Money Handling for Beginners - I can make it, just need to understand it
September 1, 2018 9:24 PM   Subscribe

Left-brained artist/inventor. I have really great ideas. Things that people could use and use them well. I've been like this all of my life - conceiving ideas - but losing momentum.

I need to understand about planning - the energy of money - where it needs to be put, how, why and here's the clincher - it needs to be alternative to conventional business - i.e. people who've quit the rat race and succeeded using a different way. Secrets from the underground where people sell/buy/trade and save their earnings, utilizing low-tech environments/establishments. My searches have not yielded - the jargon, is not yet in my vocab.

Foreseeing a time when banks become defunct, I'd like to know there are alternatives in real life - not online. So I will need for now - straight-forward, low-level teaching of the science behind handling money. Later on I can have advisers who will deal with the bigger stuff when it comes along. Any leads, books, videos, sites - appreciated.
posted by watercarrier to Work & Money (16 answers total) 10 users marked this as a favorite
I don't think I fully understand the question - energy of money etc, but a money transfer system that's an alternative to banks is hawala:
"a popular and informal value transfer system based not on the movement of cash, or on telegraph or computer network wire transfers between banks, but instead on the performance and honour of a huge network of money brokers (known as "hawaladars")"
posted by JonB at 9:49 PM on September 1, 2018

Basically, to understand the rudiments of handling earned money in the real world, offline, for left-brained artists and inventors through films, courses, books, vlogs - who're creative, make some money but use alternative ways to move their money.
posted by watercarrier at 10:15 PM on September 1, 2018

I'm also struggling to understand what an answer would look like.

What functions of banks are you trying to emulate? You talk about 'handling' and 'moving' money as well as 'where it needs to be put'. That sounds like you might be looking for alteratives to payment transfers and savings accounts? But then you also refer to wanting to understand 'the science behind handling money' which makes this seem like a much broader question about how different financial systems work.

Finally, when you refer to 'secrets from the underground' in the context of bigger amounts of money, that raises questions around your approach to tax. There are some creative and alternative approaches to paying taxes which are appealing to those who don't like following traditional paths. These frequently end in poverty and prison for those who follow them through.
posted by Busy Old Fool at 11:13 PM on September 1, 2018

As I wrote before above, to first understand money - then how to handle it - i.e. put it to use or store it - in detail. What do people do in 3rd world countries with their money? What if there was an economic collapse world-wide - we'd have to figure do-able and workable alternatives. I'm looking at that time and place - and how this actually functions.
posted by watercarrier at 12:04 AM on September 2, 2018

To be glib about it, people either keep their money in banks or bank-like services (Bitcoin could go here, though for almost any other purpose the description would be inapt) or they keep it under the mattress, in a safe, or buried somewhere. Often some combination of the above, and not necessarily with the currency of the country of their residence.

If people aren't doing those things, there generally isn't useful money and people are bartering and/or using precious metals (apart from minted coinage) as something like money.

Money as a concept relies on a functioning society since it is essentially a form of credit. Even gold sometimes fails to function as a good medium of exchange. I think that's why people are finding it hard to formulate answers within the parameters you set out.
posted by wierdo at 12:34 AM on September 2, 2018 [4 favorites]

Yeah I'm not super clear on what you're asking but I think you might find the documentary The Money Fix on local currencies really interesting.
posted by jrobin276 at 12:37 AM on September 2, 2018

I can't remember if it was Radio Lab, or Planet Money, but one of them had a podcast all about money in aincient civilisations - specifically one in the south pacific. If you can't find it let me know and I'll have a look when I'm not on my phone.
posted by jrobin276 at 12:48 AM on September 2, 2018

If there were an economic collapse worldwide, what guarantee is there that your earnings will continue? How will you fund paying for advisers?

There's likely much to be gleaned from previous examples. You could probably find histories of what people did in Japan after the war, or Germany during its hyperinflation period. More up to date cases might include Zimbabwe, Argentina, and Venezuela.
posted by Calvin and the Duplicators at 4:27 AM on September 2, 2018 [1 favorite]

In some places (I want to say Sudan?) where there’s no functional currency, mobile phone credits are basically currency.
posted by chesty_a_arthur at 5:45 AM on September 2, 2018

to first understand money

As wierdo says above: Money as a concept relies on a functioning society since it is essentially a form of credit.

