Safeguarding the Future of Value

The Subjectivity of Value

According to Merriam Webster, value is the determination of “relative worth, utility, or importance.”

Worth, as judged by whom? Utility to whom? Important to whom?

Value, rather than being objective, is an entirely human, subjective concept. Without sentience, no value can exist. The very experience of consciousness results in the world around us being attributed value.

If a money tree grows in the woods and no-one is around to know it, is that tree valuable?

An object once treasured by a civilisation due to its believed divine origins, becomes a paper weight in a future where that object’s story has been long forgotten. What is the true value of that object?

A bucket of water is thrown nonchalantly over a soapy car in one time and place, and is carried miles across a barren desert to a waiting village in another. What is the true value of that water?

The Supply of Value

Value is often the simple result of supply and demand. Something we want becomes progressively more valuable the rarer it is. And sometimes we value something simply because it is so rare.

In the Byzantine Empire, purple dye was literally worth its weight in gold because the sea snail it was derived from was so rare. It took as many as 250,000 mollusks to yield just one ounce of usable dye, but the result was a vibrant and long-lasting shade of purple, which became the colour of royalty.

If our life could be represented as an object, that object would be the most valuable object to us in the world. The demand for it would be immeasurable and the supply would be just one. Keeping that object safe would be our highest priority. If we were immortal and invulnerable—as in, if we had an infinite supply of these ‘life objects’—we would throw them around like tennis balls. Even something as objectively valuable as life itself, add enough supply and it loses its value.

The Relativity of Value

But supply and demand doesn’t explain value itself. Something isn’t automatically valuable because it is rare; an original Van Gogh painting is considered to be more valuable than a painting by a random 4 year old. They’re both one-of-a-kind paintings, painted by one-of-a-kind human beings, but the art world have agreed that paintings by Van Gogh are intrinsically valuable.

But valuable, relative to what? To currency. But what happens if you remove the currency? What is a Van Gogh painting worth then? Well you could measure it in gold… but let’s more all precious metals too. Cars… or houses perhaps? Let’s remove those too. In fact, let’s remove everything else in existence, so only Van Gogh paintings exist. Now what is a Van Gogh painting worth?

Assigning a specific value to something, without referencing anything else, is like assigning a position to an object in infinite space. Without a reference point, where is that object? Similarly, without a reference point we cannot assign a value to something. Something is here, in relation to there. Something is valuable, in relation to something else.

So value, ultimately, is relative. This cannot have value without that. Light only exists with the presence of dark. Short is meaningless without tall. Beauty means nothing without ugly. Good without evil. Life without death.

“The gods envy us. They envy us because we’re mortal, because any moment may be our last. Everything is more beautiful because we’re doomed. You will never be lovelier than you are now. We will never be here again.” - Achilles, Troy.

Money: The Medium of Exchange

So we know what we value. Chickens give us eggs. Spades make digging holes easier. Shoes make walking more comfortable.

You have a lot of chickens but want a spade. I have a spare spade I'm wiling to sell, and I am open to receiving payment in chickens.

We decide that 1 spade is worth 1.5 chickens.

How do we trade?

Easy… just give me 1 chicken and chop a second chicken in half, right?

Well, the chicken is valuable to me due to its ability to produce eggs… and half of a chicken can't produce eggs. So half a chicken is worthless to me.

He could give me 3 chickens for 2 spades… but I only have 1 spade to sell.

What we need is divisible medium of exchange that whose value we both agree on.

This is where money comes in. Money is the medium of exchange through which we can trade indivisible and non-fungible value.

Fungibility is the ability of a good or asset to be interchanged with other individual goods or assets of the same type. Fungible assets simplify the exchange and trade processes, as fungibility implies equal value between the assets.

Some historic examples are gems, beads, tobacco, salt, spices, etc… but with the resounding favourite across time being gold and silver, as they packed the most value per gram, and so was the cheapest to store and transport.

Money, however, is dangerous to transport. Carriages were always at risk of highway robbery, and ships to pirates. Transporting large amounts of gold required military escort.

Storing gold and silver was also troublesome, especially before the invention of metal safes.

The rich used to store their gold in the basements of temples, as temples were heavily guarded, and temple priests were seen as trustworthy—this is why temples were always the first places to be sacked by invading armies.

Temples then were the world's first banks.

Currency: The Abstraction of Money

Banking was an innovation that allowed cumbersome money (gold and silver) to be stored securely in a bank vault, and through currency—portable notes that represents ownership of that value—we could easily travel with that value and then redeem it for our money when we get to our destination, or trade with it, since counterparts could also redeem that currency for the money if they wished.

After the second world war America had nearly all the gold, and so in order to save Europe's currencies from collapse, they became fiat currencies that were backed by the U.S dollar, which itself was backed by gold.

Fiat money (from Latin: fiat, "let it be done") is a type of money that is not backed by any commodity such as gold or silver, and typically declared by a decree from the government to be legal tender. Throughout history, fiat money was sometimes issued by local banks and other institutions.

Then when the US dollar came off the gold standard and became a fiat currency itself, its value was then, rather than being a product of stored gold, became a product of its role as the world’s reserve currency, and currency with which the world's oil is traded.

Inflation: The Devaluation of Currency

And now in the post-pandemic world the reserve currency of the world is printing dollars at an unprecedented rate, with just over 35% of all the American dollars that have ever existed being printed in 2020 alone.

The annual inflation rate in the US accelerated to 8.5% in March of 2022, the highest since December of 1981.

While the world's best money managers apply their talents protecting the wealth of their clients and employer against this inflation, billions of dollars of unmanaged private and personal savings are evaporating, and inflation shows no signs of slowing down.

Money represents the value that we, as human beings, have produced with our energy and time. It is the very measurement we use to trade fractions of our lives.

Since currency represents money, and the integrity of currency is then paramount. To the degree the value of currency can be devalued, is the same that can be done to our lives.

Kingsilver aims to help everyone safeguard and grow this value, and ensure the fruits of their labour are not debased by governments or financial institutions.