Each value will get a value and each act will get its cost. A great future awaits us.

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Valuation is performed by us constantly. We never stop choosing and therefore valuating. The matter of the valuating process – is a consensus in determination of proportions of exchange of every product, time or service. At the dawn of society it was a question of the following nature: what part of animal skin can be changed for a piece of meat of certain dimensions at a specific place in the current moment.

I.e. at first there was a barter which directly, without intermediaries, clear reflected the very objects of exchange but receiving of “end” desirable objects in the process of exchange chain by any participants of any deal and the process of receiving the desirable thing itself as we know in such case is not pretty convenient and took too much time or other transaction costs.

This is the first benchmark forced a human for the first time to think over the problem of liquidity in trade and necessity to accept the common, universal medium of exchange.

The problem of the lack of liquidity and universality in the process of such trade of different goods and services eventually has been solved with acceptance of an asset or a symbol as a universal medium of exchange having certain degree of deficit, universal confidence and unconditional usefulness but not pegged to any of exchanging goods. Depending on special aspects and the nature of economic management such symbols or assets were animal skins, bones, other goods and even people. Exactly such logic pertaining to choice of universal and liquid medium of exchange as the main problem – is actual up to now and underlies the valuating process and choice of the most convenient form of a medium of exchange or money. The problem related this logic had been solved at the next stages by introducing of a divisible and liquid monetary unit as known coined golds in different denomination (weight or value) or dollars and cents. Let us mark once again those ordinary mandatory attributes of money: Deficit, liquidity, unique qualities, universal confidence.

It happened that for objective reasons (it could not be in a different way on the Earth in the view of absence of transport and information infrastructure) the evolution of human society were processing in the way of formation of fragmented, separated governmental or other socioeconomic zones (future counties) instead of a united socioeconomic space with a common currency and common rules to regulate economic and political relationships. Why I emphasize that will be clear a bit later when the modern and irreversible process of globalization becomes the subject of our review as one of the reasons for what is happening to modern money.

Global acceptance of gold as unconditional universal medium of exchange became the second benchmark of money development. Since eventually the specific carrier of value accepted in its time by countries became archaic gold recognized by all as money – the rates of exchange of different countries currencies were, more or less, stable (gold had the indisputable authority, and such as was no different in different jurisdictions). A medium of exchange at the territory of every zone (country) represented by gold used to receive its own identity referred to the belonging of this currency to the specific economic zone (country, state). Thus, mediums of (currency) exchange became the symbols of not exchanging goods but of a specific piece of metal having known valuable qualities and the specific country at the territory of which that stamped with a portrait currency was legitimate in the process of exchange.

This generally accepted and indisputable recently carrier of value served as a convenient tool of solution of liquidity problem upon the exchange of different kinds of goods created by and used by a human. Gold remained the principal kind of money and performed the assigned functions as long as it could sufficiently perform the exchange functions pertaining to university and liquidity and had been accepted by every owner of goods as the mean of payments. Things were going this way up to the beginning of sharp increase of production due to the technological breakthrough happened at the turn from the mid of XVIII century till the arisen need to accelerate the speed of money velocity and convenience of settlements. When the physical gold could not in duly manner secure fast exchange of rising volumes of carried goods from one owner to another one in the trade process.

The world faced the necessity of the next stage of money evolution. Following the complication of trade, accelerating of production cycle the critical need to increase liquidity and facilitate property turnover was to influence the process of exchange and the form of money. The important step and the third benchmark indicating of emerged subconscious understanding (though not formulated yet) of opportunity of currency circulation modernization in that historical moment when it became actual – was performed with the advent of banknotes.

Evolution towards liquidity increase, transportability (of money) and settlements convenience has led to the logical substitution of genuine gold for receipts guaranteeing possession of some quantity of gold – for paper banknotes (or receipts) where an issuing bank guarantees to give the holder of receipts gold from the bank safe equally to the quantity mentioned in the banknote. So a universal medium of exchange until a certain moment had been physical gold with different identity of different socioeconomic formations and later due to expansion and activization of trade it was substituted for its derivative representative – of greater liquidity – banknotes or paper currency. 

(In support of our statements and conclusions pertaining to the fact that the main catalyst of money evolution is the desire of humanity to reach the best money liquidity in order to optimize the trade turnover, we can produce testimony as the further transformation of cash settlements into cashless ones like accounts books and records and then substitution of them for electronic accounts which we will discuss below).

The next evolution stage in this sense appeared when a human took the step to understanding of accepting a greater liquid form of medium of exchange than just physical gold following the development of trade and acceleration of trade turnover. Along with that humankind was not ready to abandon so authoritative and ancient underlying asset since could not allow an idea of substitution of gold by all participants for a form of money which would have the same unique properties without risks of depreciation and counterfeiting. But the paper currency is an expected part of the process whatever conspiracists say about paper currency for example, like an intentionally invented tool to control the society by groups like masons and so on. They have no a clue either what money is as an economic category or full complicity and intricateness of tasks of new times faced financial system which was to secure increasing volume of transactions per unit time under conditions of technological breakthrough in economics and increasing in trade turnover had been completely formed by the mid of XIX century.

Simultaneously with that novation, a range of associated problems arose which complicated the economic life of people.

The first of the problems – the possibility of unsound issue of banknotes in closed economic system by financial authorities which leads to inflationary effect and multiplying of money supply due to cashflow. The second associated important problem of this evolution stage is the emergence of volatility of the currencies rates of different countries relative to each other not duly reflecting the actual demand for total manufactured products within those states.

Is gold (or its derivatives) so irreplaceable and can it theoretically “fail” in respect to its absolute value without being upon that a trade object as a product and not being associated to a product?

This question makes us wonder if we imagine a theoretical possibility of discovering of so huge deposit of this metal that it would lose all its uniqueness. What would happen next? Gold would lose all its value and got devaluated to the products. If this happened we would have to faster come to understanding of those process within money evolution we witness now. Search for the genuine sense of development process of universal monetary unit, its further universalization – that is the subject of our current discourse. We can see that gold or money in the conventional sense became a separate category and stopped to be a specific type of property as a medium of exchange. Instead, because of humans needs to facilitate and reach the liquidity of trade turnover, the human chooses a symbol and subjects as a payment unit. The liquidity and uniqueness such as became values getting separated from objects of exchange. An intermediary of exchange of money in its habitual, current form has arose.

So what kind of the present (within the discussed aspect) world can we see after people has started to change goods through intermediary of symbols unrelated to objects of exchange? I will try and explain the logic of the exchange system which has formed in the world practice in result of absence of its pegging immediately to objects of exchange due to technological unreadiness in the moment of its formation and development. Yes, until a certain moment, until the advent of relative technologies, the formed system of commercial relations is deemed the most optimal and equitable. Now we will try to rationalize our forecast of the future global monetary and financial system under conditions when the technological breakthrough allows to improve it in terms of industry and product orientation of the means of exchange unlike ordinary forms of national currencies. In order to do this we shall think through the logic of already formed economic categories and institutions and indicate barely noticeable, habitual discrepancies with the end goals pursued by participants of trade form the very beginning of economic activity and up to now.

Why the next stage of money evolution was the stage when global currency system got decoupled from gold in 1971? And demand and supply at currency market got determined by their rates relatively to each other as implicit reflection of demand and supply of all goods manufactured by member countries of international trade. That was the fourth benchmark in result of continuing grow of global economy and human intensions to secure money liquidity. Money took other, greater liquid form follow the acceleration of goods turnover and globalization. Does not matter what a reason for that was – gold standard was condemned by the needs of the age. Unilateral US withdrawal from Bretton Woods Agreement did not cause the collapse of dollar as Charles de Gaulle thought. Why? Because the factor of product value (GDP) and quality level of economic system became significant relevant to currency evaluation. An intermediary, i.e. gold is disappearing, not irreplaceable anymore. World received a new paradigm of valuation having rid of antediluvian gold as the only possible medium of exchange having transmitted to symbols linked to the produced goods.

In principal, indicators of mutual trade between countries and transboundary capital movement such as balance of payments and balance of capital account must give general understanding how much all products of one country are in-demand in comparison to those produced in other countries.

To concurrently demolish popular assertions on unconditional leaderships of gold within the given context we can fully reasonably give an example of happened actual transmission of all necessary functions of gold throughout the world to number of currencies secured with the level of GDP (manufactured product) and economic system where this GPD is manufactured. Currencies symbolizing the most quality and in-demand goods along with the quality level of systems where it is manufactured became the main criterion upon choosing them as reliable money by all participants of international trade. A good addition to it will be a strong reasoning pertaining to why exactly those currencies were chosen, what kind of qualities of artificial origin can serve as so called “security”. The reason – is a correspondence to quality criteria of producing product in “developed jurisdictions” and reliability of economic system. I would rather not to investigate the origin and establishing of European Currency Unit and Special Drawing Rights since regardless they are direct consequences of globalization they still are of no relation to the matter of reviewing of various fantasies concerning international payments units. Since we are talking here about the essence of money and in support of my thought about that, I want to quoting classics of economic thought, the part where they address this aspect:

Adam Smith “An Inquiry into the Nature and Causes of the Wealth of Nations”. Chapter IV “Of the Origin and Use of Money”:

“When the division of labour has been once thoroughly established, it is but a very small part of a man's wants which the produce of his own labour can supply. He supplies the far greater part of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men's labour as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.

But when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations. One man, we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less. The former consequently would be glad to dispose of, and the latter to purchase, a part of this superfluity. But if this latter should chance to have nothing that the former stands in need of, no exchange can be made between them. The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each of them be willing to purchase a part of it. But they have nothing to offer in exchange, except the different productions of their respective trades, and the butcher is already provided with all the bread and beer which he has immediate occasion for. No exchange can, in this case, be made between them. He cannot be their merchant, nor they his customers; and they are all of them thus mutually less serviceable to one another. In order to avoid the inconveniency of such situations, every prudent man in every period of society, after the first establishment of the division of labour, must naturally have endeavoured to manage his affairs in such a manner as to have at alltimes by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry.

Many different commodities, it is probable, were successively both thought of and employed for this purpose. In the rude ages of society, cattle are said to have been the common instrument of commerce; and, though they must have been a most inconvenient one, yet in old times we find things were frequently valued according to the number of cattle which had been given in exchange for them. The armour of Diomede, says Homer, cost only nine oxen; but that of Glaucus cost an hundred oxen. Salt is said to be the common instrument of commerce and exchanges in Abyssinia; a species of shells in some parts of the coast of India; dried cod at Newfoundland; tobacco in Virginia; sugar in some of our West India colonies; hides or dressed leather in some other countries; and there is at this day a village in Scotland where it is not uncommon, I am told, for a workman to carry nails instead of money to the baker's shop or the alehouse.

In all countries, however, men seem at last to have been determined by irresistible reasons to give the preference, for this employment, to metals above every other commodity. Metals can not only be kept with as little loss as any other commodity, scarce anything being less perishable than they are, but they can likewise, without any loss, be divided into any number of parts, as by fusion those parts can easily be reunited again; a quality which no other equally durable commodities possess, and which more than any other quality renders them fit to be the instruments of commerce and circulation. The man who wanted to buy salt, for example, and had nothing but cattle to give in exchange for it, must have been obliged to buy salt to the value of a whole ox, or a whole sheep at a time. He could seldom buy less than this, because what he was to give for it could seldom be divided without loss; and if he had a mind to buy more, he must, for the same reasons, have been obliged to buy double or triple the quantity, the value, to wit, of two or three oxen, or of two or three sheep. If, on the contrary, instead of sheep or oxen, he had metals to give in exchange for it, he could easily proportion the quantity of the metal to the precise quantity of the commodity which he had immediate occasion for.

