it essentially allows ordinary people to do what up until now only banks could do: create money and move it to wherever they wanted. With those abilities comes a certain amount of empowerment, which was not exactly what the elites had in mind.

If the banks hadn’t tried to squeeze people on the transfer of money, it’s very possible that Bitcoin might have never developed in the first place or even if it had been developed, would have never made it past the handful of computer geeks who thought it was cool. But individuals and merchants are adopting Bitcoin in droves for the simple reason that it’s cheaper and easier to move around. Greed got in the way of the quest for power and may have quite possibly derailed it. Oh happy fault!

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