Specifically, it's credit that you extend to the rest of society, in an undifferentiated manner, for services you have performed for specific members of it.

Money you receive is supposed to function as an acknowledgement both from the specific person who hands it to you and from society at large that you have provided something of value to somebody, are therefore now owed something of equivalent value in return, and that you have exchanged the obligation of the person to whom you provided that value for the right to redeem the debt in the form of goods or services from vendors of your choosing.

Money you spend functions as an agreement between yourself and the person you hand it to, saying that the debt you owe them in return for whatever thing of value they've provided you with is now no longer your personal responsibility to make good, but that of society at large.

In this context, "society at large" consists of exactly that community that's willing to take part in this kind of exchange by using the same kind of money.

What if there was an economic collapse world-wide - we'd have to figure do-able and workable alternatives. I'm looking at that time and place - and how this actually functions.

The traditional working alternative to money in the face of widespread economic collapse is barter: direct exchange of actual valuables between pairs of people.

Barter always works, but it doesn't scale. Any attempt to do barter at scale will eventually end up creating money of some kind or other.

Sometimes that money is in the form of precisely replicable units of currency that can be carefully accounted for, like grams of pure gold, or banknotes that are infeasible to counterfeit, or just entries in ledgers like mobile phone money; sometimes it's more vague, more akin to a general perception of reputation, and the economy appears to be functioning on the basis of a general willingness to just give people stuff, either because you think they deserve it or you're shit-scared not to.

Doesn't really matter. It's all money, and there is therefore always some way to game it. The only way that money works at all is if there's a general willingness to accept that debts can be settled by exchanging unlike for unlike (in fact barter relies on this too); and as soon as that's the case, possibilities for arbitrage and other forms of rent-seeking will present themselves to those skilled in the arts of looking for them.

then how to handle it - i.e. put it to use or store it - in detail

people who've quit the rat race and succeeded using a different way. Secrets from the underground where people sell/buy/trade and save their earnings, utilizing low-tech environments/establishments.

Seems to me that if you're not finding what you're after, it's because you're looking in the wrong places. You will not find money-management secrets in any kind of low-tech underground. The place to look for money-management secrets is amongst those who are demonstrably good at it i.e. people who have bags and buckets and buildings stuffed with it: the 1%. And what you'll find is the Open Secret of Capitalism: the single most effective way to gain and hold a lot of money is to start with a lot of money, then spend it at a lower rate than that at which it compounds itself.

People quit the rat race when they have a lot of money, not before. If there appear to be exceptions, take a closer look at that little phrase "a lot". "A lot" is a relative measure. Having a lot more money than the people around you works. So does having a lot more money than you will ever actually need to spend.

If you want to quit the rat race, you need wealth. That translates to either (a) a lot of money or (b) enough practical, actionable, in-demand skills that you can reliably swap them for stuff you actually need, when you need it or (c) to exist in a place and time where competition for resources is low enough that what you need is yours for the taking.

If you're looking for anything vaguely resembling post-collapse personal security, I recommend path (b); any serious collapse will render both (a) and (c) utterly unworkable. As an adjunct, you can work on reducing what you actually need in order to stay alive and content to the greatest extent you possibly can.

There are endless numbers of people who will happily sell you wealth-accumulation schemes that don't rely on any of the principles above. None of these schemes will work anywhere near as well as the one that involves selling wealth-accumulation schemes to the economically illiterate.

Best of luck to you.
posted by flabdablet at 6:05 AM on September 2, 2018 [20 favorites]

I think you’ll be interested in the 1970 Irish bank crisis - it’s fascinating. Essentially the banks were all closed, but the economy continued based on cheques circulating backed by networks of trust.

See Tim Harford, 50 Things That Made the Modern Economy, Money in an economy without banks, and J P Koning’s Moneyness blog post.
posted by siskin at 6:07 AM on September 2, 2018

Is asking for advice on developing an alternative ‘money’ handling system outside conventional currency and banking really anything that can be described as ‘for beginners’?

I mean, the fundamental problem in any kind of economic exchange is finding counterparties who want what you have and will give you something you want for it. In today’s society, which has not undergone an economic collapse, it is easy to find people who want conventional money mediated through the conventional banking system and hard to find people who want anything else.