Different metals have been made use of by different nations for this purpose. Iron was the common instrument of commerce among the ancient Spartans; copper among the ancient Romans; and gold and silver among all rich and commercial nations… It is in this manner that money has become in all civilised nations the universal instrument of commerce, by the intervention of which goods of all kinds are bought and sold, or exchanged for one another.”

But the meaning the scientist put into money is somewhat different from what we put into this concept. If someone completely reads the chapter he or she will see that in the end A. Smith identifies the value that the monetary unit contains in itself as a certain amount of invested labor. The scientist does not concentrate on the fact that during creation of a new product the so-called entrepreneurial initiative is also participating and its contribution to the creation of additional consumer benefits objectively more than the labor invested in its traditional sense. And this contribution, as well as physical labor, has all the criteria of property transformed into a product like the labor itself. Both are also the private property of each of their owners. This simplification in its time led to the fatal for the majority of humankind mistake of Karl Marx, the classic of communist theory, who in his “Das Kapital” specified entrepreneur class, the genuine initiator of progress, with an irreconcilable antagonistic character in respect to the so-called “working class". Whereas both of these classes are inextricably those productive forces that create a useful product for exchange along with the means of production and material contributing to it, each in its own way, a certain share of value. It would be more correct to equate both these classes in their rights to private property having determined the private property for each of them. Labor, time, ingenuity, the final product, enterprise – all these have their own material value which can and should be measured by a single universal approach in the evaluation process.

Returning to the main channel of our discourse on money we must recognize another criterion for the comparative evaluation of currencies in the international foreign exchange market. And this additional criterion naturally also affects the exchange rates of the respective economic systems. There is an intuitive component that actually and independently from quantitative characteristics although together with them, for purely market reasons, makes us prefer one or another currency when it comes to its reliability for settlements, storage of property or its accumulation.

What have we replaced gold as an underlying asset with? What currencies shared the functions of gold as an indicator of wealth? In this role, the most competitive currencies became those of them, as we mentioned above, which represent the economic systems within which the production process of material goods takes place in a free market, the highest quality of working institutions guaranteeing property rights including change of its (the system) ownership. The presence of all these qualities in economic systems unavoidably leads to:

• the growth in demand and quality of GDP exported outside the national system (abroad)

• reliability and popularity (as determining the liquidity) of their currencies since they are in demand due to external demand for the product (GDP) and guarantee, through the state institutions, the quality of consumer properties of the product and ownership rights to the product or transactions in international trade.

This is what I mean when I talk about the intuitive people’s choice of the currency that has replaced gold as a means of saving and a symbol of wealth. This is important to be understood by both professional pooled investment managers and ordinary people.

These qualities secure a decisive influence on the state of trade and the balance of payments between competing economies. Criteria of quality and technological level of products created within the framework of a modern developed system also play an important role here.

The fact that an additional but important criterion for choosing a currency of a country as a mean of storage or accumulation is a level of development of the economic infrastructure, the quality of the institution of private property and the guaranteed protection of the rights of economic entities has not been duly formulated until today. This criterion works at the subconscious level:

It does not matter how people perceive the USA and the whole Western system, in their business activity and economic relations with whoever, in their minds all property matters are denominated in U.S. dollars or currencies of other developed countries. Unsuccessful attempts of the third world countries (even the largest owners of the most important products – energy resources) to resist this state of affairs through political agreements contradicting to the nature and common sense are no good for the same reason. That is, in the current world system the base evaluation asset is no longer gold but the quality of gross domestic product multiplied by the quality and degree of advancement of the economic system represented by the corresponding currency. For the current day instead of gold they have chosen the United States dollar, Euro, Pound sterling, etc. The reason is easy to understand if you follow a sound logic working in accordance with and in pursuance to the self-preservative instinct of decision-makers. The reason for such work of instinct is exactly the basis of our reasoning above.

In its time, not so long ago, the world defined one of the most suitable currencies for the role of gold (regardless of someone's love or hate) which is secured with real and high-quality GDP (total product) and functions in most favorable for creating additional value economic system. Moreover, that is in the most effective system and also loyal for generation by all subjects of the economy from a simple product or service to the latest and various technologies. In a system that has the most advanced legislation both in terms of protecting the right of ownership of production means (private property) and in terms of guaranteed security of this currency with all the achievements of human creativity operating within this system. The currency of such a state due to the above qualities acquired in the process of evolution has a unique property: regardless variety and complexity of relationships between countries representing different systems, even hostile relations – this currency is unconditionally a medium and a measure of value in valuation of wealth of a country, business or individual. As we said above any of the economic entities anywhere in the world, whether a usual human, companies or even countries valuate their level of wealth by denominating it in a certain currency.

As of today, the US dollar has obviously taken the place of such a currency. This state of affairs was not forcibly introduced. It is accepted and fixed on an intuitive level. We have just formulated it here and can use it as guidelines for action while constructing or reconstructing the transitional national economy along the integration into the developed modern world.

In order not to insult our intelligence in this place we will not go into foolish inappropriate discussions with conspiracy theories of know-nothing and obscurants concerning the “global conspiracies” and USA desire to enslave the whole world and promote their currencies as the world's reserve assets. This is just an effect but not a cause. It is clear and obvious that our conclusions are justified and objective. The advocates of such theories look at least stupid if we take into account the above-mentioned arguments and the objectivity of human logic when it comes to property and adequate measures of its valuation. No one for the sake of artificial ideologemes would take personal ownership risks by converting it into trash of rubble or bolivar. It is not difficult to exposure such theories if one who is interested in this theme would study and compare the system of financial and, in general, state institutions greatly controlled by the society through a variety of appropriate leverage in developed countries and the third world countries. A substantial argument against speculations about the desire of modern developed countries to dominate through their currency can be actually working and stipulated by the law non-governmental monitoring systems and the relevant norms of the Social Pact which were fixed in public consciousness in their time. But this is a different story and we will not pay attention on that here for not to get confused as I. Kant strongly recommends in his “Critique of Pure Reason”. This is just what most of the modern economic systems of the third world countries where various conspiracy theories are very popular differ from the systems of developed countries. That is where antagonism lies – when the essential distinguishing features of systems are mutually exclusive in different countries.

Domestic product (GDP) created in various systems (jurisdictions) got entered the world commodity-money exchange through various means of exchange. Even if the groups of goods and carriers of means of exchange were not different from each other: food, clothing and gold were not of much difference in neighboring economies. It is necessary to abstract our mind from the usual thinking pattern of money and consider the mechanism of exchange/trade in terms of logic applying while considering this issue is not a vulgar but a strict (dare I say, a scientific) method in understanding of commodity-money relations. Money and monetary circulation are one of the most important aspects of the economy in terms of the participants' striving to ensure the optimal circulation of private ownership of the values ​​and means of production created by entrepreneurs including intellectual property. It is necessary to realize that money or currencies are improved by man alongside the development of technology and world trade as necessary and take new forms in accordance with the cause-and-effect paradigm. It is important to understand the cause in order to see or predetermine the effect. The technological development of the world economy determines demand for accelerating of the commodity exchange process, therefore, the adoption of new forms of money is the inevitability and the response of the human mind aimed at their improvement. Awareness of this provides us with a bright opportunity to formulate and predict the unavoidable steps of evolution when in the course of technological development the obviousness and understanding of the pattern of future events becomes the property of many people and facilitates for humanity the seamless transition to a new formation.

Under conditions when the world economic space exists and functions in the form of isolated and different-in-their-principals economic systems, the economic participants (fund managers, ordinary investors and ordinary people) choose the most reliable currency without thinking about the sources and reasons of their behavior.

The problem of the volatility of currency exchange rates in different countries fully manifested itself after a certain stage of money evolution - the abandonment of the gold standard (the principle of security of paper currency with gold) for the reasons listed above. That time the world accepted as a guarantee, without realizing it, the categories that were much closer to a matter of trade. The product such as, through supply and demand, already has a greater effect on exchange rates along with the conditions and infrastructure of the market. Now the amount of gold possessed by a state as a determining factor in its currency exchange rate had been substituted for

• commodity weights in demand on an external market produced at the territory of a money-issuing state

• the quality level of institutions ensuring reliability and guarantee of the property rights in the course of trade.

These are the basic, understandable and objective reasons that drive the exchange rates of different countries relatively to each other.

It is important to note here that even in this situation a consumer and a user values of a particular product or its categories are still not 100% reflected by the exchange rate. A significant share in valuation of the modern currency is the quality of the economic and legal systems of trading countries. The relative, time-varying demand for products produced in different countries, without interfering with the characteristics of the system, would be the most important factor and would directly influence the exchange rates, and it would be more logical if the world economy was free from boundaries between countries. The demand for the GDP goods of countries does not still reflect a dominant factor of rates formation. The influence on the exchange rates of state institutions and the system in general makes this valuation somewhat distorted. From here comes the difference between the exchange rate and PPP (purchasing power parity). I will try to decipher this thesis. Since the evolution of the world economy has taken the path of a “multicurrency world” where currencies represent the monetary unit of each country the criteria of their evaluating relatively to each other after gold has lost its former monetary qualities have become attached to the quality of the economies they represent. Forgive me, please, for repeating the same thought by using different formulations. I do this time after time in order to attract different categories of thinking people who need appropriate reasoning in order to understand the same phenomenon.

For the time being the means of exchange do not 100% represent the exchanged goods. The state and its system still influence the rates through their quality as an additional value. Despite the fact that this is true for the world developed this way and fragmented into countries, I hope we begin to understand, it will eventually become a relic of the past because at a certain moment economic system sooner or later will get globalized, become comparable in terms of ownership rights guarantee, financial infrastructure, etc. These constituent criteria of the evaluation of currencies will take back seat (as equal parts of a fraction that we reduce in mathematics). Please, note that a product such as or group of goods are still not associated with currency excluding currencies of backward raw material producing countries a significant share of exports of which are one-type raw materials on the global market, for example, energy (i.e. "petro-dollar" or “petro-currency” concepts). As a result of that there is a political, infrastructural component in evaluation of currencies, that distorts the true external value of the product (GDP) regardless its diversity. And there emergences the disbalance between (1) Exchange Rates and (2) Purchasing Power Parities (PPP) since the former contains an adjustment for the quality of the economic system, and the latter – the demand for the country's food basket reflecting in PPC index a stronger peg to the product. If the global economy were truly global, this will unavoidably happen, exchange rates would better correspond to Purchasing Power Parity. This discrepancy between PPP and the international exchange rate creates a temporary advantage (arbitrage) of economies with undervalued currency which allows exporters upon exchanging revenue in foreign currency for the national one inside the country to exchange components and labor in larger volumes every time opening the opportunity to increase quantitative exports. For example, you sold goods from China to the United States for $100. Having received this revenue you sell it on the domestic market for weakening national currency, the yuan. To reproduce the goods sold you shall spend yuan but since the rate drops then when you convert your $100 inside the country you receive more and more yuan than during the last trading and production cycle. Accordingly, the profit in the national currency is growing (provided that the purchasing power of the yuan remained at the same level).

