A Stargate in a virtual scenario of a war game in competition

One of the main activities of rulers during several centuries has been to define and to control borders between countries.  The need of new resources to improve development made possible the commerce with the neighbor countries.  Commerce is transference of goods and services, and in fact is transference of mass and energy from one point in the space to another one nearby. There is a way to do this more efficiently; this way is to transform previously those kinds of energy in another one that is easily transferred: Gold. But turning goods and services into gold has an important loss of energy. Gold is a valuable asset as it does not grow on trees. It needs some work (services) to be obtained, transported and stored. But with gold, the system is more functional than without it.

This is an example of an economy that was initially simple but in some years, although it was not complicated (the assets involved was only food, a few transformed goods and gold), it became very complex, because the value of gold can became very uncertain, it depends on so fuzzy things as perception, not only on the real energy employed to get it. When Spaniards brought gold from America to Europe and they used it to pay their armies all over Europe, this fact produced an inflation process in Europe and poverty. As the amount of gold in circulation was much higher, the prices of goods and services went up sharply. This is clearly a phenomenon of a complex system (although it was not very complicated, especially if we compare it with our time) that was very fragile under an unexpected event (a sudden increase of the monetary mass).

This fact only was possible because although the economy keeps working with the same tools, the world becomes duplicated suddenly with a single point of entry for the transference of goods and services between Europe and the new world (The Tower of Gold in Seville). If you let me, I am going to name these kind of phenomena as “Stargate-like” phenomena.

Nowadays the situation is quite different, economy is global and fully interconnected, but economists have a better understanding about the effect of the monetary mass on the economy. Governments have established mechanisms to control inflation substituting gold by bank notes and controlling the monetary mass through the monetary policy to preserve a proper performance of the economy.

We know that globalization is a phenomenon that is increasing the complexity of the economy every day, but today money is not a physical asset like gold or even the paper of a bank note, today money is information stored in a computer of a bank. Money can be transported from a side of the planet to another one instantly. As anything can be turned into money, we are transferring goods and services from one side of the planet to another one as if we had discovered a “Stargate-like device” although not really, at least virtually (from the balance sheet of a company in a country to another one).

Perhaps, the main source of complexity of current economy is not globalization itself, it resides under the capability of transferring instantly huge amounts of money from a point to another one, and this can be done only through a system of international banks that are forming a “network of Stargate-like devices”. But although we can transfer money from a world to another one, as ancient Spaniards did, economists do not understand well how it is possible to fade the effect of these huge money movements.

When we talk about the value of the assets in a country, we think that it is a decision of the markets, but are the markets deciding the value of the things or are the new devices in the market preventing that markets decide effectively the value of things? Are the world and the economy policies in particular, prepared to take advantage of a so innovative financial system?