There’s not going to be a general answer as to how would people engage in economic transactions if conventional currency/banking became unworkable. What people would do under those circumstances would emerge from the specifics of the situation, and I don’t think you’re likely to able to accurately predict it ahead of time.

For this question to be answerable, you have to figure out what you want your alternative to do for you now that money in banks won’t do. Without that, it’s too indefinite.

Tl:dr: Shoebox full of gold coins under the bed. It’s the only way.
posted by LizardBreath at 6:13 AM on September 2, 2018 [1 favorite]

I’m going to take a different tact - I don’t personally believe the banks are going to collapse but I do worry about shifts in wealth and economic power, especially for my kids. There is one thing that’s pretty much always got some value, and that’s areable land and the knowledge to make it produce.
posted by warriorqueen at 6:13 AM on September 2, 2018 [3 favorites]

There is one thing that’s pretty much always got some value, and that’s arable land and the knowledge to make it produce.

Mitchell on Farming
posted by flabdablet at 6:19 AM on September 2, 2018 [3 favorites]

As a creative person myself who was raised with a fairly rural/survivalist bent:

You will hear all kinds of opinions about what holds and stores value - from gold to bitcoin to land. I have a neighbor in rural Wisconsin who stockpiles whiskey and ammunition because according to them those will be the valuable stable commodities if the banking system collapses.

Personally, I think that I would say: To function as a creative person outside of the banking system and still be on the legal side of things (as they exist right now) and honoring your social obligations it all boils down to relationships. Treat relationships as a kind of currency. I think this speaks a lot to your comment here.

I am able to do the kinds of things I do in the way that I do them because I have built a series of relationships with my landlords, students, and clients that makes them want me to succeed and keep going. They store the value I create in their buildings, on their bodies, and in their heads depending on what part of my life we are talking about. That value returns to me in any number of ways that doesn't get quantified on a balance sheet. It is more than just bartering - it is a functional assessment of personalities and esoteric value as well. The value inherent in my skills and talents benefits them in some way - tangible or otherwise. I don't think that enough creative people recognize this and see these relationships as either entirely antagonistic or entirely transactional. This is a mistake, I think.

The US has a lot of creatives who are appreciated for their talent/skill/value who have built a simple life based on non-traditional transactions that are not quite bartering but not entirely gifts either. Building stable important relationships does this, but it is hard to explain with our current capitalist system - i.e. people are always asking me why I am doing this or that and not getting paid money when the benefits I get from the action are FAR more than the equivalent amount of money or the equivalent of stuff would bring.

In a lot of ways this feels slightly medieval or maybe even Roman-client-based, but it isn't really; a lot of the value I have stored away is my relationships with a handful of people who have been instrumental in my own successes.

I think that the second thing I think about a LOT is the idea of inheriting some store of value. On paper, I am not a rich man. I have an interesting, dynamic, really (really) full life of which I am pretty proud, but that isn't reflected in cash or my bank accounts.

I am able to have this really rich life because the people who came before me in my immediate family weren't as married to the American capitalist ideal of recreating their surroundings every 15-20 years and purging just to consume more and more. When my home is in good shape and not being disrupted with some ridiculous creative project, I am surrounded by the goods and chattel of someone between 1865-1910 with an overlay of modern technology. So I've never had to think about scrounging or saving for a piece of furniture that was good because people had the foresight to put things away that they weren't using with the understanding that those things had value. So I've never had to worry about dishes or chairs or tables or household things.

This isn't to say you should just randomly hoard things, but that good things should be put away to be passed on rather than be destroyed. That thing has value and it is all of our responsibility to preserve that value to pass on, IMO. This doesn't have to be family specifically - it can work as some kind of broader cooperative system or small group as well. The point is to step outside of the cash-stuff-trash-cash-stuff-trash-cash-stuff... mindset. A life outside of that mindset doesn't have to feel impoverished regardless of how much you have in a ledger.

And then land - some of the most solid creative people I know are fine woodworkers who live simply and have land with trees on it. For my money, trees are a great passive investment, but not as renewable as other crops. Go to the country and buy a few acres of mature trees that are desirably species, then leave them alone until you need them. There is a few thousand right there (or the equivalent of whatever post-banking thing comes along) because we will still need boats and tables and firewood &c. and there will always be a market for good woods, I'd say.