The reason for the disbalance between the PPP and the exchange rate is that each currency on the international market is evaluated with regard to the quality of the economy whether you admit it or not. The fact is that the volume of export of high-quality goods can grow in the long term (unlike China) only with guarantees from the system of state institutions provided primarily to economic participants operating within its framework. On the domestic market, due to the demand for raw materials, components, intellectual property and labor the PPP index is close to the market rate which deprives the advantages of economy with a strong currency within the international trade. This fact reduces the competitiveness of exports of such developed country in comparison to exports from countries with insufficient market economies where labor costs are regulated by the state rather than by free market, and accordingly the PPP of the currency in such country is much higher than its rate on the international maker. Let’s explain simpler: for $100 in USA you can buy much less goods than for the same $100 converted in yuan in China. This means that in China for $100 you can produce more goods to export to USA than for the same amount in USA to export to China - the cost price in the US is much higher. Another tool for undervaluing currency used by government for export incentives is artificial nonmarketable monetary measures which are the subject of disputes and conflicts between trading partners. We can see this on the example of the USA and China.

If the economic space were global allowing goods to move freely from a producer to a consumer, bypassing intermediary like state institutions and country borders this discrepancy would be eliminated by shifting courses towards PPP values which would lead to intensification of competition. Exchange premium or discount on the international market compared to PPP index ​​would be minimal or completely leveled out. This would exclude the possibility of “arbitration” and abuse of power by authorities which are the subject of trade conflicts on the example of China and the United States who are still significant trade partners.

Once again I want to emphasize that we are describing the current state of affairs, the path of money evolution which at one point due to the fragmentation of local economies and the lack of technology humanity has taken. Therefore, for a long time (up to now) the sense of trade/exchange processes was distorted by introducing a universal medium of exchange embodying not so much the value of the exchanged assets as economic systems (countries) producing these assets. So we received the currencies of the countries which partly and in fact are intermediaries in the exchange process but they have the physical nature somewhat separated from the objects of exchange.

Therefore, I can state some degree of rightness of the argument of conspiracy theorists about the damage caused by the formal centralization of issuing powers of a system of private banking structures (such as the US Federal Reserve System or a Central Bank of other countries). But not for the reason they offer when speak about the biased interests of the financial authorities due to the ideas of the “puppet master”. The true argument about the shortcomings of the centralized monetary system is not the presence of captured interests of the authorities – a crazy idea – but is the state institutions and the economic power of countries influence the exchange rates of their currencies, in reality not reflecting the demand on the world market for resources and products. We have to admit that this centralization has become an enforced consequence of the established division of the world economy into many economies and will soon become a relic of the past as long as the process of globalization develops.

The task we formulate here is of practical importance: after realizing the essence of the current technological breakthrough we are witness now – without great losses, harmoniously and most effectively to incorporate the evolution trends as technological solutions into the current global system of global finance and accept the inevitability and pattern of the emerging alternative to national currencies.

Modern processes in the global economy due to the accelerating process of globalization make economic systems equal due to a single infrastructure. This means that the monetary system established during a long historical period sooner or later will use a more natural mechanism of exchange of goods through specialized “industry-based” currencies recognized throughout the global world and independent on the monetary policy of countries.

When the global economy has reached a certain high degree of globalization (and this is an inevitable process) new currencies will be pegged to specific industries or goods and symbolize them and give the usual dollar, euro, yen and so on the role of antiques to the delight of collectors and philatelists of the distant future.

We are standing on the threshold of the next evolution stage in the development of the world monetary system. An important, main detail in the course of studying and analyzing the history of money development was not noticed by all well-known economists of all observable times. But this detail, like a switchman of railways, at the very beginning of the history of money drove the logic of the evolution of the means of exchange to the path that we now are hostages of. The path which could become much more logical and practical if in its time, at the dawn of universal mediums of exchange, there would be appropriate technological capabilities and the level of globalization of the entire world economy.

Two problems that we noted above when describing the stage of transition to paper money or debt receipts: the possibility of "unreasonable" issuing of banknotes in a closed economic system leading to the inflationary effect and the volatility of exchange rates of different countries relative to each other distort the true intrinsic value of objects of trade. These problems sooner or later will inevitably be solved by introducing new, state-independent currencies as soon as the technology of money comes in line with the technological level of production and trade relations and the level of growing globalization of the world economy.

Only the lack of a sufficient level of globalization and technological capabilities in its time turned the evolution of money to the known scenario of creating of national currencies rather than of food, energy or other currencies.

Economics is a social science, the majority of laws of which are not universal and unambiguous as those in the natural sciences since in the social sciences there are unpredictable variables (preferences, fear, the effects of self-developing processes of systems, their interdependence, etc.) influencing on the future behavior and course of the history of social development. Therefore, only inquiring minds with a strong spirit able to resist the routine, existing economic concepts and categories formed through layers of time and invented in its time for convenient use and explanation of the current state of things, can discover, forecast, formulate and adopt a new reality of social development which comes according to the essence of things. Against the influence of the resulting-form-circumstances institutions of artificial origin, we, who armed with the technologies of the modern world, must bring them in accordance with natural logic. In order to avoid future, yet unconscious problems due to a lack of understanding of the evolution logic, the representatives of financial authorities shall take the right steps to integrate technological progress into the existing monetary system. Strong spirit and discipline of the mind are necessary to catch the true motives of living rational beings in the process of creating trade tools, hunting tools or medium of exchange for facilitating trade/exchange and to realize the justice and relevance of these motives at all times. With the development of technology, the tools of mining, food and so on were improved and new ones were invented. It is necessary to correctly determine the purpose and motives of decisions made by a human at each stage of evolution in order to understand the forced nature of imperfect institutions that arose due to technical unavailability or insufficient level of consciousness of the tasks complexity in each historical period to meet the unchanged basic motive. If we learn to understand the basic function of any social institution and accordingly improve the “drives” of socio-economic interaction mechanisms by which the process of information transmission and exchange of material benefits are optimized, then the efficiency of influence on the external socio-economic environment will increase to achieve the goal of equipping the society with the most “advanced” tools within the creative activities.

Therefore, in order to better bring my message it is necessary to return to the initial discussions about the stages of money evolution and look at them again in terms of the final/true functions that should be performed by means of exchange. To realize the imperfection of the means of exchange which a human had to accept — first gold, and then the usual money symbolizing the state, accept not the product itself or its symbol, the immediate task which a human really wanted to solve shall be understood.

So, the task was consisted of two main problems to be solved:

1. Exchange a part of goods for the needed one. And that is all. Do not get a currency and then exchange it again but eventually and, as soon as possible, acquire the necessary product in exchange for own product surplus. The currency in the global world, representing not a symbol the national state and economic system where it is produced but a specialized currency characterizing a specific product with integrated analytical technology and parameters of the specific transaction, is more suitable as an intermediary in the transaction than the traditional currency. For the time being we are at an important milestone of evolution when technologies allow us to create and accept it with unparalleled accuracy and benefit. In innovative technologies and their applications in the field of money circulation we can see exactly the work of intuition from a developer to an increasing number of people willing to adopt an innovation according to the main motive or goal – to obtain the necessary product as soon as possible and at minimal costs in exchange for their product.

2. The second task of money is the fixation of accumulated property or wealth. Since the storage of surplus product in barns in its time was not so practical solution people converted them, let’s say, in gold during a long historical period.

Since during this period there was no special practical symbol “assigned to” a specific type or category of goods for liquid and quick exchange, the function of the medium of exchange was performed by gold,

paper symbols, banknotes. So if civilization were global – united and without borders then perhaps we would have not national currencies, like we have now, but specialized ones symbolizing specific groups of goods or industry branches.

Why do I pay attention to this? In order to make us better understand what is happening now and to clarify the future picture – where the transformation of money in terms of inevitable globalization goes to.

Due to the established dividing of the planet population and its territory into separate socio-economic zones in search or constant selection of a common universal medium of exchange the humankind in its time took the path of creating various national-territorial currencies as intermediaries within the exchange process. They were first gold, then gold-backed banknotes, then accounting processing (non-cash money) in specialized financial institutions secured by real GDP without the participation of gold but representing, as a matter of fact, a single medium of exchange within the state for settlements with all kinds and categories of goods. Therefore, the competition between the currencies of countries is nothing but competition not only and not so much between specific goods but between economic systems where material benefits are created. What is the next step the humankind will take having received the necessary technology to increase the liquidity of units of account in terms of inevitable globalization along with eliminating the borders in the economy? To be exact, what else shall the humanity do to reduce the chain of exchange in order to reduce the value added by participation of third parties? This is the next logical, inevitable evolution stage of the world economy and money. The rates of such currencies relative to each other will vary depending on the demand for products of a particular category or industry they will represent. I note here that this will certainly and unavoidably happen. The first: the global economic community will try to reduce the degree of government participation in national currencies;

And the second: partly get back to the old principle of barter but already modern one and equipped with advanced technology when each branch of industry or type of global strategic product will have its own unit of account not controlled by anyone individually and simultaneously as reliable and convenient that would be accepted by all users of the planet.

Currencies of a new era will represent or symbolize not competitive systems (countries) but specific industries (as representatives of product categories). As we can see, the modern technologies (blockchain, for one) are quite ready to perform such functions and can create currencies that meet the requirements of reliability, instant liquidity and, in addition, have all the necessary information on each transaction: from the quality of goods to transaction registration with all nuances. This is the next logical, inevitable evolution stage of the world economy and money. The rates of such currencies relative to each other will vary depending on the demand for products of a particular category or industry they will represent. Why do for the time being the majority of people including representatives of modern technocracy involved to the regulatory function of state financial institutions strongly push back the technological revolution of money? We get impacted with the effect of the “aquarium” of the artificial world which we are in and therefore, being inside it, we so far cannot see how the world of human motives really works. The consistency and naturalness of directly obtaining of exchanged goods without the mediation of gold, banknotes or a specialized institution which is necessarily accompanied by transaction costs has been forgotten under the layers of time. It can be expressed even more accurate – completely forgotten because the humanity following the tradition is used to consider the direct exchange of goods upon the lack of technology as primitive exchange, so-called barter and fate of primitive economies. As a matter of fact, this opinion indicates not the primitiveness of barter idea such as but the historical absence of the technology that would allow it to function without loss of liquidity and speed of transactions. As such the direct exchange process equipped with high-capacity technology that would solve the problem of liquidity, reliability and even all nuances fixing of each transaction – is more logical, understandable and with the advent of the blockchain technology (here let the experts support me, I just point out the essence and significance of its role) will kick start the evolution of not only the economy or monetary circulation but also in the political frameworks as it creates an opportunity for emerging countries in the political arena to obtain a high-quality tool of exchange.

