The standard for money

The measure as written

RESPONSIBILITIES FOR THE WEALTH leaves money to the last of the pieces of wealth, "as it needs some detail", and then sets its standard:

Any substance whose net worth remains largely constant (small fluctuations can occur) with little to virtually no degradation level is an ideal/standard for money. Other essential components include mobility (ease of transfer from possession to possession), universality (accepted by most), high demand (artificially caused increment in demand is not recommended) etc.

The same paragraph gives the measure:

(In practice, a candidate for money is tested against all the standards above, i.e. whether its worth has remained largely constant over a long period, whether it degrades, how easily it moves from possession to possession, how widely it is accepted, and whether its demand is natural; above all, its value must be natural rather than asserted, i.e. if the entity that issues it were to vanish, the thing would still retain its value. Once such a thing is chosen, it can be circulated by easier means, e.g. bank notes issued against it, but that is purely for handling purposes, while the real thing behind them remains the same.)

The next paragraph tells why such a thing holds net work in a compressed form:

High demand and resilience (to fluctuation as well as considerable degradation) cause a relatively high struggle to achieve it, and in turn virtually increase the net work done, which results in a highly compressed form (by worth-to-size ratio, i.e. greater worth with relatively low size) (this also increases mobility) of net work.

and the passage ends with what follows when the standard is not met:

Note: Any substance that is not fulfilling the above standard will eventually cause a financial crisis/societal monetary inequality and cannot bear even the slightest financial stress before collapsing entirely.

This sub-section tests the money in use today, and the things most often proposed in its place, against these standards.

What it measures, in plain words

Money is a piece of wealth like the others, "a compressed form of the net work done by other individuals", and "one of the most highly compressed and mobile forms". What a unit of money holds is a claim on the work of others. The measure asks whether a thing can hold that claim steady: whether the work one unit stands for stays the same over the years, and whether the thing meets the other standards given. Above all, its value must be "natural rather than asserted": it must keep its value even "if the entity that issues it were to vanish".

What is measured. Three candidates: each society's own paper money, gold and silver. Bank notes "issued against" a chosen thing are "purely for handling purposes"; the paper money in use today cannot be exchanged for a fixed amount of anything, so it is tested as money in its own right, like gold and silver.

Measured in work, not in money. Money cannot be measured against money: so every standard is read in human work done or in physical facts, never in a currency. Prices are left out as well, as they are written in money and are raised artificially, among other things by technology.

· Worth largely constant: the work done for each unit of it in existence. A money keeps its worth when its units grow only as fast as the human work done. For each society's own money: the money in existence against the hours worked in that society, year by year. For gold and silver, which are held across the world: the metal mined in the world against the world's people of working age, with the world's hours of work as a check.

· Degradation: whether the thing wears out, or is used up in use.

· Worth to size: the work of a year that one gram, or one note, stands for; the "greater worth with relatively low size" of a highly compressed form.

· Universality: how widely it is accepted as money: by law inside one society, or in the reserves of the world's central banks.

· Natural demand: how much of the demand for it comes from using it rather than from holding it. Demand set by law is not natural: "artificially caused increment in demand is not recommended".

· The vanishing issuer: whether its value would outlive the one who issues it.

In detail: what it is issued against. Notes are only a means of handling a chosen thing, "issued against it", while "the real thing behind them remains the same". So, in detail, the measure shows what stands behind each money. Where a money is not issued against gold or silver, what it is issued against has to be checked. For each society's own money, its own money accounts show what stands behind it, read as shares: gold, the money and debts of other societies, loans to its own government, and loans to people and firms. A loan is work not yet done: a promise to give work against work received. It can add to the swings of a money's worth, but it is not by itself a reason to reject a money; the six standards decide. There is room for such a transfer on a promise, but it must not grow beyond reality: work cannot be bought for a promise that cannot be kept, as when circumstances are so unsettled that the promised work is naturally not possible, or when the time is so long that it wears away the work paid back. So the detail checks two things: whether the promises behind a money grow faster than the work done that has to keep them, and after how many years the units paid back stand for only half of the work lent.