Once the trees are gone, you can raise whatever on it. My childhood the-world-is-going-to-collapse-at-any-moment vote would be flax if you are in the right place because it isn't as steal-able as grain or other crops. I have a feeling you won't get killed for your flax as quickly as you would for your wheat or corn. It takes a little more expertise to deal with and that puts you in a better position, maybe, not to get murdered for your flax in the field.

And, finally, to speak to that same comment linked above: I am a member of a couple of different online boards that have to do with sewing and design classes in West Africa and India. It seems from the chatter that the more you get outside of the bigger cities like Accra &c. it is straight-up old-fashioned barter. The boards are full of current and potential students from the surrounding area asking if this or that school, academy, or private tailor's demands are fair: "They are asking for 15 gallons of petrol, light bulbs, two live goats, and four pieces of Ankara fabric in four colors - is this a fair price for this semester?".

So that is how that goes from what I have seen - and it isn't dissimilar to what happens here in the US. Those fine woodworkers I have talked about are always making deals like "My wife will make you two shirts, fix your jeans, and I'll repair your gutters and run a wire to the garage if you would make us a set of cabinets to hang above the fireplace."
posted by Tchad at 9:25 AM on September 2, 2018 [8 favorites]

Secrets from the underground where people sell/buy/trade and save their earnings, utilizing low-tech environments/establishments.

There are lots of small "economies" that exist mostly based on barter or even based on communal use. Those economies are set up for trade and not for savings, though. In those cases, the value of a good or service is in its *use,* not in its possession. These are economies that likely aren't strong proponents of individual property rights or might even agree with the Proudhon maxim that "property is theft." Hoarding/saving within these kinds of economies is going to be very strongly discouraged, because it's essentially breaking the implicit social contract maintained within them. When you "save," you are taking something of value from the community (whatever it is you're saving) and refusing to put something of value back in (because you're refusing to use the thing you took, you're saving it instead). So you're essentially extracting value from the community -- in other words, exploiting the community -- and that is not going to be well-received.

There are also black and grey market economies that use alternative currencies, like the infamous use of Tide as currency. Those economies essentially function just like any currency-based economy, but the currency they use is usually less stable than a government-backed currency would be, and may be inconvenient in some other ways as well (for example, the currency may be hard to carry or store).

Pseudo-currencies spring into existence when you have a group of people who can't access conventional currencies but also can't get into highly individuated, trust-based trading arrangements. So places like prisons or prison camps are rife with them, but you could also see that kind of thing if there were a collapse of the government-backed currency. Like if the US dollar collapsed, you might see people in the US suddenly using cans of tuna (random example) instead of and in the same ways that they used to use the US dollar.

But once you get to something very large-scale like that, people who need to trade on a larger scale than just for their daily sustenance (like businesses) will probably eventually turn to alternative government-backed currencies instead of some other good -- like maybe people in the US could start trading using the Canadian dollar (random example). There are some currencies that are considered strong/stable world-wide and people who have the ability to will ultimately turn to those currencies if their own government's is too weak/unstable to use. That's why even now you see people using the US dollar and British pound as currency in lots of places outside the US.

If you want to learn more about money on an abstract level, you should take a community class in microeconomics. Microeconomics and macroeconomics 101 classes are about just this sort of thing, and you will learn a lot of fascinating stuff.

If you want to learn more about money on a practical level -- well, I think you're overthinking it. You can just cash all your paychecks as you receive them and keep the money in a lockbox beneath your bed if you want. If you want to invest in something big and you don't trust money, then buy property. If you want to invest in something small and you don't trust money, buy stuff you will use (so you know you will get value from it even if you never part with it) and maybe eventually buy objects that are as highly liquid and fungible as possible, like jewelry, gems, gold, etc. But honestly, you can trust money pretty well, because so many people have such a huge investment in it working OK as a store of value and for trade that it really is the most stable and liquid investment you can make. No investment is perfectly safe, but cash is certainly one of the least risky out there.
posted by rue72 at 10:30 AM on September 2, 2018 [4 favorites]

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