Such technology will allow to solve the convenient exchange where each means of payment will correspond to a specific product and even contains details of that transaction notifying the whole world about them, it will exclude manipulation and fraud. But it should be noted a particular dramatic, global in its scale and depth the tectonic shift in social development the role that will be played by it. Elimination of the dependence of economic entities around the world, companies and individuals, on the "old money" producers – countries seems so discouraging that it makes certain difficulties in "peaceful" integration of new technology into the existing global monetary and financial system. At first glance, it similar to incompatibility of the ideas of the Second French Revolution, its democracy and the principles of Freedom, Equality, and Brotherhood with the dominating that time monarchist idea of building a world at the time of revolution occurrence. Do not forget that their mutual hostility led to the Napoleonic wars and huge human losses. But this similarity pertains only to the high degree of incompatibility. In the case we reviewing there is no irreconcilable class antagonism. This incompatibility is of a technological nature, there is no an ideological conflict with the developed world at least in terms of the declared values. The truth is that the technological revolution we are witnessing does not contradict modern world order and values and possible political consequences can be leveled by technical adaptation of the existing system along with saving fiscal functions and counter-criminal control over states or their unions arising in the process of globalization. The absence of any monopoly of issuing money as a non-market instrument of regulation and the absence of wars financing through its I would deem right and proper.

We, usual participants and ordinary people, as we noted at the beginning, need to realize what is happening now in order to prevent the consequences of a global scale that will affect the life and well-being of every human on the planet and the states in their present form. Some nuances of recovery USA economy from the crisis in the early 20th century can help us to realize the importance of understanding the essence of what is happening. The abrupt switch to a new technological order led to a crisis of overproduction of such scale that it could be comparable to a significantly increased efficiency and productivity of labor. Only after formulating of that what happened by J. M. Keynes there was possible to develop a number of methods to cope with the consequences of that type of crisis and as a result the world obtained the necessary knowledge (realized) to smooth out the effects of crises with similar etymology in the future which was successfully accepted and tested by most countries with market economy and comparable levels of production.

Timely reflection on what is happening, unlike the “delayed” reflection of J.M. Keynes, opens the possibilities not only to prevent or reduce the consequences of a possible crisis but, anticipating the future, to facilitate the transition to a new technological structure, unprecedented in its scale.

So, it cannot hurt to reinforce what has been said above as applied to present times. Let us answer the following questions for we would not be confused by anyone.

Everyone has already recognized the fact of the ongoing globalization for the time being and also recognized the regularity of this process, has not it? Then how it can it be misunderstood that globalization will impact the entire world economic space, and all the rest areas of human activity, including politics are derivatives of the economy?

In this case, our theme regarding the form of money in the future world, where we inevitably go to, becomes just obvious. Does not it?

Therefore, how can we be wrong in our conclusions regarding the prospects for the loss of nationality by the currencies of the local monopoly and the obvious global specification of money depending on their use in a particular area or industry? Moreover, the obvious signs of the forecasting processes we can see now. What could be more natural than the verity of the thesis if the world originally inhabited by mankind was an undivided territory with a single principle of economic management and economic system, it would be quite propriate to assume that the evolution of money could develop in a completely different way. It would be more logical for each of the currencies to correspond to a certain group of goods rather than to belong to a particular political system and its socio-economic structure since this structure would be united. Then a more logical and less complicated way would be found to evaluate the consumer value of goods and therefore the currencies themselves could be referred to not socio-economic formations or states like they are now, or in medieval times and more earlier state formations, but to certain values created or gained by man. There would be, for example, "Food", "Clothing", "Instruments of Labor" and other currencies. With the emergence of the next products of human consciousness, technology, vehicles, information change (mail, etc.) the corresponding currencies would appear. If we follow this logic, then in present, in a globalizing world, we can see a “return” to common sense regarding the exchange process through specialized cryptocurrencies which are becoming popular in financial and physical respect.

Why now? First of all, this is a consequence of elimination of borders, the globalization of the modern world in terms of trade, the information technology revolution, when simple but more logical barter becomes possible due to the reduction of transactional costs and the opportunity to acquire any items in any quantity throughout the world.

Reliability and trust as the necessary criteria are secured by the blockchain technology and the decentralized natural issuing without a single controlling issuing center which eliminates the abuse of the issuing authority that provokes inflation.

While approximating such prospects it remains only to determine to what extend such a rapid development can be regulated, leaded to a single code of rules, protect society from associated risks of using them for criminal purposes, whether do it in private capacity or by countries that violate generally accepted laws of the developed world. As soon as this problem is resolved, when the governments of the countries reach a compromise on the problem of sovereignty (or partial and voluntary abandonment of it in favor of society under conditions of a high-degree globalization) upon successful phased progress of solving this problem – the new types of means of exchange will rapidly gain popularity and its intrinsic value. At present, we are witnessing the birth of a new technological order of the world economy when it became possible to have a completely new, technologically more advanced, meeting all the necessary criteria and characteristics of a type of money than even His Majesty Dollar. This technology excludes any influence of anyone: financial, political or other regulatory bodies and guarantees the stable functioning of the monetary system. We are one the way to a new technological level of social and economic relations on a global scale.

What signs of a new era and future changes can we see now and what conclusions should we come to?

Here those signs are:

The monetary system of the world economic space is going firstly, on the path of globalization with the growth of the world economy and trade ties secondly, with the increase of growth and volumes of trades the mediums of exchange, as we noted above, from the moment of their birth have been undergoing changes in increasing the intrinsic value of material assets underlying traditional money and therefore towards specialization of currencies and increase in liquidity of conventional account unit which owner is guaranteed to be able to exchange it for any product. Blurry contours of this process we can see if we pay attention to the specializations of the ICOs of cryptocurrency – they are classified in various industries and product categories.

thirdly, upon globalization the belonging of currency to any economic system (state) loses its former importance

fourthly, with the advent of appropriate technologies in the global world system, the traditional weaknesses of national currencies (devaluation, inflation, etc.) can be eliminated by adopting more reliable means of exchange in terms of decentralized circulation and programmed “independent” issuing and also the impossibility of control by any interested parties including by their creators.

fifthly, with the technologies allowing to create global units of account regardless of the will of any financial authorities with the ability to perform transactions and ignoring the boundaries of economic systems the humanity can return to the logical pegging of them to specific product clusters – the modernized barter – the direct exchange of goods without an intermediate link (gold, state, etc.)

What is the revolutionary nature of the observed technological breakthrough in the monetary system? It is in that each type of product can finally be represented by a specific cryptographic currency containing information about the product and every currency can contain information about every transaction (without loss of liquidity) and its parameters so there will not be the need for mediation and state registration of each change of ownership.

With a reasonable approach on the part of states, it remains only to solve the issue of automating taxation using uniform international or national rules and optimize the technologies underlying the new currencies for these tasks. We call this a reasonable approach since the national financial authorities are unable to stop this process because they cannot prohibit or control the widespread voluntary acceptance of universal funds as payments by all participants that perform the function of money faster, more reliably and guaranteedly. Considering the parameters of the transaction, contained with all the necessary information in the specialized monetary unit itself with the help of the newest technologies, the process will only accelerate.

It has already been said a lot about the possible consequences of this process. Therefore, we will not go into details and forecasts what industries and professions will demise as not wanted.

It is necessary to realize that these consequences are not dangerous for the modern states – these are inevitable manifestations of progress the purpose of which is to optimize socio-economic relations between all participants of the world economy. Here it is important on the part of the financial and political authorities to comprehend and take adaptive measures of a technological nature as well as to integrate the states with their institutions into the inevitable process in order to avoid uncontrolled crisis situations on a global scale. The technologies of the modern world allow this to do both in fiscal terms and in terms of control in order to avoid the use of new payment systems for criminal purposes. It is just needed to agree through the achievement of public consensus, the technological reequipment and reorganization of all financial institutions.

We intentionally divert our reasoning from the sense that classical economic theory offers describing the traditional laws of economic development and traditionally formulating new paradigms post factum when changes have already occurred and entailed consequences, as it is in mention above example with Keynes. Traditional economics primely describes and formulates the already occurred phenomena but it cannot qualitatively forecast them for exactly the same reasons as traders cannot accurately forecast rates of assets on stock markets. Economics – is a social science where there is a large number of uncertain variables relating to the psychology and human thoughts, the totality of people and all these are extremely difficult to predict and model. These conclusions are also an attempt to forecast but we consider the phenomenon in terms of its nature, so we address it differently, our goal is to understand “where the world is going to”, not to perform a quantitative analysis. We are talking about the very essence of social processes relating to our discussion. This simplifies our task since we choose to analyze the very essence of the processes. If it is discovered, if we understand the basic drivers that make society accept certain rules, the introduction of new interaction tools then the picture of future will be presented in extremely precise resolution in details. The current picture of the world without an understanding of the idea that moved humanity at the time of its origin does not make it possible to understand the complex, diverse and interrelated processes within the framework of artificial "aquarium" logic. An objective view from an investigating observer outside the “aquarium” is needed to see the most likely future.

Being within the framework of studying only a certain period of time where the human brain is overwhelmed with attempts to tie together the knowledge about the process as such, without studying the main motive that drove to introduce this or that institution to serve this process, i.e. fish, while being inside the aquarium, is impossible to understand the whole world. It is necessary to realize the motive and conditions that led to the emerging of the "aquarium" at the time of its creation.

It is important to understand once and for all that the driving force of money evolution is the constant human desire (at the level of intuition) to improve the technological component of the mediums of exchange to optimize the trading process in accordance with the requirements of time, increasing volumes and speed of trade, and expanding the range of goods in world trade.

Thus, humanity in the course of its development and development of technologies is in constant search for an asset or its symbol which could serve as a universal medium of exchange that meets the modern requirements of a certain stage of technological evolution having the most important attributes of money: the necessary degree of deficit, universal trust and at the same time liquid enough for transportation (transactions).

The general and universal trust as well as the acceptance as means of payment by all subjects of the economic space without exception is also to be solved due to the peculiarities of the technology. Without that the currency simply will not exist. Technological features of new currencies solve the problem of general trust: the impossibility of currency counterfeiting and the “programmed” issue volume once and for all.

How comes the confidence in new money. Who knew that banknotes would eventually replace physical gold? Certainly, the attitude to them at first was full of an extreme distrust and huge criticism. And it was the justified criticism if we consider innovation through the prism of the old reality. But the reality of human perception has changed. Man has changed it. Only laws of nature are unchanged. The laws of social development including economies and the evolution of money (mediums of exchange) change over time with the adoption by people of new symbols that meet the requirements of new era, not the old ones. But the motives of people do not change. As soon as a number of people accepting a new symbol or type of money (trusting them) reaches a certain critical mass we become witnesses of a self-developing process and a real boom in demand for a more convenient financial instrument.

The first signs of what exactly in the near future will turn the financial world upside down with the inevitable consequences we are already observing. The sooner we understand the essence and reality of what is happening, the sooner the world understands and realizes that this process is inevitable and necessary for the modern economy and the more chances that these consequences will be positive and in line with the positive changes of new technologies.

At the moment the world is on the threshold of a new, revolutionary technological order if we don’t realize its causes, essence, spheres of influence then large-scale shocks await us, especially in the third world countries with a great gap to developed countries even now. Understanding this, the society, the people save themselves from the problems of organizing their own monetary system while creating their own state of future.

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Valuation is performed by us constantly. We never stop choosing and therefore valuating. The matter of the valuating process – is a consensus in determination of proportions of exchange of every product, time or service. At the dawn of society it was a question of the following nature: what part of animal skin can be changed for a piece of meat of certain dimensions at a specific place in the current moment.