How to read the result. Say a money kept 50% of its worth over 20 years: its units grew twice as fast as the work done, so each unit now stands for half the work it stood for at the start. Four points keep the reading true to what was written:

· A money whose units grow with the work done keeps its worth, whatever its price in other things does; price swings are left out, as prices are written in money.

· A thing passes a standard only by a measured fact, not by its name: gold and silver are tested in the same way as paper money.

· The worth to size of a note is set by the number printed on it, not by any work in it; that is a value "asserted", not "natural".

· The result is for the money in use today. In this standard, once a fit thing is chosen, it "can be circulated by easier means, e.g. bank notes issued against it", while "the real thing behind them remains the same".

How we measured it

The measures. Each standard is read in human work, in physical amounts, or as a share inside one society; no figure is carried from one money to another.

· Worth largely constant. For each society's own money: its money in existence each year (broad money: the notes, coins and deposits that can be spent; World Bank, World Development Indicators) against the hours worked in that society in the same year: the people in work, times the hours a week they actually worked, times 52 (International Labour Organization, national labour-force surveys; for China, the National Bureau of Statistics). For the United States, also over the long run, from 1964: the hours worked by its production and non-supervisory workers (Bureau of Labor Statistics). For gold and silver: the metal mined in the world each year since 1900, added up (United States Geological Survey), against the world's people aged 15 to 64 (World Bank), from 1960; the metal above ground before 1900 is not counted. The worth kept is the work done for each unit at the end, set against the same at the start.

· Degradation. Whether gold oxidizes (United States Geological Survey); how much of the gold and silver used comes back from scrap, and how the world's use of silver compares with the world's mining of it (United States Geological Survey); how long a note lasts in use (Federal Reserve, for the notes of the United States).

· Worth to size. The hours of a year's work that one gram stands for: the world's hours of work in a year (International Labour Organization) against the gold or silver mined since 1900. For each society's own money: the hours worked there in a year against its money in existence, times its note of the largest value.

· Universality. The countries whose official reserves include gold: the reserves with gold, less the reserves without it (World Bank), in the latest year each country reports; 173 countries report both.

· Natural demand. The world's use of gold by kind, leaving out exchange-traded funds (United States Geological Survey, from the World Gold Council), and the uses of silver in the United States (United States Geological Survey): the share used against the share held.

· The vanishing issuer. Gold and silver have no issuer. For each society's own money: what became of it when its issuer or its money changed, from its central bank's own record (Bank of Russia; Banco Central do Brasil).

· In detail, what it is issued against. Each society's own money accounts, the survey of its central bank and banks (World Bank, World Development Indicators, from the International Monetary Fund): what it holds against other societies (net foreign assets), and of that the monetary gold in its reserves; its net lending to its own government; and the rest of its lending at home, to people and firms. Each is read as a share of all that stands behind its money, in the latest year, 2020 to 2025. The gold, recorded in dollars, is brought into the society's own money only to give its share. The promises behind a money: its lending at home (net domestic credit, from the same accounts) against the hours worked in that society, in the same measured years as its worth. The time of a loan: from each money's loss of worth in a year, as measured above, the years after which the units paid back stand for half of the work lent; a loan is counted as paid back in the units lent. Gold and silver are read in the same way.

Measured years only. Each year is read from its own figures; no year is carried to another. The hours worked in each society are measured in fewer years than its money: in the United States from 2010 (and from 1964 for its production and non-supervisory workers), in Brazil from 2012, in Egypt from 2010, in Russia from 2017 to 2020, in India from 2018 to 2021 and in China from 2018 to 2022; Nigeria has no year with both.

Checks. For gold and silver, the world's hours of work (a model of the International Labour Organization, from 2005) give the same reading as the world's people of working age: gold kept 85% of its worth from 2005 to 2022, and silver 81% from 2005 to 2021.

