Facebook’s Libra Is A Global Reaction To Endless Currency Instability

Originally published in Forbes, 8/4/2019

“Money does not pay for anything, never has, never will. It is an economic axiom as old as the hills that goods and services can be paid for only with good and services.” – Albert Jay Nock

Albert Jay Nock’s pithy statement of what should be obvious came to mind recently while reading Financial Times columnist Rana Foroohar’s failed takedown of Facebook’s proposed Libra currency. Somehow Foroohar’s editors forgot to delete her question about whether “easier cross-border financial flows are what the world really needs now.” She plainly knew not what she was asking, or writing.

Missed by the journalist is that money crosses borders solely because real goods and services do so with wondrous regularity. Money’s sole purpose is to facilitate the exchange of actual market goods: I’ve got bread, I want your wine, but you have no interest in my bread; the object of your consumptive excitement the butcher’s meat. Money is an agreement about value among producers that enables the exchange of actual market goods.

Looked at through the prism of a question asked by Foroohar, and that she plainly didn’t understand, “easier cross-border financial flows” have been the sole purpose of capitalist production for as long as the world’s inhabitants have been able to specialize, and in the process exchange the fruits of their own labor for the fruits of others. For one to work is for one to express a powerful desire to import. The importing could be from across the street or from the other side of the world, but import it is. The “cross-border financial flows” that Foroohar so naively disdains are merely happy evidence of a world that grows more connected by the day.

With its proposed introduction of the Libra, Facebook is thankfully aiming to enhance the ability of individuals to exchange with other individuals. Will it succeed? Who knows? Foroohar thinks not, so she dismisses the very notion of the Libra with misplaced and misinformed contempt. She misses the point. To see why, please read on.