I.e. at first there was a barter which directly, without intermediaries, clear reflected the very objects of exchange but receiving of “end” desirable objects in the process of exchange chain by any participants of any deal and the process of receiving the desirable thing itself as we know in such case is not pretty convenient and took too much time or other transaction costs.

This is the first benchmark forced a human for the first time to think over the problem of liquidity in trade and necessity to accept the common, universal medium of exchange.

The problem of the lack of liquidity and universality in the process of such trade of different goods and services eventually has been solved with acceptance of an asset or a symbol as a universal medium of exchange having certain degree of deficit, universal confidence and unconditional usefulness but not pegged to any of exchanging goods. Depending on special aspects and the nature of economic management such symbols or assets were animal skins, bones, other goods and even people. Exactly such logic pertaining to choice of universal and liquid medium of exchange as the main problem – is actual up to now and underlies the valuating process and choice of the most convenient form of a medium of exchange or money. The problem related this logic had been solved at the next stages by introducing of a divisible and liquid monetary unit as known coined golds in different denomination (weight or value) or dollars and cents. Let us mark once again those ordinary mandatory attributes of money: Deficit, liquidity, unique qualities, universal confidence.

It happened that for objective reasons (it could not be in a different way on the Earth in the view of absence of transport and information infrastructure) the evolution of human society were processing in the way of formation of fragmented, separated governmental or other socioeconomic zones (future counties) instead of a united socioeconomic space with a common currency and common rules to regulate economic and political relationships. Why I emphasize that will be clear a bit later when the modern and irreversible process of globalization becomes the subject of our review as one of the reasons for what is happening to modern money.

Global acceptance of gold as unconditional universal medium of exchange became the second benchmark of money development. Since eventually the specific carrier of value accepted in its time by countries became archaic gold recognized by all as money – the rates of exchange of different countries currencies were, more or less, stable (gold had the indisputable authority, and such as was no different in different jurisdictions). A medium of exchange at the territory of every zone (country) represented by gold used to receive its own identity referred to the belonging of this currency to the specific economic zone (country, state). Thus, mediums of (currency) exchange became the symbols of not exchanging goods but of a specific piece of metal having known valuable qualities and the specific country at the territory of which that stamped with a portrait currency was legitimate in the process of exchange.

This generally accepted and indisputable recently carrier of value served as a convenient tool of solution of liquidity problem upon the exchange of different kinds of goods created by and used by a human. Gold remained the principal kind of money and performed the assigned functions as long as it could sufficiently perform the exchange functions pertaining to university and liquidity and had been accepted by every owner of goods as the mean of payments. Things were going this way up to the beginning of sharp increase of production due to the technological breakthrough happened at the turn from the mid of XVIII century till the arisen need to accelerate the speed of money velocity and convenience of settlements. When the physical gold could not in duly manner secure fast exchange of rising volumes of carried goods from one owner to another one in the trade process.

The world faced the necessity of the next stage of money evolution. Following the complication of trade, accelerating of production cycle the critical need to increase liquidity and facilitate property turnover was to influence the process of exchange and the form of money. The important step and the third benchmark indicating of emerged subconscious understanding (though not formulated yet) of opportunity of currency circulation modernization in that historical moment when it became actual – was performed with the advent of banknotes.

Evolution towards liquidity increase, transportability (of money) and settlements convenience has led to the logical substitution of genuine gold for receipts guaranteeing possession of some quantity of gold – for paper banknotes (or receipts) where an issuing bank guarantees to give the holder of receipts gold from the bank safe equally to the quantity mentioned in the banknote. So a universal medium of exchange until a certain moment had been physical gold with different identity of different socioeconomic formations and later due to expansion and activization of trade it was substituted for its derivative representative – of greater liquidity – banknotes or paper currency. 

(In support of our statements and conclusions pertaining to the fact that the main catalyst of money evolution is the desire of humanity to reach the best money liquidity in order to optimize the trade turnover, we can produce testimony as the further transformation of cash settlements into cashless ones like accounts books and records and then substitution of them for electronic accounts which we will discuss below).

The next evolution stage in this sense appeared when a human took the step to understanding of accepting a greater liquid form of medium of exchange than just physical gold following the development of trade and acceleration of trade turnover. Along with that humankind was not ready to abandon so authoritative and ancient underlying asset since could not allow an idea of substitution of gold by all participants for a form of money which would have the same unique properties without risks of depreciation and counterfeiting. But the paper currency is an expected part of the process whatever conspiracists say about paper currency for example, like an intentionally invented tool to control the society by groups like masons and so on. They have no a clue either what money is as an economic category or full complicity and intricateness of tasks of new times faced financial system which was to secure increasing volume of transactions per unit time under conditions of technological breakthrough in economics and increasing in trade turnover had been completely formed by the mid of XIX century.

Simultaneously with that novation, a range of associated problems arose which complicated the economic life of people.

The first of the problems – the possibility of unsound issue of banknotes in closed economic system by financial authorities which leads to inflationary effect and multiplying of money supply due to cashflow. The second associated important problem of this evolution stage is the emergence of volatility of the currencies rates of different countries relative to each other not duly reflecting the actual demand for total manufactured products within those states.

Is gold (or its derivatives) so irreplaceable and can it theoretically “fail” in respect to its absolute value without being upon that a trade object as a product and not being associated to a product?

This question makes us wonder if we imagine a theoretical possibility of discovering of so huge deposit of this metal that it would lose all its uniqueness. What would happen next? Gold would lose all its value and got devaluated to the products. If this happened we would have to faster come to understanding of those process within money evolution we witness now. Search for the genuine sense of development process of universal monetary unit, its further universalization – that is the subject of our current discourse. We can see that gold or money in the conventional sense became a separate category and stopped to be a specific type of property as a medium of exchange. Instead, because of humans needs to facilitate and reach the liquidity of trade turnover, the human chooses a symbol and subjects as a payment unit. The liquidity and uniqueness such as became values getting separated from objects of exchange. An intermediary of exchange of money in its habitual, current form has arose.

So what kind of the present (within the discussed aspect) world can we see after people has started to change goods through intermediary of symbols unrelated to objects of exchange? I will try and explain the logic of the exchange system which has formed in the world practice in result of absence of its pegging immediately to objects of exchange due to technological unreadiness in the moment of its formation and development. Yes, until a certain moment, until the advent of relative technologies, the formed system of commercial relations is deemed the most optimal and equitable. Now we will try to rationalize our forecast of the future global monetary and financial system under conditions when the technological breakthrough allows to improve it in terms of industry and product orientation of the means of exchange unlike ordinary forms of national currencies. In order to do this we shall think through the logic of already formed economic categories and institutions and indicate barely noticeable, habitual discrepancies with the end goals pursued by participants of trade form the very beginning of economic activity and up to now.

Why the next stage of money evolution was the stage when global currency system got decoupled from gold in 1971? And demand and supply at currency market got determined by their rates relatively to each other as implicit reflection of demand and supply of all goods manufactured by member countries of international trade. That was the fourth benchmark in result of continuing grow of global economy and human intensions to secure money liquidity. Money took other, greater liquid form follow the acceleration of goods turnover and globalization. Does not matter what a reason for that was – gold standard was condemned by the needs of the age. Unilateral US withdrawal from Bretton Woods Agreement did not cause the collapse of dollar as Charles de Gaulle thought. Why? Because the factor of product value (GDP) and quality level of economic system became significant relevant to currency evaluation. An intermediary, i.e. gold is disappearing, not irreplaceable anymore. World received a new paradigm of valuation having rid of antediluvian gold as the only possible medium of exchange having transmitted to symbols linked to the produced goods.

In principal, indicators of mutual trade between countries and transboundary capital movement such as balance of payments and balance of capital account must give general understanding how much all products of one country are in-demand in comparison to those produced in other countries.

To concurrently demolish popular assertions on unconditional leaderships of gold within the given context we can fully reasonably give an example of happened actual transmission of all necessary functions of gold throughout the world to number of currencies secured with the level of GDP (manufactured product) and economic system where this GPD is manufactured. Currencies symbolizing the most quality and in-demand goods along with the quality level of systems where it is manufactured became the main criterion upon choosing them as reliable money by all participants of international trade. A good addition to it will be a strong reasoning pertaining to why exactly those currencies were chosen, what kind of qualities of artificial origin can serve as so called “security”. The reason – is a correspondence to quality criteria of producing product in “developed jurisdictions” and reliability of economic system. I would rather not to investigate the origin and establishing of European Currency Unit and Special Drawing Rights since regardless they are direct consequences of globalization they still are of no relation to the matter of reviewing of various fantasies concerning international payments units. Since we are talking here about the essence of money and in support of my thought about that, I want to quoting classics of economic thought, the part where they address this aspect:

Adam Smith “An Inquiry into the Nature and Causes of the Wealth of Nations”. Chapter IV “Of the Origin and Use of Money”:

“When the division of labour has been once thoroughly established, it is but a very small part of a man's wants which the produce of his own labour can supply. He supplies the far greater part of them by exchanging that surplus part of the produce of his own labour, which is over and above his own consumption, for such parts of the produce of other men's labour as he has occasion for. Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.

But when the division of labour first began to take place, this power of exchanging must frequently have been very much clogged and embarrassed in its operations. One man, we shall suppose, has more of a certain commodity than he himself has occasion for, while another has less. The former consequently would be glad to dispose of, and the latter to purchase, a part of this superfluity. But if this latter should chance to have nothing that the former stands in need of, no exchange can be made between them. The butcher has more meat in his shop than he himself can consume, and the brewer and the baker would each of them be willing to purchase a part of it. But they have nothing to offer in exchange, except the different productions of their respective trades, and the butcher is already provided with all the bread and beer which he has immediate occasion for. No exchange can, in this case, be made between them. He cannot be their merchant, nor they his customers; and they are all of them thus mutually less serviceable to one another. In order to avoid the inconveniency of such situations, every prudent man in every period of society, after the first establishment of the division of labour, must naturally have endeavoured to manage his affairs in such a manner as to have at alltimes by him, besides the peculiar produce of his own industry, a certain quantity of some one commodity or other, such as he imagined few people would be likely to refuse in exchange for the produce of their industry.

Many different commodities, it is probable, were successively both thought of and employed for this purpose. In the rude ages of society, cattle are said to have been the common instrument of commerce; and, though they must have been a most inconvenient one, yet in old times we find things were frequently valued according to the number of cattle which had been given in exchange for them. The armour of Diomede, says Homer, cost only nine oxen; but that of Glaucus cost an hundred oxen. Salt is said to be the common instrument of commerce and exchanges in Abyssinia; a species of shells in some parts of the coast of India; dried cod at Newfoundland; tobacco in Virginia; sugar in some of our West India colonies; hides or dressed leather in some other countries; and there is at this day a village in Scotland where it is not uncommon, I am told, for a workman to carry nails instead of money to the baker's shop or the alehouse.