What the seven societies show

What stands behind the money is read in the latest year: 2025 for the United States, Brazil and Egypt, 2024 for China, 2023 for Nigeria, 2021 for India and 2020 for Russia. A share below zero means the government holds more in deposits than it borrows.

The money of every one of the six societies measured loses its worth. Its units grow faster than the work done: in each society and every measured year but one, the money in existence grew faster than the hours worked. Over the long run, the money of the United States grew 67 times from 1964 to 2025, while the hours worked by its production and non-supervisory workers grew 2.4 times; each unit now stands for 3.5% of the work it stood for in 1964. In Egypt the money grew twelve times in fourteen years, and each unit kept 11% of its worth.

None of the seven issues its money against gold. Gold stands behind less than a tenth of each society's money: from under half of one percent in China to 8.2% in Russia. The rest is loans and the money of other societies. Loans to people and firms are the largest part in six of the seven, from about half to three-quarters. Loans to its own government are about half of what stands behind the money of the United States, up from 21% to 37% between 1990 and 2010, and nearly half in Egypt. A loan is a promise to give work against work received. New loans add to the money in existence; in every one of the six measured, the money grew faster than the work done (above).

The promises grew faster than the work done that has to keep them, in every one of the six societies measured. For each hour worked, lending at home grew 13.9 times in Egypt from 2010 to 2024 (the lending 18.5 times, the hours worked 1.3 times), 3.2 times in Brazil from 2012 to 2025, 1.9 times in the United States from 2010 to 2025, 1.5 times in China from 2018 to 2022, 1.4 times in Russia from 2017 to 2020 and 1.2 times in India from 2018 to 2021. And the time wears away the work paid back: at each money's measured loss of worth, the units paid back stand for half of the work lent after about 4 years in Egypt, 6 in Russia, 7 in Brazil and in China, 10 in India and 15 in the United States. Measured in the same way, it takes about 195 years in gold and about 276 in silver.

In two of the seven, the money did not outlive the stress. The State Bank of the USSR, the issuer of the money long used in Russia, was liquidated in 1992, and in 1998 the rouble was revalued at a thousand to one. Brazil changed its money five times between 1986 and 1994; one unit of the money of 1994 stood for 2,750 billion units of the money in use at the start of 1986.

Gold and silver, measured across the world, behave otherwise. The gold mined since 1900 grew 3.7 times from 1960 to 2022, close to the world's people of working age, who grew 3.0 times; each gram kept 80% of the work it stood for over 62 years, a loss of 0.4% a year, in small steps. Silver kept 86% by the same measure, but much of it does not last: in 2025 the world used 35,700 tonnes of silver against 26,000 tonnes mined, and in the United States only about a ninth of the silver used came back from scrap. Gold does not oxidize under ordinary conditions, and in the United States about three-fifths of the gold used came back from scrap. One gram of gold stands for 42 hours of a year's work across the world, eight times as much as one gram of silver; it is the most compressed of the three. Of the 173 countries that report their reserves, 109 hold gold in them, and all seven do. Of the world's gold used in a year, outside exchange-traded funds, 48% goes into use (jewellery 40%, electrical and electronic parts 7%, other 1%) and 52% into holding (bars 24%, central banks 21%, coins 7%). Of the silver used in the United States, about two-thirds goes into use. Neither gold nor silver has an issuer.

In detail, gold stands behind less than a tenth of each society's own money; the rest is loans, promises to give work against work received, and the money and debts of other societies. Gold and silver are themselves the real thing that notes could be issued against. In the United States, loans to its own government rose from 21% of what stands behind its money in 1990 to 37% in 2010 and 50% in 2025.

By this standard, gold comes closest to an ideal money: of the six standards it fails only natural demand in part, as half of it is held rather than used. The money in use today fails worth, degradation, natural demand and the vanishing issuer. In detail, it is issued mostly against loans, promises of work against work, which can add to the swings of its worth; these promises grew faster than the work done that has to keep them, and a loan in it pays back only half of the work lent after 4 to 15 years.