In all countries, however, men seem at last to have been determined by irresistible reasons to give the preference, for this employment, to metals above every other commodity. Metals can not only be kept with as little loss as any other commodity, scarce anything being less perishable than they are, but they can likewise, without any loss, be divided into any number of parts, as by fusion those parts can easily be reunited again; a quality which no other equally durable commodities possess, and which more than any other quality renders them fit to be the instruments of commerce and circulation. The man who wanted to buy salt, for example, and had nothing but cattle to give in exchange for it, must have been obliged to buy salt to the value of a whole ox, or a whole sheep at a time. He could seldom buy less than this, because what he was to give for it could seldom be divided without loss; and if he had a mind to buy more, he must, for the same reasons, have been obliged to buy double or triple the quantity, the value, to wit, of two or three oxen, or of two or three sheep. If, on the contrary, instead of sheep or oxen, he had metals to give in exchange for it, he could easily proportion the quantity of the metal to the precise quantity of the commodity which he had immediate occasion for.

Different metals have been made use of by different nations for this purpose. Iron was the common instrument of commerce among the ancient Spartans; copper among the ancient Romans; and gold and silver among all rich and commercial nations… It is in this manner that money has become in all civilised nations the universal instrument of commerce, by the intervention of which goods of all kinds are bought and sold, or exchanged for one another.”

But the meaning the scientist put into money is somewhat different from what we put into this concept. If someone completely reads the chapter he or she will see that in the end A. Smith identifies the value that the monetary unit contains in itself as a certain amount of invested labor. The scientist does not concentrate on the fact that during creation of a new product the so-called entrepreneurial initiative is also participating and its contribution to the creation of additional consumer benefits objectively more than the labor invested in its traditional sense. And this contribution, as well as physical labor, has all the criteria of property transformed into a product like the labor itself. Both are also the private property of each of their owners. This simplification in its time led to the fatal for the majority of humankind mistake of Karl Marx, the classic of communist theory, who in his “Das Kapital” specified entrepreneur class, the genuine initiator of progress, with an irreconcilable antagonistic character in respect to the so-called “working class". Whereas both of these classes are inextricably those productive forces that create a useful product for exchange along with the means of production and material contributing to it, each in its own way, a certain share of value. It would be more correct to equate both these classes in their rights to private property having determined the private property for each of them. Labor, time, ingenuity, the final product, enterprise – all these have their own material value which can and should be measured by a single universal approach in the evaluation process.

Returning to the main channel of our discourse on money we must recognize another criterion for the comparative evaluation of currencies in the international foreign exchange market. And this additional criterion naturally also affects the exchange rates of the respective economic systems. There is an intuitive component that actually and independently from quantitative characteristics although together with them, for purely market reasons, makes us prefer one or another currency when it comes to its reliability for settlements, storage of property or its accumulation.

What have we replaced gold as an underlying asset with? What currencies shared the functions of gold as an indicator of wealth? In this role, the most competitive currencies became those of them, as we mentioned above, which represent the economic systems within which the production process of material goods takes place in a free market, the highest quality of working institutions guaranteeing property rights including change of its (the system) ownership. The presence of all these qualities in economic systems unavoidably leads to:

• the growth in demand and quality of GDP exported outside the national system (abroad)

• reliability and popularity (as determining the liquidity) of their currencies since they are in demand due to external demand for the product (GDP) and guarantee, through the state institutions, the quality of consumer properties of the product and ownership rights to the product or transactions in international trade.

This is what I mean when I talk about the intuitive people’s choice of the currency that has replaced gold as a means of saving and a symbol of wealth. This is important to be understood by both professional pooled investment managers and ordinary people.

These qualities secure a decisive influence on the state of trade and the balance of payments between competing economies. Criteria of quality and technological level of products created within the framework of a modern developed system also play an important role here.

The fact that an additional but important criterion for choosing a currency of a country as a mean of storage or accumulation is a level of development of the economic infrastructure, the quality of the institution of private property and the guaranteed protection of the rights of economic entities has not been duly formulated until today. This criterion works at the subconscious level:

It does not matter how people perceive the USA and the whole Western system, in their business activity and economic relations with whoever, in their minds all property matters are denominated in U.S. dollars or currencies of other developed countries. Unsuccessful attempts of the third world countries (even the largest owners of the most important products – energy resources) to resist this state of affairs through political agreements contradicting to the nature and common sense are no good for the same reason. That is, in the current world system the base evaluation asset is no longer gold but the quality of gross domestic product multiplied by the quality and degree of advancement of the economic system represented by the corresponding currency. For the current day instead of gold they have chosen the United States dollar, Euro, Pound sterling, etc. The reason is easy to understand if you follow a sound logic working in accordance with and in pursuance to the self-preservative instinct of decision-makers. The reason for such work of instinct is exactly the basis of our reasoning above.

In its time, not so long ago, the world defined one of the most suitable currencies for the role of gold (regardless of someone's love or hate) which is secured with real and high-quality GDP (total product) and functions in most favorable for creating additional value economic system. Moreover, that is in the most effective system and also loyal for generation by all subjects of the economy from a simple product or service to the latest and various technologies. In a system that has the most advanced legislation both in terms of protecting the right of ownership of production means (private property) and in terms of guaranteed security of this currency with all the achievements of human creativity operating within this system. The currency of such a state due to the above qualities acquired in the process of evolution has a unique property: regardless variety and complexity of relationships between countries representing different systems, even hostile relations – this currency is unconditionally a medium and a measure of value in valuation of wealth of a country, business or individual. As we said above any of the economic entities anywhere in the world, whether a usual human, companies or even countries valuate their level of wealth by denominating it in a certain currency.

As of today, the US dollar has obviously taken the place of such a currency. This state of affairs was not forcibly introduced. It is accepted and fixed on an intuitive level. We have just formulated it here and can use it as guidelines for action while constructing or reconstructing the transitional national economy along the integration into the developed modern world.

In order not to insult our intelligence in this place we will not go into foolish inappropriate discussions with conspiracy theories of know-nothing and obscurants concerning the “global conspiracies” and USA desire to enslave the whole world and promote their currencies as the world's reserve assets. This is just an effect but not a cause. It is clear and obvious that our conclusions are justified and objective. The advocates of such theories look at least stupid if we take into account the above-mentioned arguments and the objectivity of human logic when it comes to property and adequate measures of its valuation. No one for the sake of artificial ideologemes would take personal ownership risks by converting it into trash of rubble or bolivar. It is not difficult to exposure such theories if one who is interested in this theme would study and compare the system of financial and, in general, state institutions greatly controlled by the society through a variety of appropriate leverage in developed countries and the third world countries. A substantial argument against speculations about the desire of modern developed countries to dominate through their currency can be actually working and stipulated by the law non-governmental monitoring systems and the relevant norms of the Social Pact which were fixed in public consciousness in their time. But this is a different story and we will not pay attention on that here for not to get confused as I. Kant strongly recommends in his “Critique of Pure Reason”. This is just what most of the modern economic systems of the third world countries where various conspiracy theories are very popular differ from the systems of developed countries. That is where antagonism lies – when the essential distinguishing features of systems are mutually exclusive in different countries.

Domestic product (GDP) created in various systems (jurisdictions) got entered the world commodity-money exchange through various means of exchange. Even if the groups of goods and carriers of means of exchange were not different from each other: food, clothing and gold were not of much difference in neighboring economies. It is necessary to abstract our mind from the usual thinking pattern of money and consider the mechanism of exchange/trade in terms of logic applying while considering this issue is not a vulgar but a strict (dare I say, a scientific) method in understanding of commodity-money relations. Money and monetary circulation are one of the most important aspects of the economy in terms of the participants' striving to ensure the optimal circulation of private ownership of the values ​​and means of production created by entrepreneurs including intellectual property. It is necessary to realize that money or currencies are improved by man alongside the development of technology and world trade as necessary and take new forms in accordance with the cause-and-effect paradigm. It is important to understand the cause in order to see or predetermine the effect. The technological development of the world economy determines demand for accelerating of the commodity exchange process, therefore, the adoption of new forms of money is the inevitability and the response of the human mind aimed at their improvement. Awareness of this provides us with a bright opportunity to formulate and predict the unavoidable steps of evolution when in the course of technological development the obviousness and understanding of the pattern of future events becomes the property of many people and facilitates for humanity the seamless transition to a new formation.

Under conditions when the world economic space exists and functions in the form of isolated and different-in-their-principals economic systems, the economic participants (fund managers, ordinary investors and ordinary people) choose the most reliable currency without thinking about the sources and reasons of their behavior.

The problem of the volatility of currency exchange rates in different countries fully manifested itself after a certain stage of money evolution - the abandonment of the gold standard (the principle of security of paper currency with gold) for the reasons listed above. That time the world accepted as a guarantee, without realizing it, the categories that were much closer to a matter of trade. The product such as, through supply and demand, already has a greater effect on exchange rates along with the conditions and infrastructure of the market. Now the amount of gold possessed by a state as a determining factor in its currency exchange rate had been substituted for

• commodity weights in demand on an external market produced at the territory of a money-issuing state

• the quality level of institutions ensuring reliability and guarantee of the property rights in the course of trade.

These are the basic, understandable and objective reasons that drive the exchange rates of different countries relatively to each other.

It is important to note here that even in this situation a consumer and a user values of a particular product or its categories are still not 100% reflected by the exchange rate. A significant share in valuation of the modern currency is the quality of the economic and legal systems of trading countries. The relative, time-varying demand for products produced in different countries, without interfering with the characteristics of the system, would be the most important factor and would directly influence the exchange rates, and it would be more logical if the world economy was free from boundaries between countries. The demand for the GDP goods of countries does not still reflect a dominant factor of rates formation. The influence on the exchange rates of state institutions and the system in general makes this valuation somewhat distorted. From here comes the difference between the exchange rate and PPP (purchasing power parity). I will try to decipher this thesis. Since the evolution of the world economy has taken the path of a “multicurrency world” where currencies represent the monetary unit of each country the criteria of their evaluating relatively to each other after gold has lost its former monetary qualities have become attached to the quality of the economies they represent. Forgive me, please, for repeating the same thought by using different formulations. I do this time after time in order to attract different categories of thinking people who need appropriate reasoning in order to understand the same phenomenon.

For the time being the means of exchange do not 100% represent the exchanged goods. The state and its system still influence the rates through their quality as an additional value. Despite the fact that this is true for the world developed this way and fragmented into countries, I hope we begin to understand, it will eventually become a relic of the past because at a certain moment economic system sooner or later will get globalized, become comparable in terms of ownership rights guarantee, financial infrastructure, etc. These constituent criteria of the evaluation of currencies will take back seat (as equal parts of a fraction that we reduce in mathematics). Please, note that a product such as or group of goods are still not associated with currency excluding currencies of backward raw material producing countries a significant share of exports of which are one-type raw materials on the global market, for example, energy (i.e. "petro-dollar" or “petro-currency” concepts). As a result of that there is a political, infrastructural component in evaluation of currencies, that distorts the true external value of the product (GDP) regardless its diversity. And there emergences the disbalance between (1) Exchange Rates and (2) Purchasing Power Parities (PPP) since the former contains an adjustment for the quality of the economic system, and the latter – the demand for the country's food basket reflecting in PPC index a stronger peg to the product. If the global economy were truly global, this will unavoidably happen, exchange rates would better correspond to Purchasing Power Parity. This discrepancy between PPP and the international exchange rate creates a temporary advantage (arbitrage) of economies with undervalued currency which allows exporters upon exchanging revenue in foreign currency for the national one inside the country to exchange components and labor in larger volumes every time opening the opportunity to increase quantitative exports. For example, you sold goods from China to the United States for $100. Having received this revenue you sell it on the domestic market for weakening national currency, the yuan. To reproduce the goods sold you shall spend yuan but since the rate drops then when you convert your $100 inside the country you receive more and more yuan than during the last trading and production cycle. Accordingly, the profit in the national currency is growing (provided that the purchasing power of the yuan remained at the same level).

The reason for the disbalance between the PPP and the exchange rate is that each currency on the international market is evaluated with regard to the quality of the economy whether you admit it or not. The fact is that the volume of export of high-quality goods can grow in the long term (unlike China) only with guarantees from the system of state institutions provided primarily to economic participants operating within its framework. On the domestic market, due to the demand for raw materials, components, intellectual property and labor the PPP index is close to the market rate which deprives the advantages of economy with a strong currency within the international trade. This fact reduces the competitiveness of exports of such developed country in comparison to exports from countries with insufficient market economies where labor costs are regulated by the state rather than by free market, and accordingly the PPP of the currency in such country is much higher than its rate on the international maker. Let’s explain simpler: for $100 in USA you can buy much less goods than for the same $100 converted in yuan in China. This means that in China for $100 you can produce more goods to export to USA than for the same amount in USA to export to China - the cost price in the US is much higher. Another tool for undervaluing currency used by government for export incentives is artificial nonmarketable monetary measures which are the subject of disputes and conflicts between trading partners. We can see this on the example of the USA and China.

If the economic space were global allowing goods to move freely from a producer to a consumer, bypassing intermediary like state institutions and country borders this discrepancy would be eliminated by shifting courses towards PPP values which would lead to intensification of competition. Exchange premium or discount on the international market compared to PPP index ​​would be minimal or completely leveled out. This would exclude the possibility of “arbitration” and abuse of power by authorities which are the subject of trade conflicts on the example of China and the United States who are still significant trade partners.

Once again I want to emphasize that we are describing the current state of affairs, the path of money evolution which at one point due to the fragmentation of local economies and the lack of technology humanity has taken. Therefore, for a long time (up to now) the sense of trade/exchange processes was distorted by introducing a universal medium of exchange embodying not so much the value of the exchanged assets as economic systems (countries) producing these assets. So we received the currencies of the countries which partly and in fact are intermediaries in the exchange process but they have the physical nature somewhat separated from the objects of exchange.

Therefore, I can state some degree of rightness of the argument of conspiracy theorists about the damage caused by the formal centralization of issuing powers of a system of private banking structures (such as the US Federal Reserve System or a Central Bank of other countries). But not for the reason they offer when speak about the biased interests of the financial authorities due to the ideas of the “puppet master”. The true argument about the shortcomings of the centralized monetary system is not the presence of captured interests of the authorities – a crazy idea – but is the state institutions and the economic power of countries influence the exchange rates of their currencies, in reality not reflecting the demand on the world market for resources and products. We have to admit that this centralization has become an enforced consequence of the established division of the world economy into many economies and will soon become a relic of the past as long as the process of globalization develops.

The task we formulate here is of practical importance: after realizing the essence of the current technological breakthrough we are witness now – without great losses, harmoniously and most effectively to incorporate the evolution trends as technological solutions into the current global system of global finance and accept the inevitability and pattern of the emerging alternative to national currencies.

Modern processes in the global economy due to the accelerating process of globalization make economic systems equal due to a single infrastructure. This means that the monetary system established during a long historical period sooner or later will use a more natural mechanism of exchange of goods through specialized “industry-based” currencies recognized throughout the global world and independent on the monetary policy of countries.

When the global economy has reached a certain high degree of globalization (and this is an inevitable process) new currencies will be pegged to specific industries or goods and symbolize them and give the usual dollar, euro, yen and so on the role of antiques to the delight of collectors and philatelists of the distant future.

We are standing on the threshold of the next evolution stage in the development of the world monetary system. An important, main detail in the course of studying and analyzing the history of money development was not noticed by all well-known economists of all observable times. But this detail, like a switchman of railways, at the very beginning of the history of money drove the logic of the evolution of the means of exchange to the path that we now are hostages of. The path which could become much more logical and practical if in its time, at the dawn of universal mediums of exchange, there would be appropriate technological capabilities and the level of globalization of the entire world economy.

Two problems that we noted above when describing the stage of transition to paper money or debt receipts: the possibility of "unreasonable" issuing of banknotes in a closed economic system leading to the inflationary effect and the volatility of exchange rates of different countries relative to each other distort the true intrinsic value of objects of trade. These problems sooner or later will inevitably be solved by introducing new, state-independent currencies as soon as the technology of money comes in line with the technological level of production and trade relations and the level of growing globalization of the world economy.

Only the lack of a sufficient level of globalization and technological capabilities in its time turned the evolution of money to the known scenario of creating of national currencies rather than of food, energy or other currencies.

Economics is a social science, the majority of laws of which are not universal and unambiguous as those in the natural sciences since in the social sciences there are unpredictable variables (preferences, fear, the effects of self-developing processes of systems, their interdependence, etc.) influencing on the future behavior and course of the history of social development. Therefore, only inquiring minds with a strong spirit able to resist the routine, existing economic concepts and categories formed through layers of time and invented in its time for convenient use and explanation of the current state of things, can discover, forecast, formulate and adopt a new reality of social development which comes according to the essence of things. Against the influence of the resulting-form-circumstances institutions of artificial origin, we, who armed with the technologies of the modern world, must bring them in accordance with natural logic. In order to avoid future, yet unconscious problems due to a lack of understanding of the evolution logic, the representatives of financial authorities shall take the right steps to integrate technological progress into the existing monetary system. Strong spirit and discipline of the mind are necessary to catch the true motives of living rational beings in the process of creating trade tools, hunting tools or medium of exchange for facilitating trade/exchange and to realize the justice and relevance of these motives at all times. With the development of technology, the tools of mining, food and so on were improved and new ones were invented. It is necessary to correctly determine the purpose and motives of decisions made by a human at each stage of evolution in order to understand the forced nature of imperfect institutions that arose due to technical unavailability or insufficient level of consciousness of the tasks complexity in each historical period to meet the unchanged basic motive. If we learn to understand the basic function of any social institution and accordingly improve the “drives” of socio-economic interaction mechanisms by which the process of information transmission and exchange of material benefits are optimized, then the efficiency of influence on the external socio-economic environment will increase to achieve the goal of equipping the society with the most “advanced” tools within the creative activities.

Therefore, in order to better bring my message it is necessary to return to the initial discussions about the stages of money evolution and look at them again in terms of the final/true functions that should be performed by means of exchange. To realize the imperfection of the means of exchange which a human had to accept — first gold, and then the usual money symbolizing the state, accept not the product itself or its symbol, the immediate task which a human really wanted to solve shall be understood.

So, the task was consisted of two main problems to be solved:

1. Exchange a part of goods for the needed one. And that is all. Do not get a currency and then exchange it again but eventually and, as soon as possible, acquire the necessary product in exchange for own product surplus. The currency in the global world, representing not a symbol the national state and economic system where it is produced but a specialized currency characterizing a specific product with integrated analytical technology and parameters of the specific transaction, is more suitable as an intermediary in the transaction than the traditional currency. For the time being we are at an important milestone of evolution when technologies allow us to create and accept it with unparalleled accuracy and benefit. In innovative technologies and their applications in the field of money circulation we can see exactly the work of intuition from a developer to an increasing number of people willing to adopt an innovation according to the main motive or goal – to obtain the necessary product as soon as possible and at minimal costs in exchange for their product.

2. The second task of money is the fixation of accumulated property or wealth. Since the storage of surplus product in barns in its time was not so practical solution people converted them, let’s say, in gold during a long historical period.

Since during this period there was no special practical symbol “assigned to” a specific type or category of goods for liquid and quick exchange, the function of the medium of exchange was performed by gold,

paper symbols, banknotes. So if civilization were global – united and without borders then perhaps we would have not national currencies, like we have now, but specialized ones symbolizing specific groups of goods or industry branches.

Why do I pay attention to this? In order to make us better understand what is happening now and to clarify the future picture – where the transformation of money in terms of inevitable globalization goes to.

Due to the established dividing of the planet population and its territory into separate socio-economic zones in search or constant selection of a common universal medium of exchange the humankind in its time took the path of creating various national-territorial currencies as intermediaries within the exchange process. They were first gold, then gold-backed banknotes, then accounting processing (non-cash money) in specialized financial institutions secured by real GDP without the participation of gold but representing, as a matter of fact, a single medium of exchange within the state for settlements with all kinds and categories of goods. Therefore, the competition between the currencies of countries is nothing but competition not only and not so much between specific goods but between economic systems where material benefits are created. What is the next step the humankind will take having received the necessary technology to increase the liquidity of units of account in terms of inevitable globalization along with eliminating the borders in the economy? To be exact, what else shall the humanity do to reduce the chain of exchange in order to reduce the value added by participation of third parties? This is the next logical, inevitable evolution stage of the world economy and money. The rates of such currencies relative to each other will vary depending on the demand for products of a particular category or industry they will represent. I note here that this will certainly and unavoidably happen. The first: the global economic community will try to reduce the degree of government participation in national currencies;

And the second: partly get back to the old principle of barter but already modern one and equipped with advanced technology when each branch of industry or type of global strategic product will have its own unit of account not controlled by anyone individually and simultaneously as reliable and convenient that would be accepted by all users of the planet.

Currencies of a new era will represent or symbolize not competitive systems (countries) but specific industries (as representatives of product categories). As we can see, the modern technologies (blockchain, for one) are quite ready to perform such functions and can create currencies that meet the requirements of reliability, instant liquidity and, in addition, have all the necessary information on each transaction: from the quality of goods to transaction registration with all nuances. This is the next logical, inevitable evolution stage of the world economy and money. The rates of such currencies relative to each other will vary depending on the demand for products of a particular category or industry they will represent. Why do for the time being the majority of people including representatives of modern technocracy involved to the regulatory function of state financial institutions strongly push back the technological revolution of money? We get impacted with the effect of the “aquarium” of the artificial world which we are in and therefore, being inside it, we so far cannot see how the world of human motives really works. The consistency and naturalness of directly obtaining of exchanged goods without the mediation of gold, banknotes or a specialized institution which is necessarily accompanied by transaction costs has been forgotten under the layers of time. It can be expressed even more accurate – completely forgotten because the humanity following the tradition is used to consider the direct exchange of goods upon the lack of technology as primitive exchange, so-called barter and fate of primitive economies. As a matter of fact, this opinion indicates not the primitiveness of barter idea such as but the historical absence of the technology that would allow it to function without loss of liquidity and speed of transactions. As such the direct exchange process equipped with high-capacity technology that would solve the problem of liquidity, reliability and even all nuances fixing of each transaction – is more logical, understandable and with the advent of the blockchain technology (here let the experts support me, I just point out the essence and significance of its role) will kick start the evolution of not only the economy or monetary circulation but also in the political frameworks as it creates an opportunity for emerging countries in the political arena to obtain a high-quality tool of exchange.

Such technology will allow to solve the convenient exchange where each means of payment will correspond to a specific product and even contains details of that transaction notifying the whole world about them, it will exclude manipulation and fraud. But it should be noted a particular dramatic, global in its scale and depth the tectonic shift in social development the role that will be played by it. Elimination of the dependence of economic entities around the world, companies and individuals, on the "old money" producers – countries seems so discouraging that it makes certain difficulties in "peaceful" integration of new technology into the existing global monetary and financial system. At first glance, it similar to incompatibility of the ideas of the Second French Revolution, its democracy and the principles of Freedom, Equality, and Brotherhood with the dominating that time monarchist idea of building a world at the time of revolution occurrence. Do not forget that their mutual hostility led to the Napoleonic wars and huge human losses. But this similarity pertains only to the high degree of incompatibility. In the case we reviewing there is no irreconcilable class antagonism. This incompatibility is of a technological nature, there is no an ideological conflict with the developed world at least in terms of the declared values. The truth is that the technological revolution we are witnessing does not contradict modern world order and values and possible political consequences can be leveled by technical adaptation of the existing system along with saving fiscal functions and counter-criminal control over states or their unions arising in the process of globalization. The absence of any monopoly of issuing money as a non-market instrument of regulation and the absence of wars financing through its I would deem right and proper.

We, usual participants and ordinary people, as we noted at the beginning, need to realize what is happening now in order to prevent the consequences of a global scale that will affect the life and well-being of every human on the planet and the states in their present form. Some nuances of recovery USA economy from the crisis in the early 20th century can help us to realize the importance of understanding the essence of what is happening. The abrupt switch to a new technological order led to a crisis of overproduction of such scale that it could be comparable to a significantly increased efficiency and productivity of labor. Only after formulating of that what happened by J. M. Keynes there was possible to develop a number of methods to cope with the consequences of that type of crisis and as a result the world obtained the necessary knowledge (realized) to smooth out the effects of crises with similar etymology in the future which was successfully accepted and tested by most countries with market economy and comparable levels of production.

Timely reflection on what is happening, unlike the “delayed” reflection of J.M. Keynes, opens the possibilities not only to prevent or reduce the consequences of a possible crisis but, anticipating the future, to facilitate the transition to a new technological structure, unprecedented in its scale.

So, it cannot hurt to reinforce what has been said above as applied to present times. Let us answer the following questions for we would not be confused by anyone.

Everyone has already recognized the fact of the ongoing globalization for the time being and also recognized the regularity of this process, has not it? Then how it can it be misunderstood that globalization will impact the entire world economic space, and all the rest areas of human activity, including politics are derivatives of the economy?

In this case, our theme regarding the form of money in the future world, where we inevitably go to, becomes just obvious. Does not it?

Therefore, how can we be wrong in our conclusions regarding the prospects for the loss of nationality by the currencies of the local monopoly and the obvious global specification of money depending on their use in a particular area or industry? Moreover, the obvious signs of the forecasting processes we can see now. What could be more natural than the verity of the thesis if the world originally inhabited by mankind was an undivided territory with a single principle of economic management and economic system, it would be quite propriate to assume that the evolution of money could develop in a completely different way. It would be more logical for each of the currencies to correspond to a certain group of goods rather than to belong to a particular political system and its socio-economic structure since this structure would be united. Then a more logical and less complicated way would be found to evaluate the consumer value of goods and therefore the currencies themselves could be referred to not socio-economic formations or states like they are now, or in medieval times and more earlier state formations, but to certain values created or gained by man. There would be, for example, "Food", "Clothing", "Instruments of Labor" and other currencies. With the emergence of the next products of human consciousness, technology, vehicles, information change (mail, etc.) the corresponding currencies would appear. If we follow this logic, then in present, in a globalizing world, we can see a “return” to common sense regarding the exchange process through specialized cryptocurrencies which are becoming popular in financial and physical respect.

Why now? First of all, this is a consequence of elimination of borders, the globalization of the modern world in terms of trade, the information technology revolution, when simple but more logical barter becomes possible due to the reduction of transactional costs and the opportunity to acquire any items in any quantity throughout the world.

Reliability and trust as the necessary criteria are secured by the blockchain technology and the decentralized natural issuing without a single controlling issuing center which eliminates the abuse of the issuing authority that provokes inflation.

While approximating such prospects it remains only to determine to what extend such a rapid development can be regulated, leaded to a single code of rules, protect society from associated risks of using them for criminal purposes, whether do it in private capacity or by countries that violate generally accepted laws of the developed world. As soon as this problem is resolved, when the governments of the countries reach a compromise on the problem of sovereignty (or partial and voluntary abandonment of it in favor of society under conditions of a high-degree globalization) upon successful phased progress of solving this problem – the new types of means of exchange will rapidly gain popularity and its intrinsic value. At present, we are witnessing the birth of a new technological order of the world economy when it became possible to have a completely new, technologically more advanced, meeting all the necessary criteria and characteristics of a type of money than even His Majesty Dollar. This technology excludes any influence of anyone: financial, political or other regulatory bodies and guarantees the stable functioning of the monetary system. We are one the way to a new technological level of social and economic relations on a global scale.

What signs of a new era and future changes can we see now and what conclusions should we come to?

Here those signs are:

The monetary system of the world economic space is going firstly, on the path of globalization with the growth of the world economy and trade ties secondly, with the increase of growth and volumes of trades the mediums of exchange, as we noted above, from the moment of their birth have been undergoing changes in increasing the intrinsic value of material assets underlying traditional money and therefore towards specialization of currencies and increase in liquidity of conventional account unit which owner is guaranteed to be able to exchange it for any product. Blurry contours of this process we can see if we pay attention to the specializations of the ICOs of cryptocurrency – they are classified in various industries and product categories.

thirdly, upon globalization the belonging of currency to any economic system (state) loses its former importance

fourthly, with the advent of appropriate technologies in the global world system, the traditional weaknesses of national currencies (devaluation, inflation, etc.) can be eliminated by adopting more reliable means of exchange in terms of decentralized circulation and programmed “independent” issuing and also the impossibility of control by any interested parties including by their creators.

fifthly, with the technologies allowing to create global units of account regardless of the will of any financial authorities with the ability to perform transactions and ignoring the boundaries of economic systems the humanity can return to the logical pegging of them to specific product clusters – the modernized barter – the direct exchange of goods without an intermediate link (gold, state, etc.)

What is the revolutionary nature of the observed technological breakthrough in the monetary system? It is in that each type of product can finally be represented by a specific cryptographic currency containing information about the product and every currency can contain information about every transaction (without loss of liquidity) and its parameters so there will not be the need for mediation and state registration of each change of ownership.

With a reasonable approach on the part of states, it remains only to solve the issue of automating taxation using uniform international or national rules and optimize the technologies underlying the new currencies for these tasks. We call this a reasonable approach since the national financial authorities are unable to stop this process because they cannot prohibit or control the widespread voluntary acceptance of universal funds as payments by all participants that perform the function of money faster, more reliably and guaranteedly. Considering the parameters of the transaction, contained with all the necessary information in the specialized monetary unit itself with the help of the newest technologies, the process will only accelerate.

It has already been said a lot about the possible consequences of this process. Therefore, we will not go into details and forecasts what industries and professions will demise as not wanted.

It is necessary to realize that these consequences are not dangerous for the modern states – these are inevitable manifestations of progress the purpose of which is to optimize socio-economic relations between all participants of the world economy. Here it is important on the part of the financial and political authorities to comprehend and take adaptive measures of a technological nature as well as to integrate the states with their institutions into the inevitable process in order to avoid uncontrolled crisis situations on a global scale. The technologies of the modern world allow this to do both in fiscal terms and in terms of control in order to avoid the use of new payment systems for criminal purposes. It is just needed to agree through the achievement of public consensus, the technological reequipment and reorganization of all financial institutions.

We intentionally divert our reasoning from the sense that classical economic theory offers describing the traditional laws of economic development and traditionally formulating new paradigms post factum when changes have already occurred and entailed consequences, as it is in mention above example with Keynes. Traditional economics primely describes and formulates the already occurred phenomena but it cannot qualitatively forecast them for exactly the same reasons as traders cannot accurately forecast rates of assets on stock markets. Economics – is a social science where there is a large number of uncertain variables relating to the psychology and human thoughts, the totality of people and all these are extremely difficult to predict and model. These conclusions are also an attempt to forecast but we consider the phenomenon in terms of its nature, so we address it differently, our goal is to understand “where the world is going to”, not to perform a quantitative analysis. We are talking about the very essence of social processes relating to our discussion. This simplifies our task since we choose to analyze the very essence of the processes. If it is discovered, if we understand the basic drivers that make society accept certain rules, the introduction of new interaction tools then the picture of future will be presented in extremely precise resolution in details. The current picture of the world without an understanding of the idea that moved humanity at the time of its origin does not make it possible to understand the complex, diverse and interrelated processes within the framework of artificial "aquarium" logic. An objective view from an investigating observer outside the “aquarium” is needed to see the most likely future.

Being within the framework of studying only a certain period of time where the human brain is overwhelmed with attempts to tie together the knowledge about the process as such, without studying the main motive that drove to introduce this or that institution to serve this process, i.e. fish, while being inside the aquarium, is impossible to understand the whole world. It is necessary to realize the motive and conditions that led to the emerging of the "aquarium" at the time of its creation.

It is important to understand once and for all that the driving force of money evolution is the constant human desire (at the level of intuition) to improve the technological component of the mediums of exchange to optimize the trading process in accordance with the requirements of time, increasing volumes and speed of trade, and expanding the range of goods in world trade.

Thus, humanity in the course of its development and development of technologies is in constant search for an asset or its symbol which could serve as a universal medium of exchange that meets the modern requirements of a certain stage of technological evolution having the most important attributes of money: the necessary degree of deficit, universal trust and at the same time liquid enough for transportation (transactions).

The general and universal trust as well as the acceptance as means of payment by all subjects of the economic space without exception is also to be solved due to the peculiarities of the technology. Without that the currency simply will not exist. Technological features of new currencies solve the problem of general trust: the impossibility of currency counterfeiting and the “programmed” issue volume once and for all.

How comes the confidence in new money. Who knew that banknotes would eventually replace physical gold? Certainly, the attitude to them at first was full of an extreme distrust and huge criticism. And it was the justified criticism if we consider innovation through the prism of the old reality. But the reality of human perception has changed. Man has changed it. Only laws of nature are unchanged. The laws of social development including economies and the evolution of money (mediums of exchange) change over time with the adoption by people of new symbols that meet the requirements of new era, not the old ones. But the motives of people do not change. As soon as a number of people accepting a new symbol or type of money (trusting them) reaches a certain critical mass we become witnesses of a self-developing process and a real boom in demand for a more convenient financial instrument.

The first signs of what exactly in the near future will turn the financial world upside down with the inevitable consequences we are already observing. The sooner we understand the essence and reality of what is happening, the sooner the world understands and realizes that this process is inevitable and necessary for the modern economy and the more chances that these consequences will be positive and in line with the positive changes of new technologies.

At the moment the world is on the threshold of a new, revolutionary technological order if we don’t realize its causes, essence, spheres of influence then large-scale shocks await us, especially in the third world countries with a great gap to developed countries even now. Understanding this, the society, the people save themselves from the problems of organizing their own monetary system while creating their own state of future.

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